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TMI Blog2017 (4) TMI 536X X X X Extracts X X X X X X X X Extracts X X X X ..... tural engineers which pointed out several structural lacunae. On coming to know about the same, the respondent further arranged inspection by various specialized agencies which confirmed the same in their reports. c) Being aggrieved by the quality of construction, the respondent served a legal notice dated 19.09.2011 to the appellant No. 1 seeking damages. The respondent, vide Clause 33 of the said agreement, appointed a sole arbitrator claiming that the appellant No. 1 has not complied with the terms of the agreement whereby disputes, requiring adjudication, have arisen between the parties. In statement of claims, the respondent, besides other claims, also sought for a sum of Rs. 39.85 lakhs paid to the appellant No. 1 along with a sum of Rs. 35,000/- for the TDS deposited to her credit. d) The appellants filed a suit for declarations, permanent injunction and recovery before the High Court being CS(OS) No. 1532 of 2012 seeking a decree that the agreement dated 06.06.2009 entered into between the appellant No. 1 and the respondent was vitiated and had been terminated by mutual consent by both the parties and any proceeding initiated pursuant to the agreement is null, non-est and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... counsel further contended that the High Court erred in upholding that the cause of action with respect to relief of money is an independent cause of action from that of the relief of declarations and injunction. The High Court failed to appreciate that common trial of joint causes of action is necessary, if at all, as they raise common questions of law and facts and the course adopted by the High Court would lead to multiplicity of proceedings causing delay. Learned senior counsel finally contended that in view of the patent illegality in the orders passed by the High Court, the same are liable to be set aside. 7) Without prejudice to the aforesaid, learned senior counsel for the appellants, in the alternative submitted that the entire matter be referred to another sole arbitrator which may be appointed by this Court as according to him, in the written contract, there was a clause for arbitration and, subsequently, in the oral contract also, the terms of the earlier contract continued to remain in operation except those which were modified in the oral contract. 8) In support of the above submission, learned senior counsel for the appellants placed reliance upon a judgment of this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w of the existence of the arbitration clause in the agreement dated 06.06.2009 and the subject matter of dispute between the parties in the present suit is already pending adjudication before the Arbitral Tribunal, the instant suit filed by the appellant No. 1 cannot be proceeded with and the matter is required to be referred to arbitration. Learned counsel finally submitted that the judgment rendered by the division bench of the High Court upholding the decision of the learned single Judge is correct and no interference is called for in the appeal. 11) Learned counsel further submitted that the oral contract did not contain any clause for arbitration and the dispute raised by the appellant No. 2 cannot be referred to arbitration. In support whereof, he relied upon a decision of this Court in Kvaerner Cementation India Limited vs. Bajranglal Agarwal and Another (2012) 5 SCC 214 wherein this Court has held that there cannot be any dispute that in the absence of arbitration clause in the agreement, no dispute could be referred for arbitration to an Arbitral Tribunal. 12) Learned counsel, however, submitted that if this Court comes to the conclusion that the matter should be resolve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be appointed as per the suggestions of appellant No.2, who would supervise the same but without any profit/remuneration as per the oral agreement. The respondent agreed to make all payments towards purchase of material, construction, fee of architect etc. Appellant No. 2 incurred an amount of Rs. 45 lakhs for and on behalf of the respondent which is sought to be recovered under this suit. The appellants also claimed a declaration to the effect that the agreement dated 06.06.2009 between appellant No. 1 and the respondent was obtained by fraud and mis-representation, hence, it is null and void. Another declaration sought for in the suit was that the agreement dated 06.06.2009 stood terminated by mutual consent. A decree for injunction is also sought for restraining the respondent from initiating and carrying on any proceeding arising out of and on the basis of agreement dated 06.06.2009 between appellant No. 1 and the respondent. On the other hand, the respondent took the preliminary objection that the suit is bad for misjoinder of parties and causes of action and further that the arbitration proceedings initiated by the respondent, in terms of the arbitration clause, is pending ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12, directed the parties to elect as to whether they want the suit to be treated as a suit for recovery of money by appellant No. 2 against the respondent or a suit for declarations and injunction by appellant No. 1 against the respondent and to amend the plaint accordingly. Learned single Judge, after taking a considered view that the suit is bad for misjoinder of parties and/or misjoinder of causes of action, held that the application filed by the defendant under Section 8 of the Act would be disposed of only after the appellants make an election in terms of this order. The appellants herein, instead of amending the plaint, went in appeal before the division bench, which got dismissed vide order dated 28.09.2012. 18) Since the suit was dismissed for misjoinder of parties and/or causes of action, it is pertinent to mention here the law on the point which is as under:- Order II Rule 3 "Joinder of causes of action - (1) Save as otherwise provided, a plaintiff may unite in the same suit several causes of action against the same defendant, or the same defendants jointly; and any plaintiffs having causes of action in which they are jointly interested against the same defendant or t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt that any joinder of plaintiffs may embarrass or delay the trial of the suit, the court may put the plaintiffs to their election or order separate trials or make such other order as may be expedient. 21) In this connection, it is pertinent to refer to a judgment of this Court in Ramesh Hirachand Kundanmal vs. Municipal Corporation of Greater Bombay and Others 1992 (2) SCC 524 wherein it was held as under:- "14. It cannot be said that the main object of the rule is to prevent multiplicity of actions though it may incidentally have that effect. But that appears to be a desirable consequence of the rule rather than its main objectives. The person to be joined must be one whose presence is necessary as a party. What makes a person a necessary party is not merely that he has relevant evidence to give on some of the questions involved; that would only make him a necessary witness . It is not merely that he has an interest in the correct solution of some questions involved and has thought or relevant arguments to advance. The only reason which makes it necessary to make a person a party to an action is that he should be bound by the result of the action and the question to be settle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... greement or its duly certified copy before the Court.] (3) Notwithstanding that an application has been made under sub-section (1) and that the issue is pending before the judicial authority, an arbitration may be commenced or continued and an arbitral award made." 24) It is also worthwhile to note Clause 33(d) of the agreement dated 06.06.2009 which refers the parties to Arbitration:- "Governing Law & Dispute Resolution: All or any disputes and differences whatsoever between the parties arising out of this Agreement or relating to or touching the mutual rights and obligations of the parties shall be subject to the jurisdiction of the Courts/Forums in Delhi only and shall be referred for adjudication to the sole arbitrator, to be appointed solely and exclusively by the FIRST PARTY, whose decision shall be final and binding upon the parties. The arbitration proceedings shall be held at New Delhi, India and only the Courts at New Delhi, India alone shall have jurisdiction over the subject matter of this AGREEMENT." 25) In Sundaram Finance Limited and Another vs. T. Thankam (2015) 14 SCC 444, this Court has held as under:- "8. Once there is an agreement between the parties ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here is an arbitration agreement; the party to the agreement brings an action in the court against the other party; the subject matter of the action is the same as the subject-matter of the arbitration agreement; and the other party moves the court for referring the parties to arbitration before it submits his first statement on the substance of the dispute. We have come to the conclusion that the civil court had no jurisdiction to entertain a suit after an application under Section 8 of the Act is made for arbitration. In such a situation, refusal to refer the dispute to arbitration would amount to failure of justice as also causing irreparable injury to the defendant. 28) As we have already held that the oral agreement as evidenced by the transcript of conversation between the appellant No. 2 and the respondent on 06/07.04.2011 substituting the alleged written agreement dated 06.06.2009 and which contained a clause for arbitration, the same clause for arbitration would also be applicable to the oral agreement. The Division Bench has also erred in law in affirming the order passed by learned single Judge. Both the orders, therefore, cannot be sustained and are set aside and, ther ..... X X X X Extracts X X X X X X X X Extracts X X X X
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