TMI Blog2003 (10) TMI 679X X X X Extracts X X X X X X X X Extracts X X X X ..... e plaintiff, the aforesaid Memorandum of Understanding as well as post-dated cheques were obtained from him by the defendants in furtherance of a conspiracy under which the plaintiff was got arrested from his house on 2nd July, 2003 and thereafter confined at Police Station Connaught Place, New Delhi, in pursuance of non-bailable warrants obtained against him by defendant No. 1, from the Court of CJM, Ahmednagar, Maharashtra. It is pleaded that under threats of incarceration, removal to Ahmednagar in custody and confining him in jail for long, the plaintiff was forced to agree to pay to defendant No. 1 a sum of ₹ 60 lacs in full and final settlement of the alleged claims of defendant No. 1 and was also compelled to sign the aforesaid Memorandum of Understanding and deliver a Pay Order of ₹ 5 lacs in favor of defendant No. 1. The plaintiff alleged that the atmosphere of the police station, the tone and tenor of the threats held out by defendant No. 2, who was acting on the instructions of defendant No. 1, the fear of loss of social and business reputation and apprehension of bodily and mental injury, compelled him to do whatever the defendants were asking for. According ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... udgments of the Punjab and Haryana High Court in Harike Rice Mills. v. State of Punjab, reported in (1998) 118 Punj. L.R. 395 and Punjab State Co-operative Supply and Marketing Federation v. Shiv Rice and General Mills, , it is submitted that after the amendment of the Act, judicial intervention has been curtailed and the arbitration proceedings cannot be interdicted by Courts. Reliance is also placed on a judgment of this Court in Sita Holiday Resorts Ltd. v. Mohan Lal Harbans Lal Bhayana and Co., reported in (2000) 1 Recent Arbitration Judgments page 103, in which it was held that all possible objections with regard to the existence or validity of the Arbitration Agreement have to be raised before the Arbitral Tribunal only. Relying upon the cases of Kalpana Kothari v. Sudha Yadav, reported in IV (2001) CLT 181 (SC)=(2002) 1 SCC 303 and P. Anand Gajapati Raju v. P.V.G. Raju, , it is argued that Section 8 mandates reference of disputes to the Arbitral Tribunal if the conditions laid therein are satisfied. It is also submitted that by unnecessarily enlarging the scope of the disputes in a suit or adding unnecessary parties, a plaintiff cannot wriggle out of Arbitration Agreement an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Industries (India) Ltd., , in which it was held that Section 8 of the Act permits reference to the Arbitrator only that dispute or matter which the Arbitrator is competent or empowered to decide. 7. Learned Counsel for plaintiff further argues that in the present suit, the plaintiff is not only claiming declaration that the Memorandum of Understanding dated 2nd July, 2003 is null and void and unenforceable but is also claiming damages against defendants, which controversy will not be looked into and adjudicated upon by the Arbitrator as it falls outside the ambit of alleged Arbitration Agreement between the parties. He also relies upon a judgment of the Supreme Court in ITI Ltd. v. Siemens Public Communications Network Ltd., , in which it was held that the jurisdiction of the Civil Courts has to be strongly presumed in respect of all disputes of civil nature and in case an inference is to be drawn, the same should be drawn in favor of the jurisdiction of the Civil Court rather than the exclusion thereof. 8. Learned Counsel for plaintiff submits that the defendants have played a fraud upon the Courts and judicial process by first filing a criminal complaint in the Court of CJ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r validity of the Arbitration Agreement before the Arbitrator. The Court dealing with an application under Section 11 of the Act, therefore, is not required to look into the pleas of a respondent including challenge to the existence or validity of the Arbitration Agreement, which can be looked into by the Arbitrator himself in terms of Section 16 of the Act. The other judgments cited by learned Counsel for the defendants, show that Section 5 of the Act is aimed at restricting judicial intervention in Arbitral proceedings so that the proceedings before the Arbitrator are expeditious and smooth. The judgments of the Apex Court in Kalpana Kothari v. Sudha Yadav; P. Anand Gajapathi Raju v. PVG Raju and Hindustan Petroleum Corporation v. Pinkcity Midway Petroleums (supra), convey that the provisions of Section 8 of the Act are mandatory in nature and as soon as the conditions prescribed therein are found to exist the Court has no option but to refer the disputes to the Arbitrator. 10. Under Section 8 of the Act also a Civil Court, before which an action is brought in respect of a matter, which is the subject matter of an Arbitration Agreement, and the conditions stated in the provisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ates that what can be referred to arbitration is that dispute which the Arbitrator is competent or empowered to decide. In Hindustan Petroleum (supra), also the Apex Court speaks of a valid Arbitration Agreement between the parties. Therefore, it cannot be said that while deciding an application under Section 8 of the Act the Court is precluded from examining as to whether the subject matter of the suit is covered by Arbitration Agreement or not and further as to whether the Arbitration Agreement exists or not between all the parties to the suit. While exercising powers under Section 8 of the Act, the Court is not discharging an administrative function as it does under Section 11 of the Act. 12. It is true that while disposing of plaintiff's application under Order 39 Rules 1 and 2 of the CPC, in the present case, this Court had observed that in terms of Section 16 of the Act the Arbitrator alone has to hear and decide objections relating to the improper constitution of the Arbitral Tribunal or existence of Arbitration Agreement but the said observations were tentative and on prima facie basis only for the disposal of the application under Section 39 Rules 1 and 2 of the CPC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gned from plaintiff under pressure, coercion and undue influence and not out of free will of the plaintiff. Therefore, on the basis of such an Arbitration Agreement the suit filed by the plaintiff cannot be permitted to be scuttled and plaintiff compelled to go to the Arbitrator for whose appointment be never agreed, whom he does not know even and who appears to be defendants' man. 14. This Court must emphasise that as a general rule a Civil Court, while dealing with an application under Section 8 of the Act must ordinarily refer the parties to Arbitrator and should not get impressed by a bald plea of non-existence or invalidity of Arbitration Agreement. It is not required to hold an in-depth inquiry also in regard to the existence or the validity of the Arbitration Agreement between parties because under Section 16 of the Act the Arbitrator can look into these questions but in certain rare and exceptional cases where the facts and circumstances on record irresistibly suggest that the Arbitration Agreement has been manipulated and the defendant is trying to overreach the Court and judicial process to scuttle a civil trial, the Court may examine the question of existence of v ..... X X X X Extracts X X X X X X X X Extracts X X X X
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