By Samay Jain
Court: Supreme Court of India
Citation: Civil Appeal No. 1854 of 2023
Date: 15.12.2023
Fact:-
The appellants before this Court were the plaintiffs in a civil suit, filed in the year 2021, seeking declaration that the Conveyance Deed dated 17.12.2019 to be declared null and void, and that the registered Development Agreements dated 17.09.2007, 20.11.2007, 30.11.2007, 03.12.2007 and 27.02.2008 stand validly terminated. The respondents/defendants moved an application under Section 8 of the Arbitration & Conciliation Act, 1996 (hereinafter referred to as Arbitration Act) for referring the matter to arbitration by relying upon the arbitral clause in the two agreements dated 31.03.2007 and 25.07.2008. It was contended that the aforesaid agreements formed the basis of the Conveyance Deed and the Development Agreements which are subject matter of the suit. The Trial Court allowed the application of the defendant and referred the matter for arbitration, vide its order dated 13.10.2021. This order was challenged in Writ Petition No.8836 of 2021 by the appellants / plaintiffs before the Bombay High Court, which was dismissed vide order dated 10.12.2021. Aggrieved by these two orders, the appellants / plaintiffs are now before this Court.
M/s Emerald Acres Private Limited (respondent no. 2) was incorporated by Late Mr. Shivkumar Daga and his wife, Mrs. Sushma Shivkumar Daga (appellant no.1) on 18.04.2006 to carry on the business of real-estate development.
Two Tripartite Agreements were signed between Shivkumar Daga (hereinafter referred to as SD), Madhurkumar Ramakrishnaji Bajaj & Ors. (hereinafter referred to as MB)
Both the Tripartite Agreements dated 31.03.2007 and 25.07.2008 contain the arbitration clause.
Issue:-
Whether the decision of trial court and the high court to referred the matter to arbitration is right?
Whether the arbitration clause of previous agreement can also affect the conveyance deed in which there is not clause for such?
Rule:-
Section 8 THE ARBITRATION AND CONCILIATION ACT, 1996:-
Power to refer parties to arbitration where there is an arbitration agreement.—1 [(1)A judicial authority, before which an action is brought in a matter which is the subject of an arbitration agreement shall, if a party to the arbitration agreement or any person claiming through or under him, so applies not later than the date of submitting his first statement on the substance of the dispute, then, notwithstanding any judgment, decree or order of the Supreme Court or any Court, refer the parties to arbitration unless it finds that prima facie no valid arbitration agreement exists.] (2) The application referred to in sub-section (1) shall not be entertained unless it is accompanied by the original arbitration agreement or a duly certified copy thereof: 2 [Provided that where the original arbitration agreement or a certified copy thereof is not available with the party applying for reference to arbitration under sub-section (1), and the said agreement or certified copy is retained by the other party to that agreement, then, the party so applying shall file such application along with a copy of the arbitration agreement and a petition praying the Court to call upon the other party to produce the original arbitration agreement or its duly certified copy before that 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.[1]
Analysis:-
This case is all about the judicial intervention in arbitration ,the judicial intervention in any case related to arbitration have very little scope due the underline of section 5.After 2005 major amendement was introduced in this act in section 8 and section 11 which reduced the judicial intervention in arbitration matters.
In Booz Allen and Hamilton Inc. v. SBI Home Finance Limited and Others, (2011) 5 SCC 532 [LQ/SC/2011/574] this Court had set apart cases where the dispute was totally non-arbitrable, such as matrimonial disputes, guardianship dispute, or even we may add disputes relating to consumers, which are governed by an entirely different Parliamentary legislation known as Consumer Protection Act, 2019 and know the question is that in this case whether the dispute is arbitrable or non-arbitrable.
For that this honourable Court in Vidya Drolia v. Durga Trading Corpn., (2021) 2 SCC 1, [LQ/SC/2020/837 ;] laid down a fourfold test for determining when the subject-matter of a dispute in an arbitration agreement is not arbitrable. These were:
(1) When cause of action and subject-matter of the dispute relates to actions in rem, that do not pertain to subordinate rights in personam that arise from rights in rem.
(2) When cause of action and subject-matter of the dispute affects third-party rights; have erga omnes effect; require centralised adjudication, and mutual adjudication would not be appropriate and enforceable.
(3) When cause of action and subject-matter of the dispute relates to inalienable sovereign and public interest functions of the State and hence mutual adjudication would be unenforceable.
(4) When the subject-matter of the dispute is expressly or by necessary implication non-arbitrable as per mandatory statute(s).
But this case is not fall any condition so for that thereis one more aspect by judiciary can intervene any arbitrary case, In Vidya Drolia (supra), honourable Court has held that Court will only decline reference under Section 8 or under Section 11 of thein rare cases where the Court is certain that either the arbitration agreement is non-existent, or the dispute is itself manifestly non-arbitrable. This was reiterated by this Court in NTPC Ltd. v. SPML Infra Ltd. (2023) 9 SCC 385.
But in this case there is valid arbitration clause in agreement.
the Arbitral Tribunal is competent to decide on its own competence. This aspect has been dealt with in a recent judgment of this Court in Uttarakhand Purv Sainik Kalyan Nigam Ltd. v. Northern Coal Field Ltd. (2020) 2 SCC 455 [LQ/SC/2019/1774] . This is what has been stated:
7.11. The doctrine of kompetenz-kompetenz, also referred to as compétence- compétence, or compétence de la recognized, implies that the Arbitral Tribunal is empowered and has the competence to rule on its own jurisdiction, including determining all jurisdictional issues, and the existence or validity of the arbitration agreement. This doctrine is intended to minimise judicial intervention, so that the arbitral process is not thwarted at the threshold, when a preliminary objection is raised by one of the parties. The doctrine of kompetenz-kompetenz is, however, subject to the exception i.e. when the arbitration agreement itself is impeached as being procured by fraud or deception. This exception would also apply to cases where the parties in the process of negotiation, may have entered into a draft agreement as an antecedent step prior to executing the final contract. The draft agreement would be a mere proposal to arbitrate, and not an unequivocal acceptance of the terms of the agreement. Section 7 of the Contract Act, 1872 requires the acceptance of a contract to be absolute and unqualified [Dresser Rand S.A. v. Bindal Agro Chem Ltd., (2006) 1 SCC 751 [LQ/SC/2006/31 ;] . See also BSNL v. Telephone Cables Ltd., (2010) 5 SCC 213 [LQ/SC/2010/116] : (2010) 2 SCC (Civ) 352. Refer to PSA Mumbai Investments Pte. Ltd. v. Jawaharlal Nehru Port Trust, (2018) 10 SCC 525 [LQ/SC/2018/1139] : (2019) 1 SCC (Civ) 1] . If an arbitration agreement is not valid or non-existent, the Arbitral Tribunal cannot assume jurisdiction to adjudicate upon the disputes. Appointment of an arbitrator may be refused if the arbitration agreement is not in writing, or the disputes are beyond the scope of the arbitration agreement. Article V(1)(a) of the New York Convention states that recognition and enforcement of an award may be refused if the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law of the country where the award was made.[2]
Conclusion-
Under the above case and all precedent, the court finds that in this case, they have a valid arbitration clause, and the matter of dispute also falls as an arbitral matter, so the honorable court validates the decision of the trial court and high court of Bombay and dismissed this appeal.
The author of this article is Samay Jain, a law student at Symbiosis School of Law.
[1] The Arbitration and Conciliation Act, 1996, § 8.
[2] Uttarakhand Purv Sainik Kalyan Nigam Ltd. v. Northern Coal Field Ltd. (2020) 2 SCC 455 [LQ/SC/2019/1774]
This article contains the view of the author and the publisher in no way associates with the views or ideologies of the author. All the moral rights vests with the Author(s).
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