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Arbitration and Conciliation Act, 1996:s.8 - Application filed by defendant u/s.8 in a pending civil suit praying that the parties to the suit be referred to arbitration - Parties to the suit were parties to an agreement which contained a provision for settlement of disputes by arbitration - Held: Even if there is an arbitration agreement between the parties, and even if the dispute is covered by the arbitration agreement, the court where the civil suit is pending, will refuse an application u/s. 8, to refer the parties to arbitration, if the subject matter of the suit is capable of adjudication only by a public forum or the relief claimed can only be granted by a special court or Tribunal. s. 8 - First statement on substance of dispute - Defendant filed detailed affidavit opposing interim injunction application filed by plaintiff in a pending suit - Later the defendant filed application u/s. 8 praying that the parties to the suit be referred to arbitration - Whether the counter affidavit filed by the defendant, in regard to the notice of motion for temporary injunction, amounted to submission of first statement on the substance of the dispute, and therefore the defendant lost the right to seek reference to arbitration - Held: Not only filing of the written statement in a suit, but filing of any statement, application, affidavit filed by a defendant prior to the filing of the written statement will be construed as 'submission of a statement on the substance of the dispute', if by filing such statement/application/affidavit, the defendant shows his intention to submit himself to the jurisdiction of the court and waive his right to seek reference to arbitration - But filing of a reply by a defendant, to an application for temporary injunction/attachment before judgement/ appointment of Receiver, cannot be considered as submission of a statement on the substance of the dispute, as that is done to avoid an interim order being made against him - In the instant case, the counter affidavit filed by the appellant in reply to the notice of motion (seeking appointment of a receiver and grant of a temporary injunction) clearly stated that the reply affidavit was being filed for the limited purpose of opposing the interim relief - Even in the absence of such a disclaimer, filing a detailed objection to an application for interim relief cannot be considered to be submission of a statement on the substance of the dispute resulting in submitting oneself to the jurisdiction of the court. s. 8 - Defendant filed detailed affidavit opposing interim injunction application filed by plaintiff in a pending suit - 20 months thereafter, the defendant filed application u/s. 8 praying that the parties to the suit be referred to arbitration - Whether the application u/s. 8 was liable to be rejected as it was filed nearly 20 months after entering appearance in the suit - Held: Though s. 8 of the Act does not prescribe any time limit for filing an application under that section, and only states that. the application u/s. 8 should be filed before submission of the first statement on the substance of the dispute, the scheme of the Act and the provisions of the section clearly indicate that the application thereunder should be made at the earliest - A party who willingly participates in the proceedings in the suit and subjects himself to the jurisdiction of the court cannot subsequently tum round and G say that the parties should be referred to arbitration in view of the existence of an arbitration agreement- Whether a party has waived his right to seek arbitration and subjected himself to the jurisdiction of the court, depends upon the conduct of such party in the suit - When plaintiffs file applications for interim relief like appointment of a receiver or grant of a temporary injunction, the defendants have to contest the application - Such contest may even lead to appeals and revisions where there may be even stay of further proceedings . in the suit - If supplemental proceedings like applications for temporary injunction on appointment of Receiver, have been pending for a considerable time and a defendant has been contesting such supplemental proceedings, it cannot be said that the defendant has lost the right to seek reference to arbitration - In the instant case, at the relevant time, the un- amended Rule 1 of Order VIII of CPC was governing the filing of written statements and the said rule did not prescribe any time limit for filing written statement - The plaintiff in the suit had filed an application for temporary injunction and appointment of Receiver and that was pending for some time - Thereafter, talks were in progress for arriving at a settlement out of court - When such talks failed, the defendant filed an application u/s. 8 before filing the written statement or filing any other statement which could be considered to be a submission of a statement on the substance of the dispute - Mere· passage of time between the date of entering appearance and date of filing the application u/s. 8, cannot lead to an inference that a defendant subjected himself to the jurisdiction of the court for adjudication of the main dispute - The High Court was therefore not justified in rejecting the application u/s. 8 on the ground of delay - Code of Civil Procedure, 1908 - Order VIII, Rule 1. ss. 8 and 11 - Nature and scope of issues arising for consideration in an application u/s. 11 for appointment of arbitrators and those arising in an application u/s. 8, seeking reference of the parties to a suit to arbitration - Distinction between - Held: Nature and scope of issues arising for consideration in an application u/s. 11 are far narrower than those arising in an application u/s.8 - While considering an application u/s. 11, the Chief Justice or his designate would not embark upon an examination of the issue of arbitrability or appropriateness of adjudication by a private forum, once he finds that there was an arbitration agreement between or among the parties, and would leave the issue of arbitrability for the decision of the arbitral Tribunal - If the arbitrator wrongly holds that the dispute is arbitrable, the aggrieved party will have to challenge the award by filing an application u/ s.34, relying upon sub-section 2(b)(i) of that section - But where the issue of 'arbitrability' arises in the context of an application u/s. 8 in a pending suit, all aspects of arbitrability have to be decided by the court seized of the suit, and cannot be left to the decision of the Arbitrator. ss.8, 34(2)(b) and 48(2) - Arbitrable disputes - Term 'arbitrability' - Meaning of - Jurisdiction of the arbitral tribunal - Held: A dispute, even if it is capable of being decided by arbitration and falling within the scope of arbitration agreement, will not be 'arbitrable' if it is not enumerated in the D joint list of disputes referred to arbitration, or in the absence of such joint list of disputes, does not form part of the disputes raised in the pleadings before the arbitral tribunal - Arbitral tribunals are private fora chosen voluntarily by the parties to the dispute, to adjudicate their disputes in place of courts and tribunals which are public fora constituted under the laws of the country - Every civil or commercial dispute, either contractual or non-contractual, which can be decided by a court, is in principle capable of being adjudicated and resolved by arbitration unless the jurisdiction of arbitral tribunals is excluded either expressly or by necessary implication - Adjudication of certain categories of proceedings are reserved by the Legislature exclusively for public for a as a matter of public policy - Certain other categories of cases, though not expressly reserved for adjudication by a public fora (courts and Tribunals), may by necessary implication stand excluded from the purview of private fora - Consequently, where the cause/dispute is inarbitrable, the court where a suit is pending, will refuse to refer the parties to arbitration, u/s. 8 of the Act, even if the parties might have agreed upon arbitration as the forum for settlement of such disputes - Examples of non-arbitrable disputes stated. s. 8 - Arbitrability of dispute - Claim for specific performance - Agreement to sell/agreement to mortgage - Held: An agreement to sell or an agreement to mortgage does not involve any transfer of right in rem but create only a personal obligation - Therefore if specific performance is sought either in regard to an agreement to sell or an agreement to mortgage, the claim for specific performance will be arbitrable. s. 8 - Arbitrability of dispute - Mortgage suits - Held: A mortgage is a transfer of a right in rem - A suit for sale, foreclosure or redemption of a mortgaged property, should only be tried by a public forum, and not by an arbitral tribunal - Consequently, the court where the mortgage suit is pending, should not refer the parties to arbitration - Even if some of the issues or questions in a mortgage suit are arbitrable or could be decided by a private forum, the issues in a mortgage suit cannot be divided - The suit in question being one for enforcement of a mortgage by sale, it should be tried by the court and not by an arbitral tribunal - Code of Civil Procedure, 1908 - Order 34. Rights - Right in rem and right in personam - Distinction between - Held: A right in rem is a right exercisable against the world at large, as contrasted from a right in personam which is an interest protected solely against specific individuals - Correspondingly, judgement in personam refers to a judgement against a person as distinguished from a judgement against a thing, right or status and Judgement in rem refers to a judgement that determines the status or condition of property which operates directly on the property itself - Generally and traditionally all disputes relating to rights in personam are considered to be amenable to arbitration; and all disputes relating to rights in rem are required to be adJudicated by courts and public tribunals, being unsuited for private arbitration - This is not however a rigid or inflexible rule - Judgement - Judgement in rem and judgement in personam. |
