Consortium Securities Private Limited vs Daljit Singh Kohli

L.N. Mittal, J.—Defendant by filing this revision petition under Article 227 of the Constitution of India has assailed order dated 1.5.2013 Annexure P/6 passed by the trial court thereby dismissing application Annexure P/2 filed by the defendant-petitioner u/s 8 of the Arbitration and Conciliation Act, 1996 (in short, the Act). Plaintiff-respondent has filed suit against defendant-petitioner vide plaint Annexure P/1 inter alia seeking declaration that agreement dated 11.1.2007 is outcome of forgery and the plaintiff never agreed to the terms and conditions of the said agreement.

The defendant in its application Annexure P/2 alleged that in view of arbitration clause contained in paragraph 1.13 of the agreement dated 11.1.2007, the dispute is required to be referred to Arbitrator.

The plaintiff by filing reply Annexure P/4 contested the application and pleaded that the agreement dated 11.1.2007 is forged document and the plaintiff had not agreed to arbitration clause contained in the agreement. It was also pleaded that limitation period for referring the dispute to the Arbitrator had expired.

Learned trial court vide impugned order Annexure P/6 has dismissed application Annexure P/2 filed by the defendant. Feeling, dissatisfied, the defendant has filed this revision petition to challenge the said order.

I have heard counsel for the parties and perused the case file.

Counsel for the petitioner contended that the trial court has dismissed the application of the defendant-petitioner on the ground that now reference to Arbitrator would be barred by limitation, but the application could not be dismissed on this ground because when the suit was filed and also when application Annexure P/2 u/s 8 of the Act was moved, reference to Arbitrator was within limitation.

On the other hand, counsel for respondent reiterated that reference to Arbitrator at this stage would be barred by limitation. It was also argued that the plaintiff respondent has disputed the very existence and validity of the arbitration clause and has alleged that the impugned agreement is forged having been tampered with and therefore, the matter cannot be referred to Arbitrator.

I have carefully considered the rival contentions. In so far as the question of bar of limitation is concerned, reference to Arbitrator would have been within limitation at the time of filing of the suit as well as at the time of filing of application u/s 8 of the Act. Consequently, application u/s 8 of the Act could not be dismissed on the ground that reference to Arbitrator would be barred by limitation at the time of deciding the said application. For the delay in the disposal of the application by the trial court, defendant-petitioner cannot be made to suffer. Consequently, application filed u/s 8 of the Act could not be dismissed on the ground that the reference to Arbitrator would now be barred by limitation. On the other hand, reference to Arbitrator would have been within limitation when application u/s 8 of the Act was instituted.

As regards contention of counsel for the respondent-plaintiff that the agreement itself has been forged and tampered with and the plaintiff had not agreed to the arbitration clause in the agreement, the said contention cannot be accepted to dismiss application u/s 8 of the Act because u/s 16 of the Act, the Arbitrator has power to rule on its own jurisdiction including ruling of any objection with respect to the existence or validity of the arbitration agreement. Consequently, whether the agreement dated 11.1.2007 has been forged or tampered with and whether the arbitration clause is in existence and is valid or not can be adjudicated upon by the Arbitrator. Consequently, application u/s 8 of the Act cannot be dismissed on the basis of aforesaid contention of counsel for the respondent.

For the reasons aforesaid, I find that application u/s 8 of the Act deserves to be allowed in view of mandatory provision contained therein. Impugned order of the trial court dismissing application Annexure P/2 filed by the defendant u/s 8 of the Act is, therefore, illegal and suffers from jurisdictional error. As a necessary consequence, the instant revision petition is allowed. Impugned order Annexure P/6 passed by the trial court is set aside. Application Annexure P/2 filed by the defendant u/s 8 of the Act is allowed and the dispute raised by the plaintiff in the suit is ordered to be referred to Arbitrator in accordance with arbitration clause contained in agreement dated 11.1.2007. The plaintiff shall be at liberty to raise his contention regarding forgery/tampering with the aforesaid agreement and regarding existence and/or validity of the arbitration clause before the Arbitrator in terms of section 16 of the Act. The trial court is accordingly directed to refer the dispute to the Arbitrator.