Jay Shree Transport Pvt. Ltd vs Sanat Kumar Das & Ors

This appeal is directed against an order dated 9th September, 2019 passed by the learned Judge (Commercial Court) at Alipore in Misc. Case (Arbitration) No.11 of 2019. The learned Trial Judge dismissed the application filed by the appellant under Section 9 of the Arbitration and Conciliation Act, 1996. The grounds for dismissal are two-fold:-

Firstly, the nature of the fraud, collusion and conspiracy pleaded in the petition may not be conveniently decided in the arbitration proceeding.

Secondly, the arbitration clause is couched in such a manner that if a party decides not to file the civil suit as per its choice may take recourse to arbitration for the purpose of interpretation of any of the terms and conditions contained in the Development Agreement but in no cases or circumstances, they could avail both the jurisdictions.

More than the first point, second point is appealing by reason of the fact that the appellant had instituted a suit before the learned Civil Judge at Sealdah where the substance of the dispute is similar to the dispute now being raised in the Section 9 petition.

On a proper and meaningful reading of the plaint filed before the Sealdah Court and read with the application filed under Section 9 of the Arbitration and Conciliation Act, 1996, it leaves no manner of doubt that this proceeding was initiated after the plaintiff was unsuccessful in obtaining an ex parte ad-interim order not only before the learned Trial Judge but also before the Division Bench. The prayers in the plaint are identical and similar to the reliefs claimed in the Section 9 application.

There are substantial similarities between the two claims. It was in that context, the quality of the resistance offered by Mr. Saptansu Basu, learned Senior Counsel appearing for the respondents needs to be considered.

The appellant in filing the suit has clearly intended to have all the disputes resolved by the Civil Court in terms of Clause 38 of the Development Agreement and not by of arbitration. The averments made in the application under Section 9 of the Arbitration and Conciliation Act, 1996, this is an attempt to artificially divide the cause of action in both the proceedings, although we find that they are inextricably connected.

Mr. Sakya Sen, learned Counsel appearing for the appellant has submitted that the dispute canvassed in the Section 9 application may not have been properly described in the suit and in view of the order passed by us it may be necessary to bring about some changes in the existing pleading so that all the disputes could be adjudicated and decided by the Civil Court.

We feel that the appellant, if so required, may apply in the pending civil suit to bring such facts which might have been left out in the suit and now canvassed in the Section 9 petition, if they so desire, so that all the disputes between the parties can be decided in a comprehensive manner.

In fact, we hold that by reason of filing the suit in exercise of Clause 38 of the Development Agreement, there is a waiver within the meaning of Section 4 of the Arbitration and Conciliation Act, 1996.

Under such circumstances, we dismiss the appeal and the connected application.

However, we make it clear that we have not gone into the merits of the matter and any observation made by us in this matter shall not influence the pending proceeding. It is needless to mention that if any application for amendment of the plaint is made in the pending proceeding, the Trial Judge shall decide the said application in accordance with law.