Tamil Nadu Fencing Association vs The Fencing Association

K. Ravichandra Baabu, J.—This Original Side Appeal is filed against the order passed by the learned Single Judge made in O.A. No. 493 of 2012 in C.S. No. 408 of 2012, wherein and whereby, the interim injunction sought for by the Appellant herein as the Plaintiff in the Suit to restrain the Respondents from acting upon the order of the Secretary General of the First Respondent/First Defendant dated 9.5.2012 and also from interfering with the functioning of the Applicant/Plaintiff-Society with its own elected executive committee in accordance with its bye-laws, was dismissed on the ground that the very Suit itself is not maintainable in view of the presence of an arbitration clause in the bye-laws of the First Respondent association. As against the dismissal of the said application, the Plaintiff is before us.

The Plaintiff is the Tamil Nadu Fencing Association, which is a society registered under the Societies Registration Act, 1973. The Plaintiff association is affiliated to the Fencing Association of India, who is the First Respondent/First Defendant in this proceeding. The Plaintiff has the approval of the Sports Development Authority of India. It is also recognised by the Tamil Nadu Olympic Association. It appears that a dispute arose between the office bearers in managing the affairs of the Plaintiff association, which culminated into passing of an order by the First Respondent, namely, Fencing Association of India dated 9.5.2012, whereby, an Ad hoc Committee was formed to run the Plaintiff''s-Association. Aggrieved by the said action of the First Respondent/First Defendant, the Appellant/Plaintiff filed the above said Suit before this Court in C.S. No. 408 of 2012 seeking the relief of declaration that the order of the Secretary General of the First Defendant dated 9.5.2012 appointing an Ad hoc Committee on the Plaintiff-Society as illegal, without authority, null and void; for mandatory injunction restraining the Defendants from acting upon the order of the Secretary General of the First Defendant dated 9.5.2012 and also from interfering with the functioning of the Plaintiff-Society with its own elected executive committee in accordance with its own bye-laws. By filing the said Suit, the Plaintiff also sought for interim injunction as stated supra in O.A. No. 493 of 2012.

The said Application filed by the Appellant/Plaintiff was resisted by Respondents 1 to 5/Defendants 1 to 5. A Counter Affidavit filed by Respondents 2 to 5 was adopted by the First Respondent. The Plaintiff filed a rejoinder also. It is the primary objection of Respondents 1 to 5 that the Suit filed by the Plaintiff itself is not maintainable in view of the fact that the Memorandum of Association of the First Respondent contains an arbitration clause under Clause XVII(iii) & (v) and hence, all disputes within the State Fencing Association/Union Territory Fencing Association affiliated to Fencing Association of India as well as all disputes between the State Fencing Association and the Fencing Association of India will have to be dealt with by the Arbitration proceedings only.

The learned Single Judge, after hearing both sides and on perusing the Arbitration clause available under the Bye-laws of the First Respondent association under Clause XVIII(iii) & (v), came to the conclusion that the Suit itself is not maintainable as the parties to the dispute have to resolve the same only through arbitration as provided under the said Arbitration clause. Consequently, the learned Single Judge dismissed the said Application, by following the decision of the Apex Court reported in Hindustan Petroleum Corpn. Ltd. v. Pinkcity Midway Petroleums, 2003 (3) CTC 438 (SC) : 2003 (6) SCC 503 : AIR 2003 SC 2881. Learned Single Judge, while holding that the Suit itself is not maintainable and the parties have to resolve their disputes only through arbitration, has also observed at paragraph 26 that the Ad hoc Committee was appointed considering the entire gamut of the situation and there was no proper functioning of the Applicant association. In paragraph 28 also, learned Single Judge has further observed that it is incorrect to state that the Secretary General has independently appointed the ad hoc committee.

Heard learned Counsel appearing for the Appellant and the learned Counsel appearing for the Respondents. The learned Counsel appearing for the Appellant contended that there is no unsolved dispute warranting invoking of arbitration clause and on the other hand, what is under challenge in the Suit is only the order of the First Defendant appointing an ad hoc committee. Therefore, according to the learned Counsel, the Suit is maintainable. We are unable to agree with this submission for the following reasons and discussions.

The order under Appeal is the one rejecting the application filed by the Plaintiff seeking for an order of interim injunction pending disposal of the Suit for the relief of declaration and injunction as stated supra. In order to seek an interim injunction, first of all the Applicant/Plaintiff has to satisfy the maintainability of the very Suit itself, especially when Defendants 1 to 5 have raised a preliminary objection with regard to the maintainability of the Suit in view of the presence of an arbitration clause in the Memorandum of Association of the First Respondent/First Defendant. Admittedly, the Memorandum of Association of the First Respondent/First Defendant contains a Clause in XVII(iii) & (v), which reads as follows:

"XVII(iii)-All unsolved disputes arising within the State Fencing Association/Union Territory Fencing Association affiliated to Fencing Association of India shall be referred by the State Fencing Association/Union Territory Fencing Associations/Union Territory Fencing Associations to Fencing Association of India for settlement by the Fencing Association of India under the Arbitration Act, 1940. For this purpose the Fencing Association of India shall elect a panel of Arbitrators to be decided Fencing Association of India General Assembly at their annual General meeting out of whom parties to the disputes in a State Fencing Association/Union Territory Fencing Association will select one Arbitrator and the third Arbitrator each out of the said panel will be mutually agreed upon by the two Arbitrators. The Arbitration proceeding shall be completed within the period specified under the Arbitration Act or within the time extended by the Arbitrators with the consent of the parties.

XVII(v)-All disputes between State Fencing Association/Union Territory Fencing Association and the Fencing Association of India or within the Fencing Association of India itself will be dealt with in the same manner as said down in (iii) above".

Reading of the said clause only shows that the parties have to agitate the matter only before the Arbitrator and they cannot rush to a Civil Court to solve their disputes as has been done by the Appellant herein. The learned Single Judge has rightly came to the conclusion that if there is a clause for arbitration, it is mandatory for the parties to refer the dispute to an Arbitrator and the Appellant herein could not have approached this Court as per the conjoint reading of Clause XVII(ii) & (iii) of the Articles of Association of the First Defendant.

The Honourable Apex Court, in the decision reported in P. Anand Gajapathi Raju v. P.V.G. Raju (Dead), 2000 (4) SCC 539, while considering the scope of Section 8 of the Arbitration and Conciliation Act, 1996, has observed that it is obligatory for the Court to refer the parties for Arbitration in terms of their Arbitration Agreement and nothing remains to be decided in the original action or the Appeal arising therefrom. This decision has been subsequently referred to and followed by the Apex Court in its subsequent decision reported in Hindustan Petroleum Corpn. Ltd. v. Pinkcity Midway Petroleums, 2003 (3) CTC 438 (SC) : 2003 (6) SCC 503 : AIR 2003 SC 2881, which is relied on by the learned Single Judge. In the same line, the Honourable Supreme Court, in another decision reported in Ardy International (P) Ltd. v. Inspiration Clothes & U, 2006 (1) SCC 417, has observed that when the judicial authority comes to know of the existence of an agreement, there is no question of the Court under Section 8 of the 1996 Act restraining the Arbitral proceedings from commencing or continuing and that in fact, Section 8 is intended to achieve, so to say, the converse result.

Thus, by considering the law laid down by the Honourable Supreme Court that the Civil Courts cannot entertain a Suit in a matter where an Arbitration clause is in existence and that it is for the Courts to refer the matter to Arbitration proceedings and not to continue further, we are of the firm view that the Plaintiff/Appellant is not entitled to maintain the Suit before this Court. The learned Single Judge has rightly held that as the very Suit is not maintainable, granting of interim order does not arise. Consequently the order dismissing the said application does not warrant any interference.

We find no merits in the Appeal and the same is dismissed. However, it is made clear that any of the observations made in the order of the learned Single Judge on merits will not, however, interfere with any proceedings that may be taken under the arbitration clause by the affected party herein. No costs. Consequently, M.P. No. 1 of 2012 is closed and M.P. No. 2 of 2012 is closed.