Tata Indicom Limited vs Ramesh Chhabra and Others

L.N. Mittal, J.—Defendant No. 1-Tata Indicom Limited has approached this Court by way of instant revision petition filed under Article 227 of the Constitution of India assailing order dated 22.09.2011 Annexure P-6 passed by the trial Court thereby dismissing application Annexure P-4 moved by defendants No. 1 and 3 u/s 8 of the Arbitration and Conciliation Act, 1996 (in short, the ''Act''). Respondent No. 1-plaintiff has filed suit against defendant No. 1-petitioner and against proforma respondent No. 2 to 4 as defendants No. 2 to 4 vide plaint Annexure P-3 seeking mandatory injunction directing the defendants to pay Rs. 1,29,000/- to the plaintiff and also seeking mandatory injunction directing the defendants to restore the distributorship of the plaintiff.

Defendants No. 1 and 3 in their application Annexure P-4 alleged that the dispute raised in the suit is covered by arbitration clause 27 contained in agreement dated 13.09.2008 Annexure P-1 entered into between plaintiff and defendant No. 1 and therefore, the dispute is required to be referred to Arbitrator. The plaintiff by filing reply Annexure P-5 opposed the aforesaid application. However, agreement Annexure P-1 was admitted by the plaintiff. It was alleged that Arbitration clause is not binding on the plaintiff.

Learned trial Court vide order Annexure P-6 has dismissed the application Annexure P-4 moved by defendants No. 1 and 3. Feeling aggrieved, defendant No. 1 only has filed this revision petition to challenge the said order.

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

Counsel for the petitioner contended that the dispute raised in the suit is covered by the arbitration clause contained in admitted agreement Annexure P-1 and, therefore, the dispute is required to be referred to Arbitrator in view of mandatory provision of Section 8 of the Act.

On the other hand, counsel for respondent No. 1-plaintiff contended that according to defendant No. 1, the agreement stands terminated and consequently arbitration clause contained in the agreement cannot be relied on.

I have carefully considered the matter. Agreement Annexure P-1 has been admitted to have been executed by the plaintiff and defendant No. 1. Clause 27 thereof is reproduced hereunder:

Arbitration

27.1. In the event of any dispute, difference or question between the Parties hereto relating to or concerning or arising out of this Agreement, the same shall be referred to the arbitration by a sole arbitrator appointed by the Head of the Circle or Managing Director of TTSL or such person duly nominated by either of them and whose decision shall be final and binding on the Parties.

27.2. The arbitration shall be governed by the Arbitration and Conciliation Act 1996 and the same shall be conducted at the headquarters of the TTSL circle or such other place/s as may be decided by the arbitrator. The arbitrator shall have summary powers and he shall not be bound to give any reasons.

27.3. The award of the arbitrator shall be final and binding on the Parties and the arbitral proceedings shall be conducted in English language.

The aforesaid arbitration clause contained in the admitted agreement is worded very widely. The suit of he plaintiff is based on the claim arising out of the aforesaid agreement. Consequently, notwithstanding that the agreement may have been terminated, the dispute arising out of the agreement has to be referred to arbitration in view of arbitration clause 27 contained in the agreement. The contention raised by counsel for respondent No. 1-plaintiff that the arbitration clause cannot be relied on because the agreement stands terminated, cannot be accepted.

The trial Court has observed in the impugned order that the matter in dispute between the parties does not fall within the ambit of arbitration clause 27 of the agreement. However, the trial Court has not recorded any reason as to how the dispute is not covered by the arbitration clause. On the contrary, even counsel for respondent No. 1-plaintiff could not dispute that the matter raised in the suit is covered by clause 27 contained in the aforesaid agreement, which is worded very widely.

Accordingly, in view of mandate of Section 8 of the Act, the trial Court was bound to refer the dispute to the Arbitrator. Impugned order passed by the trial Court dismissing the application Annexure P-4 u/s 8 of the Act is patently illegal and suffers from jurisdictional error. Resultantly, instant revision petition is allowed. Impugned order Annexure P-6 passed by the trial Court is set aside. Application Annexure P-4 moved by defendants No. 1 and 3 u/s 8 of the Act is allowed and the dispute raised in the suit by respondent No. 1-plaintiff is directed to be referred to arbitration in according with arbitration clause 27 contained in agreement Annexure P-1. The trial Court shall do the needful in accordance with law.