1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION WRIT PETITION NO.528 OF 2009 Aloke Enterprises .. Petitioner Versus Thinking Machines Pvt.Ltd. & Ors. .. Respondents Mr.A.A.Kumbhakoni, with Mr.M.S.Karnik for petitioner Ms.Sonal i/b. F.F.& Associates for respondent Nos. 2 and 3 Mr.R.D.Motkari for respondent Nos. 4 and 5 CORAM : S.C.DHARMADHIKARI, J. DATE : 15th July 2009. P.C.: 1] Rule. Respondents waive service. By consent rule is made returnable forthwith. Heard parties. 2] Petitioner is the original plaintiff. Petitioner has filed a civil suit in the Court of Civil Judge, Senior Division, Nashik being Special Civil Suit No.104 of 2005 against five defendants. The prayer in the suit is that the defendants be directed to pay to the plaintiff a sum of Rs.25 lakhs and interest therein being the amount of the dishonoured cheques which came to be issued in favour of the plaintiff by the defendants. 2 3] Petitioner is aggrieved by the two orders made by the Trial Court dated 26th September 2007 and the other dated 5th November 2008. First one is made on application below Exh.54 and latter on application below Exh.77. 4] It is not in dispute that Exh.54 was an application made by defendant Nos. 2 and 3. A copy of that application is annexed as Annexure E to the present petition. The said application proceeds on the basis that under section 9A, Section 151, Order VII Rule 11 and Order XIV Rules 1 and 2 of Code of Civil Procedure, the said defendants invokes trial court’s jurisdiction to refer the parties to arbitration. In the submission of the defendants, prior to their filing of written statement, they had demanded several documents from the plaintiff. However, only few documents were supplied. In these circumstances, they could not lay their hands on the original agreement for arbitration and accordingly after the written statement was filed, they are moving the instant application and praying that the parties should be referred to arbitration in the light of clause 8.1 of the Agreement. The Agreement in which the Arbitration clause is contained has been entered into between one Asit C. Mehta 3 Investment Intermediates Ltd. And the defendant No.2 to the instant suit, Mr.Pavitra Shripad Takle. 5] When this application was opposed the trial court heard parties and made an order on 26th September 2007 observing thus:- “14. Under these circumstances and in view of clause in the agreement, parties in my opinion are to be directed to adhere to said clause and therefore, application is allowed. Point is answered accordingly. Following order is passed:- “Application is allowed as follows:- “2. The parties are directed to proceed in view of arbitration clause in the agreement for settlement of dispute arisen between them in respect of subject matter of suit.” 6] It appears that for some time there were no steps taken by the petitioner - plaintiff but later he approached the Bombay Stock Exchange, 4 who communicated to him that the Arbitration is not possible. The communication from the Bombay Stock Exchange is dated 20th October 2008. The same reads thus:- “We refer to your letter dated September 30, 2008 on the above subject. “In this regard, please note that the Hon’ble Civil Court may refer the dispute to Arbitration for possible settlement under section 89 of the Code of Civil Procedure. “As the dispute is between the sub-broker and its client, the same will not fall within the purview of the Rules, Bye-laws and Regulations of the Bombay Stock Exchange Ltd.” 7] In such circumstances, petitioner plaintiff made an application Exh. 77 pointing out that there is no arbitration possible between the parties and, therefore, the suit must proceed. In the light of the fact that now no possibility of referring the parties to the Arbitration under section 89 of 5 the C.P.C. arises, therefore, the plaintiff/ petitioner prayed that he may be permitted to proceed with the suit. 8] That application is rejected by the order dated 5th Novemberr 2008 and in furtherance thereof, the Court directed return of plaint for presentation to the proper forum. 9] Mr.Kumbhakoni, learned Counsel appearing for petitioner submits that none of the ingredients of section 8 of the Arbitration & Conciliation Act, 1996 are satisfied. Assuming that the application is traceable to other provisions relied upon, yet, in the light of the stand taken by the Bombay Stock Exchange, it is not possible to resolve the dispute by the modes prescribed under section 89 of C.P.C. Thus, there is no alternative but to have an adjudication of the disputes in the suit before the trial court in accordance with law. In such circumstances, the orders under challenge are unsustainable and must be quashed and set aside. He submits that there is no question of the petitioner acquiescing, inasmuch as, the application Exh.54 was opposed and all that was sought was a clarification with regard to the Arbitration that the court had suggested by taking recourse to section 89 of C.P.C. In these circumstances, merely 6 because the order dated 26th September 2007 was not challenged earlier that is no bar for the petitioner to now challenge and impugn it. More so, in the light of the further order dated 5th November 2008. 10] On the other hand Ms.Sonal appearing for contesting respondents invites my attention to the affidavit filed in reply and submits that conduct of the petitioner is such that he does not deserve any equitable and discretionary reliefs from this Court. She submits that an application was filed on 29th November 2005 by these respondents seeking time to tender written statement. That application was granted. Another application was made on 12th December 2005 because requisite documents were not made available and supplied. Even that application was allowed. Thereafter, the Court made an order of “No W.S.” and that is how the respondent Nos. 2 and 3 filed Written Statement. She invites my attention to several letters seeking discovery and inspection. She also submits that the petitioner – plaintiff had himself pointed out in an application (Exh.77) that he had sought intervention of the Bombay Stock Exchange and National Stock Exchange. In such circumstances, the petitionerr is now estopped from challenging the order dated 26th 7 September 2007. In the light of the same and the order remaining unchallenged, the petitioner cannot challenge further order dated 5th November 2008. 11] I have heard both sides at length and with their assistance I have perused the petition and the annexures thereto. In my view, the order of trial court is patently unsustainable. The first order made on 26th September 2007 ignores the fact that to the suit there are five parties shown as defendants. Further, the plaintiff is Alok Enterprises, Nashik Road, through its Proprietor Sudhirkumar Sethi. The agreement which contains Arbitration clause is between Asit Investment Intermediates Ltd. and one Pavitra Takle, second defendant to the suit. M/s.Asit is not a party to the instant suit. Thus, it is not as if all parties to the suit are parties to this agreement/arbitration agreement. The petitioner has signed this agreement as authorised signatory of Asit Mehta Investment. Further, the arrangement between Asit Mehta and the petitioner – plaintiff is something which cannot be said to be germane or relevant straight way as far as the suit transaction is concerned. In such circumstances and more particularly when written statement was already filed, it cannot be 8 said that pre-requisites of section 8 are satisfied. There is thus much substance in the contention of Mr.Kumbhakoni that the order dated 26th Septemberr 2007 referring the parties to arbitration is contrary to section 8 of the Arbitration Act. The defendants also seem to be aware of this, inasmuch as they invoked several provisions of C.P.C. and do not dispute the fact that they have filed written statement. Acknowledging this fact and further being aware of the provisions of the Arbitration and Conciliation Act, 1996, they filed an application on which the order dated 26th September 2007 has been made. However, the learned Judge without satisfying himself as to how he could exercise jurisdiction and refer the parties to arbitration, passed the order. There was no necessity for the trial Judge to have referred to the agreement between Asit Mehta and how that transaction and the suit transaction can be said to be related is something which is not clear to me at all. The learned Judge refers to section 8 of the Arbitration Act and in paras 11 and 12 of the Order and yet makes the application absolute. Thus, even if the application of original defendant Nos. 2 and 3 could be held to be traceable to Order VII Rule 11(d) of C.P.C., yet, the provision of law barring the suit being under Section 8 of the Arbitration and Conciliation Act, 1996 and when 9 its ingredients are not satisfied, no order for return of plaint could have been passed. Further, the trial court does not hold in its further order that it has become functus officio and duly takes the subsequent application of the petitioner on record. It disposes of the same on 5th November 2008 on merits. In my view, this order cannot be sustained as it is ex facie contrary to law and is required to be, therefore, set aside. The conduct of the petitioners would not be an impediment inasmuch as the order has been now challenged. Since this is not the only order under challenge, but the further order dated 5th November 2008 having been also impugned, neither delay or acquiescence would bar the petitioner from urging before me that the orders should be interfered with. The objection of Ms.Sonal with regard to the conduct of petitioner and acquiescence thus will have to be over-ruled. 12] As far as the second order is concerned, the learned Judge was fully aware of the fact that no arbitration is possible in the light of the communication received from Bombay Stock Exchange. His anxiety and endeavour to resolve the dispute between parties by Alternate Disputes Redressal (ADR) mode can very well be appreciated. However, when it 10 is not possible to resolve the disputes by these means, the plain duty of the court is to proceed with the trial of the suit. Precisely that was the request made by the petitioner – plaintiff and, he desired to place on record his affidavit in lieu of evidence. I do not see how the learned Judge could have rejected this request. More so, when the request of the plaintiffs’ Advocate to refer the matter under section 89 has been rejected. In these circumstances, on self-defeating and contradictory reasons, the learned Judge proceeded to reject a reasonable request to proceed with the suit. That was innocuous as well as no prejudice is caused to the respondents - defendants if the plaintiff was allowed to proceed with the suit. 13] The impugned orders, looked at from any angle, are patently unsustainable being vitiated by errors apparent on the face of the record. I would be failing in my duty if, I do not interfere with the same in writ jurisdiction of this Court under Article 227 of the Constitution of India, which is supervisory and meant to ensure that the Courts subordinate to this Court act within the limits of their Authority. For these reasons, the petition succeeds. Rule is made absolute in terms of prayer clauses (a) 11 and (b). No costs. Needless to state that no opinion is expressed on the merits of the matter and it would be open for the parties to place their rival pleas before the Trial Court and the Trial Court must consider the same uninfluenced by any observations in the impugned orders so also this Court’s order. 14] At this stage, Ms.Sonal prays that the order passed by me just now be stayed for four weeks. She submits that grave and serious prejudice is caused to defendant Nos. 2 and 3 (respondent Nos. 2 and 3 herein) as the suit stands restored to the file of the trial court by virtue of this order. Earlier the plaint was returned to the plaintiff for presentation to proper court. 15] Mr.Kumbhakoni opposes this request. However, with a view to enable respondent Nos. 2 and 3 to test this order and challenge it in the higher court, it is stayed for four weeks. Needless to state that on expiry of four weeks the stay would automatically stand vacated and the trial court should then proceed with the matter. (S.C.DHARMADHIKARI, J)