CR No. 6334 of 2009 1 In the High Court of Punjab and Haryana, Chandigarh. CR No. 6334 of 2009 (O&M) Date of Decision: 19.08.2010 M/s. Punjab Woollen Agency ....Petitioner Versus OCM India Ltd. ....Respondents. Coram:- Hon'ble Mr. Justice Alok Singh 1.Whether reporters of local news papers may be allowed to see judgement ? 2. To be referred to reporters or not ? 3. Whether the judgement should be reported in the Digest ? Present: Mr. Amit Jain, Advocate for the petitioner. Ms. Radhika Suri, Advocate for the respondent. ... Alok Singh, J. Defendant - petitioner has invoked jurisdiction of this Court under Article 227 of the Constitution of India, assailing the order dated 18.8.2009 passed by the Civil Judge, Senior Division, Amritsar, thereby rejecting application of the petitioner moved under Section 8(1) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the Act) requesting the Court to refer the dispute to the arbitrator for adjudication. Brief facts of the present case, inter-alia, are that an agreement CR No. 6334 of 2009 2 was executed between the parties on 4.11.1999 pertaining to the franchise granted to the defendant – petitioner herein. Plaintiff – respondent herein filed civil suit in the Court of Civil Judge, Amritsar, for recovery of amount saying defendant has failed to make payment to the plaintiff of the items supplied to the defendant. In the suit, defendant before filing written statement, at the initial stage, moved an application under Section 8(1) of the Act saying franchise agreement between the parties dated 4.11.1999 contains arbitration clause, which reads as under: - “In the event of any dispute or difference between the parties arising out of or relating to the agreement, the case shall be referred to the sole arbitration of the President of OCM and in accordance with the Indian Arbitration and Conciliation Act, 1996, whose decision shall be final and binding on the parties. The venue of Arbitration shall be Amritsar.” Plaintiff – respondent herein filed reply to the application moved by the defendant and stated that the agreement was for the period of five years only and that stood expired in the year 2004 and was never renewed. Hence, there is no arbitration agreement between the parties. The trial Court in the impugned order dated 18.8.2009 made the following observations: - “From the perusal of alleged Franchise Agreement dated 4.11.1999 executed between the parties and which is not disputed between the parties it transpires that although as per clause 31 of the said agreement in the event of any dispute or difference between the parties arising out of or relating to the agreement the matter is to be referred to the sole Arbitrator of CR No. 6334 of 2009 3 the President of OCM but as per clause 19 of the said agreement it is also crystal clear that the said agreement was for a period of 5 years effective from the date of opening of shop room and which may be renewed for such a further period as may be mutually agreed upon and at this stage defendant/applicant has failed to prove on record that the said agreement was ever renewed between the parties meaning thereby that the agreement in question came to an end after expiry of 5 years from the date of opening of the show room and it has also come on record at this stage and goods were allegedly supplied by the plaintiff company to the defendant after expiry of the said agreement and as such for recovery of that amount terms and conditions as stipulated in the Franchise Agreement with regard to arbitration can not be gone into.” Learned counsel for the petitioner vehemently argued that admittedly agreement dated 4.11.1999 has never been revoked and entire supply was being made pursuant to the agreement. Had the agreement been revoked or had it been ceased to continue, plaintiff would have stopped the supply. It is further argued that payment is being claimed for the supply made to the defendant prior to 2004. Learned counsel appearing for the respondent – plaintiff stated that, although, initially there was an agreement between the parties dated 4.11.1999, since it was never extended and renewed, hence, defendant cannot be permitted to take shelter of that agreement containing the arbitration clause. I have heard learned counsel for the parties and perused the CR No. 6334 of 2009 4 record carefully. Undisputedly, on 4.11.1999, franchise agreement was executed between the parties. The agreement contains Clause 31, according to which, in the event of dispute or difference between the parties arising out of or relating to the agreement, the same shall be referred to the sole arbitration of the President of OCM, in accordance with the Indian Arbitration and Conciliation Act, 1996. Undisputedly, agreement dated 4.11.1999 was never revoked and franchise of the defendant was never cancelled and during the franchise agreement, material was supplied in accordance with the agreement and plaintiff is claiming costs of the material supplied to the defendant. Hon’ble the Apex Court in the matter of N. Srinivasa Vs. Kuttukaran Machine Tools Ltd., 2009(5) SCC 182, in paragraph 37 has observed as under: - “37. It is well settled that even if an agreement ceases to exist, the Arbitration clause remains in force and any dispute pertaining to the agreement ought to be resolved according to the conditions mentioned in the Arbitration clause. Therefore, in our view, the High Court was not justified in setting aside the order of the trial Court directing the parties to maintain status quo in the matter of transferring, alienating or creating any third party interest in the same till the award is passed by the sole Arbitrator.” In view of the dictum of the Supreme Court, I hold that the agreement containing arbitration clause cannot be overlooked merely because it was executed initially for five years and it was never extended in CR No. 6334 of 2009 5 view of the fact that the agreement was never revoked and all the material was supplied pursuant to the agreement. Not only this, if dispute arises after the expiry of the agreement regarding supply made pursuant to the agreement, then arbitration clause can be invoked. Hon’ble the Apex Court in the matter of_Rashtriya Ispat Nigam Ltd. and another Vs. M/s. Verma Transport Co, 2006(4) RCR (Civil), 478, in paragraph 15 has observed as under: - “15. Section 8 confers a power on the judicial authority. He must refer the dispute which is the subject-matter of an arbitration agreement if an action is pending before him, subject to the fulfillment of the conditions precedent. The said power, however, shall be exercised if a party so applies not later than when submitting his first statement on the substance of the dispute.” A Division Bench of this Court in the matter of M/s. Regent Automobiles Vs. Indian Oil Corporation Ltd. and others, 2008 RCR (Civil) 752, has held that in an agreement if there is an arbitration clause, then it is mandatory duty of the Court to refer the dispute arising between the contracting parties to the arbitrator. Learned Single Judge of this Court in Shriram Transport Finance Co. Ltd. and another Vs. Jasbir Singh, 2009(4) RCR (Civil) 525, while placing reliance on the judgement of the Apex Court in Rashtriya Ispat Nigam’s case (supra) and Division Bench of this Court in M/s. Regent Automobile's case (supra) has held that it is the mandatory duty of the Court to refer the dispute to the arbitrator in view of the arbitration clause. In view of the above dictum, it is now well settled principle of CR No. 6334 of 2009 6 law that if there is an arbitration clause in the agreement between the parties, then the dispute must be referred for arbitration. In view of this, order impugned cannot be sustained in the eye of law. Present petition is allowed. Order impugned dated_18.8.2009 passed by the Civil Judge, Senior Division, Amritsar, is quashed. Application moved by the defendant under Section 8(1) of the Act is allowed. Now, the dispute between the parties shall be decided as per Clause 31 of the agreement by the President of OCM, in accordance with law. No costs. ( Alok Singh ) Judge 19.08.2010 sk.