IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE S.S.SATHEESACHANDRAN MONDAY, THE 19TH OCTOBER 2009 / 27TH ASWINA 1931 WP(C).No. 1641 of 2009(U) ---------------------------------- OS.342/2007 of ADDL.MUNSIFF, KASARAGOD .................... PETITIONER(S): ------------------------ PRAKASH K, S/O.K. RAGHUVEERA RAO, R/AT. BADIADKA HOUSE, PERDALA POST, BADIADKA HOUSE, PERDALA POST, BADIADKA VILLAGE, KASARGOD. BY ADV. MR.KODOTH SREEDHARAN RESPONDENT(S): ------------------------- 1. M/S SRIRAM TRANSPORT FINANCE CO. LTD., PARADIGM PLAZA, IST FLOOR, NEAR A.B.SHETTY CIRCLE, MANGLORE-1, KARNATAKA, 2. M/S SRIRAM TRANSPORT FINANCE CO. LTD., 160-A/31,2ND FLOOR, LAND MARK CENTRE, OPP. NEW BUS STAND, KASARGOD. R1 & R2 BY ADV. MR.RAJESH NAMBIAR THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 19/10/2009, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: W.P.(C) NO.1641/2009 APPENDIX PETITIONER'S EXHIBITS P1:- COPY OF THE OBJECTION CERTIFICATE DTD. 30.12.04 ISSUED BY THE UTI BANK, BANGLORE TO THE RTO, KASARAGOD. P2:- COPY OF THE PLAINT DT. 5.11.07 BEFORE THE ADDL. MUNSIFF COURT, KASARAGOD. P3:_ COPY OF THE APPLICATION FILED BY THE RESPONDENTS DTD. 14.1.08. P4:- COPY OF THE AGREEMENT DTD. 1.4.07 EXECUTED BY THE PETITIONER AND RESPONDENT. P5:- COPY OF THE COUNTER IN IA. 270/08 FILED BY THE PETITIONER BEFORE THE COURT OF ADDL. MUNSIFF OF KASARAGOD. P6:- COPY OF THE ORDER IN IA. 270/08 DTD. 31.1.08 BY THE COURT OF ADDL. MUNSIFF OF KASARAGOD. P7:- COPY OF THE EXTRACT OF JUDGMENT IS REPORTED IN 2008 (3) KLT SN 97. P8:- COPY OF THE ORDER DTD. 28.11.08 IN IA. 270/08 IN OS. 342/07 OF ADDL.MUNSIFF COURT, KASARAGOD. RESPONDENT'S EXHIBITS R1(A):- COPY OF THE ORDER DTD. 16.1.09 IN CMP. 7081/09 AND CMP. 7082/08 IN CMP. 7023/08 IN CMP. 7013/08 OF JFMC-I, KASARAGOD. TRUE COPY P.A. TO JUDGE tss S.S.SATHEESACHANDRAN, J. ----------------------------- W.P.(C).No.1641 OF 2009 -------------------------- Dated this the 19th day of October 2009 ------------------------------------- JUDGMENT The writ petition is filed seeking the following reliefs. i) Issue a writ of certiorari or any other appropriate writ order or direction quashing Ext.P8 order. ii) An order of stay of all further proceedings pursuant to Ext.P8 order including the arbitration proceedings pursuant to Ext.P8. iii) Any other appropriate writ, order or direction as the Hon'ble Court may pleased to grant in the circumstances of the case. 2. Petitioner is the plaintiff in O.S No.342 of 2007 on the file of the Additional Munsiff Court, Kasaragod. Suit is for permanent W.P.(C).No.1641 OF 2009 Page numbers prohibitory injunction, and the respondent is the defendant. Respondent/defendant, on appearance moved an application under Section 8(1) of the Arbitration and Conciliation Act contending that the parties are governed by an arbitration agreement, and as such, the disputes have to be referred to arbitration. That application was opposed to by the plaintiff filing a counter. The court below after hearing both sides disposed that application vide order dated 31/01/2008 upholding the case canvassed by the respondent that an arbitration agreement had been entered into by the parties and thereby the disputes have to be resolved by arbitration. Ext.P6 is the order referring the parties to arbitration. That suit was closed. Against Ext.P6 order, plaintiff preferred a writ petition before this court numbered as W.P No.9831/2008. That writ petition was disposed by judgment dated 16/07/2008 setting aside Ext.P6 order and directing the learned Munsiff to examine the matter afresh taking note of W.P.(C).No.1641 OF 2009 Page numbers the observations and directions given by this court. Pursuant thereto after such remission, the learned Munsiff heard the parties again and disposed the application moved by the respondents/defendants vide Ext.P8 order upholding the contention of the defendant that the disputes have to be referred to arbitration. Propriety and correctness of Ext.P8 order is challenged in the writ petition invoking the supervisory jurisdiction vested with this court under Article 227 of the Constitution of India. 3. I heard the counsel on both sides. After having heard the counsel at length and after examining the exhibits tendered and more particularly Ext.P8 order impugned in the writ petition, I find the learned Munsiff has not taken care to understand the directions issued in the judgment passed by this court while setting aside his previous order. This court has held in its earlier judgment in the previous writ petition that W.P.(C).No.1641 OF 2009 Page numbers if the validity of an arbitration agreement is challenged the civil court has to enter a finding thereof and then only a reference can be made under Section 8 of the Arbitration and Conciliation Act 1996. It will be profitable to take note of the observations made by this court while disposing of the previous writ petition setting aside the earlier order passed by the learned Munsiff, which read thus: “Hence in all cases, when a petition is filed under Section 8(1) of the Act and an agreement is produced which contains an arbitration clause, if one of the parties dispute the execution, it is for the court to enter a finding whether the agreement was executed by the parties. What is to be decided by the court is whether there exists a valid agreement executed by the parties and if executed whether it is vitiated. Court is also to enter a finding whether that agreement contains an arbitration clause or not. Once these findings are answered and it is found that there is an agreement executed by the parties containing an arbitration clause court shall refer the parties to arbitration as provided under Section 8(1) of the Act. The enquiry contemplated under Section 8(1) of the Act is only to find out whether the agreement produced by one of the parties is an agreement executed by the parties. If it is admitted by the parties that it is an W.P.(C).No.1641 OF 2009 Page numbers agreement, no other evidence is necessary. Then what is to be looked into is whether the agreement contains an arbitration clause. If one party produces an agreement and the other party disputes the execution of the agreement, court has to enter a finding whether the agreement so produced was executed by the parties or not. It could be by recording necessary evidence or based on the affidavits or other sufficient materials. If it is found that the agreement produced is the one executed by the parties, and its execution is not vitiated and that agreement contains an arbitration clause, court shall refer the parties to arbitration, as provided under Section 8(1). 4. In the above decision setting aside the order passed by the learned Munsiff and remitting the question involved for fresh consideration with the directions/observations as above, this Court has expressed in unambiguous terms that the learned Munsiff was not justified in referring the parties to an arbitration without deciding the question of execution of the agreement, which was disputed. A specific direction was also given that since the agreement produced was not decided on materials, the learned W.P.(C).No.1641 OF 2009 Page numbers Munsiff has to reconsider the application of the defendant seeking reference to arbitration in the light of the observations made by this Court and to pass appropriate orders in accordance with law. It has also to be pointed out that referring to and analysing the decision rendered by the apex court in SBP & Co. v. Patel Engineering Ltd. and another ((2005) 8 SCC 618), whereunder a constitutional bench considered the question with respect to the function of the Honourable Chief Justice when an application filed under Section 11 of the Act arises for consideration, this court has observed that having regard to the limited scope of Section 8 of the Act, the same procedure laid down for consideration of the application under Section 11 of the Act would also govern the question posed for consideration under Section 8 of the Act as well. In a case where the execution of the validity of the agreement was disputed, even under Section 8 of the Act, that question has to be gone into by the W.P.(C).No.1641 OF 2009 Page numbers civil court, was the view expressed by this Court. At this juncture, it has to be pointed out that the above view was expressed by this Court, to be followed by the learned Munsiff in the present case, after analysing and taking note of the decisions rendered by the apex court including that of Hindustan Petroleum Corpn. Ltd. v. Pinkcity Midway Petroleums ((2003) 6 SCC 503). 5. Surprisingly, showing scant respect for the directions/orders issued and without even adverting to nor referring to the remand made under the judgment of this Court, the learned Munsiff has passed impugned Ext.P8 order discarding the specific directions/orders to be followed in determining the question involved. Banking upon the dictum laid down by the apex court in Hindustan Petroleum Corpn. Ltd. v. Pinkcity Midway Petroleums ((2003) 6 SCC 503), which as already indicated, had been considered by this Court while W.P.(C).No.1641 OF 2009 Page numbers directing the court below to examine the validity of the arbitration agreement, the execution of which had been disputed, the learned Munsiff discarding the directions/orders, disposed the application once again holding that if there is an arbitration clause in the agreement, it is mandatory for the civil court to refer the dispute to an arbitrator. In doing so, the learned Munsiff has flagrantly flouted the directions/orders passed by this Court, the judgment rendered in the previous writ petition. The court below cannot flout the directions/orders passed by this Court when the matter had been remitted for reconsideration indicating in what way the question posed for consideration should be analysed and decided. Other than the reliance placed in the above decision the only other material which appears to have impressed the learned Munsiff was the purported admission stated to have been made by the plaintiff in the caveat application, copy of which was produced as Ext.A1, but, on that point W.P.(C).No.1641 OF 2009 Page numbers also there is no discussion in Ext.P8 order other than stating that there was an admission as to execution of an agreement, which on no account would lead to admission of a valid arbitration agreement. To say the least, the learned Munsiff has not examined the disputed question with reference to the directions given by this court in the judgment rendered in the writ petition. Ext.P8 order in the circumstance cannot be sustained and it is liable to be set aside. I do so. The learned Munsiff is directed to strictly follow the directions given in the judgment rendered by this court in the previous writ petition and decide the question involved in accordance with law. I make it clear that, I am not expressing any opinion on the merit of the disputes emerging for adjudication before the Munsiff which is canvassed by the respondents/ defendants under Ext.P3 application nor of the challenge raised thereto by the plaintiff. Court below is directed to dispose of Ext.P3 application after hearing both sides, within W.P.(C).No.1641 OF 2009 Page numbers one month from the date of receipt/production of a copy of this judgment. 6. Registry is directed to place a copy of the judgment before the administrative judge in charge of the district for consideration whether further directions/instructions, as deemed fit and proper, on the administrative side require to be issued to the officer concerned for strict compliance of directions/orders passed by superior forums. Sd/- S.S.SATHEESACHANDRAN, JUDGE //TRUE COPY// P.A TO JUDGE vdv