B.K.PATEL, J. W.P.(C) NO.18033 OF 2010 (Decided on 4.3.2011) VISHAL RETAIL LTD. & ANR. …… Petitioners. .Vrs. ACHHAR SINGH BHUMBER & ORS. ……. Opp.Parties. ARBITRATION & CONCILIATION ACT, 1996 (ACT NO.26 OF 1996) – S.8(1) (2). For Petitioners - M/s. Basudev Mishra & B.L.Tripathy. For Opp.Parties - M/s. G.Mukherjee, A.C.Panda, S.Patra, S.Laxmi, S.Das & S.Mishra. B.K.PATEL, J. In this writ application, petitioners have assailed legality of order dated 8.1.2009 passed by learned Civil Judge, (Senior Division), Jeypore in I.A. No. 24 of 2009, arising out of C.S. No.53 of 2009, by which their application under Section 8 (1) of the Arbitration and Conciliation Act, 1996 (for short ‘the Act’) was rejected. 2. Petitioners are defendants and opposite parties are plaintiffs in the suit. The suit has been filed for realization of security deposit and arrear rent alongwith interest and cost. Plaintiffs’ case is that in terms of agreement in the Memorandum of Understanding dated 2.7.2008 (for short ‘the MOU’) defendants took on lease the suit property for a period of ten years in order to run a retail show room on payment of rent at the rate of Rs.18/- per sq. feet per month. Show room over the suit land was constructed by the plaintiffs as per the specification of defendants. Defendants occupied and used the building without payment of security deposit and monthly rent. Plaintiffs wrote letters to the defendants in response to which defendants issued letter dated 13.6.2009 stating that agreement has been terminated. 3. On their appearance defendants filed application under Section 8 (1) of the Act on 28.10.2008. Thereafter, written statement was filed on 14.12.2009. Defendants’ prayer for amendment of written statement was allowed by order dated 3.5.2010. P.W.1, examined on behalf of plaintiffs on 22.9.2010, was partially cross-examined by defendants on 24.9.2010. 4. Prayer in the application under Section 8 (1) of the Act in I.A. No.24 of 2009 reads: “It is, therefore, respectfully prayed that keeping in view the clause of Arbitration between the parties to the present suit, the suit of the plaintiff may kindly be returned to the plaintiff and the period of filing of the written statement as stipulated in the CPC may kindly be kept in abeyance till the decision of the present application. This prayer is made as an abandoned (sic) precaution.” Defendants filed objection resisting the application on the ground that Clause-18 of the MOU relied upon by the plaintiffs to be an arbitration clause provided for option to the parties either to resort to arbitration or to approach Civil Court. Considering the rival contentions, learned Civil Judge (Senior Division), Jeypore passed the impugned order upholding plaintiffs’ stand that Clause-18 of the MOU provided for such option for which Civil Court has jurisdiction to entertain the suit. 5. Opposite parties-plaintiffs have filed counter affidavit and petitioners-defendants have filed rejoinder to the counter affidavit. 6. It was contended on behalf of the petitioners that there is no dispute between the parties to have entered into the MOU on 2.7.2008. Clause-18 of the MOU specifically provides for resolution of dispute between the parties by arbitration. Defendants filed application under Section 8 (1) of the Act before filing of the written statement. However, learned court below proceeded with the trial instead of relegating the parties to arbitration. It was strenuously contended that the learned court below committed gross illegality in holding that Clause-18 of the MOU provided for option to the parties to approach the Civil Court also. 7. In reply, it was submitted by the learned counsel for the opposite parties that a plain reading of Clause-18 shows that the agreement provided for an option to the parties for resolution of dispute by either resorting to arbitration or by approaching Civil Court. In such circumstance, plaintiffs were not obliged to approach the defendants for appointment of sole arbitrator for redressal of their grievance. In this connection, learned counsel for the opposite parties relied upon the decision in Wellington Associates Ltd. –vrs.- Kirit Mehta: AIR 2000 SC 1379. 8. It was next contended on behalf of the opposite parties that on the face of it application stated to have been filed under Section 8 (1) of the Act by the defendants was not maintainable due to non-compliance of mandatory provision under sub-section (2) of Section 8 of the Act to the effect that application under Section 8 (1) of the Act is to be accompanied by the original arbitration agreement or a duly certified copy thereof. Decision of the Hon’ble Supreme Court in Atul Singh –vrs.- Sunil Kumar Singh : AIR 2008 SC 1016 was relied upon in support of the contention. In this context, it was not disputed by the learned counsel for the opposite parties that neither original arbitration agreement nor any certified copy thereof was filed alongwith the application under Section 8 (1) of the Act. However, placing reliance on two decisions of Rajastan High Court it was contended that the provision under Section 8(2) of the Act is not mandatory. It was also argued that as a copy of the MOU filed by the plaintiffs was already on record, non-filing of the same along with the application under Section 8 (1) of the Act is not material. 9. Learned counsel for the opposite parties would also contend that defendants not only filed written statement but also participated in the trial by cross-examining P.W.1. Therefore, they acquiesced in and submitted to the jurisdiction of the Civil Court without pursuing the application to refer the parties to arbitration. Therefore, there being substantial progress in the suit, defendants are estopped from seeking shelter of the provision under the Act at a belated stage. In this connection, reliance was placed by the learned counsel for the opposite parties on The State of Uttar Pradesh and Anr. – vrs.- Janki Saran Kailash Chandra and Anr. : AIR 1973 SC 2071, Saurashtra 2 Chemicals Ltd. –vrs.- Union of India : AIR 2008 Gujarat 148 and W.B.S.E. Board – vrs.- Shanti Conductors Pvt. Ltd. : AIR 2004 Gauhati 70. repel Repelling the objection, it was argued by the learned counsel for the petitioners that, admittedly, defendants had filed application under Section 8 (1) before filing of written statement. They were not responsible for keeping the application pending till examination of P.W.1. Therefore, even if the defendants subsequently filed the written statement and cross-examined P.W.1, such conduct would not prevent them from claiming arbitration in terms of the MOU. Learned counsel for the petitioners relied upon decision in Rashtriya Ispat Nigam Ltd. –vrs.- Verma Transport Company : AIR 2006 SC 2800 in support of such contention. Also, relying upon decision in P. Anand Gajapathi Raju –vrs.- P.V.G. Raju : AIR 2000 SC 1886 it was submitted by the learned counsel for the petitioners that public policy being encouragement of out of court settlement of dispute by resorting to arbitration, conciliation and mediation etc. learned Civil Judge ought to have directed the parties to arbitration. 10. In order to appreciate the controversy between the parties, it is necessary to reproduce Clause-18 of the MOU. It reads: “ARBITRATION & CONCILIATION In case of any difference or dispute arising between the parities herein on any of the terms and conditions contained herein, such difference or dispute shall be referred to sole arbitrator appointed by the LESSEE and the LESSOR shall have no objection to it. The provision of the Arbitration and Conciliation Act, 1996 and any modification thereof shall be applicable for settlement of disputes, thus referred. The Venue for holding all such proceeding shall be at New Delhi. The Courts at Jeypur shall have the sole and exclusive jurisdiction to try any such dispute that may arise out of this instant agreement.” 11. A cursory reading only makes it evident that the clause does not provide for arbitration as the only mode of resolution of difference or dispute arising out of the agreement between the parties. Though first part of clause provides for resolution of dispute in New Delhi by the sole arbitrator appointed by the petitioners, in the last sentence parties have agreed that Courts at Jeypore shall have the sole and exclusive jurisdiction to try any such dispute that may arise out of the MOU. It is not disputed that in the suit opposite parties have alleged breach of agreement as the basis of their claim. Clause-18 of the MOU does not prescribe arbitration to be the only mode of settlement of such dispute by the parties to the agreement. It does not appear that the intention of the parties was that arbitration would be the sole remedy. Clause-18 is not an unequivocal and firm arbitration clause. 12. Under similar circumstances, the Hon’ble Supreme Court in Wellington Associates Ltd. –vrs.- Kirit Mehta (supra) pointed out: “………. Section 7 defines ‘arbitration agreement’ as follows : ‘S.7. Arbitration agreement :- (1) In this part “arbitration agreement” means an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not. 3 xx xx xx xx xx xx xx xx’. The words in sub-clause (1) of S.7, “means an agreement by the parties to submit to arbitration,” in my opinion, postulate an agreement which necessarily or rather mandatorily requires the appointment of an arbitrator/ arbitrators. Section 7 does not cover a case where the parties agree that they “may” go to a suit or that they ‘may’ also go to arbitration.” 13. In the present case, though the word “may” has not been used by the parties in the arbitration clause, it has been agreed upon by the parties that either the dispute shall be referred to arbitrator or Courts at Jeypore shall have the sole and exclusive jurisdiction to try any such dispute. Both the options having been agreed upon by the parties and one of the parties having approached the Civil Court at Jeypore by filing the suit, there appears no infirmity in the impugned order. Where both the arbitration clause and clause for deciding dispute by Civil Court of particular jurisdiction is available the parties may choose any one out of the two to decide the dispute. 14. It is not disputed that defendants did not file a copy of the MOU or Clause-18 thereof alongwith their application under Section 8(1) of the Act. Prayer in the application under Section 8(1) of the Act extracted above is not a prayer for referring the parties to arbitration. Defendants made prayer simply to return the plaint and to keep in abeyance period stipulated for filing of written statement till decision on the application. 15. Section 8 of the Act reads as follows: “Power to refer parties to arbitration where there is an arbitration agreement.- (1) A judicial authority before which an action is brought in a matter which is the subject of an arbitration agreement shall, if a party so applies not later than when submitting his first statement on the substance of the dispute, refer the parties to arbitration. (2) The application referred to in sub-section (1) shall not be entertained unless it is accompanied by the original arbitration agreement or a duly certified copy thereof. (3) Notwithstanding that an application has been made under sub- section (1) and that the issue is pending before the judicial authority, an arbitration may be commenced or continued and an arbitral award made.” 16. In view of nature of prayer made in the application and in view of non-filing of arbitration agreement or copy thereof alongwith the application, the petitioners are found to have complied with neither sub-section (1) nor sub-section (2) of Section 8 of the Act. In the absence of specific prayer to refer the parties to arbitration, petitioners cannot claim to have applied to refer the parties to the suit to arbitration under Section 8(1) of the Act. 17. That apart, language in sub-section (2) of Section 8 of the Act is in negative terms providing for the consequence of filing an application under Section 8(1) of the Act without being accompanied by the original arbitration agreement or duly certified copy thereof. Court cannot entertain such an application. In other words in the absence 4 of the original arbitration agreement or copy thereof, there is no application in the eye of law. 18. In Atul Singh –vrs.- Sunil Kumar Singh (supra), dealing with a case in which application under Section 8(1) of the Act was filed without agreement, it was observed and held by Hon’ble Supreme Court as follows: “There is no whisper in the petition dated 28.2.2005 that the original arbitration agreement or a duly certified copy thereof is being filed along with the application. Therefore, there was a clear non-compliance of sub- section (2) of Section 8 of 1996 Act which is a mandatory provision and the dispute could not have been referred to arbitration. Learned counsel for the respondent has submitted that a copy of the partnership deed was on the record of the case. However, in order to satisfy the requirement of sub-section (2) of Section 8 of the Act, defendant No.3 should have filed the original arbitration agreement or a duly certified copy thereof along with the petition filed by him on 28.2.2005, which he did not do. Therefore, no order for referring the dispute to arbitration could have been passed in the suit.” 19. Thus, availability of copy of the MOU, filed by the plaintiffs, in the record is inconsequential. Mandatory provision under Section 8(2) of the Act having not been complied with by the defendants seeking referral of the dispute to arbitration, learned Civil Judge could not have referred the dispute to arbitration. In view of such settled principle of law, decisions in Ranwa Construction Co. –vrs.- Administrator, Pant Krishi Bhawan : AIR 2006 Rajasthan 70 and M.P. Housing Board & Anr. –vrs.- Sohanlal Chourasia & Anr. : AIR 2008 (NOC) 593 (M.P.) are of no assistance to the petitioners. 20. Nature of prayer made by the petitioners in their application under Section 8(1) of the Act has already been referred to. In spite of the only prayer to return the “suit” to the plaintiffs and to keep in abeyance period stipulated for filing of written statement, petitioners chose not only to file written statement but also to participate in the trial by cross-examining P.W.1. Such conduct of the petitioners amounts to not only submission and acquiescence to the jurisdiction of the Civil Court but also explicit waiver of the right to claim arbitration. Also, such conduct is in consonance with Clause- 18 of the MOU which provided for redressal of remedy by sole arbitrator or by adjudication in the Courts at Jeypore. Plaintiffs and defendants having right to opt for adjudication of dispute arising out of the MOU in Civil Court also, the right cannot be taken away. Even in the absence of such option, a party seeking to deprive the adversary of the general right to seek remedy in a Civil Court under Section 9 of the C.P.C. has to make out a very strong case. 21. In The State of Uttar Pradesh and Anr. –vrs.- Janki Saran Kailash Chandra and Anr. (supra), it has been held: “…….When a party to an arbitration agreement commences any legal proceedings against any other party to the said agreement with respect to the subject-matter thereof, then the other party is entitled to ask for such proceedings to be stayed so as to enable the arbitration agreement to be carried out. It is, however, to be clearly understood that the mere existence of arbitration clause in an agreement does not by itself operate as a bar to a suit in the Court. It does not by itself impose any obligation on the Court to stay the suit 5 or to give any opportunity to the defendant to consider the question of enforcing the arbitration agreement. The right to institute a suit in some court is conferred, on a person having a grievance of a civil nature under the general law. It is a fundamental principle of law that where there is a right there is a remedy. Section 9 of the CPC confers this general right of suit on aggrieved person except where the cognizance of the suit is barred either expressly or impliedly. A party seeking to curtail this general right of suit has to discharge the onus of establishing his right to do so and the law curtailing such general right has to be strictly complied with……..” 22. No doubt, petitioners filed the application purported to be under Section 8(1) of the Act before filing of written statement. However, without pursuing the application they submitted and acquiesced to the jurisdiction of the Court not only by filing of written statement but also by participating in the trial and thereby waived any objection to the Court’s jurisdiction. In view of such conduct of the petitioners it may be unhesitatingly held that they waived their right to invoke the arbitration clause. 23. In Rashtriya Ispat Nigam Ltd. –vrs.- Verma Transport Company (supra), relied upon by the petitioners, it has been held: “34. The expression ‘first statement on the substance of the dispute’ contained in Section 8(1) of the 1996 Act must be contra-distinguished with the expression ‘written statement’. It employs submission of the party to the jurisdiction of the judicial authority. What is, therefore, needed is a finding on the part of the judicial authority that the party has waived his right to invoke the arbitration clause.” 24. It has been held by Gauhati High Court in W.B.S.E. Board –vrs.- Shanti Conductors Pvt. Ltd. (supra): “If despite existence of arbitration clause, the parties choose to contest the suit, the powers under Section 8 cannot be invoked.” 25. Thus, it is evident that not only Clause-18 of the MOU provided for option to approach Civil Court but also the petitioners’ application under Section 8 (1) of the Act is not an application for arbitration in the eye of law. Opposite parties chose to invoke the jurisdiction of Civil Court. Petitioners, waiving their right, if any, to claim arbitration, submitted and acquiesced to the jurisdiction of the Court. Therefore, there is absolutely no scope to hold that opposite parties have not acted in accordance with terms of the Clause-18 of the MOU. Under the facts and circumstances of the case, petitioners have not made out any case to prevent the opposite parties to seek remedy in Court both in view of nature of the provision under said Clause and in exercise of general right conferred under Section 9 of the C.P.C. 26. Moreover, it is to be borne in mind that trial in the suit has already commenced. Both the parties have participated in the trial. Civil Court is equally efficacious in resolving dispute between the parties. At this stage, it would not be just and proper to refer the parties to arbitration solely on the ground that the public policy encourages out of Court settlement of disputes. 6 27. In view of the above, there is no merit in any of the contentions raised on behalf of the petitioners. The impugned order is immune for interference. Accordingly, the writ petition is dismissed. Writ petition dismissed. 7