SUPREME CO-OPERATIVE GROUP HOUSING SOCIETY

M/S. H.S. NAG AND ASSOCIATES (P) LTD.

MAY 9, 1996

[K. RAMASWAMY, FAIZAN UDDIN AND G.B. PATTANAJ"K, JJ.]

Arbitration Act, 1940 :

Ss. 2( a), 20, 60, 90, 93-Co-operative housing society-Agreement for c COnStlUCtion of houses stipulating for reference of dispute to ariJitrato,-.l.ater

some more work awarded to contractor-Displlle regarding-Application u/s. 20 for producing the agreement and refening the dispute to arbitration-Objection by Society that matter being arbitrable u/s. 60, suit was not maintainable by virtue of s. 93 and even otlzetwise, in absence of a notice u/s. 90,

D suit was liable to be dismissed-Held, bar of jurisdiction of Court, gets attracted an1ong nienzbers, JJast 1nembers, between n1en1bers and Society etc. as envisaged in clauses (a) to (d) of s. 60( 1)-Though application u/s. 20 is treated as suit, it is procedural part-Mandatory requirement of s. 90 does not get attracted to such proceedings--Contention that there was no arbitration agreen1ent with respect to the construction in dispute not tenable, since E jurisdiction to arbitrate the dispute is founded upon an agreement entered with consensus ad idem under which the parties exciuded established courts and submitted to jurisdiction of arbitrat01-Tenns of agreement clearly indicate that award of work during cow:re of execution is a part of agreement originally entered into-Clause of agreement containing settlement of dispute by arbitra- F tion is an arbitration agreement witllin the meaning of s. 2(a}-Application u/s. 20 would be maintainable.

Kalyan People' Co-operative Bank Ltd. v. Dullhanbibi Aqua! Aminsaheb Patil & Ors., AIR (1966) SC 1066; referred te.

G CIVIL APPELLATE JURISDICTION : Special Leave Petition (C) No. 11037 of 1996.

From the Judgment and Order dated 8.3.96 of the Delhi High Court in F.A.0.(0S) No. 44 of 1996.

H K. Madhava Reddy, U.U. Lalit and Satish Vig for the Petitioner. 658

The following Order of the Court was ddiv.ered : A

This special leave petition arises from the order of the Division Bench of the High Court of Delhi made on 8.3.1996 in F.A.0. (OS) 44/96.

The petitioner had entered into a contract on September 4; J 986 with the respondent with covenant contained therein as under : .

11Antl \vherca~ lhe contractor has also agreed to execute the \Vork of seven towers with 1.00'Y,; external works with the said contract amount in the first instance and further work of the balance towers that would be entrusted to him within 4 months of the dale of a\vard of \Vork at the same per sq. n1. rates arrived at the above Jump sum price for each to\ver and for the alternate specifications.

And whereas the employer has accepted the .offer of the contractor the said contract an1ount subject to the tern1s and conditions set forth herein and mutually agreed lo by both the parties".

Therein clause 32 relates lo settlement of dispute by arbitration which read as under :

11J2-Settle111e11t of Disputes by Arbitration :

If any dispute, question of controversy, the settlement of which is not herein specifically approved for, shall at any time arise between the owner and the contractor relating to this contract or any clause or thing contained or the construction thereof or any portion of the same or the rights or duties or liabilities of either party, then in every such cases the matter in dispute shall be referred lo the Arbitration of the Hony. Director, O\Vner or his nominee and his decision shall be final and binding on both the parties ............. "

In furtherance of the agreement, apart from 7 to\vers entrusted for construction, the construction of 3 more towers was awarded on December 12, 1.988 and 4 more towers on March 12, 1990. Dispute and differences had arisen in construction of the latter 7 towers. The respondent invoking G clause 32 of the agreement filed application under Section 20 of the Arbitration Act, 1940 (for short, the 'Act') for calling upon the petitioner to produce the agreement and to have the dispute referred to arbitration.

It \Vas nun1bered as a suit on the original side of the High Court. Therein, the petitioner filed I.A. No. 7860 of 1994 in Suit No. 2760/93 under Order H

SUPREME COURT REPORTS {1996] SUPP. 2 S.C.R.

A 7, Rule 11, CPC to dismiss the suit. Two grounds were mainly pressed for consideration in support thereof. The first contention urged was that the petitioner being a co-operative society registered under the Delhi Cooperative Societies Act, 1972, the dispute is arbitrable under Section 60 of that Act and Section 93 thereat puts an embargo on the power of the

B civil Court to decide the dispute and that, therefore, the suit is not maintainable. The learned single Judge and the Division Bench negatived the contention and in our view rightly, on the ground that Section 60 of the Co-operative Societies Act would apply to a dispute among members, past-members or person claiming though them or between them and the society or the n1embcrs of the: committee or officers or agent~ etc. as C envisaged in clauses (a) to (ti) of Section GO( 1) of the Co-operative

Societies Act. By operation of the non obstante clause, the bar of suit attracts only if the dispute falls within the parameters of clauses (a) lo (d) thereof and the bar or jurisdiction of the Court under Section 93 gets attracted in respect of the specified subjects in sub-section (1) of Section D 93 thereof. Therefore, the plea or the bar of Sections 60 and 93 is devoid or substance.

It is then contended in this Court that notice a:-. required un<lcr Section 90, is a pre-condition to lay the suit. Since the proceedings under Section 20 of the Act was a suit, absence of notice meets \vith dismissal of E the suit. We find no force in the contention. As per ratio in Ka/yan Peoples' Co-operative Bank Ltd. v. Dullhanbibi Aqua/ Aminsaheb Patil & Ors., AIR

(1966) SC 1066, prior to ere 1976 Amendment Act, insistence upon a notice under Section 80 ere in a suit under Order 21 Rule 63 renders no assistance to the petitioner. Even analogy of Section 80 CPC sought for in

support of reference is of no avail, since rigo11r of notice under Section 80 ere was softened by CPC 1976 Amendment Act in directing, in an appropriate case, posts-suit notice. Though application under Section 20 of the Act is treated as suit, in proceedings under the Act, it is a procedural part. The mandatory requirement of Section 90 docs nut get attracted to proceedings laid under Section 20 of the Act.

A serious contention raised by Shri K. Madhava Reddy, learned senior counsel for the petitioner, i~ that contract for arbitration is a pre-condition to avail arbitration. Since the agreement fur the 7 tll\Vers does not contain such arbitration clause, the application under Section 20 H is not maintainable and, therefore, the suit deserves lo be dismissed. We

find no force in the contention. Undoubtedly, jurisdiction to arbitrate the A dispute is founded upon an agreement entered with consensus ad idem under which the parties excluded established courts and submitted to the jurisdiction of the arbitrator for settlement of differences and disputes having arises thereunder. Otherwise, court is devoid of jurisdiction to refer such disputes under section 20 for arbitration. It is seen that the above quoted terms of the agreement and clause 32 of the contract read together clearly indicate that the award of the work during the course of execution

is a part of the agreement originally entered into. Therefore, clause 32 of the agreement containing settlement of disputes by arbitration is an arbitra tion agreement within the meaning of Section 2(a) of the Act. Therefore, application under Section 20 would be maintainable. We do not find any substance in the special leave petition.

The special leave petition is accordingly dismissed.

R.P.

Petition dismissed.