Arbitration clause enforcement: civil court must refer covered disputes to arbitration, while jurisdictional objections go to the tribunal.

An admitted, broadly worded arbitration clause required referral of the dealership dispute to arbitration under section 8 of the Arbitration and Conciliation Act, 1996; objections about short delivery and tampering with seals were matters for the arbitral tribunal under section 16, so the civil court should not have refused reference. The corporation's contractual power to suspend supply for breach of dealership obligations operated independently of the statutory regime under the Essential Commodities and weights-and-measures laws, so suspension could not be invalidated merely because statutory remedies also existed. Refusal to make the section 8 reference amounted to failure to exercise jurisdiction, making revision under section 115 CPC maintainable.

---

---

Issues: (i) Whether the civil court could refuse reference to arbitration despite an admitted arbitration clause on the ground that the dispute concerned alleged short delivery and tampering with seals; (ii) Whether the corporation's contractual power to suspend supply for breach of dealership obligations was independent of the statutory regime governing inspection, search, seizure and prosecution; (iii) Whether the revision under section 115 of the Code of Civil Procedure, 1908 was maintainable against the order refusing reference to arbitration.

Issue (i): Whether the civil court could refuse reference to arbitration despite an admitted arbitration clause on the ground that the dispute concerned alleged short delivery and tampering with seals.

Analysis: The arbitration clause was widely worded and covered disputes of any nature arising out of or in relation to the dealership agreement. Section 8 of the Arbitration and Conciliation Act, 1996 is mandatory in character and requires a judicial authority to refer the parties to arbitration where the subject matter of the action is covered by an arbitration agreement. Any objection as to the applicability of the arbitration clause to the facts of the dispute falls within the jurisdiction of the arbitral tribunal under section 16 of the Act, which empowers the tribunal to rule on its own jurisdiction and on objections regarding the existence or validity of the arbitration agreement.

Conclusion: The civil court ought not to have adjudicated the applicability of the arbitration clause and the dispute had to be referred to arbitration.

Issue (ii): Whether the corporation's contractual power to suspend supply for breach of dealership obligations was independent of the statutory regime governing inspection, search, seizure and prosecution.

Analysis: The dealership agreement required the dealer to comply with contractual directions on safe practices and marketing discipline as well as with specified enactments and regulations. It also expressly empowered the corporation to suspend supply upon breach of the agreement. That contractual power operated independently of the statutory machinery under the Essential Commodities Act, 1955 and the weights and measures regime. The contractual action did not usurp criminal process or statutory powers, and the existence of a statutory remedy did not exclude the agreed contractual consequence for breach.

Conclusion: The corporation's suspension of supply was a contractual remedy distinct from the statutory process and could not be invalidated on the ground that only the statute could address the alleged misconduct.

Issue (iii): Whether the revision under section 115 of the Code of Civil Procedure, 1908 was maintainable against the order refusing reference to arbitration.

Analysis: Once the trial court declined to act on a mandatory request for reference under section 8 of the Arbitration and Conciliation Act, 1996, it failed to exercise jurisdiction vested in it. Such refusal resulted in denial of the contractual and statutory right to arbitration and amounted to failure of justice and irreparable injury. In that situation, revisional interference was justified.

Conclusion: The revision was maintainable and the High Court erred in declining relief.

Final Conclusion: The dispute was required to be sent to arbitration, the contrary orders of the courts below were set aside, and the appellant obtained complete relief.

Ratio Decidendi: Where an arbitration clause is admitted and the dispute is covered by the contract, the civil court must refer the parties to arbitration under section 8 of the Arbitration and Conciliation Act, 1996, leaving objections to the tribunal under section 16; a contractual remedy for breach may operate independently of parallel statutory proceedings.

---