Arbitration jurisdiction and SICA bar principles clarified for suits involving lease disputes and guarantees.

An application under Section 11 before the Chief Justice does not trigger the exclusive-jurisdiction rule in Section 42 because the Chief Justice acts administratively, not as a court. A reference to arbitration under Section 8 requires a written request before the first statement on the dispute and identity between the suit matter and the arbitration clause; where the suit also concerns a separate guarantee agreement, those conditions are not met and Section 5 does not bar the action. Section 22 of SICA does not bar a composite suit primarily for recovery of leased equipment, with lease arrears only incidental, where the guarantee is not in respect of a loan or advance to the industrial company.

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Issues: (i) Whether pendency of an application under Section 11 of the Arbitration and Conciliation Act, 1996 before the Chief Justice of a High Court ousted the court's jurisdiction under Section 42; (ii) whether the suit could be referred to arbitration under Section 8 and barred by Section 5 of the Arbitration and Conciliation Act, 1996; (iii) whether the suit was barred by Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 against the industrial company and its guarantor.

Issue (i): Whether pendency of an application under Section 11 of the Arbitration and Conciliation Act, 1996 before the Chief Justice of a High Court ousted the court's jurisdiction under Section 42.

Analysis: Section 42 is attracted only when an application under Part I of the Act is made in a court. The Chief Justice acting under Section 11 performs an administrative function and is not a court within the meaning of Section 2(e). Therefore, an application under Section 11 before the Chief Justice does not trigger the exclusive-jurisdiction rule under Section 42.

Conclusion: The objection under Section 42 failed, and the court's jurisdiction was not barred.

Issue (ii): Whether the suit could be referred to arbitration under Section 8 and barred by Section 5 of the Arbitration and Conciliation Act, 1996.

Analysis: A reference under Section 8 requires a written application made before the first statement on the substance of the dispute and the subject matter of the action must be the same as the subject matter of the arbitration agreement. The suit covered both the lease agreement and the guarantee agreement, whereas the arbitration clause was confined to the lease agreement. The statutory conditions for reference were therefore not satisfied.

Conclusion: The request for reference to arbitration was not maintainable, and Section 5 did not bar the suit.

Issue (iii): Whether the suit was barred by Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 against the industrial company and its guarantor.

Analysis: Section 22 bars suits for recovery of money, enforcement of security, or enforcement of a guarantee in respect of loans or advances granted to the industrial company. The suit here was substantially for recovery of leased equipment belonging to the plaintiff, with arrears of lease money claimed incidentally. The guarantee was also not one in respect of a loan or advance to the industrial company. On that footing, the statutory bar did not apply.

Conclusion: The suit was not barred by Section 22 against either the company or the guarantor.

Final Conclusion: The preliminary objections to jurisdiction and maintainability were rejected, and the notice of motion was allowed with interim and receiver reliefs in favour of the plaintiff.

Ratio Decidendi: An application under Section 11 before the Chief Justice is not an application in a court for the purpose of Section 42, Section 8 requires a written application and identity of subject matter, and Section 22 of SICA does not bar a composite suit primarily for recovery of leased property where the guarantee is not in respect of a loan or advance.

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