TaxTMI 
TaxTMI 
2010 (6) TMI 886
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.... refer the matter to arbitrator as according to the Trial court, the declaratory Suit, seeking injunction also, was maintainable before it. 4. It emerges from the record that an agreement was executed between the revisionist-Company and respondent No. 1, Messrs. Raj Kumar Lohia, representing the Lohia Family of Kanpur on 10.11.1992. A copy of the agreement has been placed as Annexure-3 to the affidavit submitted in this case. This agreement contains 18 terms and conditions, which were binding on the contracting parties. 5. Learned Counsel for the revisionist has laid much stress that as per Clause 17 of the said agreement, the dispute, if any, between the parties would have to be resolved by taking recourse to arbitration. 6. Later on , some dispute regarding sale and transfer of 17,60,000/- shares arose between the parties. The respondent No. s 1 and 2, that is, Raj Kumar Lohia, representing Lohia Family and Messrs Shruti Finsec Private Limited, having its registered office at D-3/A, Panki Industrial Area, Kanpur, have filed a Civil Suit No. 788 of 2006, Raj Kumar Lohia and Anr. v. Lohia Starlinger & Company (revisionist). In the aforesaid Civil Suit, following reliefs we....
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....lhi, India and the decision of the arbitration court will be final and binding on the parties. Arbitration proceedings shall be conducted in English language. The applicable laws shall be Indian laws. 8. Further, reliance was placed on Section 8 of the Arbitration and Conciliation Act, 1996, which is being quoted below: 8(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. 9. Other submissions were also made, which are contained in the application submitted by the revisionist before the Trial court. Objections were filed by the respondents herein to the application submitting that the subject matter in dispute could not be dealt with by the arbitrator and the Civil Court would be the appropriate forum for resolving the dispute. In fact, Messrs. Shruti Finsec Private ....
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....force the rights flowing from the agreement dated 10.11.1992. According to him, even plaintiffs' rights, if any, were subject to the arbitration Clause (Clause No. 17) of the aforementioned agreement. The learned Trial court had failed to appreciate that it was right of the parties under the agreement which was under challenge and, thus, the dispute could have been resolved by the Arbitration Tribunal. Thus, the declaratory Suit was not maintainable in these circumstances. The order impugned is a non-speaking and non- reasoned order. Learned Counsel for the revisionist has placed reliance on following judgments in support of his submissions: 1. 2007 (3) SCC 686, Agri Gold Exims Ltd. v. Sri Lakshmi Knits & Wovens and Ors. 2. AIR 2003 SC 2252, Sukanya Holdings (P) Ltd. v. Jayesh P. Pandya and Anr.. 3. 2009(10) SCC 103, 4. (2006) 1 SCC 417, Ardy International (P) Ltd. v. Inspiration Clothes & U and Anr.. 5. (2003) 6 SCC 503, Hindustan Petroleum Corp. Ltd. v. Pincity Midway Petroleums. 6. AIR 1999 SC 2102, Olympus Superstructures Pvt. Ltd. v. Meena Vijay Khetan and Ors.. 7. (200....
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....uit. 18. Sri Sinha has submitted that the Hon'ble Apex Court in Sukanya Holdings Pvt. Ltd. v. Jayesh H. Pandya AIR 2003 SC 2252 has held that unless all the parties to the Suit are the parties to the arbitration agreement, the dispute cannot be referred to arbitration. Further, it has been held that unless the matter in the Suit is wholly covered by the agreement, the parties cannot be asked to go to the arbitrator. In the said case, it has also been clearly held that even in the case of partial coverage of dispute by the arbitration agreement, the parties cannot be referred to arbitration. 19. Emphasis has been laid by Sri Sinha, learned Senior Advocate, appearing for the respondents, that the reliefs sought for cannot be granted by the Arbitral Tribunal and could be granted by the Civil court only for the reason that the existence of a valid, subsisting and binding agreement between the parties was not the shareholders' agreement dated 10.11.1992. The said agreement had worked itself out. The specific performance of the contract was sought in respect of the subsequent contract which came into existence and conferred rights on the respondent No. 2 which was not a par....
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....te of Section 8 of the Act, the application was not to be entertained unless it is accompanied by the original arbitration agreement or a duly certified copy thereof. In, the instant case, the revisionist had filed a self-attested true copy of the agreement and as per the provisions contained in Section 8(2) of the Arbitration and Conciliation Act, 1996, such application was liable to be dismissed as the said application did not meet the statutory requirement. 23. Sri Naveen Sinha, learned Senior Advocate appearing for the respondents, has placed reliance on following judgments in support of his case: 1. AIR 1959 SC 1362, The Union of India v. Kishore Lal Gupta and Brothers 2. AIR 1969 SC 488, Union of India (UOI) v. Salweel Timber Construction (India) and Ors. 3. 1984 (2) SCC 680, Tarapore and Company v. Cochin Shipyard Ltd. 4. AIR 1996 Karnataka 69, Aktiengesellschaft v. Insotex (India) Limited and Anr.. 5. 2003 (5) SCC 531, Sukanya Holdings Pvt. Ltd. v. Jayesh H. Pandya and Anr.. 6. AIR 1974 Delhi 223, Dadri Cement Company and Anr. v. Bird & Co.(P) Ltd. 7. AIR 1953 Calcutt....
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.... between Starlinger & Company and Messrs Lohia Company, as defined in the Shareholders' Agreement, represented by Sri Raj Kumar Lohia. Messrs. Shruti Finsec Private Limited, respondent No. 2, was a party outside the Shareholders' Agreement, then, how any dispute in which Messrs. Shruti Finsec Private Limited, is not a party could be referred to arbitration. The Hon'ble Apex Court, Karnataka High Court and Delhi High Court in the judgments reported in 2003 (5) SCC 531, Sukanya Holdings Pvt. Ltd. v. Jayesh H. Pandya and Anr. AIR 1974 Delhi 223, Dadri Cement Company and Anr. v. Bird & Co.(P) Ltd. and AIR 1996 Karnataka 69, Aktiengesellschaft v. Insotex (India) Limited and Anr., have categorically held that unless all the parties to the Suit are the parties to the arbitration agreement, the parties cannot be directed to approach Arbitral Tribunal. Such matters cannot be referred to the arbitration. Thus, it has been provided that unless the dispute is wholly covered by the agreement, the parties cannot be referred to the arbitration. It has also been held that even in the case of partial coverage of dispute by the agreement, the parties cannot be asked to go for arbitration....
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....n has arisen, where the Hon'ble Apex Court has dealt with the following questions in Paragraph 9 of the judgment, which is being quoted below: 9. The said judgment is challenged in this appeal by special leave. On the contentions urged the following two questions arise for consideration: (i) Whether an arbitration clause found in a document (agreement) between two parties, could be considered as a binding arbitration agreement on a person who is not a signatory to the agreement? (ii) Whether a company could be said to be a party to a contract containing an arbitration agreement, even though it did not sign the agreement containing an arbitration clause, with reference to its subsequent conduct? 32. The Hon'ble Court has dealt with the dispute in detail and had held that the agreement in dispute dated 24.2.2006 was signed by Wescare and Subuthi Company and not by the Indowind Energy Company. After dealing with the dispute in detail, the Hon'ble Apex Court has held as under: 13. Wescare puts forth the agreement dated 24.2.2006 as an agreement signed by the parties containing an arbitration agreement but the sa....
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....by the acts of the other. If the Director who signed on behalf of Subuthi was also a Director of Indowind and if the intention of the parties was that Indowind should be bound by the agreement, nothing prevented Wescare insisting that Indowind should be made a party to the agreement and requesting the Director who signed for Subuthi also to sign on behalf of Indowind. The very fact that parties carefully avoided making Indowind a party and the fact that the Director of Subuthi though a Director of Indowind, was careful not to sign the agreement as on behalf of Indowind, shows that the parties did not intend that Indowind should be a party to the agreement. Therefore the mere fact that Subuthi described Indowind as its nominee or as a company promoted by it or that the agreement was purportedly entered by Subuthi on behalf of Indowind, will not make Indowind a party in the absence of a ratification, approval, adoption or confirmation of the agreement dated 24.2.2006 by Indowind. 33. In the aforesaid judgment, the Hon'ble Apex Court had allowed the Appeal of Indowind Energy Limited reversing the judgment of Hon'ble Madras High Court by which an Arbitrator was appointed dir....