Kishore Kumar Baid Vs Shri Suresh P. Bohra — Arbitration | Chhattisgarh HC (2024)

Kishore Kumar Baid Vs Shri Suresh P. Bohra — Arbitration | Chhattisgarh HC (2024)

What the court decided

AI extract

Outcome

None to the Applicant/Defendant: the Civil Revision was dismissed and the Court below's findings dismissing the plaint-rejection application stand undisturbed.

Issue for consideration

Whether clause-18 of the partnership deed (Annexure P-5) constituted an arbitration agreement between the parties sufficient to restrain judicial intervention. +1 more

Court's answer

Clause-18 of the partnership deed (Annexure P-5) is not an arbitration agreement under Section 7 of the Act of 1996: it stipulates that a dispute shall be decided mutually or referred to arbitration only where all partners agree to the appointment of arbitrators by mutual consent, i.e., it is a provision enabling arbitration only if the parties mutually decide after due consideration whether a dispute should be so referred; the consensus ad idem required of an arbitration agreement is therefore absent.

Ratio / Principle

Applying the position recorded at para-9 of Jagdish Chander vs. Ramesh Chander, (2007) 5 SCC 719, the main attribute of an arbitration agreement, namely consensus ad idem to refer disputes to arbitration, being missing in the instant case, the learned trial Court correctly took the view that there is no final agreement to refer the dispute to arbitration.

Key takeaways

The case laws relied upon by learned Counsel for the Applicant (Zhejiang Bonly Elevator, (2018) 9 SCC 774; Vidya Drolia, (2021) 2 SCC 1, paras 152-153; Enercon (India) Limited, (2014) 5 SCC 1, paras 88 and 90) are distinguishable from the facts of the present case, as there is no clear intention of the parties to enter into arbitration; in the absence of consensus ad idem the Court below could not find an arbitration agreement under Section 7 of the Act of 1996, and its view suffers from no illegality or infirmity.ratio¶8
The findings arrived at by the Court below are well merited and do not call for any interference; accordingly the instant Revision fails and is dismissed.ratio¶9

Detailed headnote1 paragraphs

Chhattisgarh High Court, Bilaspur — Civil Revision C.R No.86 of 2023 (order dated 23.01.2024, Justice Deepak Kumar Tiwari) — DISMISSED (NAFR). Hearing a suit for declaration of permanent injunction (Civil Suit No.19-A/2023, Rajnandgaon) in which the plaintiff claimed a 50% share in the property under the partnership deed (Annexure P-5) and alleged damage to the property and obstruction of entry to his factory, the defendant had sought rejection of the plaint under Order 7 Rule 11 (d) CPC r/w Section 5 of the Arbitration and Conciliation Act, 1996, contending that clause-18 of the deed was an arbitration agreement barring judicial intervention; the 6th Additional Judge, Court of 1st Civil Judge Class-II, Rajnandgaon dismissed that application by order dated 16.06.2023. Examining clause-18 — under which a dispute 'shall be decided mutually or shall be referred to arbitration, in the case where all the partners agreed', arbitrators to be chosen by mutual consent of all partners — the Court, invoking para-9 of Jagdish Chander vs. Ramesh Chander, (2007) 5 SCC 719, held that the essential consensus ad idem to refer disputes to arbitration was wanting: clause-18 is not an arbitration agreement under Section 7 of the Act of 1996 but merely enables arbitration if the partners mutually elect that course after the dispute arises. The precedents pressed by the defendant — Zhejiang Bonly Elevator (2018) 9 SCC 774, Vidya Drolia (2021) 2 SCC 1 (paras 152-153) and Enercon (India) Ltd. (2014) 5 SCC 1 (paras 88, 90) — were held distinguishable for want of clear intention of the parties to arbitrate. Finding no illegality or infirmity in the Court below's view, the Court dismissed the Revision.

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NAFR

HIGH COURT OF CHHATTISGARH, BILASPUR C.R No.86 of 2023

Kishore Kumar Baid, S/o Shri Banshi Lal Baid Aged About 59 Years R/o Kishore Jewelers, Sadar Bazar, Rajnandgaon, Tehsil And District - Rajnandgaon (C.G.), (Surname Baidya Wrongly Mentioned In Cause Title Of Annexure P-1)....(Defendant)

---- Applicant

Versus

Shri Suresh P. Bohra S/o Shri Prakashmal Jain Aged About 47 Years R/o Upukinar, B.B. Street, Coimbatore, Tamil Nadu, Through General Power Of Attorney Dharmchand Parekh, S/o Late Shri Anoop Chand Parekh, R/o House No. 30-10-6- C. Pidaparthi Wari Street H.D.C.R. Daba Garden, Vishakhapatnam, Andhra Pradesh, Pincode - 530020, A.No. 964595347755, Mo. No. 8074185997.... (Plaintiff) ---- Non-Applicant

---- Non-Applicant

For Applicant: Shri Nitesh Jain, Advocate. For Non-Applicant: Shri Rajendra Patel appears on behalf of Shri SS Baghel, Advocates.

Hon'ble Shri Justice Deepak Kumar Tiwari Order on Board

23.01.2024

This Civil Revision has been filed against the order dated 16.06.2023 passed by the 6^th Additional Judge to the Court of 1^st Civil Judge, Class-II, Rajnandgaon, District Rajnandgaon in Civil Suit No.19-A/2023 whereby, the application filed by the Applicant/Defendant under Order 7 Rule 11 (d) CPC r/w Section 5 of the Arbitration and Conciliation Act, 1996 (for short ‘the Act of 1996’) seeking rejection of the Plaint, was dismissed.

Brief facts of the case are that the Non-Applicant/Plaintiff has

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filed a Civil Suit for declaration of permanent injunction with an averment that though he was holding 50% share of the property in question as per the partnership deed (Annexure P-5), but the Applicant/Defendant was intentionally causing damage to the said property and was also creating obstruction in the entry of his factory and in the said suit, the Applicant/Defendant has filed an application under Order 7 Rule 11 CPC and raised a ground that in the partnership deed (Annexure P-5), there is a specific clause i.e. clause-18 which relates to arbitration agreement, therefore, in view of Section 5 of the Act of 1996, no judicial authority has jurisdiction to intervene in the matter and the suit was barred by law. Hence, this Revision.

Shri Jain, learned Counsel for the Applicant/Defendant submits that the learned trial Court has failed to appreciate the law in its proper perspective and referred to clause-18 of the partnership deed (Annexure P-5), where there is an arbitration clause and while placing reliance in the matters of Zhejiang Bonly Elevator Guide Rail Manufacture Company Limited vs. Jade Elevator Components reported in (2018) 9 SCC 774, and Vidya Drolia and others vs. Durga Trading Corporation reported in (2021) 2 SCC 1, referred to paras152 and 153 and further, while placing reliance in the matter of Enercon (India) Limited and Others vs. Enercon GMBH and Another reported in (2014) 5 SCC 1, referred to paras-88 and 90 and submitted that when an arbitration clause is present, then the Courts

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play supportive role in encouraging the arbitration to proceed with the matter in an expeditious manner and equally important principle recognized in almost all jurisdictions is the least intervention by the Courts and prays to reject the Plaint under Order 7 Rule 11 (d) CPC.

On the other hand, Shri Patel, learned Counsel appearing for the Non-Applicant/Plaintiff supports the impugned order.

Heard learned Counsel for the parties and perused the order impugned as also the documents annexed herewith carefully.

The term which has been used in the partnership deed (Annexure P-5) at clause-18 is significant to decide whether there was an arbitration agreement between the parties to restrain judicial intervention and the said clause of the partnership deed (Annexure P-5) reads as under:-

“18. If any dispute and/or difference be arise amongst the partners in respect of the conduct of the business of the partnership or in respect of any of the terms and conditions of this agreement or in respect of any other matter, cause or thing whatsoever there in above otherwise not provided for and any other thing which arises during the partnership business or afterwards between the partners or their legal representative shall be decided mutually or shall be referred to arbitration, in the case where all the partners agreed, of one or more arbitrators (to be appointed by the mutual consent of all the partners) whose decision shall be final and binding on all the parties and their legal representatives.”

In the matter of Jagdish Chander vs. Ramesh Chander And

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Others reported in (2007) 5 SCC 719, as held at para-9, the main attribute of an arbitration agreement, namely consensus ad idem to refer the disputes to arbitration is missing in the instant case as defined under Section 7 of the Act of 1996, therefore, the learned trial Court has correctly taken the view that there is no final agreement to refer the dispute to arbitration and the words, which have been referred by the parties at clause-18 of the partnership deed (Annexure P-5) provides that if there is any dispute, it shall be decided mutually or shall be referred to arbitration, in the case where all the partners agreed, of one or more arbitrators (to be appointed by mutual consent of all the partners) which means that it is not an arbitration agreement but a provision which enables arbitration only if the parties mutually decide after due consideration as to whether a dispute should be referred to arbitration or not.

There is no dispute about the proposition that whenever arbitration agreement was present, then the Courts have to adopt a pragmatic approach for considering the arbitration agreement or arbitration clause. The case laws which have been relied upon by learned Counsel for the Applicant are distinguishable with the facts of the present case as there is no clear intention of the parties herein to enter into arbitration and in the absence of consensus ad idem , the Court below could not find that there is an arbitration agreement under Section 7 of the Act of 1996, therefore, there is no illegality or infirmity in the view taken by the said Court.

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Accordingly, the findings arrived at by the Court below are well merited and do not call for any interference. Consequently, the instant Revision fails and is accordingly dismissed .

Sd/-

(Deepak Kumar Tiwari) Judge

Priya