Allowed

M/S Magma Leasing Ltd. v. Inder Pal Singh

Punjab & Haryana HC7 Aug 2009CR/4773/2008

Case brief

AI extract

What is this about?

The High Court allowed a civil revision, holding that a Civil Court cannot inquire into the legality of an agreement to decide jurisdiction but must refer the matter to arbitration if a valid clause exists, relying on Hindustan Petroleum Corpn. Ltd. v. M/s Pinkcity Midway Petroleum.

What did the court decide?

The order dated 30.07.2008 dismissing the application was set aside. The trial Court is directed to refer the matter to the Arbitrator.

M/S Magma Leasing Ltd. Vs Inder Pal Singh — Arbitration | Punjab & Haryana HC (2009)

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Civil Revision No. 4773 of 2008 --1--

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IN THE HIGH COURT OF PUNJAB & HARYANA, CHANDIGARH

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Civil Revision No. 4773 of 2008 Date of decision. 07.08.2009

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1.M/s Magma Leasing Limited, Regional and Branch Office, SCO No. 10, Ist Floor, Sector 26, Chandigarh (UT).

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2.M/s Magma Leasing Limited, Branch Office, the Mall, Opposite Head Post Office near Mohan Gardens, Patiala, District Patiala.

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Both petitioners through authorized signatory Sh. Sanjeev Chandok son of Sh. S.C. Chandok, General Manager, Magama Sharachi Finance Ltd. (Earlier M/s Magma Leasing Ltd.) C/o SCO 10, Sector 26, First Floor, Madhya Marg, Chandigarh.

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....... Petitioners(Defendants)

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Versus

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Inder Pal Singh son of Sh. Pal Singh resident of village Naina Khurd, Post Office Sphera, Tehsil and District Patiala.

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...... Respondent (Plaintiff)

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Civil Revision No. 4773 of 2008 --2--

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CORAM:

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HON'BLE MR. JUSTICE SHAM SUNDER

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Present: Mr.Yashwinder Paul Singh,Advocate for the petitioners.

Respondent ex-parte.

Sham Sunder, J.

This revision-petition under

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Article 227 of the Constitution of India

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has been filed by the petitioners against the order dated 30.07.2008, rendered by

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the Court of Civil Judge (Junior Division), Patiala, vide which it dismissed the application for referring the matter to the Arbitrator.

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The petitioner moved an

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application that there was an Arbitration Clause in the agreement, executed between the parties, at the time of finance of the

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vehicle. It was stated that both the

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parties were bound by the agreement. It

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Civil Revision No. 4773 of 2008 --3--

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was further stated that in view of the specific clause in the agreement, executed between the parties, that in case of dispute, the matter was to be referred to the Arbitrator, the Civil Court had got no jurisdiction to try the suit. A prayer was, thus, made that the matter be referred to the Arbitrator, for the effective settlement of the matter, in dispute.

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In reply, the plaintiff (respondent)pleaded that the defendants (applicants) had no locus standi to file the application, nor the same was maintainable. It was denied that any arbitration agreement was entered into between the parties, at the time of finance, as alleged by the applicants. It was further stated that the application, having been filed with a view to delay the proceedings, be dismissed.

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After hearing the Counsel for the parties, and, on going through the

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Civil Revision No. 4773 of 2008

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--4--

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record of the case, the trial Court dismissed the application.

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Feeling aggrieved, the instant revision petition, was filed by the applicants-revision petitioners.

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I have heard the Counsel for

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the revision-petitioners, and have gone through the documents, on record, carefully.

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The Counsel for the revisionpetitioners, submitted that the Civil Court, was not required to go into the legality or otherwise of the agreement, containing the Arbitration Clause. He further submitted that when an application was moved for referring the matter to the

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Arbitrator, on the basis of the Arbitration Clause, contained in the arbitration agreement, executed between

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the parties, the Court was required to

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refer the same. He placed reliance on

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Hindustan Petroleum Corpn. Ltd. v. M/s

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Civil Revision No. 4773 of 2008 --5--

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Pinkcity Midway Petroleum, AIR 2003

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Supreme Court 2881 in support of his contention. He further submitted that the trial Court was, thus, wrong in dismissing the application, for referring the matter to the Arbitrator, and going into the legality or otherwise of the agreement. He further submitted that the order impugned, being illegal, was liable to be set aside.

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After giving my thoughtful consideration, to the contentions, raised by the Counsel for the revisionpetitioners, in my considered opinion, it is a fit case, in which the order impugned, deserves to be set aside, for the reasons to be recorded hereinafter. It is evident from para no.7 of the order impugned that the trial Court came to the conclusion that, an agreement containing the Arbitration Clause,was executed between the parties. Once the execution of

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Civil Revision No. 4773 of 2008 --6--

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the agreement between the parties containing the arbitration clause, was admitted by the trial Court, it was required to refer the matter to the Arbitrator. It was not required to go into the legality or otherwise of the same. The trial Court, as is evident from the order impugned, went into the legality or otherwise of the agreement and recorded observations that, at the time of execution of such an agreement, one of the parties being in a greater bargaining position, generally drafts the terms, which suit most, and go against the other party, which is in a weaker bargaining position. These observations, in my opinion, were not warranted while deciding the application, as to whether, the matter was to be referred to the Arbitrator or

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not. In Hindustan Petroleum Corpn. Ltd.

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's case (supra) it was held that the language of Section 8 is peremptory in

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Civil Revision No. 4773 of 2008 --7--

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nature. Therefore, in cases where there is an arbitration clause, in the agreement, it is obligatory for the Court to refer the parties to arbitration in terms of their arbitration agreement and nothing remains to be decided, in the original action, after such an application is made, except to refer the dispute to an Arbitrator. It was further held that the language of Section aforesaid, was clear that if there was any objection, as to the applicability, to the facts of the case, the same will have to be raised before the concerned Arbitral Tribunal. It was further held that the Civil Court should not embark upon an enquiry, in regard to the application of the arbitration clause to the facts of the case. The principle of law, laid down, in the aforesaid authority, is fully applicable to the facts of the instant case. The matter was required to be referred to the Arbitrator by the Trial Court, but, on the other

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Civil Revision No. 4773 of 2008 --8--

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hand, it dismissed the application for the aforesaid purpose, illegally. The order impugned, thus, suffers from illegality, and perversity, warranting interference of this Court, in its revisional jurisdiction, under Article 227 of the Constitution of India. The order, impugned is, therefore, liable to be set aside.

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For the reasons recorded above, the petition is accepted. The order dated 30.07.2008, rendered by the Court of Civil Judge, (Junior Division), Patiala, is set aside. The revisionpetitioner is directed to appear before the trial Court, on 03.09.2009, at 10.00 AM positively. The trial Court shall refer the matter to the Arbitrator, in view of the arbitration clause, in the agreement, executed between the parties.

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(Sham Sunder) Judge

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07.08.2009 dinesh

M/S Magma Leasing Ltd. v. Inder Pal Singh

Case brief

What is this about?

What did the court decide?

M/S Magma Leasing Ltd. v. Inder Pal Singh

Case brief

What is this about?

What did the court decide?

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