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Judgment
This application has been taken out by the defendant No. 1 asking amongst other for revocation of Leave under Clause 12 of the Letters Patent granted by this Court before institution of the suit. The suit has been filed by the plaintiff above-named praying following reliefs :-
(a) Declaration that the plaintiff did not enter into any arbitration agreement with the defendant No. 1 and/or any of the defendant Nos. 1,2,3 and 4;
(b) Declaration that-
(i) Composite Agreement of Assignment and Arbitral Adjudication of disputes dated December 15,1997.
(ii) Alleged letter dated December 10,1997 addressed by the defendant No. 2 to the plaintiff, and.
(iii) Alleged registered letter No. 4707 sent to the plaintiff, mentioned in paragraph 10 of the plaint did not constitute any arbitration agreement:
(c) (i) Composite Agreement of Assignment and Arbitral Adjudication of disputes dated December 15,1997.
(ii) Alleged letter dated December 10,1997 addressed by the defendant No. 2 to the plaintiff, and,
(iii) Alleged registered letter No. 4707 sent to the plaintiff mentioned In paragraph 10 of the plaint, be adjudged void, delivered up and cancelled;
(d) Declaration that the plaintiff did not agree to any concillation proceeding relating to and arising out of any alleged disputes touching, concerning or in relation to the contract dated May 22,1996, or otherwise;
(e) Perpetual injunction restraining the defendant Nos. 1,2,3 and 4, their servants, agents and assigns and each of them from in any way or manner whatsoever or howsoever relying, acting upon, giving effect or further effect to, enforcing or taking steps and/or causing any step to be taken pursuant to or under any of the following :-
(i) Composite Agreement of Assignment and Arbitral Adjudication of Disputes dated December 15, 1997;
(ii) Alleged letter dated December 10,1997 addressed by the defendant No. 2 to the plaintiff, and,
(iii) Alleged registered letter No. 4707 sent to the plaintiff, mentioned in paragraph 10 of the plaint;
(i) Costs;
(g) Further and other reliefs."
This application Is obviously opposed by filing an affidavit.
Mr. Binoy Sinha Roy, learned counsel appearing with Ms. Pathayria, learned counsel submits that his client, viz., the defendant No. 1 pursuant to an arbitration agreement which is sought to be challenged In this Court in the aforesaid suit has already taken out an application u/s 9 of the Arbitration and Conciliation Act, 1996 thereinafter referred to as the said Act) in the Court of the learned District Judge, 24-Parganas (North) at Barasat. The said application has been marked as Misc. Case No. 2 of 1998 and the same is pending. The plaintiff herein has entered appearance in the said Misc. Case No. 2 of 1998 and has been contesting the said case. This fact of pendency of this proceeding also admitted in the plaint Itself. He argues that the whole scope of the suit relates to existence of the aforesaid arbitration agreement. He argues in view of section 42 of the aforesaid Act read with section 5 thereof this Court has no jurisdiction at all to entertain this suit By this special statute the Jurisdiction of this Court has been expressly ousted Inasmuch as one of the defendants in an arbitration proceedings had no option but to approach the same Court where a proceedings under the above Act has been Initiated in relation to arbitration agreement. Since by operation of law Jurisdiction of this Court is ousted question of granting Leave under Clause 12 of the Letters Patent does not and cannot arise. As such leave should be revoked. Moreover, the dispute raised in this application relates to existence of the arbitration agreement, So any dispute relating to validity, legality and existence of the arbitration agreement can be decided by the tribunal of arbitration alone and by virtue of section 5 of the aforesaid Act the Court is precluded from adjudicating disputes of this nature. On this score also leave already granted should be revoked. He also argues that Court must scrutinize cause of action and if the Court finds, In doing so, that there cannot be any cause of action under the law the court should revoke. In support of his submission he relies on the following decisions :-
(i) AIR 1949 Cal 496, (ii) Meduri Rama Rao Vs. Medurl Gopalakrishnamurthy and Another , (iii) Ram Awalamb and Others Vs. Jata Shankar and Others, , (iv) A.B.C. Laminart Pvt. Ltd. and Another Vs. A.P. Agencies, Salem, a and a Bench decision of this Court reported in 1998 (1) CHN 500.
Mr. Mitra led by Mr. Bachwat opposes this application submitting that this application should be decided on the basis of the averments made in the plaint. It has been averred that dominant part of the cause of action has arisen within the territorial limit of this Court as the alleged arbitration agreement Is said to have been concluded within the Jurisdiction of this Court. He contends the issue Involved in this suit had nothing to do with the disputes relating to arbitration. In this case factual existence of the arbitration agreement is challenged on the ground of forgery, manipulation and/or fabrication. This cannot be decided by the arbitration proceedings. Section 16 of the aforesaid Act does not cover a mechanism for adjudication of dispute relating to factual existence. It relates to legal existence. So going by the averment made in the plaint question of revoking leave does not arise.
Having hear a the submissions of the learned lawyers and considered the material placed before me it appears to me the following are the admitted positions.
(i) The instant suit has been filed challenging the legality, validity and factual existence of the arbitration agreement.
(ii) A proceedings has been initiated in relation to an arbitration agreement, u/s 9 of the said Act, in enquires limit, whereas the validity and factual existence of such agreement is being challenged in this Court.
(iii) The plaintiff herein has been contesting the said proceedings u/s 9 of the said Act.
It is an admitted position that sections 9 and 42 of the Arbitration Act fall within Part-I of the aforesaid Act. Section 42 of the said Act provides expressed ouster of the jurisdiction of any other Court. So it would be very useful to reproduce the text of section 42 of the said Act.
"Notwithstanding anything else where in this part or in any other law for the time being in force, where with respect to an arbitration agreement, any application under this part has been made to a Court, that Court alone shall have Jurisdiction over the arbitral proceedings and all subsequent applications arising out of that agreement and the arbitral proceedings shall be made in that Court and in no other Court."
It is no doubt the aforesaid Jurisdiction clauses is a mandatory one. Now it is Incumbent for me to examine whether the disputes canvassed in the present plaint can be termed and/or treated to be the arbitral proceedings. When a proceedings u/s 9 of the said Act has been Instituted by one party in this suit and the plaintiff is contesting such proceedings, the legality and validity of the arbitration proceedings are bound to be arisen therein and the Court will have to consider the same for adjudication. Whether Court can decide the question of factual existence and validity of the arbitration agreement or not, is one aspect of the matter but in order to entertain a proceedings there must be conferment of power under law to do so. Therefore, when a proceedings has been Instituted under Part-I by one party adversary party must approach to that Court u/s 42 of the said Act. The language used in the said section "alone" completely oust the jurisdiction of any other Court. Section 42 has got overriding effect of any other law meaning thereby clause 12 of the Letters Patent of this Court is overridden. Needless to mention that this Court as a Court of principal civil Jurisdiction is clothed with jurisdiction by virtue of clause 12 of the Letters Patent. When the effect of Clause 12 in it s entirety has been overridden by section 42 of the said Act this Court cannot entertain this suit. I hold that disputes canvassed In the present plaint are not entertainable by this Court. In any event section 16 of the said Act also provides for adjudication of such dispute by the arbitrator himself. Mr. Mitra, however, argues that section 16 does not provide for adjudication of disputes with regard to the factual existence of the arbitration agreement that is what is exactly raised here. With respect I cannot accept the argument of Mr. Mitra that the language of section 16(1) is very clear which reads as follows :
"16(1) The arbitral tribunal may rule on its own Jurisdiction, including ruling on any objections with respect to the existence or validity of the arbitration agreement, ............"
So, the words "objections, with respect to the existence or validity of the arbitration agreement" are qualified by the word ''any'' connotes and/ or Includes not only legal existence but factual existence as well. Needless to mention that this section 16 falls within Part-I. Section 5 of the aforesaid Act also falls within Part-I Chapter-I of the said Act. Section 5 of the said Act provides as follows :
"Notwithstanding anything contained in any other law for the time being In force, in matters governed by this Part, no judicial authority shall intervene except where so provided in this Part."
Nowhere in this part any Civil Court is conferred with Jurisdiction expressly to decide the question of factual existence or validity and legality of the arbitration agreement. This section is coupled with non obstante Clause. So it is of mandatory nature. By this section the Civil Court particularly this Court is stripped off Jurisdiction conferred upon it under Clause 12 of the Letters Patent. When Clause 12 is not invokable so leave thereunder granted by this Court is also not sustainable. On this score also this application is bound to succeed. As such Leave granted Clause 12 of the Letters Patent is revoked. All Interim orders, if any, stand vacated.
There will be no order as to costs.
Application succeeds