Sharika Peeth Sanastha and Others vs Bansilal Raina and Others

Y.P. Nargotra, J.—The question arising for consideration in this revision petition is whether the following clause existing in the constitution of

Sharika Peeth Sanastha, a registered society, constitutes and arbitration clause within the meaning of Arbitration and Conciliation Act ?

No clause of the constitution shall be enforceable in the Court of law. However, immediately after the registration of the constitution with the J &

K Govt. the executive Committee should constitute an arbitration committee comprising of members other than those included in any of the

committees mentioned in this constitution so far. Those nominated to arbitration committee should as far as possible be members of highest degree

of integrity independent opinion and law knowing.

Admittedly no committee as envisaged by the abovesaid clause has been constituted. Arbitration agreement is defined in Section 7 of the

Arbitration and Reconciliation Act. It reads as under :--

Arbitration Agreement:-- In this part ""arbitration agreement"" means an agreement by the parties to submit to arbitration all or certain disputes

which have arisen or which may arise between them in respect of a defined legal relationship whether contractual or not.

From the bare reading of the section it is manifest that arbitration agreement is an agreement whereby the parties agree to submit all or certain

disputes which have arisen or which may arise in future to be referred for adjudication through arbitration by an Arbitral Tribunal. In K.K. Modi

Vs. K.N. Modi and Others, it was held :-

Among the attributes which must be present for an agreement to be considered as an arbitration agreement are (1) The arbitration agreement must

contemplate that the decision of the tribunal will be binding on the parties to the agreement (2) That the jurisdiction of the tribunals to decide the

rights of parties must derive either from the consent of the parties or from an order of the Court or from a statute, the terms of which make it clear

that the process is to be an arbitration, (3) The agreement must contemplate that substantive rights of the parties will be determined by the agreed

tribunal, (4) That the tribunal will determine the rights of the parties in an impartial and judicial manner with the tribunal owing an equal obligation of

fairness towards both sides, (5) That the agreement of the parties to refer their disputes to the decision of the tribunal must be intended to be

enforceable in law and lastly, (6) The agreement must contemplate that the tribunal will make a decision upon a dispute which is already formulated

at the time when a reference is made to the tribunal.

The other facts which are relevant include, whether the agreement contemplates that the tribunal will receive evidence from both sides and hear

their contentions or at least give the parties an opportunity to put them forward.; Whether the wording of the agreement is consistent or inconsistent

with the view that the process was intended to be an arbitration, and whether the agreement requires the tribunal to decide the dispute according to

law.

In the present case above quoted clause of the agreement provides that no clause of the constitution shall be enforceable in the Court of law.

Expressly it does not say as to whether any dispute arising with regard to"" any clause of the constitution shall be referable to an Arbitral tribunal or

committee for adjudication but by implication from the bare reading of the above clause it appears to be the intention of the parties that whenever

such dispute arises that shall be referred to Arbitration Committee for adjudication but there is noting in the clause which can be construed to

contemplate that the parties agreed that the decision of the Arbitration Committee shall be final and binding upon the parties to the agreement.

Moreover, no arbitration committee has been constituted pursuant to the said clause of the constitution. The basic concept of the arbitration

appears to be that the parties must repose trust and faith in a person or a committee chosen to be the Arbitrator and agree to accept his decision.

Assuming that such a committee has been constituted, there is nothing in the clause whereby the parties have agreed that the finding or decision of

the committee shall be binding upon the parties. The essence of ingredients of the arbitration agreement being missing from the arbitration clause,

the above clause, in my view cannot be said to be an arbitration agreement within the meaning of the Act.

Learned Trial Court, therefore, was justified in rejecting the application of the respondent herein filed before it seeking dismissal of the suit on

the plea that in view of the arbitration clause the jurisdiction of the trial Court was barred. There is no merit in this revision petition, which is

accordingly dismissed.

Record of the trial Court, along with a copy of this judgment, be returned back. Learned counsel for the parties are directed to appear before that

Court on 15-4-2004.