Subhro Kamal Mukherjee, J.
1. This is a revisional application under Article 227 of the Constitution of India against Judgment and order dated March 2, 2006 passed by the learned District Judge, Darjeeling in Civil Revision Case No. 5 of 2005 affirming order Nos. 29 and 30 both dated April 18, 2005 passed by the learned Civil Judge (Junior Division) at Siliguri, District : Darjeeling, in Misc. Case No. 8 of 2004 arising out of Title Suit No. 224 of 2003 of the said Court.
2. The facts material for disposal of this revisional application are as under:
(a) Indian Oil Corporation ('IOL' in short) appointed Agarwal Trading Company, a proprietorship firm, as its retail outlet dealer for sales of petrol, high speed diesel and other allied petroleum products for Joratham in the state of Sikkim.
(b) Parties entered into an agreement on February 18, 1970. For the purpose of this revisional application we are concerned with the Clauses 21 and 22 of the said agreement.
Under the said Clause 21 any dispute arising on or out of the said agreement shall be referred to the sole arbitration of the Managing Director of IOL and if the said Managing Director is unable or unwilling to act as the sole arbitrator, the matter shall be referred to the sole arbitration of some other person appointed by the Managing Director, who is willing to act as such arbitrator. The award of the arbitrator so appointed shall be final, conclusive and binding on all parties to the agreement subject to the provisions of the Arbitration Act, 1940 or any statutory modification or re-enactment thereof and the rules made there under and in force shall apply to the arbitration proceedings.
The Clause 22 runs as under: "Notwithstanding anything hereinabove contained, if the dealer shall be adjudicated an insolvent or being a company shall be resolved or ordered to be wound up then in such case this agreement shall automatically terminate and in the event of the breach by the dealer of any of the terms hereof the company shall be at liberty to terminate this agreement at any time by giving in advance one month's notice in writing to the dealer of which fact company shall be the sole judge."
(c) The officials of IOL conducted an inspection and checking in the outlet of the said dealer and took sample on December 21, 2002. It is alleged that such sample was tested in the laboratory of IOL at Siliguri, but the sample did not meet the specification.
(d) On January 1, 2003 IOL issued a show cause notice to the dealer alleging adulteration of the products and directed the dealer to show cause as to why action against the dealer should not be initiated.
(e) On January 10, 2003 the dealer submitted his reply to the said show cause.
(f) The Area Manager (Sales), Siliguri, IOL, on January 30, 2003 suspended the sales and supply at the retail outlet of the said dealer for thirty days. The dealer was advised to deposit Rs. 2,000/- in favour of IOL towards penalty for failure of the sample.
(g) On December 1, 2003, Manish Agarwal, the sole proprietor of the Agarwal Trading Company, as the plaintiff, instituted Title Suit No, 224 of 2003 in the Court of the learned Civil Judge (Junior Division) at Siliguri against IOL, the Senior Divisional Manager of IOL and the Assistant Manager (Sales) of IOL, inter alia, for declaration and perpetual injunction.
In the said suit the plaintiff, inter alia, prayed for a decree for declaration that the suspension letter dated January 30, 2003 issued by the Assistant Manager (Sales), Siliguri of IOL was illegal, arbitrary, void, ab initio and the same was not binding upon the plaintiff.
(h) The defendants on February 6, 2004 filed an application under Sections 5 and 8 of the Arbitration and Conciliation Act, 1996 in the said suit, inter alia, seeking a direction on the parties to resort to arbitration proceedings in terms of the agreement dated February 18, 1970. The said application was registered as Misc. Case No. 8 of 2004 in connection with Title Suit No. 224 of 2003. In the said application the defendants contended that there existed an arbitration agreement between the parties and as such the Civil Court had no jurisdiction to try the suit; the parties should be referred to arbitration.
(i) The plaintiff contested the said application by filing a written objection alleging that the subject matter of the suit did not fall within the ambit of the dealership agreement and as such the civil Court had every jurisdiction to try an adjudicate the subject matters of the suit.
(j) The learned Trial Judge by order No. 29 dated February 18, 2004 allowed the application filed by the defendants and directed the parties to take steps according to the provisions of the Arbitration and Conciliation Act, 1996 in terms of the of the agreement dated February 18, 1970. The learned judge held that there was an arbitration clause in the agreement dated February 18, 1970 and as such the dispute should be referred to arbitrator in terms of the Clause 21 of the said agreement.
By order No. 30 the learned judge dismissed the suit as the Civil Court lacked jurisdiction to entertain the dispute involved in the suit.
(k) Being aggrieved by and dissatisfied with the aforesaid orders dated April 18, 2005 the plaintiff moved a revisional application under Section 115A of the Code of Civil Procedure in the Court of the learned District Judge, Darjeeling, which was registered as Civil Revision Case No. 5 of 2005.
(l) The learned District Judge by the impugned Judgment and order dated March 2, 2006 dismissed the revisional application and affirmed the orders passed by the learned Trial Judge. The learned District Judge held that there was an arbitration clause in the agreement dated February 18, 1970 and as such the dispute, if any, must be settled through arbitration in terms of the said agreement.
(m) Being aggrieved the plaintiff has come up with this revisional application under Article 227 of the Constitution of India before this Court.
3. Mr. Milan Chandra Bhattacharya, learned advocate, appearing on behalf of the petitioner, submits that the Area Manager (Sales) of the defendant No. 1 had no power to suspend the dealer and the disputes raised in the suit cannot be settled by the arbitral tribunal in terms of the Clause 21 of the said agreement as the issues raised do not come within the purview of the said clause. Mr. Bhattacharya, further, submits that Clause 21 never contemplates termination of the agreement. In the meantime by an order dated July 12, 2005 the dealership agreement of the plaintiff has been terminated. Mr. Bhattacharya, therefore, submits that the issue as to termination of dealership agreement cannot be decided by the arbitral tribunal as there was no such clause in the agreement and, therefore, the Courts below committed error of jurisdiction in directing the parties to take steps for referring the disputes before the arbitral tribunal.
4. Mr. Saptangshu Basu, learned advocate for the opposite parties, however, submits that there was an arbitration clause in the agreement and as such the Courts below were justified in referring the parties to arbitration. Mr. Basu submits that the Managing Director of IOL appointed Mr. Samar Ghosh as the sole arbitrator and the arbitrator has already entered upon the reference. The plaintiff, Mahesh Agarwal, participated in the arbitration proceedings held on February 23, 2006. Mr. Basu, also, submits that the plaintiff filed an application under Section 9 of the Arbitration and Conciliation Act, 1996 against IOL and its officials in the Court of the learned District Judge, Darjeeling, which has been registered under Misc. Judicial (Arbitration) Case No. 39 of 2005. Mr. Basu, therefore, submits that as the plaintiff himself has filed an application under Section 9 of the Arbitration and Conciliation Act, 1996 on November 21, 2005, this suit is not maintainable at the instance of the plaintiff.
5. Under the Clause 21 of the agreement dated February 18, 1970 any dispute arising on or out of this agreement shall be referred to the sole arbitration of the Managing Director of the company.
6. However, in the Clause 22 of the said agreement it was stipulated that notwithstanding anything contained in the said agreement if the dealer be adjudicated an insolvent or being a company be resolved or ordered to be wound up, in such case the agreement should automatically terminated and in the event of the breach by the dealer of any of the terms, the company shall, also, be at liberty to terminate the agreement at any time by giving in advance one month's notice in writing to the dealer of which fact company should be the sole judge.
7. I am unable to accept the contentions of Mr. Milan Chandra Bhattacharya, learned advocate, appearing for the petitioner, that the issues involved in the present suit cannot be adjudicated by the arbitral tribunal or that since there is a separate clause concerning termination on certain events, the arbitral tribunal cannot decide the dispute concerning termination of the dealership in the event of the breach by the dealer of any of the terms mentioned in the said agreement. There are two separate parts in the said Clause 22. The first part contemplates automatic termination of the agreement on certain events; the second part contemplates termination of the agreement on account of breach of the terms of the dealership agreement.
8. The Supreme Court of India in the case of Renusagar Power Co. Ltd. v. General Electric Co. and Anr. holds
that expressions such as "arising out of or "in respect of or "in connection with" or "in relation to" or "in consequence of" or "concerning" or "relating to" the contract are of the widest amplitude and content and include even questions as to the existence, validity and effect (scope) of the arbitration agreement.
9. In the agreement I have noticed that it was agreed by and between the parties that any dispute arising out of the said agreement should be referred to arbitration. In my view, this is a very widely worded arbitration agreement, which includes, within its scope, any dispute including the dispute touching termination of the agreement for breach of any of the terms stipulated by the company.
10. The power to order winding up of a company is contained under the provisions of the Companies Act and is conferred on the Court. Similarly, power to adjudicate a person as insolvent is contained in the provisions of the Presidency-towns Insolvency Act, 1900 and the Provincial Insolvency Act, 1920 and is conferred on the Courts exercising jurisdiction under the said Acts. The arbitral tribunal, notwithstanding any agreement between the parties, would have no jurisdiction to order winding up of a company or adjudicate a debtor as insolvent. Therefore, consciously in Clause 22 it was agreed by and between the parties that in case the dealer be adjudicated as an insolvent or being a company be resolved or ordered to be wound up then in such case the agreement should automatically terminated.
11. The Supreme Court of India in the case of P. Anand Gajapathi Raju and Ors. v. P.V.G. Rqju(dead) and Ors.
holds that the conditions, which are required to be satisfied under Sections 8(1) and 8(2) of the Arbitration and Conciliation Act, 1996 before the Court can exercise its powers are:
(1) there is an arbitration agreement;
(2) a party to the agreement brings an action in the Court against the other party;
(3) subject-matter of the action is the same as the subject-matter of the arbitration agreement;
(4) the other party moves the Court for referring the parties to arbitration before it submits his first statement on the substance of the dispute.
This last provision creates a right in the person bringing the action to have the dispute adjudicated by the Court, once the other party has submitted his first statement of defence. But if the party, who wants the matter to be referred to arbitration, applies to the Court after submission of his statement and the party who has brought the action does not object there is no bar on the Court referring the parties to arbitration.
12. The language of Section 8 is peremptory. It is, therefore, obligatory for the Court to refer the parties to arbitration in terms of their arbitration agreement. Nothing remains to be decided in the original action or the appeal arising therefrom. There is no question of stay of the proceedings till the arbitration proceedings conclude and the award becomes final in terms of the provisions of the new Act. All the rights, obligations and remedies of the parties would now be governed by the new Act including the right to challenge the award. The Court to which the party shall have recourse to challenge the award would be the Court as defined in Clause (e) of Section 2 of the new Act and not the Court to which an application under Section 8 of the new Act is made. An application before a Court under Section 8 merely brings to the Court's notice that the subject matter of the action before it is the subject matter of an arbitration agreement. This would not be such an application as contemplated under Section 42 of the Act as the Court trying the action may or may not have had jurisdiction to try the suit to start with or be the competent Court within the meaning of Section 2(e) of the new Act.
13. The learned Trial Judge was, therefore, justified in referring the parties to arbitration when he found that there existed an .arbitration agreement. He rightly dismissed the suit as the matter has to be decided by the arbitral tribunal. Similarly, the learned district judge was right in dismissing the revisional application under Section 115A of the Code of Civil Procedure as the learned trial judge did not commit any error of jurisdiction requiring interference by the revisional Court.
The revisional application is, thus, rejected.
I make no order as to costs.
Urgent xerox certified copy of this order is to be supplied to the applicant, upon compliance of alt formalities, expeditiously.
