Ronojit Kumar, J. - (1.) -Three applications appeared in the cause list marked under one number for analogous hearing. There were two applications marked G. A. No. 2894 and G. A. No. 3294, made by The Peerless General Finance & Investment Company Limited. In the first application, the petitioner had prayed for an order for attachment before judgment, injunction and receiver. The prayer in the second application was for judgment upon admission. The third application, which had appeared in the cause list, was made by Mohon Gold Water Breweries Limited, the only contestant in these applications and shall be referred as the respondent hereafter. This application had been made under Section 8 of the Arbitration and Conciliation Act, 1996 with a prayer to stay the suit and, in terms of an arbitration agreement between the parties, refer the disputes to the arbitrator named in the agreement. A joint prayer was made by Counsels for the parties, and the third application mentioned above was taken up for hearing.
(2.) The facts of the matter of course, were strictly not necessary to be gone into by Court in deciding this application. In order to appreciate the true scope of this application however, it would in my view be convenient to be appraised of the bare facts of the case. Pursuant to a 'Memorandum of Understanding' dated May 5, 1992, which shall be referred hereinafter as M.O.U., the parties had subsequently entered into two agreements dated May 26, 1992 and June 4, 1992. In terms of the two agreements, it had been alleged by the respondent that it had paid and the petitioner had received, between June 5, 1992 and March 30, 1995, diverse sums of money which together with interest amounted to an aggregate sum of Rs. 11,76,37,138.67p. Except for a sum of Rs. 10,86,272.00p. according to the respondent no part of its dues had been paid by the petitioner in spite of demands. In those circumstances, the respondent had called back the advance and instituted this suit on July 7, 1997 before this Court, which has been marked C. S. No. 262 of 1997.
(3.) It had been alleged by the petitioner, that there was an arbitration agreement between the parties and the alleged disputes and differences in respect to which the respondent had instituted the suit ought to be referred to the agreed arbitrator for his decision. The arbitration clause being part of Clause 7 in the M.O.U., Contended counsel for the petitioner, had been clearly and specifically incorporated in the two agreements by reason of the fact that in the agreement dated May 26, 1992, the parties had agreed that the M.O.U. would form part of the agreement. Therefore, he submitted that by valid incorporation of the M.O.U. the arbitration clause contained in the M.O.U. must be read into each of the two agreements. He interpreted the arbitration clause in the M.O.U. to be applicable, not just to all disputes and differences between the parties prior to documentation but, as stated in the petition, "was also meant to apply to all disputes and differences arising out of or in connection with the said M.O.U. and the said agreements dated May 26, 1992 and June 4, 1992 at all subsequent stages thereafter". In support of his submissions, he cited and relied on the decisions reported in (1) AIR 1951 Cal 10; (2) AIR 1977 Cal 482 ; and (3) AIR 1987 SC 643. The alleged claim, according to him, had been made in the plaint against the petitioner and not against the guarantor who had however, been impleaded as the defendant No. 2, and that though no claim admittedly had been made against the bank, it had been implead as the defendant No. 3 in the plaint for no apparent reason. He submitted, that both the defendant Nos. 2 and 3 were unnecessary parties, who had been impleaded only for the purpose of and with intent to avoid the arbitration clause. He argued, that in those circumstances, this Court in accordance with the provisions of Section 8 of The Arbitration & Conciliation Act, 1996 "shall refer the parties to arbitration", and that "shall" will not be taken to mean "may". In support of his submissions, he cited and relied on the decisions reported in (4) AIR 1974 AP 278 ; (5) AIR 1975 Cal 222 ; (6) 1999 (1) CLT 285 ; and 1997 (3) CHN 1. It was contended by counsel for the petitioner that the alleged claim which had been made by the respondent in Paragraph 10 of its plaint, was admittedly not covered by the arbitration agreement as there was no incorporation of the M.O.U. and hence this Court would follow the judicial pronouncement in the decision reported in AIR 1953 Cal 446 and bifurcate the two claims so as to allow both the arbitration proceedings as also the suit to subsist with regard to the respective claims.;