RAJIV NARAIN RAINA, J. - (1.) THIS petition is directed against the order dated 26th November, 2013 passed by the Civil Judge (Senior Division), SAS Nagar (Mohali) refusing to refer the parties to arbitration in a suit brought by Blue Star Limited ('Blue Star') against the defendant No 1 ('Turning Point'), petitioner before this Court, and a third party, i.e., the Hongkong and Shanghai Banking Corporation Limited ('HSBC') arraigned as defendant No.2 in Civil Suit No.264 of 16th October, .2012.
(2.) TURNING Point and Blue Star executed three work orders, two of which, do notcontain an arbitration clause. The third work order is by way of tender which contains an arbitration clause but the final work order relating to the third work resulting in concluded contract from the tender does not contain an arbitration clause. In the tender agreement, there is presence of Clause 3.15 which is an arbitration clause. But the tender stands merged in the work order without an arbitration clause showing up therein. Even if there was one, then still it is only when the subject matter of the suit and the subject matter of the arbitration agreement are the same that the parties can be compelled to resort to arbitration proceedings. Splitting up the subject matter would lead to conflict of jurisdictions and in case allowed to proceed in two forums may result in disastrous consequences and possible conflict of decisions. In defence of the suit for recovery, declaration and permanent injunction brought before the Civil Court, Turning Point objected to the continuation of the suit by filing an application under Section 8 of the Arbitration and Conciliation Act, 1996 ('the Act') combining prayers with Order VII Rule 11 of the Code of Civil Procedure, 1908 ('CPC') for rejection of the plaint in view of the arbitration clause in the tender agreement. This composite application has been dismissed by the learned trial Judge by the impugned order giving rise to the present petition challenging the order.
(3.) THE disputes arose when Turning Point started a project to make a Mall at Chandigarh, for which it needed to outsource sophisticated air conditioning equipment and electrical installations. This is how Blue Star came in from Delhi and agreed to supply the equipment needed and to install it at site. The work orders were placed by Turning Point and duly accepted by Blue Star, which is the supplier of goods. In the fiscal arrangement that followed, HSBC undertook to pay to Blue Star within 30 days of demand such sums adjusted against the value of the work executed by Blue Star for Turning point. Accordingly, HSBC came into the picture resulting in creation of bank guarantees to work the contract successfully and to safe guard competing interests properly.;