VINOD K.SHARMA, J. - (1.) THE petitioner herein was sanctioned a loan of Rs. 11,000/- for establishment of Oil Ghani. Out of the said amount, part of it was to be treated as subsidy. It was the case of the petitioner that out of the sanctioned loan of Rs. 11,000/- a sum of Rs. 6,950/- was disbursed to him. The petitioner, out of the said amount, is said to have paid a part of the amount for supply of machinery parts and a sum of Rs. 4,125/- was said to have been given to him for construction of shed while a sum of Rs. 4,000/- was said to have been given to the petitioner for purchase of raw material. However, the plant could not be set up. Accordingly, a demand was made by the Haryana Khadi and Village Industries Board, Chandigarh (for short the 'Board') for refund of the loan amount. As per clause of 12 of the memorandum executed between the parties, in the event of any dispute concerning this loan, the matter was to be referred to the sole arbitration of any person in terms of the said clause, which reads as under :- "Clause 12 : In the event of any dispute, difference arising out or in any way touching or concerning any one or all the terms and the conditions herein above mentioned in respect of this loan grant or any account of valuation whatsoever connected with it, it shall be referred to the sole arbitration of any person nominated by the Member/Secretary of the Board. The Society Institution Individual will have no objection that such a person is a servant of the Khadi and Village Industries Commissioner/The Haryana Khadi and Village Industries Board/The Government. In the event of such sole arbitrator's vacating his office or being unable to act for any reason whatsoever the member/Secretary of the Haryana Khadi and Village Industries Board shall appoint another person to act as the sole arbitrator. The provision of Indian Arbitration Act, 1940 shall apply to such arbitration proceedings and the award of the arbitration shall be conclusive, final and binding on both the society Institution/Individual and the Board."
(2.) THE case of the petitioner was that the Board launched the recovery proceedings without giving full amount of the loan and without referring the matter to the arbitration. In the petition filed by the petitioner under Section 20 of the Arbitration Act, it was claimed that the machinery was supplied at village Inchhapuri and, therefore, the Court at Gurgaon had the jurisdiction to entertain and try the said petition. The reply to the said petition was filed, wherein a preliminary objection was taken by the respondent-Board that the Court at Gurgaon had no jurisdiction to entertain and try the petition as the agreed jurisdiction for referring any dispute with regard to loan etc. was at Chandigarh.
(3.) IT may be noticed that on 11.9.1984 the learned trial Court was pleased to pass the following order :- "Photostat copy of the agreement has already been placed on the record. The learned counsel for the respondent has not disputed the clause 12 of the agreement, the matter has to be referred to the sole arbitration of any person nominated by the Member-Secretary of the Board. The learned counsel for the respondents has prayed that he will request the Member Secretary of the Board to appoint the Arbitrator. Other side has no objection. To come up on 28.9.1984 for further proceedings." Thereafter on the pleadings of the parties, the following preliminary issues were framed :- "1. Whether the Civil Court at Gurgaon has no jurisdiction ? OPD 2. Whether the defendants-respondents have submitted to the jurisdiction of the Court and if so, its effect ? OPD ;