OLAM INTERNATIONAL LTD. AND GILL & CO. LTD. Vs. SRI SAKTHI TEXTILES LTD., SRI MAHASAKTHI MILLS LTD., SRI BHAGAVATHI TEXTILES LTD. AND KALAIVANI SPINNERS LTD.

JUDGEMENT

(1.) These revisions have arisen from the common judgment of the learned I Additional District Judge, Coimbatore, made in the abovesaid eight civil miscellaneous appeals confirming the orders of the learned II Additional Subordinate Judge, Coimbatore made in eight interlocutory applications.

(2.) C.M.A.Nos.96, 97, 98 and 101/99 have been preferred from the order of the learned Subordinate Judge dismissing the four interlocutory applications in IA 1334/98 in OS 675/98, IA 1341/98 in OS 663/98, IA 1336/98 in OS 678/98 and IA 1338/98 in OS 681/98, filed by the petitioners herein for stay of the trial of the said four suits filed by the respondents/plaintiffs, while CMA Nos.99, 100, 102 and 103/99 were preferred from the order of the learned Subordinate Judge made in another four interlocutory applications in IA 809/98 in OS 678/98, IA 78 6/98 in OS 663/98, IA 811/98 in OS 681/98 and IA 807/98 in OS 675/98, granting temporary injunction in favour of the plaintiffs, sought for in those applications. The respondents herein filed O.S.Naos.663/9 8, 675/98, 678/98 and 681/98 on the file of the II Additional Subordinate Judge, Coimbatore, seeking for declaration that the memorandum of settlement entered into between the plaintiffs and the second defendant in respect of the contracts between them did not subsist and for consequential permanent injunction restraining the defendants from treating the contracts as subsisting or making or enforcing any claim thereunder. In those suits, the respondents filed I.A.Nos.786, 807, 809 and 811/98 for interim injunction restraining the defendants from treating the contracts as subsisting or making or enforcing any claim thereunder pending disposal of the suits. On contest by the petitioners/defendants, those interlocutory applications were allowed by the trial court, granting the interim relief as asked for. The four civil miscellaneous appeals in CMAs 99, 100, 102 and 103/99, which arose therefrom were also dismissed confirming the order of the trial court. Aggrieved defendants have brought forth the four civil revision petitions in CRPs 530, 965, 1007 and 1535 of 2001. The defendants filed four interlocutory applications in I.As. 1334, 1341, 1336 and 1338 /98 under Ss. 8 and 45 of the Arbitration and Conciliation Act, 1996 and S. 115 of the Code of Civil Procedure to stay the trial of the suits pending resolution of the disputes by the arbitration. On contest all those applications were dismissed. Aggrieved defendants preferred CMAs 96, 97, 98 and 101/99 as stated supra, which also met the same fate. Aggrieved over the same, the defendants have brought forth the other four CRPs 529, 1343, 2371 and 2375/2001. Since all the said revisions have culminated from a common judgment by the court below, on request by the learned counsel for both sides, all the revisions were heard together, and the following order shall govern all the revisions.

(3.) Arguing for the petitioners/defendants, the learned counsel Mr. Irwin Aaron would submit that the lower courts were not correct in dismissing the applications filed by the defendants seeking stay of all further proceedings in the suits pending resolution of the disputes by the arbitration, and in granting interim injunction in favour of the respondents/plaintiffs; that under S. 45 of the Arbitration and Conciliation Act (Act 34/96), the jurisdiction of the civil courts were restricted to decide about the validity or otherwise of the arbitration agreement between the parties, and if the arbitration agreement was valid and the disputes raised in the suit were covered by the arbitration clause, the courts have no discretion but to refer the disputes to the arbitration; that it is pertinent to note that the memorandum of settlement dated 29.5.98 was to be treated as one arising out of the earlier contracts between the parties, and the said contracts contained an arbitration agreement to resolve all the disputes arising out of the contracts by arbitration; that the said agreement was not null and void or incapable of performance; that under such circumstances, the lower courts should have stayed the hearing of the suit and referred the parties to arbitration in terms and conditions of the sales contract between them; that the disputes raised by the respondents in the suit were covered by a valid arbitration agreement between the parties; that the said disputes were to be resolved by arbitration, as mutually agreed upon and when Sec. 45 of Act 34/96 is mandatory and makes it obligatory upon the court to pass an order staying the legal proceedings, commenced by a party to the agreement, the trial court was in error in dismissing the applications for stay, and the confirmation of the same by the appellate forum was also wrong; that it is not correct to state that the jurisdiction of the civil court could not be presumed to be taken away and the civil court alone can decide the dispute as to the validity or otherwise of the memorandum of settlement of contract, when Act 34/96 was a complete code by itself providing for all possible contingencies and the jurisdiction of the civil courts were restricted and powers have also been conferred on the arbitration to decide all disputes inclusive of their own jurisdiction; that S. 5 of Act 34/96 provides that in all matters governed by the said Act, no judicial authority shall intervene in the arbitral process except so provided in the Act, when particularly the arbitral proceedings were commenced in accordance with a valid and enforceable agreement to resolve the disputes between the parties, and hence the proceedings should have been stayed by the lower court; that under S. 16 of the said Act, the arbitral tribunal was competent to rule on its own jurisdiction with respect to the existence and validity of the arbitration agreement, and can make a decision rejecting the plea of want of jurisdiction and can continue with its proceedings and pass an award, and the party if aggrieved by such an award could only take out an application for setting aside the award as provided under the Act; that it is pertinent to note that the objects and scheme of Act 34/96 was to achieve speedy settlement of disputes and minimizing the intervention of courts in the arbitral process; that when Sec. 45 of the Act was identical with S. 3 of Foreign Awards (Recognition and Enforcement Act) of 19612, the lower court should not have relied on the judgment of the Hon'ble Supreme Court reported in, AIR 1985 S.C. 1451, interpreting S. 34 of Act 10/40 and holding that the disputes could not be decided by arbitration when particularly S. 34 of Act 10/40 was not identical with S. 45 of Act 34/96 bu t modeled in the UNCITRAL model law; that the Supreme Court of India while interpreting S. 3 of the Foreign Awards Act in the latter part of the very same judgment, has held that there was nothing in the general law of arbitration either in English or Indian Law which prevents the arbitrators or an umpire from deciding the question of their own jurisdiction provisionally or technically and to proceed to make their awards on that basis, though it was clear that their provisional or tentative decision on questions of their own jurisdiction would be subject to the final determination by the Court; that the learned District Judge should not have confirmed the order of injunction granted by the trial court against the defendants from claiming relief under the sales contract when particularly the arbitral proceedings were commenced prior to the plaintiffs filing the suits; that under S. 8(3) of the Act, an arbitral tribunal can continue with its proceedings and pass an award notwithstanding the pendency of the legal proceedings; that the trial court had no jurisdiction to pass an order of injunction and continue the suits when the arbitral tribunal has seized of the disputes under a valid agreement to resolve all the disputes inclusive of the disputes raised by the respondents in the suits by arbitration; that the order of injunction granted against the first petitioner was without jurisdiction, and the same was non -est in law; that the plaintiffs were not entitled to the relief claimed in the suits, much less an interim relief when it has not approached the court with clean hands on account of its collusion with one of the employees of the defendants and manipulated the memorandum of cancellation of the contract and suppression of the initiation of the arbitration proceedings by the first petitioner prior to the institution of the suits when particularly the relief claimed in the suits were discretionary in nature; that when it was agreed between the parties that the forum of arbitration was Liverpool and the arbitration was governed by the bye -laws of the Liverpool Cotton Association Ltd, the courts in India have no jurisdiction to decide the disputes raised by the plaintiffs in the suits, and the orders passed by the lower court were liable to be set aside for want of jurisdiction; that in view of the plaintiffs relying on the award of the arbitral tribunal dated 8.12.1998 and filing the same into the court, the plaintiffs have waived its rights to raise objections, if any, for the arbitral tribunal proceedings with its proceedings irrespective of an order of injunction passed by the court, and hence the order of the learned District Judge confirming the order of the trial court has got to be set aside, and the applications filed by the petitioners for stay have to be allowed and the applications filed by the respondents/plaintiffs for interim injunction have got to be dismissed.