Skip to content


The Aerens Gold Souk International Ltd. and Others Vs. M/S. Parthas Textiles - Court Judgment

LegalCrystal Citation
CourtKerala High Court
Decided On
Case NumberCRP.NO. 604 OF 2010 & Arb. Request No.26 of 2011
Judge
AppellantThe Aerens Gold Souk International Ltd. and Others
RespondentM/S. Parthas Textiles
Excerpt:
civil procedure code - section 8 of the arbitration and conciliation act, 1996 point urged for a decision in these cases is whether when several causes of action arising from different subject matters which does and does not provide for arbitration are joined in one suit, it is within the power of the court to refer the parties in respect of the disputes arising from subject matters which are subject to an arbitration agreement, to arbitration? –thomas p.joseph, j. 1. the point urged for a decision in these cases is whether when several causes of action arising from different subject matters which does and does not provide for arbitration are joined in one suit, it is within the power of the court to refer the parties in respect of the disputes arising from subject matters which are subject to an arbitration agreement, to arbitration? 2. short facts necessary for a decision of the question are: annexure-a (anchor-i) agreement to lease was executed between first petitioner and the respondent on 03.09.2005. as per that agreement, first petitioner agreed to grant lease of 6000 sq.ft area on the ground floor of the building to the respondent at the rate of rs.60/- per sq.foot per month. respondent paid refundable amount equivalent to.....
Judgment:

THOMAS P.JOSEPH, J.

1. The point urged for a decision in these cases is whether when several causes of action arising from different subject matters which does and does not provide for arbitration are joined in one suit, it is within the power of the court to refer the parties in respect of the disputes arising from subject matters which are subject to an arbitration agreement, to arbitration?

2. Short facts necessary for a decision of the question are: Annexure-A (Anchor-I) agreement to lease was executed between first petitioner and the respondent on 03.09.2005. As per that agreement, first petitioner agreed to grant lease of 6000 sq.ft area on the ground floor of the building to the respondent at the rate of Rs.60/- per sq.foot per month. Respondent paid refundable amount equivalent to six months' rent aggregating to Rs.21,60,000/- to the first petitioner subject to the terms and conditions of the agreement. Clause 12 of the agreement provided that a lease deed would be executed and registered between the parties. A similar agreement was executed between the parties on 05.06.2006 marked as Annexure-B (Anchor-II) in respect of 3972 sq.ft area as per which Rs.14,29,920/- was paid by the respondent to the first petitioner as advance. Yet another agreement executed between the parties is WSOO7A for purchase of 1395 sq.ft. Pursuant to that agreement, respondent paid Rs.1,01,42,000/- to the first petitioner. Respondent filed O.S. No.311 of 2010 in the Sub Court, Ernakulam for recovery of Rs.2,07,02790/- being the principal sum of 1,37,31,920/- paid as advance to the first petitioner in terms of the above said three agreements with interest at the rate of 18% per annum alleging that first petitioner committed breach of the contracts.

3. Petitioners filed I.A. No.3287 of 2010 in the suit under Section 8 of the Arbitration and Conciliation Act, 1996 (for short, "the Act") claiming that Anchor I and II, agreements (marked as Annexures-A and B, agreements in the Civil Revision) provide for arbitration of disputes/claims arising from those agreements and requesting the court to refer the parties to arbitration so far as those agreements are concerned. That application was resisted by the respondent on various grounds including that terms and conditions of the agreements regarding arbitration are vague, uncertain and hence unenforceable. Respondent contended that there was no concluded contract for purchase of the 1395 sq.ft covered by agreement No.WS007A (The said agreement was regarding exchange of correspondence between parties as regards proposal for purchase).

4. Learned Sub Judge while negativing the contention of respondent that arbitration clauses in Annexures-A and B, agreements are vague, uncertain and unenforceable, held that the agreement (WS007A) for purchase of 1395 sq.ft does not contain any provision for arbitration. Learned Sub Judge held that subject matter of the suit should be the same as subject matter of arbitration agreement but in this case, only Annexures-A and B, agreements provide for arbitration while the agreement (WS007A) for purchase of 1395 sq.ft does not contain any provision for arbitration and hence bifurcation of causes of action pleaded in the suit is not permissible. I.A. No.3287 of 2010 was dismissed. That order is under challenge in C.R.P. No.604 of 2010 at the instance of petitioners/defendants. Petitioners have filed Arbitration Request No.26 of 2011 for the appointment of an Arbitrator with respect to Annexure-B, agreement as per which the venue of Arbitration is Kochi (with respect to Annexure-A, agreement the venue of arbitration is New Delhi and regarding that, an Arbitration Request has been made before the High Court of Delhi which is pending decision).

5. The Point:

Learned Sub Judge has proceeded on the premise that Annexures-A and B, agreements are of lease but unregistered. It is seen from the identical clauses in Annexures-A and B that parties have agreed that the premises mentioned therein are to be handed over to the respondent on a future date on fulfillment of the terms and conditions mentioned therein. It is specifically stated that agreements of lease are to be executed and registered between the parties. When transfer of interest in the immovable property is to take place at the future time subject to conditions to be fulfilled, it is an agreement for lease. In this case that there was no entrustment of the premises in present pursuant to Annexures-A and B, agreements so that it could be described as agreements of lease. I am inclined to think, having regard to the terms and conditions of the agreements that they are only agreements for lease. Registration of those agreements not being compulsory, non-registration of those agreements would not affect the plea raised by petitioners to refer the dispute to arbitration if otherwise the request is tenable.

6. Annexures-A and B, agreements contain clauses relating to arbitration. The clauses in the said agreements are identical in nature. The relevant clause in Annexure-B, agreement reads:

"23. That in case of any disputes and differences arising between the parties in relation to this agreement, then the matter will be referred to the arbitration under the Arbitration and Conciliation Act, 1996. The venue of the Arbitration shall be at Cochin".

(In Annexure-A, agreement the venue is New Delhi).

7. Though respondent took up a contention before learned Sub Judge that the clauses relating to arbitration in Annexures-A and B, agreements are vague, uncertain and unenforceable, learned Sub Judge found against that plea and having regard to the clauses regarding arbitration, I am inclined to agree with that view of learned Sub Judge.

8. The question is whether request of petitioners to refer the parties to arbitration invoking the clauses in Annexures A and B, agreements can be sustained? Learned Sub Judge took the view that the clause for arbitration must encompass the entire subject matter of the suit but in this case the agreement - WS007A for purchase of 1395 sq.ft does not contain provision for arbitration and hence it is not open to the court to bifurcate the causes of action joined in the suit and refer the parties to arbitration so far as disputes and claims arising between them with respect to Annexures-A and B, agreements alone is concerned. Is that view of learned Sub Judge correct?

9. It is contended by the learned counsel for petitioners that though Rule 3 Order II of the Code of Civil Procedure (for short, "the Code") enables respondent-plaintiff to unite various causes of action against petitioners in the same suit, it is not an unbridled right so as to defeat the provision for arbitration where different subject matters with and without arbitration clauses are rolled into the same suit. Right of petitioners-defendants to request for arbitration with respect to those subject matters which are covered by agreement for arbitration cannot be taken away. It is contended that Rule 6 of Order II empowers the court to order separate trials and in cases where an arbitrable dispute is joined with a non-arbitrable dispute arising from a separate subject matter, the court has the power, nay, the duty to ensure that the dispute in relation to the subject matter covered by arbitration agreement is referred to arbitration. It is pointed out that otherwise it is possible for a party to an arbitration agreement to defeat the agreement for arbitration by uniting arbitrable disputes with another subject matter containing no provision for arbitration in the same suit. Learned counsel has placed reliance on the decision in Pandara Mukundan v. Pandara Kumaran (1967 KLR 372) to contend that jurisdiction for the court cannot be conferred by joinder of causes of action and in such cases it cannot be argued that the court cannot call upon the plaintiff to split the causes of action. Reliance is also placed on the decision in Rashtriya Ispat Nigam Ltd. v. Verma Transport Co. ([2006] 7 SCC 275) to contend that when a request is made under Sec.8 of the Act it is mandatory for the court, if it satisfied that requirements of the Section are complied to direct the parties to arbitration.

10. Learned Senior Advocate for the respondent has argued that it is not open to the court to split up the causes of action which have been united by the respondent-plaintiff as provided under law and direct the parties to arbitration in respect of any one cause of action. According to the learned Senior Advocate, it is within the right of respondent to unite the various causes of action it has and that having been validly done in accordance with Rule 3 Order II of the Code, the subject matter of the suit cannot be bifurcated to direct parties to arbitration in respect of any particular cause of action. Reliance is placed on the decisions in Sukanya Holdings (P) Ltd. v. Jayesh H.Pandya And Another ([2003] 5 SCC 531), India Household and Healthcare Ltd v. LG Household And Healthcare Ltd ([2007] 5 SCC 510) and Booz Allean and Hamilton Inc. v. SBI Home Finance Limited and Others ([2011] 5 SCC 532).

11. A further argument which learned Senior Advocate has advanced is referring to the Power of Attorney dated 23.12.2005 executed between M/s.Sonia Farms Private Ltd. (owner of the properties which are the subject matter of the agreements referred above) and first petitioner, produced along with I.A. No.2851 of 2011 in CRP No.604 of 2010. It is argued that first petitioner got power to enter into agreement for lease with the respondent only by virtue of Power of Attorney dated 23.12.2005 but Annexure-A, agreement was executed on 03.09.2005. It is contended that first petitioner made the respondent believe that it is authorized and entitled to enter into Annexure-A, agreement with the respondent on behalf of M/s.Sonia Farms Private Ltd. And that it is believing the said representation that respondent entered into Annexure-A, agreement with first petitioner. Annexure-A, agreement dated 03.09.2005 is without authority, is the result of fraud and suppression of material facts and hence the agreement is not valid. When the agreement itself is vitiated by fraud, it is contended, dispute arising from that agreement though subject to arbitration clause is not capable of being arbitrated. Reliance is placed on the decisions in Hamza Haji v. State of Kerala and Another ([2006] 7 SCC 416), India Household and Handicare Ltd v. LG Household and Handicare Ltd (AIR 2007 SC 1376) and Wayanad District Wholesale Consumers Co- operative Store Ltd v. Thomas K.D. (2011 (4) ILR Kerala 334).

12. In reply, learned counsel for petitioners submitted that though a general Power of Attorney was executed in favour of first petitioner by M/s.Sonia Farms Private Ltd., only on 23.12.2005, there was in force a collaboration agreement between first petitioner and M/s.Sonia Farms Private Ltd. Even as on the day Annexure-A, agreement was executed on 03.09.2005 as is revealed by the said agreement itself. It is contended that the said collaboration agreement authorized and enabled first petitioner to do all and any acts on behalf of M/s.Sonia Farms Private Ltd. It is also contended that the said question has only academic interest in view of a subsequent development - the order dated 04.03.2008 passed by the High Court of Delhi in C.P. No.306 of 2007 as per which M/s.Sonia Farms Private Ltd. was amalgamated with the first petitioner. In that situation it is argued that there is no merit in the contention that it was without authority that first petitioner entered into Annexure-A, agreement with the respondent on behalf of M/s.Sonia Famrs Farms Private Ltd on 03.09.2005.

13. I shall first advert to the last argument learned Senior Advocate has raised as to the authority of first petitioner to enter into Annexure-A agreement on 03.09.2005. The Power of Attorney dated 23.12.2005 produced by the respondent along with I.A No.2851 of 2011 in C.R.P. No.604 of 2010 states that M/s.Sonia Farms Private Ltd. and first petitioner had entered into a collaboration agreement dated 06.06.2005 (i.e., even prior to Annexure-A, agreement dated 03.09.2005) for constructing a gold souk/wedding souk/commercial complex on the said site with powers to do all acts, deeds and things as may be required on behalf of M/s.Sonia Farms Private Ltd. It is useful to refer to Annexure-A, agreement dated 03.09.2005. There, it is stated that first petitioner is duly authorized vide resolution passed in the meeting of Board of Directors (of M/s.Sonia Famrs Private Ltd.) to enter into the transaction with the respondent and further, that first petitioner has entered into a collaboration agreement dated 06.06.2005 (referred to in the Power of Attorney dated 23.12.2005) with M/s.Sonia Farms Private Ltd for construction and development of the said commercial complex on the land referred to therein. It is stated that M/s.Sonia Farms Private Ltd had given a general Power of Attorney to the first petitioner with powers to lease out/convey/transfer the units to the prospective tenants/buyers.

14. The argument of learned Senior Advocate for the respondent is that the collaboration agreement referred to above is only to undertake construction works but does not extend to giving power to the first petitioner to grant lease of the premises. It is also argued that the collaboration agreement is not produced before this Court and the Power of Attorney referred to in Annexure-A, agreement allegedly executed by M/s.Sonia Farms Private Ltd in favour first petitioner empowering the latter to lease out the premises is also not produced.

15. The above contention is not a ground of attack in the suit. Concededly no attempt was made by the respondent at any time to rescind or avoid Annexure-A, agreement on the ground that it was executed by the first petitioner without authority. It is not a case where even according to the respondent there is any inter-se dispute between first petitioner and M/s.Sonia Farms Private Ltd so that the said question is required to be gone into in these proceedings. Added to that, there is the submission of learned counsel for respondent that the High Court of Delhi, by order dated 04.03.2008 in C.P. No.306 of 2007 has recorded amalgamation of M/s.Sonia Farms Private Ltd with the first petitioner. Hence the above said contention raised by the respondent cannot be accepted.

16. Now, to the crucial question whether on account of the causes of action being united in one suit it is within the power of the court to direct parties to arbitration with respect to disputes arising from such of the agreements containing provision for arbitration. Before adverting to the decisions cited, it is relevant to note the scope of Rules 2 and 6 of Order II of the Code. Rule 3 of Order II deals with joinder of causes of action and says that save as otherwise provided, a plaintiff may unite in the same suit several causes of action against the same defendant, or the same defendants jointly; and any plaintiffs having causes of action in which they are jointly interested against the same defendant or the same defendants jointly may unite such causes of action in the same suit. This is to avoid multiplicity of suits. The alleged breach of Annexures-A and B, agreements, and agreement No.WS007A by the petitioners gave separate causes of action to the respondent to sue for recovery of advance amount paid to the petitioners as per the said agreements. Respondent united all those causes of action in one suit invoking Rule 3 of Order II of the Code.

17. Rule 6 of Order II of the Code though does not confer right on the defendant, gives power to the court where it appears to it that joinder of causes of action in one suit may embarrass or delay the trial or is otherwise inconvenient, to order separate trials or make such other order as may be expedient in the interest justice. Under the Code of 1882 the power under Rule 6 of Order II could be exercised only before the first hearing of the suit unless the parties otherwise agreed. Rule 6 as it stood before amendment provided that where it appears to the court that any causes of action joined in one suit cannot be conveniently tried or disposed of together, the court may order separate trials or make such other order as may be expedient. By Amendment Act 104 of 1976, Rule 6 of Order II of the Code of 1908 was substituted with the present Rule 6. As Rule 6 (of Order II) now stands in the Code, the scope is widened to empower the court to order separate trial where joinder of causes of action may cause embarrassment, delay or inconvenience to the parties.

18. The object of Rule 6 of Order II is to prevent embarrassment, delay or inconvenience to the parties in the trial of the suit. Collins, MR said in Saccharin Corporation, Ltd. v. Wild (1903 [1] Ch. 410 (422) where the plaintiffs joined in one action claims for infringement of 23 patents:

".......Prima facie a dozen causes of action cannot be combined in one writ; they must be so intimately connected as to justify their being included in one writ; but when one finds not less than twenty-three, that seems to me to be an outrageous extension of the latitude given by the rules to a plaintiff...".

Rule 3 of Order II is subject to the power of the Court under Rule 6 and the jurisdiction of the court as to all causes of action involved. When the court finds that joiner of several causes of action in one action may cause embarrassment, delay or inconvenience to the parties, it has the power to order separate trials. Right of a plaintiff under Rule 3 of Order II of the Code should yield to that power of the court under Rule 6.

19. In this case the causes of action pleaded by the respondent are with respect to three independent subject matters covered by three agreements. In such situation it is not as if it is beyond the power of the court to direct separate trial if the court is satisfied that it is necessary to do so to avoid embarrassment or delay or is otherwise inconvenient to the parties.

20. It could be seen from the various provisions of the Act and in particular, Secs.5 and 8 that a conscious change is made by the legislature from the Arbitration Act of 1940 (for short, "the Act of 1940") to minimize intervention of the court with respect to matters where parties have agreed for arbitration. Section 5 of the Act states that notwithstanding anything contained in any other law for the time being in force, in matters governed by Part I of that Act, no judicial authority shall intervene except where so provided in Part I. Section 8 of the Act deals with the power of the court to refer parties to arbitration where there is an arbitration agreement. Hudson in 'Buildings and Engineering Contract' at Page 1579 in criticism of Sec.5 of the Act wrote:

"It would be seen that there has been a wide- spread movement by influential interest in the arbitration process against control by the courts, supported by many modern Governments who perceive a public financial advantage in diverting litigation away from the public funded judiciary into the privatized sector which arbitration represents".

But Russel on 'Arbitration, 20th Edn.' by Anthony Walton and Mary Victoria states at page 10:

"a statute may provide that disputes of a particular class shall be determined by arbitration of a particular sort, either in every case or upon certain steps being taken by the party. Where such a provision applies the arbitral Tribunal laid down by the statute has exclusive jurisdiction over such disputes".

Lord Chancellor Selbourne, in Willesford v. Watson ([1873] 8 Ch. App, 473 at P.480) said:

"If parties chose to determine for themselves that they will have a domestic forum instead of resorting to the ordinary courts, then, since that Act of Parliament was passed a prima facie duty is cast upon the courts to act upon such an agreement. The parties here have made that agreement. They probably knew what were the reasons in favour of determining these questions by arbitration, and what were the reasons against it, and they made it part of their natural contract that these questions should be so determined. The plaintiff cannot therefore be now heard to complain if that part of their contract is carried into effect......."

A similar view is taken in Quantas Airways Ltd. v. Dillingham Corporation ([1985] 4 NSWLR 113 at page 122). It is held:

"It is simply not open to the plaintiff to complain of the cost and expenses of arbitration, after all, it had freely subscribed to the arbitration clause and is, prima facie, liable to bear the cots of such choice..."

21. As distinguished from Sec.34 of the Act of 1940, no discretionary power is conferred on the court under Sec.8 of the Act. Once the requirements of Sec.8 of the Act are satisfied, it is mandatory for the court to refer the parties to arbitration. If the parties have agreed to resolve their disputes by arbitration and if requirements of Sec.8 of the Act are satisfied, courts are bound by it - there is no discretion vested with the court in the matter of referring the parties to arbitration. The Supreme Court in State of Orissa v. Bhagyadhar Dash ([2011] 7 SCC 406), referring to the decision in K.K. Modi v. K.N. Modi ([1998] 3 SCC 573) referred to the requirements for a valid arbitration agreement as under:

(1) there exists and arbitration agreement;

(2) a party to the agreement takes action against the other party;

(3) subject matter of the suit is the same as the subject matter of the arbitration agreement, and;

(4) the other party before he submits his first statement on substance of the disputes applies to refer the parties to arbitration.

The language of Sec.8 of the Act is peremptory and hence it is obligatory for the court to refer the parties to arbitration in terms of their arbitration agreement.

22. In this case, two of the three agreements executed between the parties contain arbitration clauses. It is relevant to note that under Sec.16(1)(a) of the Act, an arbitration clause which forms part of a contract shall itself be treated as an agreement independent of other terms of the contract. Petitioners filed I.A. No.3287 of 2010 in the suit requesting for arbitration before they submitted their first statement on the substance of the disputes.

23. Sukanya Holdings Pvt. Ltd. v. Jayesh H. Pandya (supra) and in particular, paragraphs 15 to 17 refer to the question whether the court could split causes of action which are covered by arbitration clauses. In Paragraph 15 it is stated that the step (taken under Sec.8 of the Act) should be in respect of a "matter" which the parties had agreed to refer and which comes within the ambit of the arbitration agreement. The suit should be in respect of a "matter". Where, however a suit is commenced "as to a matter" which lies outside the arbitration agreement and is also between some of the parties who are not parties to the arbitration agreement, there is no question of application of Sec.8 of the Act. It is held that the words "a matter" indicates that the entire subject matter of the suit should be subject to arbitration agreement. In paragraph 16 the question whether, even if there is no provision for partly referring the dispute to arbitration such a course is possible under Sec. 8 of the Act is considered. The Supreme Court held that it would be difficult to give an interpretation to Sec.8 under which bifurcation of causes of action, that is to say, the subject matter of the suit or in some cases bifurcation of the case between parties who are parties to the arbitration agreement and others is possible. Such a view would be laying down a totally new procedure not contemplated under the Act. If bifurcation of the subject matter of a suit was contemplated (by Sec.8), the legislature would have used appropriate language to permit such a course. Since there is no such indication in the language, it follows that bifurcation of the subject matter of an action brought before a judicial authority is not allowed. In paragraph 17, it is held that such bifurcation of suit in two parts, one to be decided by the arbitral tribunal and other, to be decided by the civil Court would inevitably delay the proceedings. The whole purpose of speedy disposal of dispute and decreasing the cost of litigation would be frustrated by such procedure. It would also increase the cost of litigation and harassment to the parties and on occasions there is possibility of conflicting judgments and orders by two different forums. The above decision was distinguished in Rashtriya Ispat Nigam Ltd. v. Verma Transport Co. (supra). In paragraph 45, the Supreme Court, referring to the decision in Sukanya Holdings (P) Ltd. v. Jayesh H.Pandya pointed out that in that case not only a suit for dissolution of the firm was filed but a different cause of action had arisen in relation whereto, apart from the parties to the arbitration agreements other parties had also been impleaded. The Supreme Court pointed out in Rashtriya Ispat Nigam Ltd. v. Verma Transport Co. (supra) that it was in the aforesaid fact situation that Sukanya Holdings (P) Ltd. v. Jayesh H.Pandya was decided. Reference is made in paragraph 46 to the observations in paragraphs 16 and 17 of the decision in Sukanya Holdings (P) Ltd. v. Jayesh H.Pandya and it is held that such a situation does not arise on the facts of the case in Rashtriya Ispat Nigam Ltd. v. Verma Transport Co. as the parties therein were parties to the arbitration agreement and the question in regard to the jurisdiction of the arbitrator if any could be determined by the arbitrator himself in terms of Sec.16 of the Act.

24. Another decision learned Senior Advocate for the respondent has placed reliance is India Household and Healthcare Ltd. v. LG Household And Healthcare Ltd. (supra). Contentions raised in that case are available in paragraph 8, and clause (vii) states that one of the contentions was that as some of the disputes fell outside the scope of arbitration agreement, application under Sec.8 of the Act was not maintainable. There, relief prayed for was not with respect to the arbitration agreement as well. In paragraph 21 reference was made to the decision in Sukanya Holdings (P) Ltd. v. Jayesh H.Pandya and it was held that in view of the nature of reliefs sought for with respect to the causes of action which arose, a bifurcation of the causes of action to direct parties to arbitration with respect to a portion of it was not permissible.

25. The above are not cases where several causes of action arising from different independent agreements with and without arbitration clauses are joined together in one suit and a request to direct parties to arbitration with respect to the agreements containing arbitration was rejected. In the above said cases the causes of action arose from the same 'matter', i.e., the same agreement and subject matter some of which were arbitrable while others were not. That distinction could be read from Rashtriya Ispat Nigam Ltd. v. Verma Transport Co.

26. Section 8 of the Act uses the expression, "an action is brought in a matter which is the subject matter of an agreement". When several causes of action arising from separate agreements each of which has independent existence are joined in the same action brought before court invoking Rule 3 of Order II of the Code and some of those agreements contain arbitration clauses, the cause of action with respect to the agreement which contains arbitration clause must be taken as "a matter" as stated in Sec.8. In this case by virtue of the privilege given to the respondent under Rule 3 of Order II of the Code he has chosen to file a single suit in respect of different causes of action (which otherwise should have been the subject matter of three suits between the same parties) covered by three independent agreements. Two of those agreements contain arbitration clause and hence should have been referred to arbitration under Sec.8 of the Act had the respondent brought separate suits in respect of those agreements. In such situation, I am not inclined to think that it is not within the right of petitioners to seek arbitration or that the court is powerless, to refer the parties to arbitration in respect of those agreements containing arbitration clauses. Adopting a contra view, in my view would render Sec.8 of the Act redundant at the instance of a plaintiff who could conveniently unite causes of action arising from several agreements with and without arbitration clauses in the same suit and thus defeat the very object of the Act. In this connection reference can be made to the decision in Pandara Mukundan v. Pandara Kumaran (supra) where it is held that jurisdiction of the court cannot be conferred by joinder of causes of action.

27. The decision in Yogi Agarwal v. Inspiration Clothes and U and Others ([2009] 1 SCC 372) lends some support for the above view. There, the suit was based on certain transactions parties had. Defendant in that case claimed that three invoices contained arbitration clauses. Defendant invoked Sec.8 of the Act by alleging existence of arbitration agreement with respect to those invoices. The Supreme Court pointed out in paragraph 9:

"....When a defendant invokes Sec.8 of the Act by alleging existence of an arbitration agreement, he should establish that such arbitration agreement related to, or is applicable to the suit transaction/contract. The parties may enter into different contracts at different points of time or may enter into a series of unrelated transactions. It is possible that in regard to some they may provide for arbitration and in regard to others, may not provide for arbitration. Obviously the existence of an arbitration agreement with reference to some other transaction/contract to which the plaintiff was or is a party, unconnected with the transactions or contracts to which a suit relates, cannot be considered as existence of an 'arbitration agreement' in regard to the suit transactions/contracts".

28. Learned Senior Advocate for the respondent has contended that as Annexures-A and B, agreements relate to lease, it could not be the subject matter of arbitration. Reliance is placed on the decision in Booz allen and Hamilton Inc. v. SBI Home Finance Ltd. and Others (supra). There, in paragraph 36, the well recognized examples of non-arbitrable disputes are given which includes among other things, disputes relating to "eviction or tenancy matters governed by special statutes where the tenant enjoys statutory protection against eviction and only the specified courts are conferred jurisdiction to grant eviction or decide the disputes". The dispute/claim in the present case as to breach of Annexures-A and B, agreements for lease and the liability if any, of petitioners to refund the advance amount is not a dispute falling within the above said category. Hence that contention has to be dismissed.

29. Thus, if the parties entered into independent contracts some of which contain provision for arbitration while the other does not, and in such circumstances plaintiff by virtue of the privilege conferred on him under Rule 3 of Order II of the Code unites the various causes of actions arising from the independent contracts in one suit, it is not as if the power of court under Sec.8 of the Act to direct parties to arbitration with respect to those contracts which contain arbitration clause is taken away by such joinder of causes of action. I am inclined to take the view that in such a situation the privilege of plaintiff under Rule 3 of Order II of the Code is subject to the power of the court and the right of the opposite party to ask for arbitration under Sec.8 of the Act and the power of the court to order separate trial under Rule 6 of Order II of the Code. I therefore hold that in cases where separate causes of action based on independent contracts are united in one suit and some of those contracts contain provision for arbitration while others do not, it is within the power of the court to direct the parties to arbitration with respect to those contracts which contain provision for arbitration while retaining the claim with respect to the contract which does not contain provision for arbitration in the suit. In the above view learned Sub Judge was wrong in concluding that since various subject matters are joined together all of which are not subject to arbitration, Sec.8 of the Act cannot be invoked. The order dated 14.10.2010 dismissing I.A. No.3287 of 2010 is liable to be set aside.

30. Arbitration Request No.26 of 2011 concerns Annexure-B, agreement dated 05.06.2006. Venue of that arbitration is fixed by the parties as Kochi. As agreed by counsel on both sides, Shri A.Haridasan, District Judge (Retd.), Plot No.237, Hill Garden Housing Colony, Kuttanellur, Thrissur-14 is appointed as the Sole Arbitrator to arbitrate the dispute arising in respect of Annexure-B (Anchor-II), agreement.

31. So far as Annexure-A (Anchor-I), agreement is concerned, parties shall await decision of the High Court of Delhi in the matter of appointment of Arbitrator.

32. Learned Sub Judge shall direct separate trial of the causes of action and proceed with trial of the cause of action arising with regard to agreement No.WS007A.

33. Learned Senior Advocate for respondent pointed out that so far as Annexures-A and B (Anchors I and II), agreements are concerned learned Sub Judge has ordered attachment of immovable properties and if the attachment is lifted by virtue of the decision this Court has taken, it is possible that petitioners may transfer those properties which may eventually affect the right of respondent to realize the amount due to it. In view of the apprehension raised by the learned Senior Advocate and after hearing learned counsel for petitioners also, it is directed that the order of attachment issued by the learned Sub Judge shall remain in force for a period of one month from the date on which a copy of this judgment is notified to be delivered to the respondent. It is made clear that it is open to the respondent to approach the appropriate court under Sec.9 of the Act and seek appropriate relief in the matter, in the meantime.

34. Now that I have held that claims and disputes arising with respect to Annexures-A and B (Anchors I and II) agreements are to be referred to arbitration, it follows that learned Sub Judge has to split up the causes of action pleaded by the respondent with respect to those two agreements and refer the parties to arbitration as above stated. On such reference to arbitration, nothing remains in the suit to be adjudicated by the learned Sub Judge with respect to Annexures-A and B, agreements. It is as good as of no suit was brought with respect to the claims/disputes arising from Annexures-A and B, agreements. So far as refund of court fee paid in relation to those claims which are referred to arbitration is concerned, I make it clear that it is open to the respondent to move the learned Sub Judge for appropriate relief and if any such request is made, learned Sub Judge shall decide the request as provided under the law. It is open to the respondent to confine its claim in the suit with respect to agreement No.WS007A. Petitioners may request learned Sub Judge to grant them sufficient time to file written statement if respondent confines the claim in the suit as aforesaid.

The Civil Revision and Arbitration Request are disposed of as follows:

(1) C.R.P. No.604 of 2010 is allowed as under:

(a) Order dated 14.10.2010 on I.A. No.3287of 2010 in O.S. No.311 of 2010 is set aside. I.A. No.3287 of 2010 will stand allowed as aforesaid.

(2) Arbitration Request No.26 of 2010 is allowed as follows:

(a) Shri A.Haridasan, District Judge (Retd.), Plot No.237, Hill Garden Housing Colony, Kuttanellur, Thrissur-14 is appointed as the Sole Arbitrator to arbitrate the dispute arising with respect of Annexure-B (Anchor-II), agreement.

Registry shall forward a copy of this order to the Arbitrator who shall enter upon arbitration on the claim/dispute being referred to him.

All pending Interlocutory Applications will stand dismissed.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //