Full Judgment Text
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PETITIONER:
SUPREME CO-OPERATIVE GROUPHOUSING SOCIETY
Vs.
RESPONDENT:
M/S. H.S. NAG & ASSOCIATES
DATE OF JUDGMENT: 09/05/1996
BENCH:
RAMASWAMY, K.
BENCH:
RAMASWAMY, K.
FAIZAN UDDIN (J)
G.B. PATTANAIK (J)
CITATION:
JT 1996 (6) 592 1996 SCALE (5)343
ACT:
HEADNOTE:
JUDGMENT:
THE 9TH DAY OF MAY, 1996
Present:
Hon’ble Mr.Justice K. Ramaswamy
Hon’ble Mr.Justice Faizan Uddin
Hon’ble Mr.Justice G.B.Pattanaik
K.Madhava Reddy, Sr.Adv., U.U.Lalit and Satish Vig, Advs.
with him for the Petitioner.
O R D E R
The following Order of the court was delivered:
Supreme Co-operative Group
Housing Society.
V.
M/s. H.S. Nag & Associates
(P) Ltd.
O R D E R
This special leave petition arises from the order of
the Division Bench of the High Court of Delhi made on
8.3.1996 in F.A.O.. (OS)44/96. The petitioner had entered
into a contract on September 4,1996 with the respondent with
covenant contained therein as under:
"And whereas the contractor has
also agreed to execute the work or
seven towers with 100% external
works with the said contract amount
in the first instance and further
work of the balance towers that
would be entrusted to him within 4
months of the date of award of work
at the same per sq.m. rates arrived
at the above lump sum price for
each tower and for the alternate
specifications.
And whereas the employer has
accepted the offer of the
contractor the said contract amount
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subject to the terms and conditions
set forth herein and mutually
agreed to by both the parties"
Therein clause 32 relates to settlement of dispute by
arbitration which read as under:
"32-Settlement of Disputes by
Arbitration:
If any dispute, question of
controversy, the settlement or
which is not herein specifically
approved for, shall at any time
arise between the owner and the
contractor relating to this
contract or any clause or thing
contained or the construction
thereof or any portion of the same
or the rights or duties or
liabilities of either party, then
in every such cases the matter in
dispute shall be referred to the
Arbitration of the Hony. Director,
owner or his nominee and his
decision shall be final and binding
on both the parties
.................................."
In furtherance of the agreement, apart from 7 towers
entrusted for construction, the construction of 3 more
towers was awarded on December 12, 1988 and 4 more towers on
March 12, 1990. Dispute and differences had arisen in
construction of the latter 7 towers. The respondent invoking
clause 32 or the agreement filed application under Section
20 of the Arbitration Act, 1940 (for short the ’Act’) for
calling upon the petitioner to produce the agreement and to
have the dispute referred to arbitration. It was numbered as
a suit on the original side of the High Court. Therein, the
petitioner filed I.A. No.7860 of 1994 in Suit No.2760/93
under Order 7 Rule 11, CPC to dismiss the suit. Two grounds
were mainly pressed for consideration in support thereof.
The first contention urged was that the petitioner being a
co-operative society registered under the Delhi Co-operative
Societies Act, 1972 the dispute is arbitrable under Section
60 of that Act and Section 93 thereof puts an embargo on the
power of the civil Court to decide the dispute and that,
therefore, the suit is not maintainable. The learned single
Judge and the Division Bench negatived the contention and in
our view rightly, on the ground that Section 60 of the
Cooperative Societies Act would apply to a dispute among
members, past-members or persons claiming through them or
between them and the society or the members of the committee
or officers or agents etc. as envisaged in clauses (a) to
(d) of Section 60(1) of the Co-operative Societies Act. By
operation of the non obstante clause, the bar of suit
attracts only if the dispute falls within the parameters of
clauses (a) to (d) thereof and the bar of jurisdiction of
the Court under Section 93 gets attracted in respect of the
specified subjects in sub-section (1) of Section 93 thereof.
Therefore, the plea of the bar of Sections 60 and 93 is
devoid of substance.
It is then contended in this Court that notice as
required under Section 90, is a pre-condition to lay the
suit. Since the proceedings under Section 20 of the Act was
a suit, absence of notice meets with dismissal the suit. We
find no force in the contention. As per ratio in Kalyan
Peoples’ Co-operative Bank ltd. vs. Dullhanbibi Aqual
Aminsaheb Patil & Ors. [AIR 1966 SC 1066] prior to CPC 1976
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Amendment Act, insistence upon a notice under Section 80 CPC
in a suit under Order 21 Rule 63 renders no assistance to
the petitioner. Even analogy of Section 80 CPC sought for
in support of reference is of no avail, since rigour of
notice under Section 80 CPC was softened by CPC 1976
Amendment Act directing, in an appropriate case, post-suit
notice. Though application under Section 20 or the Act is
treated as suit, in proceedings under the Act, it is a
procedural part. The mandatory requirement of Section 90
does not get attracted to proceedings laid under Section 20
of the Act.
A serious contention raised by Shri K. Madhava Reddy,
learned senior counsel for the petitioner, is that contract
for arbitration is a pre-condition to avail arbitration,
Since the agreement for the 7 towers does not contain such
arbitration clause, the application under Section 20 is not
maintainable and therefore, the suit deserves to be
dismissed. We find no force in the contention. Undoubtedly,
jurisdiction to arbitrate the dispute is founded upon an
agreement entered with consensus ad idem under which the
parties excluded established courts and submitted to the
jurisdiction of the arbitrator for settlement of differences
and having arisen thereunder. Otherwise, court is devoid of
jurisdiction to refer such disputes under Section 20 for
arbitration. It is seen that the above quoted terms of the
agreement and clause 32 of the contract read together
clearly indicate that the award of the work during the
course of execution is a part of the agreement originally
entered into. Therefore, clause 32 of the agreement
containing settlement of disputes by arbitration is an
arbitration agreement within the meaning of Section 2 (a) of
the Act. Therefore, application under Section 20 would be
maintainable. We do not find any substance in the special
leave petition.
The special leave petition is accordingly dismissed.