Full Judgment Text
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PETITIONER:
SUPREME CO-OPERATIVE GROUP, HOUSING SOCIETY
Vs.
RESPONDENT:
M/S. H.S. NAG & ASSOCIATES (P) LTD.
DATE OF JUDGMENT: 09/05/1996
BENCH:
K. RAMASWAMY, FAIZAN UDDIN, G.B. PATTANAIK
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:
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 work of
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 the him within 4
months of the date of award of work
at the same per sq.m. rates arrived
at the above lump sm rice for each
tower and for the alternate
specifications.
And whereas the employer has
accepted the officer of the
contractor the said contract amount
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 reads as under:
"32-Settlement of Disputes by
Arbitration;
If any dispute, question of
controversy, the settlement of
which is not herein specifically
approved for, shall at any time
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arise between the owner and the
contractor relating tot his
contract or any clause or thing
contained or the construction
thereof or any portion of the same
or the rights of 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 him 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, 1990. Dispute and difference had arisen the
construction of the latter 7 towers. The respondent invoking
clause 32 of 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 1, 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 Societies Act, 1972, the dispute is arbitrable
under Section 60 of the 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 the
Section 60 of the Co-operative 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 of 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
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
in directing, in an appropriate case, post-suit notice.
Though application under Section 20 of 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 proceeding 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 precondition to avail arbitration.
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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 disputes 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.