SHREE SUBHLAXMI FABRICS PVT. LTD. versus CHAND MAL BARADIA AND ORS.

Citation: [2005] 2 S.C.R. 1138 · Decided: 29-03-2005 · Supreme Court of India · Bench: D.M. DHARMADHIKARI · Disposal: Appeal(s) allowed

Cited by 2 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

A 
B 
SH REE SUBHLAXMI FABRICS PVT. LTD. 
v. 
CHAND MAL BARADIA AND ORS. 
MARCH 29, 2005 
[G.P. MATHUR AND D.M. DHARMADHIKARI, JJ.] 
Arbitration and Conciliation Act, 1996-Section 16--0bjection regarding 
non-existence of arbitration agreement-Jurisdiction of civil court to entertain-
C On facts, Plaintiff seeking injunction against arbitration proceedings on the 
ground that there was no arbitration agreement-Trial court declining but 
High Court granting injunction on the ground that plaintiff has arguable 
case-On appeal, Held: Contentious issues are not to be gone into or decided 
at the stage of appointment of an arbitrator-Aggrieved party can raise all the 
objections including objection regarding non-existence of an arbitration clause 
D before the arbitral tribunal-Thus, High Court erred in granting injunction-
Code of Civil Procedure, 1908-0rder 39, Rules 1 and 2. 
';,. 
Plaintiff, a cloth merchant had been purchasing the cloth material 
from an agent of defendant no. 1 having office at Calcutta under terms 
dictated by defendant no. 1. Dispute arose between them and defendant 
E no. 1 referred the matter to arbitration. Plaintiff filed suit for injunction 
and application under Order 39 Rules 1 and 2 CPC, restraining arbitration 
proceedings on the ground that there was 110 arbitration agreement 
between them. Defendant no. 1 contested the application contending that 
the indent letter, bills/invoices which were sent to plaintiff mentioned that 
F disputes were subject to Bombay jurisdiction and in case of dispute, same 
shall be referred to defendant no. 2. Trial Court dismissed the application 
holding that the arbitration proceedings having already commenced, it 
cannot interfere with the functioning of the arbitrator. On appeal, High 
Court stayed the arbitration proceedings. Hence the present appeal. 
G 
Defendant No. 1 contended that the indent (contract) contained a 
H 
clause that in case of dispute, the same shall be referred to defendant No. 
2; that defendant No. 2 had sent a notice to the plaintiff asking it to 
nominate an arbitrator from the panel/list supplied to it and also to remit 
an amount of Rs. 200 towards the fee of arbitration. The notice was duly 
1138 
-, 
I -
-
SHREE SUBHLAXMI FABRICS PVT. LTD. v. CHAND MAL BARADIA 
J J 39 
replied along with Rs. 200 and the plea of non-existence of arbitration A 
clause in the agreement could be raised before the arbitrator under Section 
16 of the Arbitration and Conciliation Act, 1996. 
Plaintiff contended that a part of cause of action had accrued at 
Calcutta and the plaintiff had never consciously agreed to any condition , 
that any dispute arising shall be decided by the courts at Bombay and by 'B 
no other courts and, therefore, the court at Calcutta had the jurisdiction 
to try the suit. 
Allowing the appeal, the Court 
HELD : 1. The contentious issues should not be gone into or decided C 
at the stage of appointment of an arbitrator and no time should be wasted 
in such an exercise. The remedy of the aggrieved party is to raise an 
~ 
objection before the arbitral tribunal, as under Section 16 of the 
Arbitration and Conciliation Act, 1996, it is empowered to rule about its 
own jurisdiction. It is, therefore, open to the plaintiff to raise all the pleas D 
before defendant No. 2 including a plea that there is no arbitration 
agreement between the parties for referring any dispute for arbitration. 
Also that in response to the notice issued by defendant No. 2 the plaintiff 
had sent a communication raising certain pleas and had also remitted an 
amount of Rs. 200 as fee for arbitration. In such circumstances, the view 
1 
taken by the Tri~I Court was just and proper and the High Court erred E 
in granting an injunction in favour of the plaintiff and staying the 
proceedings before defendant No. 2. (1148-F-H; 1149-A] 
Konkan Railway Corpn. ltd v. Mehul Construction Co., [2000) 7 SCC 
201; State ofOrissa and Ors. v. Gokulananda.J_ena, (2003) 6 SCC 465; Food 
Corporation of India v. Indian Council of Arbitration and Ors., (2003) 6 SCC F 
564; Hakam Singh v. Gammon (India) Ltd., (1971) 1 SCC 286; A.B.C. 
Laminart (P) ltd v. A.P. Agencies, (1989) 2 SCC 163 and Angile Insulation 
v. Davy Ashmore India ltd., (1995) 4 SCC 153, referred to. 
r; 
2. In the case on hand, the clause in the indent is very clear, viz., G 
"court of Bombay and no other court". The trial court on consideration 
of material on record held that the court at Calcutta had n

Excerpt shown. Read the full judgment & AI analysis in Lexace.