SUKANYA HOLDINGS PVT. LTD versus JAYESH H. PANDYA AND ANR.

Citation: [2003] 3 S.C.R. 558 · Decided: 14-04-2003 · Supreme Court of India · Bench: M.B. SHAH · Disposal: Dismissed

Cited by 6 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

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A 
SUK.ANY A HOLDINGS PVT. LTD. 
V. 
JAYESH H. PANDYA AND ANR. 
APRIL 14, 2003 
B 
[M.B. SHAH AND ARUN KUMAR, JJ. ] 
Arbitration and Conciliation Act. I 996-Section 8-Power to refer parties 
to arbitration where there is an arbitration agreement-Dissolution of 
c 
partnership--Suit for dissolution by one-Arbitration petition by other-
Dismissal of petition by High Court-Justification of-Held: Order of High 
Court does not call for any interference since Arbitration Act does not oust 
the jurisdiction of Civil Court to decide the dispute in a case where parties to 
arbitration agreement do not take :c,::yropriate steps under Section 8(1) and 
(2)-Section 8 does not apply when suit is commenced as to a matter which 
D lies outside the arbitration agreement and is also between some of the parties 
who are not parties to arbitration agreement-Also bifurcation of subject 
matter to the action is not allowed and Section 89 cannot be resorted to for 
interpreting Section 8--Code of Civil Procedure, I 908, Section 89. 
Words and Phrases: 
.. 
E 
"A matter"-Meaning of in the context of Section 8 of the Arbitration 
and Conciliation Act, 1996. 
Appellant and respondents entered into a partnership agreement for 
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carrying out construction of flats. The agreement contained an arbitrat~on 
clause. Dispute arose between the parties. Respondent No. I filed a suit 
for dissolution of partnership and accounts and various other reliefs 
against contracting parties and also raised disputes against purchasers of 
the disputed flats. Appellant filed arbitration petition under Section 8 of 
the Arbitration and Conciliation Act, 1996. High Court rejected the 
' 
G petition as suit has been filed and as the defendants of the suit are not 
party or partners in the partnership firm and the terms of the partnership 
deed including the arbitration clause are not binding to them. Hence the 
present appeal. Appellant contended that under Section 8 of the Act the 
Court was required to refer the dispute arising to the arbitrator as 
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contemplated by the arbitration clause because of the dissolution of the 
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558 
SUKANYA HOLDINGS PVT. LTD. v. J.H. PANDYA 
559 
partnership; that in any case there is no bar in referring the dispute which A 
arises between the appellant and respondents who are bound by the 
agreement to the arbitrator; that if the interpretation given by the High 
Court is accepted, arbitration clause could be defeated by an interested 
party by adding some reliefs which are not covered by the arbitration 
clause or by adding a few parties who are not bound by the arbitration B 
clause; that this interpretation would be against the object and purpose 
of the Act and against the spirit of Section 89 CPC; and that the third 
parties who purchased the flat are not necessary parties to the dispute 
amongst the partners relating to dissolution and accounts of the firm and, 
therefore, dispute ought to have been referred to the arbitrator. 
Respondent contended that the order passed by the High Court does 
not call for any interference as the plaintiffs have claimed various reliefs 
in the suit which could not be referred to the arbitrator; and that few of 
the defendants are not parties to the arbitration agreement. 
Dismissing the appeal, the Court 
HELD: I.I. Except Section 8 of the Arbitration and Conciliation Act, 
1996 there is no other provision in the Act that in a pending suit, the 
dispute is required to be refrrred to the arbitrator. Further, the matter is 
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D 
not required to be referred to the arbitral tribunal, if the parties to the 
arbitration agreement have not filed any such application for referring E 
the dispute to the arbitrator; in a pending suit, such application is not filed 
before submitting first statement on the substance of the dispute; or such 
application is not accompanied by the original arbitration agreement or 
duly certified copy thereof. Therefore, the Act does not oust the jurisdiction 
of the Civil Court to decide the dispute in a case where parties to the F 
arbitration agreement do not take appropriate steps as contemplated 
under section 8 (1) and (2) of the Act. 1564-B-DI 
1.2. There is no provision in the Act that when the subject matter of 
the suit includes subject matter of the arbitration agreement as well as 
other disputes, the matter is required to be referred to arbitration and G 
for splitting the cause or parties and referring the subject matter of the 
suit to the arbitra

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