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CHEQUE BOUNS CASE

Section 5 of the Act bars judicial intervention in matters governed by Part (1) thereof. Section 8 of the Act mandates that if any proceeding is instituted before it, which is subject matter of an arbitration agreement and if a party applies before submitting his first statement of defence for reference of the dispute to arbitration, the judicial authority before which such proceedings are instituted shall refer the dispute to arbitration. 5. In the case on hand, even by the time the petitioners filed I.A.No.54 of 2011 for rejection of the plaint, an ex parte award was passed. Therefore, no arbitral proceedings were pending. Hence, the provisions of Sections 5 and 8 of the Act have no application to the facts of the present case.

HON’BLE SRI JUSTICE C.V.NAGARJUNA REDDY

The London Court of International Arbitration,...

The London Court of International Arbitration, 70 Fleet Street, London (Photo credit: Wikipedia)

Civil Revision Petition No.4811 of 2011

20-01-2012

M/s. Shriram City Union Finance Ltd., Kukatpally and another

S.Mohan Rao S/o S.Venkateswarlu and another

Counsel for the petitioners: Sri O.Udaya Kumar, representing
Sri K.Maheswara Rao

Counsel for the respondents: —
Order:

This civil revision petition is filed by the defendants in O.S.No.3665 of
2010, which was filed by the respondents for permanent injunction. The
petitioners filed I.A.No.54 of 2011 in the Court of X Junior Civil Judge, City
Civil Court, Hyderabad, under Order VII, Rule 11 of C.P.C for rejection of
plaint in view of the provisions of Sections 5 and 8 of the Arbitration and
Conciliation Act, 1996 (for short ‘the Act’). The said application having been
rejected, the petitioners filed the present civil revision petition.

2. At the hearing, Sri K.Maheswara Rao, learned counsel for the petitioners,
submitted that on receipt of notice dated
05-8-2010 of reference of dispute to an arbitral tribunal, the respondents
instituted O.S.No.3665 of 2010 for permanent injunction against the petitioners
on 17-8-2010 without disclosing pendency of arbitral proceedings. He further
submitted that an
ex parte award was passed on 20-11-2010 in favour of the petitioners as the
respondents failed to participate in the arbitral proceedings. The learned
counsel, therefore, submitted that filing of suit itself is impermissible and
therefore, the Court below ought to have rejected the plaint under the
provisions of Order VII, Rule 11 of C.P.C.

3. I have carefully considered the submissions of the learned counsel for the
petitioners.

4. In order to seek rejection of the plaint, the petitioners have placed
reliance on Sections 5 and 8 of the Act. Section 5 of the Act bars judicial
intervention in matters governed by Part (1) thereof. Section 8 of the Act
mandates that if any proceeding is instituted before it, which is subject matter
of an arbitration agreement and if a party applies before submitting his first
statement of defence for reference of the dispute to arbitration, the judicial
authority before which such proceedings are instituted shall refer the dispute
to arbitration.
5. In the case on hand, even by the time the petitioners filed I.A.No.54 of 2011
for rejection of the plaint, an ex parte award was passed. Therefore, no
arbitral proceedings were pending. Hence, the provisions of Sections 5 and 8 of
the Act have no application to the facts of the present case. The petitioners
have not pleaded that their case falls in any of Clauses (a) to (f) of Rule 11
of Order VII, C.P.C warranting rejection of the plaint. While the petitioners
are entitled to seek dismissal of the suit itself on merits in the face of the
ex parte award, on the facts of the present case, they cannot seek rejection of
the plaint.
6. Therefore, I do not find any merit in this civil revision petition and the
same is accordingly dismissed. No costs.

7. As a sequel to the dismissal of the civil revision petition,
C.R.P.M.P.No.6831 of 2011 is also dismissed as infructuous.

____________________________
C.V.NAGARJUNA REDDY, J.
20th January, 2012.

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