BANGALORE UNIVERSITY

UNIVERSITY LAW COLLEGE AND

DEPARTMENT OF STUDIES IN LAW

CLINICAL COURSE PAPER 3

Case Study

‘ K B PEETHMBARAN Vs. E V THOMAS &

OTHERS ’

Submitted to
Dr Chandrakanthi L
Assistant Professor
University law College and Department of Studies in Law
Bangalore University, Bangalore- 560056

Submitted by
Mohan Krishna
15LUL09049
X Semester B.A, LLB (5 Years)
University law College and Department of Studies in Law
Bangalore University, Bangalore- 560056

2020
 Contents

 INTRODUCTION
 BRIEF FACTS OF THE CASE
 CITATIONS EXPLAINED
 INTERPRETATION OF JUDGEMENT
 MENTIONS OF THIS CASE
 SIMILAR JUDGEMENTS
 CONCLUSION
 INTRODUCTION
This case was decided by the High Court of Kerala on 18 th February 2003. The
Petitioner in this case is K B Peethambaran and the Defendants are E V Thomas and
others. The Original Suit for this case was filed before the Additional Munsiff Court,
Ernakulam. Aggrieved by the order of the Munsiff Court, Ernakulam, The Petitioner
i.e, K B Peethambaran approached the High Court of Kerala.

The Judgement of this Case is based on the Arbitration and

Conciliation Act, 1996. Here is a brief introduction about Arbitration in India;

The Arbitration proceedings in India are governed by the Arbitration and

Conciliation Act, 1996. The Indian Arbitration Act is based on the UNCITRAL
Model Law on International Commercial Arbitration 1985 and the UNCITRAL
Arbitration Rules 1976. The UNCITRAL Model Law was adopted in 1985 with the
objective to assist States in reforming and modernizing their laws on arbitral
procedure so as to take into account the particular features and needs of international
commercial arbitration.

In the year 2006, the UNCITRAL Model Law was

amended with the object to modernize the form requirement of an arbitration
agreement to conform with international contract practices and establish a more
comprehensive legal regime dealing with interim measures in support of arbitration.
Accordingly, the General Assembly of the United Nations recommended that all
countries give due consideration to the said Model Law, in view of the desirability of
uniformity of the law of arbitral procedures and the specific needs of international
Commercial arbitration practice. In view of the recommendation, the Indian
Legislature enacted the Arbitration and Conciliation Act in 1996 with the object to
consolidate and amend the law relating to domestic arbitration, international
commercial arbitration and enforcement of foreign arbitral awards so as to define the
law relating to conciliation and for matters connected therewith or incidental thereto.
BRIEF FACTS OF THE CASE
 K B Peethambaran and E V Thomas are partners to a firm named Slim
Collections, which carries out business from dealing with to selling out the ready
made Garments, tailoring units and furniture and fittings.

 K B Peethambaran files a suit bearing O S NO 1341/2002 in the Additional

Munsiff Court Ernakulam for a permanent injunction restraining defendants 1 and
2 i.e, E V Thomas along with one other from carrying on any business mentioned
in plaint 1 to 3 other than the business of the firm.

 After receiving the summons, the defendants field an application under Section
8(1) of the act. The trail court accepted the contentions of the defendants and
ruled out that since there is an arbitration clause enclosed in the partnership
agreement, the dispute has to be settled by an arbitrator and the suit is not
maintainable and closed the suit.

 Aggrieved by the order of the Munsiff Court, The Plaintiff filed the Original
petition before the High Court of Kerala Stating that the defendant describes
himself as the proprietor in application filled by him under Section 8(1) of the
Act. Hence, he cannot invoke the arbitration clause in the partnership agreement
as he is denying the partnership. The Counsel for the Petitioner sought the
assistance of the case decided by the Supreme Court Gajapathi Raju Vs. P V G
Raju. Where, supreme court outlined the conditions to be satisfied for invoking
Section 8;

(1) there should an arbitration agreement.

(2) a party to the agreement brings an action in the Court against the
other party.

(3) subject matter of the action is same as the subject matter of the
Arbitration agreement.

(4) the other party moves the Court for referring the parties to arbitration before it
submits his first statement on the substance of the dispute.

 According to the learned counsel for the petitioner, conditions 1, 2 and 4 are
present and condition No. 3 is not present. Condition No. 3 says that the subject
matter of the action is the same as the subject matter of the arbitration agreement.
As already noted earlier the reason for the learned counsel to contend that the
subject matter is different is that the defendant has described himself as the
Proprietor of the business in the petition filed under Section 8.
 Further the petitioner relied on the decision of the House of Lords in Heyman and
Anr. v. Darwins Ltd. (1942 (1) All ER 337. The learned counsel relied on the
sentences in page 341 which reads as follows:

"If the respondents were denying that the contract had ever bound them at all, such an
attitude would dis-entitle them from relying on the arbitration clause which it
contains; but that is not the position they take up. They admit the contract, and deny
that they have repudiated it. Whether they have, or have not, is one of the disputes
arising out of the agreement."

 The Petitioner also relied on the decisions reported in Dinasari Ltd. v. Hussain
Ali & Sons and Anr. , B.J. Manufacturing Co. v. Dulichand (: AIR 1953 Cal.
450), Chartered Bank v. Port Commissioner (AIR 1972 Cal. 198), Subhash
Industries v. Bhagwandas , Food Corporation of India v. P.K. and Company
(2000 (Supp) Arb. LR 467. but all these decisions relied on by the learned
counsel except the decision in 2000 (Suppl.) Arb. LR are under Arbitration Act
1940.

 Learned counsel for the respondents emphasized the word "may" in Section 34 of
1940 Act and the word "shall" used in Section 8 of the 1996 Act. It is therefore
contended by the learned counsel for the respondents that the decision under the
old Arbitration Act cannot be blindly followed for interpreting the corresponding
provisions as changes are made in the new Act.

 when the Arbitration Act 1940 was only an Act to consolidate and amend the law
relating to arbitration, 1996 Act is an Act to consolidate and amend the law
relating to domestic arbitration, international commercial arbitration and
enforcement of foreign arbitral awards as also to define the law relating to
conciliation and for matters connected therewith or incidental thereto. It is also
brought to my notice that in Section 5 of the new Act there is complete exclusion
of other judicial authority except as provided in the Act. When the petitioner
admits the execution of the partnership deed and the existence of an arbitration
clause and the respondent points out that the matter has to be left for arbitration in
view of the existence of such a clause, the court has to refer the parties to an
arbitration. Since it is a mandatory provision in the Act, the court has no
jurisdiction to deal with the matter thereafter. This aspect has been considered by
the High Court of Kerala in Asokan v. Jayan (1998 (1) KLT 430 and by the
Supreme Court in Kalpana Kothari v. Sudha Yadav and Ors.
CITATIONS EXPLAINED
TO UNDESRSTAND ANY CASE, IT IS IMPORTANT TO KNOW THE SCOPE
OF THE SECTIONS CITED WITHIN THE CASE;

ARBITRATION AGREEMENT

The Act renders definition of Arbitration Agreement (Section 7). The essential

ingredients of an arbitration agreement are as under:

1. Agreement by the parties to submit to arbitration all or certain disputes.

2. Dispute must have arisen in respect of a defined legal relationship (may or
may not be contractual)
3. Agreement can be (i) in form of arbitration clause or (ii) a separate
agreement.
4. Agreement must be in writing.
5. Signed by both the parties.

JUDICIAL DICTA

ARBITRTATION AGREEMENT INDEPENDENT OF UNDERLYING CONTRACT

 In the case of Enercon (India) Ltd. v. Enercon Gmbh & Anr.  the question
confronted by the Supreme Court was whether an arbitration clause being a
part of an Agreement/contract which is not concluded is a valid arbitration
agreement.The Appellants in the case had alleged that the matter could not be
referred to arbitration as the IPLA (Intellectual Property License Agreement),
containing the arbitration clause/agreement, is not a concluded contract.
However, the Supreme Court rejected the Appellant’s submissions and observed
that their existed a legal relationship between the parties and the arbitration clause
in the IPLA abundantly indicated the intention of the parties to arbitrate.
 The Court opined that the arbitration clause is independent of the underlying
contract, i.e.  IPLA containing the arbitration clause. In this context Court made
reference to Section 16 which provides that the Arbitration clause forming part of
a contract shall be treated as an agreement independent of such a contract. The
Court further observed that the concept of severability of the arbitration
clause/agreement from the underlying contract is a necessity to ensure that the
intention of the parties to resolve the disputes by arbitration does not evaporate
into thin air with every challenge to the legality, validity, finality or breach of the
underlying contract.
 Similarly, in the case of Ashapura Mine-Chem Ltd. V. Gujarat Mineral
Development Corporation the Supreme Court held that the arbitration clause
contained in the MoU was an independent arbitration agreement and therefore
even if the Respondent chose to terminate the MoU, the arbitration agreement
would continue to remain.
 Consensus ad idem- From the interpretation of law and Judiciary’s opinion it can
be deciphered that one of the most essential elements for existence of a valid
arbitration agreement is consensus ad idem i.e. agreeing to the same thing in the
same sense by the parties. In the case of Rickners Verwaltung Gmbh v. Indian
Oil Corporation it was held that the intention of the parties to arbitration is to be
gathered only from the expressions used in correspondence and the meaning it
conveys.
 Similarly, in the case of Visa International Ltd. v. Continental Resources
(USA) Ltd. the Supreme Court while determining whether the parties to dispute
agreed to resolving of dispute through arbitration or conciliation observed that in
such circumstances what is required to be gathered is the intention of the parties
from the surrounding circumstances including the conduct of the parties and the
evidence such as exchange of correspondence between the parties.
 The Courts have settled the legal proposition that an arbitration agreement is not
required to be in any particular form. For instance, in the case of Rukmani Bai
Gupta v. Collector of Jabalpur, the Court ruled that arbitration agreement is not
required to be in any particular form. It was held what is required to be
ascertained is whether the parties have agreed that if disputes arise between them
in respect of the subject matter of contract such dispute shall be referred to
arbitration, then such an arrangement would spell out an arbitration agreement.
 A similar stance was taken by the Court in the case of M. Dayanand
Reddy v. A.P. Industrial Infrastructure Corp. Ltd. & Ors.– An arbitration
clause is not required to be stated in any particular form. If the intention of the
parties to refer the dispute to arbitration can be clearly ascertained from the terms
of the agreement, it is immaterial whether or not the expression ‘arbitration’ or
‘arbitrator’ or arbitrators’ has been used in the agreement.

SECTION 5 OF THE ARBITRATION AND CONCILIATION

ACT, 1996

Extent of judicial intervention

Notwithstanding anything contained in any other law for the time being in force, in
matters governed by this Part, no judicial authority shall intervene except where so
provided in this Part.

SECTION 8 OF THE ARBITRATION AND CONCILIATION

ACT, 1996; THE GOLDEN EAGLE

A. Condition Precedent Stipulated under Section 8

Section 8 of the Arbitration and Conciliation Act, 1996 is peremptory in nature. It

provides that a judicial authority shall, on the basis of the arbitration agreement
between the parties, direct the parties to go for arbitration. It also enlists conditions
precedent, which need fulfillment before a reference can be made as per the terms of
the 1996 Act. In P. Anand Gajapathi Raju & Ors. v. P.V.G. Raju (Died) & Ors., while
iterating the periphery of Section 8 of the 1996 Act, the Supreme Court said that:

"The conditions which are required to be satisfied under Sub-sections (1) and (2) of
Section 8 before the Court can exercise its powers are (1) there is an arbitration
agreement; (2) a party to the agreement brings an action in the Court against the other
party; (3) subject matter of the action is the same as the subject matter of the
arbitration agreement; (4) the other party moves the Court for referring the parties to
arbitration before it submits his first statement on the substance of the dispute. The
language of Section 8 is per-emptory."

The following factors are to be considered before entertaining an application under

Section 8 of the 1996 Act:
 First question to be analyzed is whether it can be made applicable to a civil
dispute. The Supreme Court while answering the aforesaid question in H.
Srinivas Pai and Anr. v. H.V. Pai (D) thr. L.Rs. and Ors., said that "The Act
applies to domestic arbitrations, international commercial arbitrations and
conciliations. The applicability of the Act does not depend upon the dispute being
a commercial dispute. Reference to arbitration and arbitability depends upon the
existence of an arbitration agreement, and not upon the question whether it is a
civil dispute or commercial dispute. There can be arbitration agreements in non-
commercial civil disputes also."

 The presence of arbitration agreement is another pre-requisite for seeking a

reference under Section 8. Section 7 of the 1996 Act provides the diameter of the
term "arbitration agreement". The importance of arbitration agreement, for
seeking a reference under Section 8, was emphasized by the Supreme Court in
Smt. Kalpana Kothari v. Smt. Sudha Yadav and ors. wherein the Court said that
"As long as the Arbitration clause exists, having recourse to Civil Court for
adjudication of disputes envisaged to be resolved through arbitral process or
getting any orders of the nature from Civil Court for appointment of Receiver or
prohibitory orders without evincing any intention to have recourse to arbitration
in terms of the agreement may not arise."
 Next question which might arise in the step wise analysis of Section 8 is whether
the validity of the arbitration clause can be disputed before the Court, in front of
which an application for reference is made. The answer to the question was laid
in the negative by the Supreme Court in Hindustan Petroleum Corpn. Ltd. v.
Pinkcity Midway Petroleums. The Court in this case held that if the existence of
the arbitration clause is admitted, in view of the mandatory language of Section 8
of the Act, the courts ought to refer the dispute to arbitration. The Supreme Court,
while raising a presumption for the validity of an arbitration clause in an
agreement, in India Household and Healthcare Ltd. v. LG Household and
Healthcare Ltd., said that the Courts would construe the agreement in such a
manner so as to uphold the arbitration agreement.
 Section 8 further mandates that the subject matter of the dispute is the same as the
subject matter of the arbitration agreement. While articulating on this pre-
requisite, the Supreme Court in Sukanya Holdings Pvt. Ltd. v. Jayesh H. Pandya
and Anr., said that "The relevant language used in Section 8 is-"in a matter which
is the subject matter of an arbitration agreement". Court is required to refer the
parties to arbitration. Therefore, the suit should be in respect of 'a matter' which
the parties have agreed to refer and which comes within the ambit of arbitration
agreement."
 An application under Section 8(1) cannot be entertained unless accompanied by
original arbitration agreement or a certified copy thereof. Laying emphasis on
section 8(2) for the grant of reference, the Supreme Court in The Branch
Manager, Magma Leasing and Finance Limited and Anr. v. Potluri Madhavilata
and Anr. said that "An analysis of Section 8 would show that for its applicability,
the following conditions must be satisfied: (e) that along with the application the
other party tenders the original arbitration agreement or duly certified copy
thereof."

B. Implied Inclusion under Section 8

Though not implicit in the reading of Section 8 of the Act, the Court in the case
of Haryana Telecom Ltd. v. Sterlite Industries (India) Ltd.10 brought in the
competence of the arbitral tribunal as one of the grounds for the grant of reference.
The proposition that Section 8, despite providing the explicit grounds on which
reference can be made, also lays down the implicit ground of competence of the
Arbitral Tribunal, was also read in the affirmative by the Court in the case of Booz
Allen & Hamilton Inc. v. SBI Home Finance Ltd.11 wherein it was held that where
the cause/dispute is inarbitrable, the court where a suit is pending, will refuse to refer
the parties to arbitration, under Section 8 of the Act.

SECTION 9 OF THE ARBITRATION AND CONCILIATION

ACT, 1996
INTERIM MEASURES ETC, BY THE COURT

A party may, before or during arbitral proceedings or at any time after the making of
the arbitral award but before it is enforced in accordance with section 36, apply to a
court: -
 
(i) For the appointment of a guardian for a minor or a person of unsound mind for the
purposes of arbitral proceedings; or
 
(ii) For an interim measure of protection in respect of any of the following matters,
namely: -
 
(a) The preservation, interim custody or sale of any goods, which are the subject
matter of the arbitration agreement;
 
(b) Securing the amount in dispute in the arbitration;
 
(c) The detention, preservation or inspection of any property or thing which is the
subject-matter of the dispute in arbitration, or as to which any question may arise
therein and authorising for any of the aforesaid purposes any person to enter upon any
land or building in the possession of any party, or authorising any samples to be taken
or any observation to be made, or experiment to be tried, which may be necessary or
expedient for the purpose of obtaining full information or evidence;
 
(d) Interim injunction or the appointment of a receiver;
 
(e) Such other interim measure of protection as may appear to the court to be just and
convenient,
 
And the Court shall have the same power for making orders as it has for the purpose
of, and in relation to, any proceedings before it.
SECTION 16 OF THE ARBITRATION AND
CONCILIATION ACT, 1996

COMPETENCE OF ARBITRAL TRIBUNAL TO MAKE A BINDING DECISION ON

ITS OWN JURISDICTION

 There was no provision under the Arbitration Act of 1940 which allowed the
Arbitral Tribunal to make a decision on its own jurisdiction and it was the job of
the court to decide on the jurisdiction of the arbitral tribunal. But under Section
16 of the Arbitration and Conciliation Act, 1996 the Arbitral Tribunal has been
granted the power to make a ruling on its own jurisdiction. Section 16 (1) of the
Arbitration and Conciliation Act states that the Arbitral Tribunal may rule on its
own jurisdiction, including ruling on any objection with respect to the existence
or validity of the arbitration agreement.

 Section 16 of the Arbitration and Conciliation Act incorporates the principle of

competence-competence. It has two aspects: first, that the tribunal may decide on
its jurisdiction without support from the courts and secondly, that the courts are
prevented from determining this issue before the tribunal has made a
determination on this issue.  But does this determination by the Arbitral Tribunal
have a binding effect? Can it not be challenged in courts? In the case of Union of
India vs. M/s. East Coast Boat Builders & Engineers Ltd. it was stated: “From the
scheme of the Act it is apparent that the legislature did not provide appeal against
the order under section 16(5) where the arbitral tribunal takes a decision rejecting
the plea that the arbitral tribunal has no jurisdiction. The intention appears to be
that in such case, the arbitral tribunal shall continue with the arbitral proceedings
and make an award without delay and without being interfered in the arbitral
process at that stage by any court in their supervisory role.”

 In the case of Nav Sansad Vihar Coop. Group Housing Society Ltd. (Regd.) vs.
Ram Sharma and Associates it was stated that if a plea is rejected by the Arbitral
Tribunal under section 16(5) of the Arbitration and Conciliation Act the arbitral
proceedings shall continue, an award shall be given and the aggrieved party shall
have to wait till the giving out of the award and there is no separate remedy
against such order.

 But under section 37(2) of the Arbitration and Conciliation Act a decision of the
tribunal accepting the plea that it does not have jurisdiction or is exceeding its
scope of authority is appealable. In the case of Pharmaceutical Products of India
Ltd. vs. Tata Finance Ltd. it was stated: “Where the Arbitral Tribunal decides to
reject the plea regarding its jurisdiction, sub-section (5) clearly empowers the
Tribunal to continue with the arbitral proceedings and make an arbitral award.
Sub-section (5) provides for the manner in which such an arbitral award may be
challenged. It provides that such an award can only be challenged in accordance
with section 34. On the other hand, if the Arbitral Tribunal decides to accept the
plea that it has no jurisdiction, then such an order is appealable under section
37(2) of the Act… .”
 Thus we see that when the Arbitral Tribunal decides to reject a plea regarding its
jurisdiction then the order made regarding its jurisdiction is not appealable but
when the Arbitral tribunal decides to accept the plea that it has no jurisdiction
then such an order is appealable under section 37(2) of the Arbitration and
Conciliation Act.

SECTION 17 OF THE ARBITRATION AND THE

CONCILIATION ACT, 1996

Interim Protection by Arbitral Tribunal

 Arbitral tribunal which could be a single arbitrator or a panel of arbitrator is also
empowered to grant interim protection. Section 17 of the Arbitration and
Conciliation Act 1996 provides that the arbitral tribunal may, order a party to take
any interim measure of protection or provide security for the measure in regard
to dispute. It is axiomatic that before making a request to the arbitral tribunal, the
same has to be in existence. This is surely a stage subsequent to the request to the
party for referring the dispute to arbitration having been received by the other
party. The arbitral tribunal has not been endowed with power of civil court under
the Section to have its orders of interim protection enforced.

 As per the Arbitration and Conciliation Act 1996, the arbitral tribunal is
empowered by Section 17 to make orders amounting to interim measures. The
corresponding provision was not available in the predecessor Act of
1940.However interim protection was available through court as per Section 18
of the Arbitration Act 1940 which stipulated that at any time after the filing of the
award, upon satisfaction of laid down criteria, the court may pass such interim
orders as it deems necessary. The Interim protection through court was envisaged
only after award has been filed in court and the court is satisfied that a party has
taken or is about to take steps to defeat, delay or obstruct the execution of any
decree that may be passed. In the Arbitration and Reconciliation Act 1996, the
power to grant interim protection has been enjoined upon the arbitral tribunal. But
such power can be exercised during the period when arbitral tribunal is in
existence. Section 17 is invoked by party to the dispute upon application filed
before the arbitral tribunal. Hence the question of interim protection by arbitral
tribunal does not arise under the following situations:
• Prior to its existence
• After the arbitral tribunal has given award.
 In nutshell, prior to the constitution of arbitral tribunal or after the award having
been made, the arbitral tribunal does not get jurisdiction to grant interim
protection, which falls within the exclusive jurisdiction of court.

SECTION 34 OF THE ARBITRATION ACT, 1940

Power to stay legal proceedings where there is an arbitration agreement. Where
any party to an arbitration agreement or any person claiming under him
commences any legal proceedings against any other patty to the agreement or any
person claiming under him in respect of any matter agreed to be referred, any
party to such legal proceedings may, at any time before filing a written statement
or taking any other steps in' the proceedings, apply to the judicial authority before
which the proceedings are pending to stay the proceedings; and if satisfied that
there is no sufficient reason why the matter should not be referred in accordance
with the arbitration agreement and that the applicant was, at the time when the
proceed-

INTERPRETATION OF
JUDGEMENT
 In a contract consisting of an arbitration clause, if a suit is filed before invoking
the Arbitration clause, it is for the defendant to point out the existence of the
Arbitration clause and request the court to stop proceedings and refer the parties
to Arbitration. The application under Section 8 should not be made not later than
submitting his first statement on the substance of dispute by the defendant. The
Counsel for appellant has no submission that relief sought for suit is not based on
partnership deed which contains Arbitration clause or the dispute between the
parties is not related to the partnership business. Therefore, both the conditions
are satisfied and the matter has to be settled by the Arbitrator.

 The defendant claiming to be Proprietor by itself is not sufficient to take the

dispute outside the agreement between the parties as the petitioner himself has
approached the court on the partnership agreement. He cannot say that he is not
having any dispute as per the partnership agreement.

 Section 5 of the 1996 Act says that, there is complete exclusion of judicial
authority except as provided in the Act. When the petitioner admits the execution
of the partnership deed and the existence of an arbitration clause and the
respondent points out that the matter has to be left for arbitration in view of the
existence of such a clause, the court has to refer the parties to an arbitration. Since
it is a mandatory provision in the Act, the court has no jurisdiction to deal with
the matter thereafter. This aspect has been considered by this Court in Asokan v.
Jayan (1998 (1) KLT 430 and by the Supreme Court in Kalpana Kothari v. Sudha
Yadav and Ors.

 In Kalpana Kothari's case the Supreme Court has stated that Section 8 of the 1996
mandates that the judicial authority before which an action has been brought in
respect of a matter which is the subject matter of an arbitration agreement, shall
refer the parties to arbitration if a party to such an agreement applies not later
than submitting his first statement. The provisions of the 1996 Act do not
envisage the specific obtaining of any stay as under the 1940 Act.

 In P. Anand Gajapathi Raju and Ors. v. P.V.G. Raju and Ors. the Supreme Court
has even stated that a reference of the dispute under Section 8 can be made even
after the submission of the first statement, if the party which instituted civil suit
 did not object.

 Under Section 16 of the Arbitration and Conciliation Act 1996 the Arbitral
Tribunal has got the jurisdiction to rule on its own jurisdiction including ruling on
any objections with respect to the existence or validity of the arbitration
agreement and a party aggrieved by such an arbitral award may make an
application for setting aside such an arbitral award in accordance with Section 34.

 There is a difference between the 1940 Act and the present Act. Under the old
Act the Arbitrator had no power to decide upon the validity of the contract. Such
disputes were to be decided by the court and not by the Arbitrator. But under the
new Act the Tribunal can decide its own jurisdiction. In this case the plaintiff has
admitted the existence of the partnership and has filed the suit on that basis. The
agreement contained the arbitration clause. The defendants have invoked the
arbitration clause and requested to refer the parties to arbitration. Therefore on the
admission of the plaintiff with regard to the existence of arbitration clause the
civil court lacks jurisdiction to decide the dispute. The further dispute as to
whether the parties have acted upon the agreement etc are for the Arbitrator to
decide.

 The only other contention put forward by the counsel for the petitioner is that the
Arbitrator has no power to grant reliefs prayed for in the suit by the petitioner.
That contention also is without any force as Section 17 of the 1996 Act gives the
Arbitral Tribunal power to order a party to take interim measure of protection as
the arbitral tribunal may consider necessary in respect of the subject matter of the
dispute.

 Section 9 of the 1996 Act also gives powers to the court to pass orders for
appointment of a guardian, for interim measure of protection, the preservation of
interim custody or sale of any goods which are the subject matter of the
arbitration agreement, secure the amount in dispute in the arbitration, for
detention, preservation or inspection of any property, interim injunction or the
appointment of a receiver and such other interim measures. Section 2(e) of the
Act defines the court as the principal Civil Court of original jurisdiction in a
district, and includes the High Court in exercise of its ordinary original civil
jurisdiction, having jurisdiction to decide the questions forming the subject matter
of the arbitration if the same had been the subject matter of a suit, but does not
include any civil court of a grade inferior to such principal Civil Court, or any
Court of Small Causes. It is therefore clear that the court before which the present
suit is filed being a Munsiff Court, Ernakulam is not a Court under Section 9
which has no jurisdiction to pass orders.

 The Petitioner admitted the existence of partnership agreement and the agreement
contained Arbitration clause. Hence, the Munsiff court of Ernakulam lacks the
jurisdiction to decide the dispute on admission of plaintiff of existence of
Arbitration clause.
 Hence, the petition was dismissed by the High Court of Kerala

MENTIONS
THIS CASE WAS MENTIONED BY THE FOLLOWING COURTS IN THE
FOLLOWING CASE;
SIMILAR JUDGEMENTS/
CASES
 SBP & Co. Vs. Engineering Ltd. and Another
 Rashtriya Ispat Nigam Ltd. Vs. Verma Transport Co.

 Booz Allen and Hamilton Inc. Vs. SBI Home Finance

limited and Others

 Hindustan Petroleum Corpn. Ltd. Vs. Pinkcity Midway

Petroleums

 Narayan Vs. Prabhakaran

 State of West Bengal and Others Vs. Associated

Contracters

 N Radhakrishnan Vs. Maestro Engineers and Others

 Akshay Kapur & Ors Vs. Rishav apur & Ors.

CONCLUSION
LIMITED SCOPE OF JUDICIAL INTERVENTION

 One of the intrinsic objectives behind the enactment of Arbitration and

Conciliation Act, 1996 was reducing the scope of judicial intervention. The
Indian Legislature in conformity with Article 5 of the UNCITRAL Model Law on
International Commercial Arbitration 1985 enacted Section 5 of the Act which
eliminates the scope of judicial intervention and enumerates that no judicial
 authority shall intervene except where so provided by the Act.

 In plethora of judgments, the Indian Judiciary has reaffirmed this settled principle
of Law and stated that the Act under Section 5 intends to limit judicial
intervention. Furthermore, Section 34 of the Act also restricts the scope of
judicial intervention by Courts and provides an inclusive list of circumstances in
which an Arbitral Award can be set aside by the Court. For instance, an Arbitral
Award can be set aside by the Court when:

 A party is under some incapacity;

 Arbitration agreement in not valid under the Law;
 Party making the application was not given proper notice of appointment of
arbitrator;
 The arbitral award deals with a dispute not contemplated by or not falling within
the terms of the submission to arbitration;
 The composition of the arbitral tribunal or the arbitral procedure was not in
accordance with the agreement of the parties;
 When Court finds that the subject-matter of the dispute is not capable of
settlement by arbitration under the law for the time being in force or Award is in
conflict with the Public Policy of India

 The aforesaid grounds as enlisted for judicial intervention under Section 34 have
also been upheld by the Supreme Court in the case of McDermott International
Inc. v. Burn Standards Co. Ltd. In this case, the Court stated that the 1996 Act
makes provision for the supervisory role of Courts, for the review of the arbitral
award only to ensure fairness. The Court further observed that intervention of the
Court is envisaged in few circumstances only, like, in case of fraud or bias by the
Arbitrators, violation of natural justice, etc. The Court cannot correct errors of the
Arbitrators. It can only quash the award leaving the parties free to begin the
arbitration again if it is desired. So, scheme of the provision aims at keeping the
supervisory role of the Court at minimum level and this can be justified as parties
to the agreement make a conscious decision to exclude the Court’s jurisdiction by
opting for arbitration as they prefer the expediency and finality offered by it.

 Section 8 of the Act also eliminates the scope of judicial intervention and states
that a judicial authority before which an action is brought in a matter, which is the
subject of an arbitration agreement shall refer the parties to arbitration. Hence, the
scheme of the Act is such that Court intervention is minimal and commercial
disputes are attempted to be resolved through the arbitration mechanism. This
apart from saving precious judicial time also aids in amicable resolution of
dispute.

Court cannot substitute its views over that of the arbitrators

 In a recent case Ssangyong Engineering & Construction v. National Highways

Authority of India, the Division Bench of Delhi High Court while dismissing
Petition under Section 34 of the Act, opined that if a Contract can be interpreted
in two ways, then it is not open for the Court to interfere with an arbitral award,
just because the Court prefers the other view. In this case, the Appellant had
challenged the order of Single Judge, wherein the Single Judge had dismissed the
Appellant’s petition under Section 34 of the Arbitration and Conciliation Act,
1996 for setting aside the arbitral award. The Court in the case also observed that
Court could not substitute its view over that of the Arbitrators.