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2007 (1) TMI 612 - SC - Indian LawsMaintainability Of Suit - Arbitration Agreement - businesses of export - predecessor-in-interest - non-payment of the amount under the two dishonoured cheques - application dismissed opining that no dispute existed between the parties for reference to an arbitration - HELD THAT - Admittedly, the appellant s claim is not confined to the question regarding non-payment of the amount under the two dishonoured cheques. Thus, there existed a dispute between the parties. Had the dispute between the parties been confined thereto only, the same had come to an end. Appellant evidently has taken before us an inconsistent stand. If he was satisfied with the payment of the said demand drafts, he need not pursue the suit. It could have said so explicitly before the High Court. It cannot, therefore, be permitted to approbate and reprobate. Section 8 of the 1996 Act is peremptory in nature. In a case where there exists an arbitration agreement, the court is under obligation to refer the parties to arbitration in terms of the arbitration agreement. Hindustan Petroleum Corpn. Ltd. v. Pinkcity Midway Petroleums 2003 (7) TMI 493 - SUPREME COURT and Rashtriya Ispat Nigam Limited 2006 (8) TMI 515 - SUPREME COURT No issue, therefore, would remain to be decided in a suit. Existence of arbitration agreement is not disputed. The High Court, therefore, in our opinion, was right in referring the dispute between the parties to arbitration. Thus, there is no merit in this appeal which is dismissed accordingly with costs.
Issues Involved:
1. Interpretation of arbitration clause in a Memorandum of Understanding. 2. Dispute resolution mechanism under the Arbitration and Conciliation Act, 1996. 3. Applicability of Section 8 of the 1996 Act in referring disputes to arbitration. 4. Consideration of payments made by respondents and their impact on the existence of a dispute. 5. Principle of approbation and reprobation in legal proceedings. Analysis: Issue 1: Interpretation of arbitration clause The judgment revolves around a Memorandum of Understanding containing an arbitration clause for resolving disputes between the parties. The court analyzed the language of the clause and its implications in the context of the subsequent disputes that arose between the parties. Issue 2: Dispute resolution mechanism The primary issue was whether the suit filed by the appellant was maintainable or if the dispute should be referred to arbitration as per the arbitration clause in the Memorandum of Understanding. The court examined the nature of the dispute, the actions of the parties, and the legal framework under the Arbitration and Conciliation Act, 1996. Issue 3: Applicability of Section 8 of the 1996 Act The court compared Section 8 of the 1996 Act with Section 34 of the Arbitration Act, 1940, highlighting the mandatory nature of Section 8 in referring disputes to arbitration. The judgment emphasized the departure from the previous legal provisions and the importance of upholding arbitration agreements. Issue 4: Impact of payments on dispute existence Payments made by the respondents were a crucial aspect of the case. The court considered the effect of these payments on the existence of a dispute between the parties, especially in the context of the appellant's claim and the broader interpretation of the term 'dispute' under the 1996 Act. Issue 5: Principle of approbation and reprobation The judgment discussed the principle of approbation and reprobation concerning the appellant's inconsistent stance regarding the payments received and the pursuit of the suit. The court emphasized the need for consistency in legal positions and the consequences of taking contradictory stands in legal proceedings. In conclusion, the Supreme Court upheld the High Court's decision to refer the dispute to arbitration based on the interpretation of the arbitration clause, the mandatory nature of Section 8 of the 1996 Act, and the presence of a genuine dispute between the parties. The judgment dismissed the appeal, highlighting the importance of honoring arbitration agreements and maintaining consistency in legal actions.
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