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Issues:
1. Validity of arbitration agreement in a money claim suit. 2. Interpretation of Section 8 of the Arbitration and Conciliation Act, 1996. 3. Application of Order 39 Rules 1 and 2 of the Code of Civil Procedure in arbitration matters. Issue 1: Validity of arbitration agreement in a money claim suit The Respondent filed a money claim suit against the Appellant, disputing the existence of an arbitration agreement in the transaction. The Appellant argued that the invoices contained an arbitration clause, making arbitration necessary for disputes. The civil court initially dismissed the Respondent's application for interim relief under Order 39 Rules 1 and 2, but on appeal, it was treated as an application under Section 8 of the 1996 Act. The civil court later held that a valid arbitration agreement existed under Section 7 of the 1996 Act, requiring arbitration under Sections 5 and 8. The High Court, however, ruled that the endorsement on the invoice did not constitute an arbitration agreement under the 1996 Act, allowing the appeal and granting interim relief. Issue 2: Interpretation of Section 8 of the Arbitration and Conciliation Act, 1996 The Supreme Court clarified the purpose of Section 8, emphasizing that it does not aim to restrain arbitration proceedings before an arbitral tribunal. Section 8 is triggered when a judicial authority becomes aware of an arbitration agreement, and it does not involve restraining ongoing arbitration proceedings. In this case, the Respondent, as the Plaintiff, sought to restrain arbitral proceedings through an application under Order 39 Rules 1 and 2, which should have been dealt with accordingly. The Court noted that a proceeding under Section 8 should not result in an order restraining arbitration, as erroneously done in the impugned order. Issue 3: Application of Order 39 Rules 1 and 2 of the Code of Civil Procedure in arbitration matters The Supreme Court set aside the High Court's judgment and directed the Appellant to file an application under Section 8 of the 1996 Act for arbitration reference within two weeks. The Respondent could oppose this application on legal grounds. The civil court was instructed to hear and decide on the application within six weeks, ensuring no further steps were taken by the Bharat Merchants Chamber until the civil court's decision. The appeal was allowed with no order as to costs, aiming to rectify the misconceptions in the legal proceedings and ensure fair treatment for all parties involved.
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