2010 (3) TMI 1286 - HC - Indian Laws

Summary

Issues Involved:

1. Maintainability of the writ petition to invoke the arbitration clause.
2. Jurisdiction under the Arbitration and Conciliation Act, 1996.
3. Applicability of Section 11 and Section 5 of the Arbitration and Conciliation Act, 1996.
4. Statutory nature of arbitration under the byelaws of respondent No.1.

Issue-wise Detailed Analysis:

1. Maintainability of the Writ Petition:

The primary issue was whether the writ petition filed by the petitioners to compel respondent No.1 to invoke the arbitration clause in the agreement with respondent No.4 was maintainable. The court examined precedents such as Durga Enterprises (P) Ltd. and Whirlpool Corporation, which discuss the High Court's discretion to entertain writ petitions despite alternative remedies being available. The court noted that the rule requiring exhaustion of statutory remedies is one of policy and discretion, not compulsion. The court acknowledged that writ jurisdiction could be exercised in specific situations, such as enforcement of fundamental rights, failure of natural justice, or when proceedings are without jurisdiction.

2. Jurisdiction under the Arbitration and Conciliation Act, 1996:

The court analyzed the relevant sections of the Arbitration and Conciliation Act, 1996, particularly Section 11(6)(c), which allows a party to request the Chief Justice to take necessary measures if an agreed appointment procedure fails. The court emphasized that Section 5 limits judicial intervention in arbitration matters, underscoring that arbitration agreements do not automatically oust the jurisdiction of civil courts unless Section 8 is invoked. The court held that the petitioners could have sought relief under Section 11 for the appointment of an arbitrator, thus providing an efficacious legal remedy.

3. Applicability of Section 11 and Section 5 of the Arbitration and Conciliation Act, 1996:

The court discussed the implications of Section 11, which provides a mechanism for appointing arbitrators when parties fail to agree. The court referenced the case of S.B.P. & Co. vs. Patel Engineer, which clarified that orders under Section 11 are quasi-judicial. The court concluded that since the petitioners had invoked the arbitration clause and respondent No.2 failed to refer the parties to arbitration, the petitioners should have pursued relief under Section 11. The court reiterated that Section 5 restricts judicial intervention, thereby suggesting that the High Court should not exercise its extraordinary jurisdiction in this instance.

4. Statutory Nature of Arbitration under Byelaws:

Respondent No.1 contended that arbitration under their byelaws was statutory, invoking Section 2(4) of the Act. The court considered the judgment in Bombay Stock Exchange Vs. Jaya I. Shah, which indicated that byelaws have a statutory flavor but are not made under a statute. The court noted that the procedure under Section 11 would prevail unless shown to be inconsistent with the byelaws and rules. The court left this issue open for determination if the petitioners invoked jurisdiction under Section 11.

Conclusion:

The court concluded that the petitioners had an efficacious legal remedy under the Arbitration and Conciliation Act, 1996, particularly through Section 11, and therefore declined to exercise its extraordinary jurisdiction under Article 226 of the Constitution. The rule was discharged, and no order as to costs was made.