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TMI Blog2000 (11) TMI 1133X X X X Extracts X X X X X X X X Extracts X X X X ..... pect of the loan to be taken from the Plaintiff (Clause 2) and that they had consented to Arbitration (Clause 19). The second document executed on the same date was the Bond of Guarantee, the salient covenants of which are that in the event of a default in payment of the principal, interest and other monies due to the plaintiff, the guarantors will pay the whole of such amount (Clause 1); and that all legal proceedings arising out of or under the said guarantee shall be subject to the jurisdiction of the High Court of Delhi (Clause 18). The guarantee also contains a recital to the effect that the deed was intended to supplement the Loan Agreement (presumably the Associateship Agreement as no objection has been raised on this score). Both agreements have been signed by the Promoter Directors (Defendants 1 to 3) of the company (Defendant No. 4). 3. The contention of the learned counsel for the applicants/defendants is that the suit is not maintainable in view of the existence of the Arbitration Clause, invoked previously. In terms thereof the parties have been referred to the Sole Arbitration of Mr. Justice P.K. Bahri (Retd.) by orders dated 29-10-1998 passed in AA No. 244 of 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... endants 1 to 3, as Directors of defendant No. 4 company, had executed the bond of guarantee. It is a well established principle of law, admitting of no exceptions, that the simultaneous continuance of two independent legal proceedings on the same subject-matter must be assiduously avoided. Not only does this expose the parties to multiplicity of proceedings but, even more importantly, it creates the possibility of a piquant situation where there may be diametrically conflicting decisions on the same matter by two jural entities of competent jurisdiction. As has already been mentioned, the disputes inter se the plaintiff and defendant No. 4, who is the principal debtor, is already pending adjudication before Mr. Justice P.K. Bahri (Retd.). I am informed that the plaintiff has preferred a claim of approximately Rs. 2 crores (which is also the claim filed before this Court), and defendant No. 4 has filed a counter-claim of approximately Rs. 3 crores. Furthermore, it has been clarified by the Supreme Court that it is not mandatory for the creditor to attempt recoveries firstly against the principal debtor and only thereafter from the guarantors. The creditor is free to proceed agains ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, the observations contained in this case make the position of the plaintiff, wholly indefensible. The learned counsel for the plaintiff had argued that it is not clear whether registration has been accorded to defendant No. 4 under section 22(1). The learned counsel for the applicants/defendants has relied on a decision of the Supreme Court in Rishabh Agro Industries Ltd. v. P.N.B. Capital Services Ltd. [2000] 25 SCL 461 , in which the plaintiff has been noticed as having been so registered. A perusal of the written arguments filed on behalf of the plaintiff further clarifies that this contention has lost all force because of the reversal of the decision of the Division Bench of the High Court of Punjab Haryana by the aforementioned decision of the Supreme Court. 8. In order to answer the remaining question, that is, whether the applicants have the right to invoke section 8, it would be necessary to appreciate the differences in the provisions of the Act and the section 34 of the Arbitration Act, 1940. Section 8 of the Arbitration and Conciliation Act, 1996 and section 34 of the Arbitration Act, 1940 read as follows : "8. Power to refer parties to arbitration where t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mination. ( iii ) The 1940 Act contemplated an invocation by as well as against a party to an arbitration agreement or any person claiming under him. The 1996 Act by referring to the legal action in a matter which is the subject of any arbitration agreement, shifts the focus from the parties to the matter to the matter itself. The ambit of section 8 is clearly much wider than of section 34. This appears to me to be a natural jurisprudential progression from the period when arbitration as a mode of the disposal of disputes was at its nascent stages, to the present time, when arbitration is well established as an effective alternate system, conceptually quicker and cheaper than the jural establishment. There is a conscious shift from the Courts to the Arbitral Tribunals. These are not the only differences between the two Acts. I do not feel the necessity to adumbrate others since they may not be relevant to the facts and issues of the present case. 9. It is not in dispute that the arbitration clause exists between the plaintiff and defendant No. 4. This being the position the present suit is manifestly not maintainable because the company, which is defendant No. 4, has signed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agreement". The whole dispute is what is contemplated by the section, and not the narrower concept of the parties to the disputes. The learned counsel has not shown any decision which interprets this section to the confines of the parties to the litigation. A holistic interpretation, calculated to carry out complete adjudication, should be preferred to compartmentalization and splinterization of disputes. The contention that section 8 is not applicable is, therefore, rejected. 11. In this analysis, the application is allowed. The parties are referred to the pending arbitration before Mr. Justice P.K. Bahri (Retd.). The plaintiff may seek the impleadment of defendants 1 to 3 in these proceedings and they shall not be heard to object to such impleadment. I.A. 5115 of 1998 12. This is an application under Order XXXIX, Rules 1 and 2 read with section 151 of the Code of Civil Procedure. I have already held that the present suit is not maintainable because of the existence of an arbitration clause on the matter in dispute. An application under section 8 of the Arbitration and Conciliation Act has been allowed. On 3-6-1998 the defendants had been restrained from selling, alie ..... X X X X Extracts X X X X X X X X Extracts X X X X
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