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TMI Blog2002 (6) TMI 441X X X X Extracts X X X X X X X X Extracts X X X X ..... able in Bombay. Out of the above- mentioned amount of Rs. 89,70,500. Rs. 4,48,525 shall be payable at the time of signing this agreement and Rs. 22,42,625 shall be payable on the closure of the issue and the second party having obtained confirmation from the Registrars/bankers to the issue of the required funds been collected. The first party shall provide to the second party a Bank Guarantee for the amount of Rs. 22,42,625 to be paid to the second party. The balance amount of Rs. 62,79,350 shall be payable by the first party within 30 days of the closure of the above-mentioned Public Issue. The first party shall honour the cheques so given to the second party. 4. The second party undertakes to ensure that the funds are arranged as mentioned in clause (2) subject to the first party complying to each of the clauses as mentioned above. Further, in the event of any discrepancy or difference between the parties concerning the meaning or interpretation of these presents or the rights and obligations of the parties, the same shall be referred to the arbitrators appointed each by the first party and the second party and in the event of difference of opinion of any of the said arbitrator ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers for the equity shares as the plaintiffs were unable to fulfil their commitment in terms of the MOU. That being the case the plaintiffs would not be entitled to the amounts as claimed by them under the MOU. It is lastly contended that the MOU contains a provision for arbitration. The plaintiffs could have resorted to arbitration, which they have not done. Even otherwise once there is an arbitral clause a judicial authority before whom the proceedings are filed can suo motu direct the parties to arbitration considering section 8 of the Arbitration Conciliation Act, 1996 ( the Act ). The learned Counsel in support of that proposition has placed reliance on two unreported judgments of the learned single Judges of this Court, namely in the case of Jivan Service Centre v. Hindustan Petroleum Corpn. Ltd. of 7-10-1998 in Appeal from Order No. 897 of 1998 in Notice of Motion No. 4279 of 1998 in Suit No. 5101 of 1998 and in the case of Hindustan Petroleum Corpn. Ltd. v. Labhasing Sohan Singh of 30-1-2002 in Appeal from Order No. 797 of 2001. It may be pointed out that in so far as this submission is concerned learned Counsel for the plaintiffs has drawn my attention to the ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icable to the second instalment. There is also no dispute from the material on record that the issue was fully subscribed. The only limited issue raised by the defendant is that it is the defendant who procured the entire subscription on failure of the plaintiffs to get subscribers for the issue. Let us refer to the correspondence and the terms of the MOU for that purpose. As set out earlier there is some dispute about receipt of letter dated 13-8-1996. There is, however, no dispute about the receipt of letter dated 2-8-1996. By that letter the plaintiffs informed the defendants that they had marketed the public issue extensively and the issue had been over-subscribed. It was also pointed out that the defendants have failed to perform their part of the MOU as the amount was payable within 30 days of the closure. This letter was not replied nor receipt of the letter has been denied by the defendants. At least, therefore, there is nothing on record to show that the defendants indicated to the plaintiffs that the issue had been over-subscribed on account of their marketing of the said issue on failure by the plaintiffs to get the subscription. Assuming for a moment that it is the defe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on if the entire subject- matter of the suit will fall under the arbitration clause and the Arbitral Tribunal will be able to dispose of the entire subject-matter which is the subject-matter of the suit. Section 5 of the Act is an embargo on the judicial authority in intervening in a matter where there is an arbitration clause except where so provided by the Act, section 5 is not an ouster of jurisdiction of Civil Court to try a civil suit even if there be an arbitral clause. Section 5 is an embargo on the authorities entertaining objection/ applications under the Arbitration Act not to intervene unless a power has been conferred on the judicial authority to intervene. We will, therefore, examine whether the two judgments cited and on which reliance has been placed have considered the scope of section 8. Before considering the judgment it may be stated that what the Court has to consider is the ratio of the judgments. The ratio of the judgment will arise in the event firstly the matter was directly in issue, the matter needed to have been decided and has been decided by reasons. If these three basic predicates are satisfied and met, then only can it be said that there is a ratio d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts do not really deal with the contention based on section 8 as raised by the defendant. 5. On the other hand on behalf of the plaintiffs their learned counsel has drawn my attention to the judgment of another learned single Judge of this Court in Garden Finance Ltd. s case ( supra ) wherein the learned Judge has considered the provisions of section 8 and the judgment of the Apex Court in P. Anand Gajapathi Raju s case ( supra ). In fact in the case of P. Anand Gajapathi Raju ( supra ) the real issue before the Apex Court was whether in appeal the Court could refer the parties to arbitration under the new Act. During the pendency of the appeal before the Apex Court the parties entered into an arbitration agreement and agreed to refer those disputes in appeal for arbitration. The arbitration agreement was in the form of an application and signed by all the parties. This was the application for consideration before the Apex Court. Construing the language of section 8 the Apex Court held that not only the trial Court, but also the Apex Court on an application made to it in writing could refer the parties to arbitration. In other words even in appeal the power of referring t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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