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TMI Blog2008 (10) TMI 629X X X X Extracts X X X X X X X X Extracts X X X X ..... ondent nos. 6 and 7 are partnership firms carrying on business under the name of Shrivastava Group. The respondent no. 8, also arrayed as party to the petition, is a company formed under the Joint Venture Agreement (for short `JVA') between the petitioner and respondent no. 1. The said company was incorporated and registered under the provisions of the Indian Companies Act, 1956. However, during the pendency of the aforesaid proceedings the name of respondent no. 8 was deleted from the array of parties. 3. On 08.09.2003, an agreement of cooperation was entered into between the petitioner on one hand and respondent no. 1 on the other hand for the purpose of providing cooperation and also for exports of iron ore from mines belonging to Shrivastava Group. Pursuant to the above agreement, a JVA was executed on 25.09.2003 between the petitioner and respondent no. 1 for the purpose of mining, processing and export of iron ore. On 26.03.2004 another JVA was executed between the parties, particularly, to iron out certain controversies in respect of the JVA dated 25.09.2003. Article 14.3 of the said JVA, which is an arbitration clause, reads as follows: If the parties fail to re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied on 06.10.2004, wherein it was pointed out to respondent no. 3 that reduction of price of the consignment had not only caused loss to respondent no. 3 but also to M/s. Focus Trading Company Ltd. It was further pointed out to respondent no. 3 that future of the JVA should not be jeopardized only on account of the said event, particularly, when both the parties had invested enormous time and energy in establishing the Joint Venture. By the said reply the respondent no. 3 was requested to withdraw the letter of cancellation. On 04.11.2004, the sister concern of the petitioner, namely, M/s. Focus Trading Company Ltd. and its director Mr. J.M. Sahai received a legal notice from the advocate of respondent no. 2 demanding an amount of rupees US $ 5,03,319 with 14% interest towards the reduction of price in the shipment supplied through the vessel named M.V. LUO - QUING. The petitioner pointed out in the reply to the aforesaid notice that the petitioner is willing to cooperate and resolve the issues provided the said issues are within the JVA. However, the said issues could not be resolved as the respondents were not willing to resolve the same. Consequently on 15.12.2004 the petiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... VA containing an arbitration clause, in terms of which, any dispute or difference that arises between the parties is required to be adjudicated and decided through the process of arbitration. It was submitted by the counsel for the petitioner that since in the present case disputes have arisen between the parties in connection with the matters pertaining to the JVA, therefore, all the said disputes are required to be referred for adjudication to the arbitration by appointing an arbitrator. 8. Upon careful perusal of the petition filed under Section 11(6) and (9) of the Act and upon hearing the counsel appearing for the parties it could be deduced that the petitioner is mainly confining its claim for refund of the money paid/deposited pursuant to and in execution of JVA and also amount paid towards working expenses of respondent no. 8 with interest @ 18% per annum. In the petition details of the amount as paid by the petitioner towards JVA are also furnished, wherein it is stated that M/s. Focus Trading Company Ltd., a sister concern of the petitioner company even prior to the singing of JVA on 18.02.2004 advanced an amount of US $ 450,000 to respondent no. 3 company i.e. the De ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ticle 1 constituting the Shrivastava Group. In the said JVA Mining Companies which are referred to in the agreement, are the following companies owned/controlled by Shrivastava Group: (a) M/s. The Deccan Minerals Private Limited; (b) M/s. New India Mining Corporation Pvt. Ltd. (c) Minerals and Metals; (d) M/s. Raw and Finished Product; and (e) M/s. The Champion India Industries Pvt. Ltd. By the aforesaid JVA the parties have expressed their intention to form and register a Joint Venture Company with equal equity participation at the earliest possible date for the purposes of carrying on the business as mentioned in the said agreement. The incorporation of the company was in the name of Everest Mining Mineral Pvt. Ltd. which was incorporated with initial authorized capital of ₹ 50,00,000/-. Both the parties, namely, Shrivastava Group and M/s. Everest Holding Ltd. agreed to capitalize the Joint Venture Company up to ₹ 10,00,000/- and that each party was required to subscribe to 50,000 equity shares of ₹ 10/- each. In the said clause, namely, clause 3.3, the parties also agreed that the aforesaid shares could be subscribed by either of the parties itself or by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sts or not and consequent thereto a Chief Justice or the person or institution designated by him, is bound to decide whether he has jurisdiction to entertain the request, in the sense, whether the parties making the motion has approached the right High Court, whether there is a valid arbitration agreement in terms of Section 7 of the Act and whether the person before him with the request is a party to the arbitration agreement or whether there was no dispute subsisting which was capable of being arbitrated upon. It was also held in the said decision that the Chief Justice can also decide the question whether the claim was a dead one; or a long barred claim that was sought to be resurrected and whether the parties have concluded the transaction by recording satisfaction of their mutual rights and obligations or by receiving the final payment without objection. This Court, however, issued a caution that at that stage it may not be possible to decide whether a live claim made is one which comes within the purview of the arbitration clause and that it would be appropriate to leave that question to be decided by the Arbitral Tribunal on taking evidence, along with the merits of the cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich reads as under: The next question which requires consideration is - even if there is no provision for partly referring the dispute to arbitration, whether such a course is possible under Section 8 of the Act. In our view, it would be difficult to give an interpretation to Section 8 under which bifurcation of the cause of action, that is to say, the subject-matter of the suit or in some cases bifurcation of the suit between parties who are parties to the arbitration agreement and others is possible. This would be laying down a totally new procedure not contemplated under the Act. If bifurcation of the subject-matter of a suit was contemplated, the legislature would have used appropriate language to permit such a course. Since there is no such indication in the language, it follows that bifurcation of the subject-matter of an action before a judicial authority is not allowed . In paragraph 17 of the said judgment it was held as follows: Secondly, such bifurcation of suit in two parts, one to be decided by the Arbitral Tribunal and the other to be decided by the civil court would inevitably delay the proceedings. The whole purpose of speedy disposal of dispute and d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , I am of the considered opinion that there is a valid arbitration agreement between the parties as contained in the JVA, which the parties are required to adhere to and are bound by the same. In other words, if there is any dispute between the parties to the agreement arising out of or in relation to the subject matter of the said JVA, all such disputes and differences have to be adjudicated upon and decided through the process of arbitration by appointing a mutually agreed arbitrator. Pursuant to the aforesaid JVA dated 26.03.2004 Everest Mining Mineral Pvt. Ltd. was incorporated and various amounts were also deposited by the petitioner through sister concerns for the incorporation and functioning of the said company. The said company could not function due to disputes which arose between the parties. Such disputes which relate to the working of JVA and various deposits made and which arose out of and in relation to the said JVA are required to be considered and decided through the process of arbitration as envisaged under clause 14.3 of the JVA. Though the JVA may have been terminated and cancelled as stated but it was a valid JVA containing a valid arbitration agreement for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... putes would have to be decided and adjudicated upon in accordance with law. But all such disputes which are identified and mentioned hereinbefore and which arise out of and in relation to JVA have to be and must be decided by appointing an arbitrator in terms of the arbitration agreement. 21.During the course of the arguments the parties have agreed that in case the Court decides to refer the disputes to the arbitrator in that event the same may be referred to Justice V.N. Khare, retired Chief Justice of this Court for adjudication and decision. The parties mutually agreed for him as the arbitrator for deciding these issues. Consequent to the said agreement, I appoint Justice V.N. Khare, retired Chief Justice of this Court as the sole arbitrator with a request to him to decide the disputes between the parties arising out of the JVA as expeditiously as possible. It shall be open for the learned Arbitrator to fix his remuneration after discussing with the parties. 22.Accordingly, the petition is disposed of. It goes without saying that the observations made herein are only for the purpose of deciding the issue as to whether or not the disputes should be referred to the arbitra ..... X X X X Extracts X X X X X X X X Extracts X X X X
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