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TMI Blog2014 (1) TMI 1811X X X X Extracts X X X X X X X X Extracts X X X X ..... the plaint is liable to be rejected. Accordingly, the application is allowed and the present suit is dismissed. - CS(OS) 1231/2013 - - - Dated:- 17-1-2014 - HON'BLE MR. JUSTICE JAYANT NATH For the Appellant : Mr. V.Shankara, Advocate For the Respondent : Mr. Neeraj Kishan Kaul, Senior Advocate with Ms. Madhu Sweta, Mr. Ravi Singhania and Mr. Sumit Gupta, Advocates JAYANT NATH, J. IA No. 12140/2013(Order 7 Rule 11 of CPC) 1. This is an application filed under Order 7 Rule 11 of CPC for rejection of the plaint. 2. The present suit is filed by the plaintiff seeking a decree against the defendants for permanent injunction to restrain the defendants from proceeding before Singapore International Arbitration Centre for arbitration in alleged violation of Shareholders Agreement dated 6th October , 2011 and Master Agreement dated 24th August, 2012. 3. The averment of the plaintiff is that the plaintiff and the defendant no.1 entered into a joint venture Shareholder Agreement in October, 2011 and Master Agreement dated 24th August, 2012. The business of the joint venture started in October, 2011. Certain disputes arose between the parties on account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e or the validity of the arbitration agreement. The submission put forth is that Clause 12.3 of the Share-Holders Agreement which is an arbitration clause is in three parts, namely, Clause 12.3(a), (b) and (c). It is stated that defendant has straightway invoked sub-clause 12.3 (c) by-passing Clause 12.3 (a) and Clause 12.3(b). It is stated that as the defendant has failed to follow the said procedure, the arbitration cannot be done and hence the present suit would lie. He submits that all the judgments relied upon by the counsel for the defendant pertains to the suits where there was a challenge to the validity of the Shareholders Agreement. He relies on Section 21 of the Arbitration Act and reliance is also placed on the judgment of the Hon ble Supreme Court in the case of Venture Global Engineering Vs. Satyam Computer Services Ltd., AIR 2008( SC) 1061, where the Hon ble Supreme Court held that since all the courts below failed to advert and take into consideration the specific clause in the Shareholders Agreement and the conduct of the parties, it set aside the orders passed. 7. Since the plaintiff argues about non- compliance of Clause 12.3(a) and Clause 12.3(b) of the Share ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion is in the discretion of the court. A permanent injunction cannot be granted under clause (h) of Section 41 when equally efficacious relief can be obtained by any other usual mode of proceeding except in case of breach of trust. The discretion of the court ought not to be exercised in a manner so as to adversely affect the arbitral proceedings or to negate the purport of the 1996 Act. Similarly, it is not as if, if injunction restraining the arbitration is not given, the party challenging the validity of the arbitration agreement would be rendered remediless. The said party has the equally efficacious remedy of Sections 16 and 34 of the Arbitration Act. The suit for declaration and permanent injunction is found to be barred by provisions of Specific Relief Act also. 23. In my view, the law with respect to the adjudication by the courts while dealing with an application under Section 8 or Section 11 of the Act would not apply to the suit. Firstly, the proceedings under Sections 8 and 11 are provided for by the Act itself while the suit challenging the validity of the arbitration agreement has not been provided for in the Act and is barred under Section 5 of the Act. Thus merel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t confined to the width of its jurisdiction but goes to the very root of its jurisdiction (see Secur Industries Ltd. vs. Godrej Boyce Mfg. Co. Ltd.). In the present case, therefore, the question as to whether the draft purchase order acquired the character of a concluded contract or not and the question as to whether the contract was non est can only be decided by the arbitrator. Therefore, the aforestated question have got to be decided by arbitration proceedings. ........ 12. The case of Clearwater Capital Partners (Cyprus) Ltd., Vs. Gurmeher Singh Majithia (Supra) also related to a case where the suit was filed seeking the relief of declaration that the Shareholder Subscription Agreement and Shareholder Agreement are illegal and therefore void ab intio and for an injunction restraining defendant No. 1 from initiating any legal action for enforcement of any terms of the said two Agreements including but not limited to invocation of the arbitration clause. This Court held as under: Under Section 33 of the 1940 Act, the Arbitrator could examine the question of the existence or validity of the arbitration agreement. Section 16 of the Act not only preserves this power of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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