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TMI Blog2019 (7) TMI 1469X X X X Extracts X X X X X X X X Extracts X X X X ..... o 31.03.2002. 3. RPIL vide its letter dated 20.07.2001 informed the appellant that their Company is getting merged with respondent Company- Nicholas Piramal India Ltd. (NPIL) and that pursuant to the merger, RPIL shall cease to exist as a legal entity and therefore, with effect from three months from the date of the letter, the subsisting clearing and forwarding agency agreement shall stand terminated in terms of the provisions of the agreement. The Bombay High Court in Company Application No.252 of 2001 passed the order dated 27.09.2001 inter alia approving amalgamation of RPIL with the respondent Company. The appellant by its letter dated 25.07.2001 objected to the unilateral decision of the respondent Company to terminate the clearing and forwarding agency agreement and requested the respondent to maintain status-quo with respect to the agency until the issue is resolved through negotiations. RPIL vide its letter dated 03.09.2001 informed the appellant that they are unable to accede to the request for withdrawing the termination letter. For all practical purposes, the clearing and forwarding agency agreement dated 01.05.1997 thus stood terminated. 4. The appellant filed Titl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 19.02.2005 dismissed the application filed under Section 8 of the Act by holding that the earlier suit in Title Suit No.241 of 2001 filed by the appellant was decreed on compromise between the parties and therefore, in view of the law laid down in Nathani Steels Ltd. v. Associated Constructions 1995 Supp.(3) SCC 324, the respondent-defendant cannot invoke the arbitration clause pertaining to the same dispute and the suit was directed to be proceeded. The respondent filed Civil Revision Petition No.31 of 2005 before the High Court challenging the order of the trial court dated 19.02.2005. The High Court vide impugned order allowed the revision petition and referred the dispute to arbitration. The High Court held that even before the merger of RPIL with the respondent which was approved by the Bombay High Court on 27.09.2001, the appellant instituted Title Suit No.241 of 2001 on the ground of illegal termination of contract, which suit resulted in a compromise decree. Observing that the existence of arbitration clause has been admitted by the appellant Company, the High Court held that in view of the decision reported in Konkan Railway Corporation Ltd. and Another v. Rani Const ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so submitted that the compromise deed dated 11.12.2001 in Title Suit No.241 of 2001 was obtained by the appellant Company through false inducement and practising fraud upon the respondent Company and if the fraud played by the appellant was known to the respondent Company, the respondent would not have been a party to the aforesaid compromise deed and the said compromise decree having been obtained by practising fraud is a nullity and void ab-initio. Learned counsel further submitted that the dispute raised by the appellant is "....touching upon the presents...." of the agreement dated 01.05.1997 and the High Court rightly set aside the order of the trial court and referred the parties to arbitration". 10. We have carefully considered the rival contentions and perused the impugned judgment and materials on record. The following points arise for determination in this appeal:- (i) Whether the High Court was right in referring the parties to arbitration by observing that the appellant- Company admits the existence of arbitration clause in the agreement dated 01.05.1997? (ii) Whether the appellant is right in contending that the dispute raised in the Money Suit No.73 of 2003 is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... intiff and expected to clear by 11th December, 2001. The plaintiff has also handed over entire documents including L/R in possession, files, records and Sales Tax documents such as both utilized and unutilized sales tax documents (1) Road Permit; (2) Despatched Note; (3) 'C' Forms; (4) 'F' Forms; (5) 'C' Forms from stockists and papers to the defendants relating to the C & F Agency under defendants No.1; (6) All previous records starting from November, 1994 till date has also been handed over to the plaintiff; (7) Software supplied and data's of computer is also taken and PC left after complete deletion of programme of RPIL." 13. From a reading of the above terms of the compromise deed dated 11.12.2001, it is clear that the parties have substituted a new agreement by way of compromise. As per the agreement dated 01.05.1997, the appellant was the clearing and forwarding agent for the entire north-eastern region; whereas under the terms of the compromise, the appellant has been appointed as stockist of the company only for Guwahati and Agartala and not as clearing and forwarding agent for north-eastern region. The clauses in the compromise memo also clearly state that the appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e dispute, in Yogi Agarwal v. Inspiration Clothes and U and Others (2009) 1 SCC 372, it was held as under:- "9. When a defendant invokes Section 8 of the Act by alleging existence of an arbitration agreement, he should establish that such arbitration agreement related to, or is applicable to, the suit transaction/contract. The parties may enter into different contracts at different points of time or may enter into a series of unrelated transactions. It is possible that in regard to some, they may provide for arbitration and in regard to others, may not provide for arbitration. Obviously, the existence of an arbitration agreement with reference to some other transaction/contract to which the plaintiff was or is a party, unconnected with the transactions or contracts to which a suit relates, cannot be considered as existence of an "arbitration agreement" in regard to the suit transactions/contracts. 16. In the present case, the compromise decree does not contain any arbitration clause. The subsequent Suit No.73 of 2003 has been filed by the appellant due to failure of the respondent Company to appoint the appellant as stockist of their products in Guwahati and Agartala and the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the respondent submitted that the various claims made in the Money Suit No.73 of 2003 relate to the alleged loss sustained by the appellant-plaintiff due to termination of the agreement dated 01.05.1997 necessarily falls within the ambit of ".....touching upon these presents....." occurring in clause 17 of the agreement and therefore, the High Court rightly referred the parties to arbitration. Placing reliance upon Swiss Timing v. Commonwealth Games 2010 (2014) 6 SCC 677, the learned counsel submitted that to shut out arbitration at the initial stage would destroy the very purpose for which the parties had entered into arbitration agreement. It was submitted that when there is a clause for arbitration agreed by the parties, it is mandatory for the civil court to refer the disputes to an arbitrator. It was urged that in the present case, in view of clause 17 of the agreement dated 01.05.1997 and in view of the mandatory language of Section 8 of the Act, the High Court rightly referred the parties to arbitration. 19. Though some of the claims in the Money Suit No.73 of 2003 relate to the loss allegedly sustained by the appellantplaintiff due to termination of the agreement date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appreciation of the voluminous evidence that needs to be produced, the court can sidetrack the agreement by dismissing the application under Section 8 and proceed with the suit on merits. It can be so done also in those cases where there are serious allegations of forgery/fabrication of documents in support of the plea of fraud or where fraud is alleged against the arbitration provision itself or is of such a nature that permeates the entire contract, including the agreement to arbitrate, meaning thereby in those cases where fraud goes to the validity of the contract itself of the entire contract which contains the arbitration clause or the validity of the arbitration clause itself.......". Since the respondent has raised the plea that the compromise decree is vitiated by fraud, the merits of such a plea could be decided only by the Civil Court upon consideration of the evidence adduced by the parties. 22. As discussed earlier, there is no arbitration clause relating to the dispute between the parties in not appointing the appellant as stockist and the claim of compensation towards loss of goodwill and reputation. The High Court erred in proceeding under the footing that th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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