Citation Codes

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citation codes

Case Number

IA No. 8315 of 2005 in CS(OS) No. 534 of 2003

Advocates

Biswajeet Bhattacharya
Nilesh Sawhney
Prem Peyara
Prem Kumar

Judges

Pradeep Nandrajog, J.

Acts

SECTION 16 ARBITRATION AND CONCILIATION ACT 1996
Sections 5 and 8 of the Arbitration and Conciliation Act, 1996
ARBITRATION AND CONCILIATION ACT 1996
SECTION 5 ARBITRATION AND CONCILIATION ACT 1996
SECTION 8 ARBITRATION AND CONCILIATION ACT
clauses of Sub-section 4 of Section
Section 5 and Section 8

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Smart Summary

Structured Summary of the Opinion (Pradeep Nandrajog, J.)

Factual and Procedural Background

This matter concerns an application filed by the defendants under Sections 5 and 8 of the Arbitration and Conciliation Act, 1996, seeking that the dispute in the suit be referred to arbitration. The defendants relied upon an alleged Enterprise Partner Agreement dated 26 August 2000 (containing an arbitration clause at Clause 19) as the basis for referral.

The plaintiff's case, as pleaded, is that in August 2000 defendant No. 2 (Chairman & CEO of defendant No. 1) approached the plaintiff to form a joint venture, and because of representations made the plaintiff advanced Rs. 40,00,000 by cheque dated 24.8.2000 as a short-term loan. The plaintiff later alleged that defendants acted dishonestly and that a draft joint venture agreement sent in May 2001 attempted to appropriate the loan amount; the plaintiff seeks recovery of Rs. 40,00,000 with interest, characterising the transaction as a loan and alleging fraud.

Procedurally, the defendants filed their application for reference to arbitration simultaneously with filing a written statement and a counterclaim. The Court heard argument and disposed of the application by dismissing it and ordering no costs.

Legal Issues Presented

Whether the dispute raised in the suit should be referred to arbitration under Section 8 of the Arbitration and Conciliation Act, 1996, read with the restriction on judicial intervention under Section 5.
Whether the defendants can simultaneously seek a reference to arbitration while asserting a counterclaim in the same court proceeding (i.e., whether a party may "approbate and reprobate").
Whether, on the facts of this case, there exists an arbitration agreement (within the meaning of Section 7) so as to trigger mandatory referral under Section 8, or whether the question of existence/validity of any arbitration agreement should be left to the arbitral tribunal under Section 16.

Arguments of the Parties

Defendants' Arguments

The defendants relied on Sections 5 and 8 of the Arbitration and Conciliation Act, 1996. They submitted that Section 5 prevents a judicial authority from intervening in matters governed by Part I of the Act and that Section 8 requires a judicial authority to refer parties to arbitration where the subject-matter of the action is covered by an arbitration agreement, provided a party so applies timely.
The defendants contended that an Enterprise Partner Agreement dated 26.8.2000 (allegedly containing Clause 19 providing for arbitration at New Delhi under the Arbitration and Conciliation Act, 1996) governed the dispute and therefore the matter should be referred to arbitration.
Counsel for the defendants argued that jurisdictional questions (including whether an arbitration agreement exists) are for the arbitral tribunal to decide under Section 16, and thus the Court should not embark on enquiry into such issues at the stage of Section 8 application.
Counsel relied on several decisions of the Supreme Court to support the submission that contentious jurisdictional issues should ordinarily be left to the arbitrator (cases cited by counsel are listed in the precedents section below).

Plaintiff's Position

The plaintiff's pleaded case is that the Rs. 40,00,000 was advanced as a loan on 24.8.2000 and was encashed by the defendants; subsequent conduct and a draft agreement in May 2001 amounted to fraud by the defendants in attempting to appropriate the loan.
The plaintiff averred that negotiations had been verbal, that the plaintiff never executed the Enterprise Partner Agreement relied upon by the defendants, and that the agreement does not bear the plaintiff's signature or any signatory on behalf of the plaintiff.
The plaintiff sent a letter dated 29.5.2001 demanding immediate refund of Rs. 40,00,000 with interest (18% p.a.) and stated that the draft EPA was not acceptable and differed materially from what had been discussed.
Implicit in the plaintiff's position (as recorded) is that the suit proceeds on a claim for recovery of the loan and for fraud, not on the written Enterprise Partner Agreement which was not executed by the plaintiff.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Hindustan Petroleum Corpn. Ltd. v. Pinkcity Midway Petroleums, (2003) 6 SCC 503	The Supreme Court observed that Section 16 empowers the arbitral tribunal to rule on its own jurisdiction, including objections with respect to existence or validity of the arbitration agreement; where existence of an arbitration clause is admitted, Section 8's mandatory language requires reference to arbitration.	The Court noted that Hindustan Petroleum applied where the existence of an arbitration clause was not in dispute; the present case was distinguished because the existence of an arbitration agreement was disputed and, more importantly, the plaintiff denies having executed the agreement and sues on a different basis (loan/fraud).
Niko Resources Ltd. v. Gujarat State Petroleum Corporation (Gspc), (2002) 10 SCC 71	The decision recorded a finding that there was an agreement between the parties containing an arbitration clause and, as a result, the matter was referred to arbitration.	The Court observed that Niko showed that where an agreement containing an arbitration clause is found to exist, referral follows; the case was noted but the present facts did not show such an admitted agreement.
Nimet Resources Inc. v. Essar Steels Limited, (2000) 7 SCC 497	Where there was a transaction evidenced by correspondence and documents but it was unclear whether an arbitration agreement existed, the appropriate course was to refer the dispute to arbitration and leave the question to the arbitral tribunal under Section 16; the Court also noted Section 7's requirements for what constitutes an arbitration agreement in writing.	The Court distinguished Nimet on its facts: in Nimet there was clear transactional correspondence suggesting a contract; in the present case the document relied upon by the defendants surfaced after the loan was paid and the plaintiff denies execution, so the Court found no prima facie arbitration agreement within the Section 7 categories.
Hythro Power Corporation Ltd. v. Delhi Transco Ltd., JT 2003 (6) SC 515	Where tender process and correspondence were admitted facts and tender documents contained an arbitration clause, the question whether those letters/communication constituted a contract with an arbitration agreement was held to be within the jurisdiction of the arbitral tribunal under Section 16.	The Court noted Hythro as an example where admitted facts supported a prima facie arbitration agreement; it concluded that the present facts did not present such admitted foundations for an arbitration agreement.
Viatra A.G v. State Trading Corpn. Of India Ltd., (2002) 10 SCC 74	The objection that there is no valid arbitral clause in the agreement is a matter for the arbitral tribunal and not for the appointing judge to decide.	The Court recorded the precedent but observed that counsel for the applicant could hardly explain its relevance to the present case; the Court treated it as inapposite because here the document relied upon appeared to be a post hoc creation (surfacing after the loan) and there was no signed arbitration agreement.

Court's Reasoning and Analysis

The Court analysed the application and arguments in two stages and gave two principal reasons for dismissing the defendants' application to refer the dispute to arbitration.

First reason — procedural/inconsistent conduct (approbate and reprobate):

The defendants filed a written statement and simultaneously pursued a counterclaim in the same suit while seeking a referral to arbitration for the plaintiff's claim. The Court held that because the defendants themselves made the alleged agreement the foundation of their counterclaim, they could not on the one hand require the Court to adjudicate their counterclaim under that alleged agreement and on the other hand require the plaintiff's claim to be referred to arbitration. The Court characterised this as an attempt to "approbate and reprobate" and found that inconsistent posture precluded allowing the application.

Second and more fundamental reason — absence of a prima facie arbitration agreement on the facts:

The Court examined the pleaded case of the plaintiff and the factual record. It recorded that:

The plaintiff's claim is founded on the contention that Rs. 40,00,000 was advanced as a loan (cheque dated 24.8.2000) and that thereafter defendants acted dishonestly; the plaintiff did not execute the Enterprise Partner Agreement relied on by the defendants.
The alleged Enterprise Partner Agreement relied upon by the defendants has not been executed by the plaintiff and bears no signature on behalf of the plaintiff; the document relied upon by the defendants first surfaced in May 2001 whereas the money was paid in August 2000.
Section 7 of the Act defines what an arbitration agreement in writing is and lists the forms in which such an agreement may be established (including document signed by the parties, exchange of letters/telecommunications providing a record, or exchange of statements of claim and defence where existence is alleged and not denied).

The Court considered the precedents relied upon by the defendants which generally support leaving jurisdictional objections to the arbitral tribunal under Section 16 where there is a prima facie arbitration agreement or where the parties' communications show a contract with an arbitration clause. However, the Court emphasised that those precedents applied in contexts where there was at least a prima facie basis for concluding that an arbitration agreement existed (e.g., agreement admitted by parties, transactional correspondence showing a contract, tender documents containing arbitration clauses, etc.).

The Court concluded that the present case did not disclose an arbitration agreement within the clauses of Section 7(4). Given the plaintiff's denial of execution and the timing and circumstances (document surfacing after the payment), the Court considered that it was ex facie evident that no arbitration agreement existed as a basis for mandatory reference under Section 8. The Court also warned that where a document relied upon is created, sham or fabricated, the position differs from those precedents and a court should not refer to arbitration.

Holding and Implications

Core Ruling: Application dismissed.

The Court dismissed the defendants' application under Sections 5 and 8 of the Arbitration and Conciliation Act, 1996, and ordered no costs.

Implications and direct consequences:

The defendants' request to refer the plaintiff's suit to arbitration was refused; the suit will proceed in the Court (the application to refer was dismissed).
The Court relied on two discrete grounds: (a) inconsistent conduct by the defendants in prosecuting a counterclaim while seeking reference (approbate and reprobate), and (b) absence of a prima facie arbitration agreement on the admitted facts (document not executed by the plaintiff and produced after the loan was made).
The opinion distinguishes earlier Supreme Court authorities relied upon by the defendants by reference to the particular factual matrices of those cases (where a prima facie arbitration agreement was present), and does not lay down any novel legal principle beyond the application of Sections 5, 7, 8 and 16 to the facts before the Court.

Note: The Court did not indicate that it was establishing any new binding precedent; it applied existing authorities and distinguished them on facts to reach the decision to dismiss the application.

This summary is based exclusively on the content of the provided opinion and does not add or infer information not contained in that opinion.

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Asiasoft (India) Pvt. Ltd. v. Globesyn Technologies Ltd.

Pradeep Nandrajog, J.— Application filed by the defendants invoking Sections 5 and 8 of the Arbitration and Conciliation Act, 1996 is being disposed of by the present order. Section 5 and Section 8 relied upon read as under:

“5. Extent of judicial intervention.—Notwithstanding anything contained in any other law for the time being in force, in matters governed by this Part, no judicial authority shall intervene except where so provided in this Part.”

“8. Power to refer parties to arbitration where there is an arbitration agreement.—(1) A judicial authority before which an action is brought in a matter which is the subject of an arbitration agreement shall, if a party so applies not later than when submitting his first statement on the substance of the dispute refer the parties to arbitration.

(2) The application referred to in Sub-section (1) shall not be entertained unless it is accompanied by the original arbitration agreement or a duly certified copy thereof.

(3) Notwithstanding that an application has been made under Subsection (1) and that the issue is pending before the judicial authority, an arbitration may be commenced or continued and an arbitral award made.”

2. Pleadings of the defendants in aid of the relief prayed in the application, relief being to refer the dispute to arbitration, are as under:

“That the defendants herein submits that the enterprise Partner Agreement dated 26th August, 2000 although not signed by the plaintiff but upon which the plaintiff insists and relied at various points of time consist of an arbitration Clause being Clause No. 19, which states as under—

‘All disputes or the differences whatsoever arising between the parties hereto out of or relating to the construction, meaning and operation or effect of this Agreement or the breach thereof which cannot be settled by mutual discussion the same shall be referred to the decision of an arbitrator to be appointed in writing by the parties to the Agreement or if they cannot agree upon a single arbitrator to the decision of three arbitrators, one each to be appointed by the Parties herein and the third to be mutually agreed upon by the two arbitrators will be appointed as the Chairman. The arbitration proceedings shall be conducted at New Delhi and the arbitration proceedings shall be in accordance with the provisions of the Arbitration and Conciliation Act, 1996’.”

3. Sh. Biswajeet Bhattacharya, Counsel for the defendants urged that mandate of Section 5 of the Arbitration and Conciliation Act, 1996 prohibited a judicial authority to determine any dispute which was the subject matter of an arbitration agreement between the parties. Counsel urged that mandate of Section 8 required a judicial authority before which an action is brought to refer the parties to arbitration if the subject matter of the action was the subject matter of an arbitration agreement.

4. There could hardly be any dispute to the proposition of law propounded by Counsel for the defendants, but the issue is, whether facts of the present case would prohibit a trial of the suit in this Court.

5. Application has to be dismissed for two reasons. The first and the foremost reason is that the defendants have not only filed a written statement simultaneously when the application was filed but have also laid a counter claim. Sh. Biswajeet Bhattacharya argued that the suit has to be referred to arbitration but the counter claim has to continue in this Court.

6. I am quite surprised with the arguments urged for the reason the alleged agreement dated 26.8.2000 which has been made the basis of the application has been made the basis of the counter claim by the defendants themselves. If the defendants lay a counter claim under the alleged agreement dated 26.8.2000 and require this Court to adjudicate their counter claim, defendants cannot approbate and reprobate, requiring the dispute raised in the plaint to be referred to arbitration.

7. The second reason as to why the application cannot be allowed, being more fundamental to the issue, may now be decided.

8. Case of the plaintiff is that defendant No. 2 who is the Chairman and Chief Executive Officer of defendant No. 1 approached the plaintiff in August, 2000 and expressed a desire to do business in partnership with the plaintiff. Said defendant gave a very rosy picture of defendant No. 1. As per the plaintiff, believing the representations of the defendants, parties discussed the modality of a joint venture. Verbal discussions were held and it was agreed that a joint venture company would be formed with equity participation from the plaintiff and the defendants. As per the plaintiff when negotiations were at an advanced stage, defendants represented that they were facing liquidated problem and to tide over the same requested the plaintiff for a short term financial assistance in sum of Rs. 40,00,000/-. Plaintiff advanced a loan in sum of Rs. 40,00,000/- by means of a cheque dated 24.8.2000 drawn in favour of defendant No. 1. The cheque was encashed.

9. Plaintiff states that having received the sum of Rs. 40,00,000/- by way of loan, defendant No. 2 turned dishonest inasmuch as in May, 2001 he sent a copy of a proposed joint venture agreement for the formation of a joint venture company containing terms not agreed to by the parties. In the draft of the agreement sent, defendants sought to appropriate the sum of Rs. 40,00,000/- received by them.

10. According to the plaintiff, this was an act of complete fraud. Accordingly, plaintiff seeks to recover sum of Rs. 40,00,000/- received by the defendants together with interest thereon.

11. It is the admitted position between the parties that the agreement relied upon by the defendants has not been executed by the plaintiff. Indeed, the agreement does not bear the signatures of any person on behalf of the plaintiff.

12. Assertion of the defendant that plaintiff has sued on the basis of the agreement dated 26.8.2000 relied upon by the defendant is incorrect. I have noted above the case of the plaintiff. Plaintiff has categorically averred that the sum of Rs. 40,00,000/- in question was by way of loan. Plaintiff has categorically averred that after verbal negotiations, defendants sent a draft of a proposed joint venture which contained terms not agreed upon and therefore plaintiff did not sign the agreement in question.

13. Learned Counsel for the applicant submitted that jurisdiction of this Court under Section 8 had to be understood in the context of Section 16 of the Arbitration and Conciliation Act, 1996. Submission made was that the learned arbitrators had to rule on their jurisdiction. Counsel urged that whether or not an agreement existed between the parties had to be decided by the learned arbitrator.

14. Counsel relied upon the following decisions:

(i) (2003) 6 SCC 503, Hindustan Petroleum Corpn. Ltd. v. Pinkcity Midway Petroleums.;

(ii) (2002) 10 SCC 71, Niko Resources Ltd. v. Gujarat State Petroleum Corporation (Gspc).;

(iii) (2000) 7 SCC 497, Nimet Resources Inc. v. Essar Steels Limited;

(iv) JT 2003 (6) SC 515, Hythro Power Corporation Ltd. v. Delhi Transco Ltd..;

(v) (2002) 10 SCC 74, Viatra A.G v. State Trading Corpn. Of India Ltd.. Limited.

15. Decision of the Hon'ble Supreme Court in Hindustan Petroleum Corporation Limited pertained to an issue where agreement between the parties was not in dispute. Plaintiff had filed the suit in respect of a cause of action under the agreement alleging breach by the defendant. Application under Section 8 of the Arbitration and Conciliation Act filed by the defendant was dismissed by the trial Court on the ground that the dispute raised was not covered by the ambit of the arbitration clause and hence the suit could proceed in the Court. Revision petition filed before the High Court had failed.

16. In the context of the said facts, learned Supreme Court held as under:

“15. The question then would arise: what would be the role of the Civil Court when an argument is raised that such an arbitration clause does not apply to the facts of the case in hand? Learned Counsel for the appellant contends that it is a matter which should be raised before the arbitrator who is competent to adjudicate upon the same and the Civil Court should not embark upon an inquiry in regard to the applicability of the arbitration clause to the facts of the case. While learned Counsel appearing for the respondent contends that since the applicability of the arbitration clause to the facts of the case goes to the very root of the jurisdiction of the reference to arbitration, this question will have to be decided by the Civil Court before referring the matter to arbitration even in cases where there is admittedly an arbitration clause. The answer to this argument, in our opinion, is found in Section 16 of the Act itself. It has empowered the Arbitral Tribunal to rule on its own jurisdiction including rule on any objection with respect to the existence or validity of the arbitration agreement.”

17. Following pertinent observations of Their Lordships in para 14 of the report are relevant for the purposes of the present adjudication and hence are being noted. They read as under:

“14……….Therefore, it is clear that if, as contended by a party in an agreement between the parties before the Civil Court, there is a clause for arbitration, it is mandatory for the Civil Court to refer the dispute to an arbitrator. In the instant case the existence of an arbitral clause in the Agreement is accepted by both the parties as also by the Courts below but the applicability thereof is disputed by the respondent and the said dispute is accepted by the Courts below. Be that as it may, at the cost of repetition, we may again state that the existence of the arbitration clause is admitted. If that be so, in view of the mandatory language of Section 8 of the Act, the Courts below ought to have referred the dispute to arbitration.”

18. Decision in Niko Resources Limited's judgment (supra), shows, refer para 9 of the report, that Their Lordships of the Supreme Court recorded a finding that there was an agreement between the parties containing an arbitration clause and as a result thereof, matter was referred for arbitration.

19. In Nimit Resources' case (supra), Their Lordships of the Supreme Court held that where there was undoubtedly a transaction, evidenced from correspondence and documents exchanged between the parities but it was not clear whether there existed or not an arbitration agreement, appropriate course would be to refer the dispute to arbitration leaving it open to the arbitration to decide the question under Section 16. Their Lordships of the Supreme Court noted Section 7 of the Act which sets out what an arbitration agreement is.

20. Section 7 of the Act reads as under:

“7. Arbitration Agreement.—(1) In this part, ‘arbitration agreement’ means an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not.

(2) An arbitration agreement may be in the form of an arbitration Clause in a contract or in the form of a separate agreement.

(3) An arbitration agreement shall be in writing.

(4) An arbitration agreement is in writing if it is contained in—

(a) a document signed by the parties;

(b) an exchange of letters, telex, telegrams or other means of telecommunication which provide a record of the agreement; or

(c) an exchange of statements of claim and defence in which the existence of the agreement is alleged by one party and not denied by the other.

(5) The reference in a contract to a document containing an arbitration Clause constitutes an arbitration agreement if the contract is in writing and the reference is such as to make that arbitration clause part of the contract.”

21. Decision in Nimet Resources' case (supra) has to be understood in context of the admitted facts of the case. Facts being that Nimet Resources claim to have supplied goods as per contract dated 20.8.1998 Contract dated 20.8.1998 was followed by a purchase order dated 25.8.1998 issued by Essar Steel followed by Essar Steel opening a L.C On 15.10.98 There was a dispute. Essar Steel disclaimed the contract alleging that it had not signed the same. Nimet alleged that by placing purchase order and opening L.C Essar Steel had acted under the contract dated 20.8.1998 It was accordingly held in para 4 as under:

“4. In this case from the pleadings raised by the parties, prima facie, it appears to me that the parties are not total strangers. There has been some correspondence between them in regard to sale and supply of different quantities of ferro-vanadium on different dates. Prima facie examination reveals that it cannot be a case of there being no transaction between the parties in regard to sale and supply of the goods in question. Whether that transaction fructified into a contract with an arbitration Clause is a moot point to be decided.”

22. Admitted facts noted in Hythro Power Corporation's case (supra) were that respondent had issued a NIT pursuant whereto Hythro Power Corporation submitted an offer which was accepted. Tender documents contained an arbitration Clause. In light of said admitted facts, Their Lordships of the Supreme Court held in para 9:

“9……….Whether the letters and exchange of correspondence between the parties, pursuant to NIT, can constitute a contract and an arbitration agreement can be read into the same in terms of Section 7(4)(b) of the Act was a question solely within the jurisdiction of the Arbitral Tribunal under Section 16 of the Act.”

23. Decision in Viatra A.G (supra) reads as under:

“1. In view of a factual error in the order made by me on 1.5.2002, I recall the same and make the following order after hearing the parties—

‘I have been nominated by the Hon'ble the Chief Justice of India to appoint a presiding arbitrator to decide the dispute between Viatra A.G and State Trading Corporation of India Ltd.’

2. Exercising the authority so vested in me and after hearing the parties concerned, I appoint Mr. Justice S. Ranganathan, resident of A-102, Anandlok Coop. Group Housing Society, ‘Purvasha’, Mayur Vihar, Phase I, Delhi-110 091, a retired Judge of the Supreme Court of India as the presiding arbitrator to decide the said dispute between the parties.

3. The said presiding arbitrator will be paid such fee as may be determined by him.

4. Learned Counsel appearing for the State Trading Corporation has put forward a contention that there is no valid arbitral clause in the agreement. This is not a matter for me to decide. The objection, if any, in this regard will have to be raised before the learned arbitrators.

5. Ordered accordingly.”

24. Learned Counsel for the applicant could hardly explain its relevance.

25. Plaintiffs assertion in para 16 of the plaint pertaining to the alleged agreement relied upon by the defendant are:

“That the defendant No. 2 mischievously after persistent demands, reminders, pleas and notices from the plaintiff Company, in or about May, 2001 instead of sending a draft of the proposed Joint Venture Agreement for the formation of a Joint Venture Company, in utter disregard and absolutely contrary to the representations made earlier and the understanding arrived at between the parties, send an alleged Enterprise Partner Agreement to the plaintiff which was neither in contemplation of the plaintiff nor was ever discussed by the parties.”

26. Defendants' response to para 16 is as under:

“16. False and denied. It is stated that the parties had only agreed to sign an Enterprise Partner Agreement and not Joint Venture Agreement. Preliminary objections are reiterated.”

27. When plaintiff received the alleged agreement in May, 2001, it wrote a letter on 29.5.2001 as under:

“M/s. Globsyn Technologies Limited,

Registered Office,

E-993, Chittranjan Park,

New Delhi-110019

Also at:

M/s Globsyn Technologies Ltd.,

Enkay Tower, B & B1, Vanijya Nikunj,

Udyog Vihar, Phase-V,

Gurgaon-122016

Attn: Mr. Bikram Dasgupta, Chairman.

Dear Sirs/Mr. Bikram Dasgupta, Chairman,

As discussed and conveyed to you during our meeting with you, we once again confirm and convey that the draft ‘Enterprise Partner Agreement’ (EPA) as sent by you is not acceptable to us as the said draft ‘BPA’ sent by you is substantially and materially at variance with what had been agreed to between you (Mr. Bikram Dasgupta, Chairman and other senior officers of GTL) and us [M/s. Asiasoft (India) Private Limited]. Further, during your discussions with us you also declined to finalise and execute the JV agreement and to incorporate the Joint Venture Company as was originally proposed by you and agreed to by us.

In view of the above, we now request and call upon you to immediately refund Rs. 40,00,000/- (Rupees forty lacs) which was lent by us to you on the basis of the explicit promise made by you that the said short term loan of Rs. 40,00,000/- (Rupees forty lacs) would, in the event of the formation of a JV and execution of the JV agreement, be converted into ‘Equity Contribution’ by us-M/s. Asiasoft (India) Private Limited, or would be repaid in cash in the event of failure of parties to reach the agreement in the formation of JV.

We hope as per our understanding and as conveyed, assured and agreed by you, GTL will immediately refund the said amount of Rs. 40,00,000/- (Rupees forty lacs) with up to date interest @ 18% per annum thereon, by way of demand draft/pay order in our favour and payable at New Delhi and we call upon you to please pay the entire sum of Rs. 40,00,000/- (Rupees forty lacs) with upto date interest calculated @ 18% from 24.8.2000 to the date of the pay order.

Thanking you

Yours truly,

for Asiasoft (India) Pvt. Ltd.

Director.”

28. Aforenoted decisions cited by Counsel for the applicant bring out that contentious issues should not be gone into or decided at the stage of appointment of an arbitrator and no time should be wasted in such an exercise. Remedy of the aggrieved party being to raise the issue of jurisdiction before the arbitrator. But where ‘ex facie’ it is evident that there exists no arbitration agreement between the parties and the stand of the defendant is based on a document which is created, sham or fabricated, position would be otherwise.

29. Facts of the case do not bring out any arbitration agreement under any of the clauses of Sub-section 4 of Section 7. Document relied upon by the applicant surfaced in May 2001 whereas money in question was paid in August, 2000.

30. Application is accordingly dismissed.

31. No costs.

Application dismissed.

Asiasoft (India) Pvt. Ltd. v. Globesyn Technologies Ltd.

Structured Summary of the Opinion (Pradeep Nandrajog, J.)

Factual and Procedural Background

Legal Issues Presented

Arguments of the Parties

Defendants' Arguments

Plaintiff's Position

Table of Precedents Cited

Court's Reasoning and Analysis

Holding and Implications

Asiasoft (India) Pvt. Ltd. v. Globesyn Technologies Ltd.

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