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Smart Summary

Structured Summary of the Provided Legal Opinion

Factual and Procedural Background

The parties had entered into an agreement for dealership of petroleum products which contained Clause 67 providing that disputes would be resolved by reference to a sole arbitrator — the Managing Director of the respondent corporation. The petitioner had been appointed as a dealer by the respondent. Alleging breach of the agreement, the respondent terminated the agreement by an order dated 20.2.2001. The respondent then filed I.A. No. 8807 of 2001 under Section 8(1) of the Arbitration and Conciliation Act, 1996 (the Act). That application was allowed by the judicial authority below, and the petitioner filed the present civil revision challenging the order. The petitioner challenged primarily the maintainability of the application under Section 8 on the ground that the application had not been accompanied by the original arbitration agreement or a duly certified copy, and also contended that the termination order was null and void. The record shows that show-cause notices had been issued to the petitioner on 4.5.1999 and 20.10.1999 and that the petitioner had submitted a detailed reply, giving rise to the dispute about alleged breach.

Legal Issues Presented

  1. Whether an application under Section 8(1) of the Arbitration and Conciliation Act, 1996 "shall not be entertained" unless it is accompanied at the time of filing by the original arbitration agreement or a duly certified copy — specifically, whether showing the original agreement at the time of enquiry/hearing amounts to compliance with Section 8.
  2. Whether a xerox copy of the arbitration agreement, certified as a "true copy" by an advocate (or otherwise not certified in statutory form), qualifies as a "duly certified copy" within the meaning of Section 8.
  3. Whether, having terminated the agreement without reference to arbitration, the respondent can nonetheless invoke the arbitration clause (i.e., whether the respondent's termination of the agreement precludes it from later seeking referral to arbitration).

Arguments of the Parties

Petitioner's Arguments (as presented in the opinion)

  • The application under Section 8 of the Act was not maintainable because it did not comply with the mandatory requirement that it be accompanied by the original arbitration agreement or a duly certified copy.
  • The termination order dated 20.2.2001 was null and void; the respondent had issued show-cause notices (4.5.1999 and 20.10.1999) and the petitioner had replied, creating a dispute that should have been referred to arbitration rather than resulting in unilateral termination.
  • The application below was accompanied only by a xerox copy of the agreement; the original was produced only at the time of hearing — contrary to the mandatory words "shall not be entertained" in Section 8.
  • The xerox copy was not a "duly certified copy" as required; reliance was placed on definitions and on Sections 74 and 75 of the Evidence Act to show what constitutes a certified copy.
  • By invoking authorities (e.g., Thatha v. Paru; Malayalam Plantations; Mohan Reddy), the petitioner argued that a certified copy connotes specific formality and custody requirements and that an uncertified xerox cannot be treated as "duly certified."

Respondent's Arguments (as presented in the opinion)

  • The xerox copy of the agreement was certified as a true copy by the respondent's counsel (an advocate), and thus acquired the character of a duly certified copy.
  • The objection regarding lack of a certified copy was not raised before the court below (the trial court), implying an issue of waiver or non-preservation of objection.
  • Counsel relied on the policy favoring arbitration (citing P. Anand Gajapathi Raju v. P.V.G. Raju) to urge minimal judicial intervention and encourage reference to arbitration expeditiously.
  • Reference to Wharton's Law Lexicon was made to assert that a certified copy is a copy signed and certified by the officer in whose custody the original is entrusted; respondent's counsel contended the original was entrusted to her and she had signed and certified the xerox as a true copy.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Thatha v. Paru, AIR 1986 Ker 196 Held that a carbon copy could be treated as a certified copy though it lacked a formal certificate; drew a presumption under Section 79 Evidence Act in favour of genuineness. Referred to by petitioner to argue that non-strict compliance with certification may still attract a presumption of genuineness; the Court observed it was not necessary in this case to decide whether the xerox copy (certified by an advocate) amounted to a duly certified copy.
Malayalam Plantations Limited, Quilon v. Commissioner of Income-Tax, Mysore, AIR 1959 Ker 34 Interpreted "certified copy" as understood by long usage — typically a copy obtained under Section 76 of the Evidence Act on payment of fee (connoting formality). Relied on by petitioner to show "duly certified" requires formality; the Court noted the formal question need not be decided because the original was before the judicial authority at the time of enquiry.
Mohan Reddy v. Neelagiri Muralidhar Rao, AIR 1958 AP 485 Considered authenticated copy in lieu of certified copy (electoral context) and highlighted that certified copies should ordinarily come from the custody of the officer entitled to issue them. Cited by petitioner to emphasize custody/formality requirements for certified copies; the Court did not decide the broader issue because the original was produced at the hearing.
Refrigeration and Appliances v. Jayaben Bharatkumar Thakkar, JT 2000 8 SC 101 Involved an application under Section 8 where the certified copy was not initially filed; subsequently another application complied with the Act and a technical objection was withdrawn. Petitioner relied on it to show the technical objection had been considered at the Supreme Court level; the Court noted that in that Supreme Court matter the objection was not finally decided because it had been withdrawn.
P. Anand Gajapathi Raju v. P.V.G. Raju (died), AIR 2000 SCW 1489 Authority for the principle that courts should encourage arbitration and minimize judicial intervention, enabling expeditious resolution by arbitration. Referred to by respondent's counsel to underline policy favouring arbitration; the Court considered the policy but resolved the specific procedural point on the facts before it.
Dhoom Chand Jain v. Chaman Lal Gupta, AIR 1962 All 543 Interpreted the meaning of "entertained" (in Order 21, Rule 90 CPC) — held that "entertain" in that context means to admit to consideration and that the Court is expected to allow opportunity to comply but the Court does not judicially consider until conditions are met. Adopted by the Court to analyse the meaning of "entertained" in the context of Section 8 of the Act; used to support the proposition that "entertain" means to proceed to consider or adjudicate on merits.
Kundan Lal v. Jagan Nath Sharma, AIR 1962 All 547 Held that "entertain" denotes the point of time at which an application is heard by the Court — not equivalent to mere filing; Court entertains only when adjudicating on merits. Relied on to reinforce the interpretation that "entertain" means adjudicating on the merits rather than mere filing; applied to conclude that production of the original at hearing satisfied the requirement in context.
Hindustan Commercial Bank Limited v. Punnu Sahu, 1971 3 SCC 124 Supreme Court approved the construction that "entertain" means adjudicate upon or proceed to consider on merits. Used by the Court to support its conclusion on the meaning of "entertain" in Section 8 and related provisions; applied to hold that the presence of the original at the time of adjudication met the statutory purpose.
Lakjshmiratan Engineering Works Ltd. v. Assistant Commissioner (Judicial) I, Sales Tax, Kanpur Range, AIR 1968 SC 488 Considered proviso requiring proof of payment for an appeal to be "entertained"; held that "entertain" means proceed to consider on merits, and technical non-compliance should not defeat substantive justice where satisfactory proof is available at hearing. Applied by the Court by analogy to conclude that technicality of non-production at filing should not defeat the statutory purpose when satisfactory proof (here, the original agreement) is produced at the time of hearing.

Court's Reasoning and Analysis

The Court proceeded in several analytical steps based on the record and the authorities cited:

  1. The Court noted that the petitioner had raised the objection regarding non-compliance with Section 8 before the lower court, and that the lower court nevertheless proceeded because the original agreement was produced at the time of enquiry/hearing by the respondent's counsel.
  2. The text of Section 8 was examined: it provides that an application under sub-section (1) "shall not be entertained unless it is accompanied by the original arbitration agreement or a duly certified copy thereof."
  3. The Court considered earlier authorities on the meaning of the word "entertain" (from Dhoom Chand Jain, Kundan Lal, Hindustan Commercial Bank and Lakjshmiratan) and accepted the construction in those cases that "entertain" means to adjudicate upon or to proceed to consider the application on merits — not merely the filing or clerical admission of the application.
  4. Applying that construction, the Court held that the crucial point in the present case was that when the judicial authority actually took up the application for hearing, the original agreement was before it. Given the accepted meaning of "entertain," presentation of the original at the time the Court proceeded to consider the application satisfied the purpose of Section 8 in that factual context.
  5. The Court therefore stated it was unnecessary to decide the broader and contestable question whether a xerox copy signed as true by an advocate constitutes a "duly certified copy" within the meaning of Section 8 and the Evidence Act; because the original document was physically before the judicial authority at the time the application was entertained, that technical question did not need resolution for disposal of the revision.
  6. The Court further observed that rules and procedures are intended to advance justice and not to defeat it, and that to hold that an application is automatically non-maintainable simply because the original was not filed at the moment of filing would run counter to the authorities construing "entertain" and to the aim of substantive justice.
  7. Finally, on the other objections (such as propriety of termination), the Court held that those matters were within the arbitrator's power to decide and therefore did not warrant intervention in the present civil revision.

Holding and Implications

Holding: The civil revision is dismissed.

Implications and direct consequences (as stated in the opinion):

  • The petitioner’s objection that the Section 8 application was not maintainable on the ground that the original agreement or a duly certified copy had not accompanied the application is overruled on the facts of this case because the original agreement was produced before the judicial authority at the time the application was entertained.
  • The Court declined to decide the broader question whether a xerox copy certified by an advocate qualifies as a "duly certified copy" under Section 8 and the Evidence Act, observing that such a decision was unnecessary on the facts before it.
  • Objections as to the propriety of the respondent's termination of the agreement are matters to be determined by the arbitrator under the arbitration clause and are not grounds for the civil revision.
  • No costs were awarded. The connected miscellaneous petitions (C.M.Ps) are closed.

The opinion does not purport to lay down a broad new precedent resolving the status of xerox/advocate-certified copies under Section 8; it resolves the dispute on the present facts and on authoritative construction of the word "entertain."

    Mahabaleswar Service Station v. Indian Oil Corporation Ltd. And Another

    2. An interesting point has been raised in this revision, which is against the order passed under the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the Act). The parties to the revision had entered into an agreement for dealership of petroleum products. Clause 67 of the agreement provides for resolution of disputes by referring to the sole Arbitrator, the Managing Director of the respondent-Corporation. The petitioner was appointed as a dealer of petroleum products by the respondent. Alleging breach of the terms of agreement, the respondent terminated the agreement, by an order dated 20.2.2001 The respondent filed I.A No. 8807 of 2001 under Section 8(1) of the Act. This application was ordered and therefore, this revision was filed. The learned counsel for the petitioner, Mr. Veeerapathiran, stated that the application was not maintainable since it did not comply with the mandatory provisions of the Act. Further, he also submitted that the termination order was null and void. On 4.5.1999, a show cause notice was issued by the respondent to the petitioner. The second show cause notice was issued on 20.10.1999 to which the petitioner had given his detailed reply. Therefore, a dispute arose as to whether the petitioner had committed breach of the agreement, in which case the respondent ought to have referred the matter to arbitration. Insted of this the respondent took law into their own hands and terminated the agreement. When the respondent had themselves given the go-by to the arbitration agreement it is not open to them to now say that the petitioner should have referred the dispute to arbitration. Therefore, according to the learned counsel this petition under Section 8 of the Act is not maintainable. Further, he submitted that Section 8(2) of the Act requires the party to produce the original of the agreement or a duly certified copy thereof and without that the judicial authority referred to in Section 8 should not entertain the application. In this case, according to the learned counsel the order ex-facie would show that the application was accompanied only by a xerox copy of the agreement and only at the time of hearing the respondent had produced the original of the agreement. Inspite of this the Court below had entertained the application which was violative of provisions of Section 8 of the Act. The learned counsel pointed out to the definition of certified copy of the Judicial Dictionary and also to Sections 74 and 75 of the Evidence Act which dealt with what is a certified copy of a public document. Since the xerox copy was not a certified copy as per the provisions of the Evidence Act it ought not to have been accepted. He submitted that since words “shall not be entertained” are used in the section, production of the original is mandatory.

    3. The learned counsel referred to Thatha v. Paru AIR 1986 Ker 196., where a carbon copy was treated as certified copy though it did not contain a certificate to that effect. He referred to if for the purpose that in that case under Section 79 of the Evidence Act, a legal presumption was drawn in favour of the genuineness of the document though it was not in strict compliance that the provisions for certifications of a copy. In that case the words ‘duly certified’ were explained as copies officially issued under the authority of the Court. The learned counsel submitted that when this copy of the arbitration agreement was not certified by the Manager of the respondent-Corporation it cannot be treated as duly certified copy.

    4. He also referred to Malayalam Plantations Limited, Quilon v. Commissioner of Income-Tax, Mysore AIR 1959 Ker 34, where the words “certified copy” came up for consideration and it was held that by long usage, “certified copy” has always been understood as the copy which the party preferring the appeal obtains under Section 76 of the Evidence Act on payment of the necessary fee. So according to the learned counsel the words “duly certified” connote a certain formality and therefore, a xerox copy cannot be treated as duly certified.

    5. Next, he referred to Mohan Reddy… v. Neelagiri Muralidhar Rao…. AIR 1958 AP 485. In this case, the Division Bench of the Andhra Pradesh High Court had to consider the effect of production of an authenticated copy in the place of a certified copy which entailed rejection of the nomination paper. That case arose out of an election petition. This was referred to by the learned counsel to show that the since authenticated copy emanated from the electoral registration office it only underscores the position that a certified copy should be produced from the custody of the officer who is entitled to the same.

    6. Finally, he referred to Refrigeration and Appliances v. Jayaben Bharatkumar Thakkar JT 2000 8 SC 101, where an application was filed under Section 8 of the Act and it was challenged as not maintainable since the certified copy of the agreement was not filed there-after, another application was moved complying with the provisions of the Act and this technical objection was withdrawn. This was relied on by the learned counsel to show that Supreme Court had not rejected the objection totally. The matter was not considered only because the objection was withdrawn.

    7. Ms. Meera Gupta, learned counsel for the respondent on the other hand submitted that the xerox copy of the agreement was certified by her as true copy as an Advocate and therefore, it acquired the character of the duly certified copy. She also submitted that this objection was not raised before the Court below.

    8. She referred to P. Anand Gajapathi Raju v. P.V.G Raju (died) AIR 2000 SCW 1489, for the purpose of showing that the Supreme Court has clearly held that Courts should encourage resolution of disputes by arbitration expeditiously and Court's intervention should be minimal. She also referred to Wharton's Law Lexicon for the meaning of ‘certified copy’ wherein it is stated that it is a copy of a document signed and certified as a true copy by the officer to whose custody the original is entrusted. According to her, since the original was entrusted to her and since she had signed and certified it as a true copy there was no error on the part of the Lower Court in allowing the application. The language of Section 8 of the Act is as follows:

    “Power to refer parties to arbitration where there is an arbitration agreement:

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

    (1) 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.

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

    9. The impugned order shows that this ground regarding non-compliance with provision of Section 8 of the Act had been taken by the petitioner even before the Court below, because it was assailed that it was mandatory on the part of the petitioner to produce the original document. The Court nonetheless, decided the application because at the time of enquiry the original agreement was shown by the counsel for the respondent. If the original of the agreement is shown at the time of enquiry would it amount to compliance with the provisions of the Act? The Act clearly says that the application shall not be entertained unless it is accompanied by the original of the agreement or duly certified copy.

    10. In Dhoom Chand Jain v. Chaman Lal Gupta AIR 1962 All 543., a Division of the Allahabad High Court had an occasion to consider the meaning of the word ‘entertained’. This was in the context of an application under Order 21, Rule 90, C.P.C where it is provided that no application to set aside a sale shall be entertained unless the conditions enumerated in the rule are satisfied. The Court held that,

    “(8) The dictionary meaning of the word ‘entertained’ is to deal with, to admit to consideration. In its application to Clause (a) the word bear the meaning of admitting to consideration. That clause enjoins the Court from considering the application on any ground which could have been taken on or before the drawing up of the sale proclamanation. In its application to Clause (b) the word should bear the same sense. Accordingly, while the Court cannot refuse to take an application which is not backed by deposit or security, it cannot judicially consider it. It is expected that the Court would ordinarily given an opportunity to the applicant to comply with Clause (b) and would reject the application if Clause (b) were still not complied with.”

    11. Then again, in Kundan Lal v. Jagan Nath Sharma AIR 1962 All 547., which also arose out of an application under Order 21, Rule 90, C.P.C another Division Bench of the same High Court held thus:

    “The use of the word “entertain” in the proviso (All) to Order 21, Rule 90 denotes a point of time at which an application to set aside the sale is heard by the Court. The expression “entertain” does not mean the same thing as the filing of the application by the Court. A Court hearing an application under Order 21, Rule 90 can only be said to entertain the application when it is actually disposing of the application on merits and the mere filing of the application by the judgment-debtor would not be its entertainment by Court.”

    12. Therefore, though the learned counsel for the petitioner would vehemently submit that ‘entertain’ only means filing or admission of the application, the aforesaid decisions show that it does not mean the same thing as filing and that the Court entertains an application only when it is actually adjudicating or disposing the application on merit.

    13. In Hindustan Commercial Bank Limited v. Punnu Sahu 1971 3 SCC 124., the Supreme Court approved of the above construction of the expression “entertain” to mean adjudicate upon or proceeding to consider on merits.

    14. An almost identical situation arose in Lakjshmiratan Engineering Works Limited v. Assistant Commissioner (Judicial) I, Sales Tax, Kanpur Range AIR 1968 SC 488. The Supreme Court had an occasion to consider Section 9 of the U.P Sales Tax Act, which deals with the power of appeal. The proviso to that section reads thus:

    “Provided that no appeal against an assessment shall be entertained unless it is accompanied by satisfactory proof of the payment of the amount of tax admitted by the appellant to be due or of such instalments thereof as may have become payable.”

    15. In that case the appeal was filed stating that the amount of tax had been paid accompanied by an affidavit. At the time of hearing, the appellant produced a certificate from the Salex Tax Officer that the tax had been paid. The Supreme Court held that the Assistant Commissioner ought therefore, to have proceeded with the appeal because it was accompanied by satisfactory proof of the payment of the tax and that to hold otherwise would put a premium upon a technicality which will not advance the case either for the collection of the tax or for administration of justice. The Supreme Court held that when the proviso speaks of the entertainment of the appeal it means that the appeal such as this when filed will not be admitted to consideration unless there is satisfactory proof available of making of the payment of the admitted tax. The word “entertain” was construed to mean not “received” or “aspect” but “proceed to consider on merits or adjudicate upon”

    16. In the present case, when the Court below took up the application the original agreement was before the Court as is seen from the impugned order. The Supreme Court has constantly held that all rules and procedures are intended to advance justice and not to defeat it. Therefore, it is not necessary to decide whether a xerox copy signed to be a true copy by an Advocate is duly certified or not in this case, since when the application under Section 8 of the Act was entertained, the original of the agreement was before the judicial authority.

    17. To hold that, unless the original agreement had accompanied the application at the time of filing, the application is not maintainable would go contrary to the decision of the Supreme Court with regard to the meaning of the word “entertain”.

    18. In these circumstances, the objection raised by the petitioner is without merit. The other objections regarding the propriety of the respondent to terminate the agreement are matters that are well within the Arbitrator's power to decide. The civil revision is therefore, dismissed. No costs. The connected C.M.Ps are also closed.

    Revision dismissed.

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    Mahabaleswar Service Station v. Indian Oil Corporation Ltd. And Another
    (Dec 21, 2001)