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M/S. Raman & Raman A... v. M/S. Mahendra & Mahe...
Factual and Procedural Background
The petitioner filed a suit (O.S No. 73 of 2008) before the Principal Sub Court, Kumbakonam, seeking a permanent injunction restraining the first respondent from encashing a bank guarantee provided by the second and third respondents without compliance with the terms of the bank guarantee agreement. The first respondent appeared and filed an application (I.A No. 267 of 2008) to refer the dispute to arbitration under Section 8 of the Arbitration and Conciliation Act, 1996, based on Clause 32 of the dealership agreement between the parties. The petitioner opposed this application. The Trial Judge allowed the application to refer the dispute to arbitration, and the petitioner challenged this order by filing the present Civil Revision Petition under Article 227 of the Constitution of India.
Legal Issues Presented
- Whether the dispute between the parties should be referred to arbitration pursuant to the arbitration clause contained in the dealership agreement.
- Whether the Trial Judge was correct in allowing the application to refer the dispute to arbitration despite the petitioner’s contention that the arbitration clause was one-sided and the agreement was not produced before the Court below.
Arguments of the Parties
Petitioner's Arguments
- The arbitration clause was inserted unilaterally by the first respondent, making it a one-sided agreement that would cause considerable hardship to the petitioner.
- The first respondent did not produce the dealership agreement before the Trial Court, thus the reference to arbitration was not justified.
Respondent's Arguments
- This information was not available in the provided opinion.
Table of Precedents Cited
No precedents were cited in the provided opinion.
Court's Reasoning and Analysis
The Court acknowledged that there was no dispute about the existence of the dealership agreement containing a specific arbitration clause (Clause 32), which provides that disputes shall be referred to an arbitrator nominated by the first respondent. The petitioner was held to have accepted the terms of the agreement knowingly and cannot now claim that the terms are not binding. The Court emphasized that when a statute or a binding contract mandates a particular procedure, it must be followed. The Court also rejected the contention regarding non-production of the agreement, noting that the petitioner had produced the dealership agreement along with the plaint. Based on these findings, the Court concluded that the Trial Judge was correct in allowing the application to refer the matter to arbitration.
Holding and Implications
The Civil Revision Petition is dismissed.
The direct effect of this decision is that the order referring the dispute to arbitration under Clause 32 of the dealership agreement stands affirmed. No costs were awarded. The opinion does not establish any new precedent beyond confirming the binding nature of arbitration clauses voluntarily accepted in contracts and the procedural correctness of the Trial Judge's order.
Prayer: Civil Revision Petition is filed under Article 227 of the Constitution of India praying to set aside the fair and decreetal order passed by the Principal Sub Court, Kumbakonam, in I.A No. 267 of 2008 in O.S No. 73 of 2008 dated 20.12.2012
K.K Sasidharan, J.:— The petitioner filed a suit in O.S No. 73 of 2008 before the Principal Sub Court, Kumbakonam, against the respondents praying for a decree of permanent injunction, restraining the first respondent herein from encashing the bank guarantee from the second and third respondents, without complying with the terms and conditions of the bank guarantee agreement. The first respondent entered appearance in the said suit and filed an application in I.A No. 267 of 2008 to refer the dispute to Arbitration, in accordance with Section 8 of the Arbitration and Conciliation Act, 1996, in view of Clause 32 of the dealership agreement entered into between the parties. The petitioner filed a counter-affidavit opposing the said prayer.
2. The learned Trial Judge, having found that there is a binding agreement entered into between the parties and the said agreement contains a provision for arbitration, allowed the application. The said order is under challenge in this Civil Revision Petition.
3. The learned counsel for the petitioner contended that the first respondent have prepared an agreement, wherein a provision was added to the effect that the arbitrator would be nominated by the Company and arbitration proceedings would be held at Bombay. According to the learned counsel, it is a one side agreement and as such, reference to arbitration would cause considerable hardship to the petitioner. The learned counsel has taken up a further contention that the first respondent have not produced the dealership agreement before the Court below and as such, the learned Trial Judge was not correct in referring the matter to arbitration.
4. There is no dispute that the petitioner has entered into an agreement with the first respondent. The dealership agreement contains a specific clause for arbitration. Clause 32 of the dealership agreement provides that in case there is a dispute between the parties, the same shall be referred to the Arbitrator to be nominated by the first respondent. The petitioner accepted the terms and conditions of the agreement with his eyes open. It is too late to contend that the terms of the agreement are not binding on the petitioner. When the Statute or a binding contract says that a particular thing has to be done in a particular manner, it should be done in that manner and not at all. I am, therefore, of the view that the learned Trial Judge was correct in allowing the application in I.A No. 267 of 2008.
5. The learned counsel for the petitioner has taken up another contention with regard to non-production of dealership agreement. In fact, the very same agreement was produced by the petitioner along with the plaint in O.S No. 73 of 2008. Such being the factual position, I do not find any merit in the contention taken by the learned counsel with regard to non-production of the agreement in question.
6. In the upshot, I dismiss the Civil Revision Petition. No costs.
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