ORAL JUDGMENT

1. The present First Appeal has been preferred by the appellants herein - original defendants to quash and set aside the impugned judgement and order dated 26/07/2002 passed by learned District Judge, Kutch at Bhuj in Civil Misc. Application No. 258 of 1999 preferred under Section 9 of the Arbitration and Conciliation Act, 1996 [hereinafter referred to as “the Arbitration Act”].

2. A Contract Agreement dated 26/10/1998 was entered into between the appellants and the respondent for execution of work of construction of Bhavanidham on Plot No. 37 situated at Lotus Colony, Bhuj. Under the said contract, the appellants herein has to act as Developers while respondent was the Contractor. Clause 10 of the agreement provides that “if any dispute arises between the parties it will be referred to the Arbitrator and the Arbitrator will be appointed by mutual consent of the parties.” The dispute raised between the parties with respect to the contract work and by communication dated 16/04/1999, the respondent herein submitted name of an Arbitrator, to which the present appellants refused to give consent. That thereafter, respondent herein submitted an application being Civil Misc. Application No. 258 of 1999 under Section 9 of the Arbitration and Conciliation Act before the learned District Court, Kutch at Bhuj for an appropriate order directing the appellants herein to furnish the bank security of Rs. 6,96,778/- for some other interim relief. The learned District Judge, Kutch at Bhuj by impugned order dated 26/07/2002 partly allowed the said application and directed the appellants herein to furnish Bank Security of Rs. 5,00,000/- (Rupees Five Lacs). Simultaneously, learned Judge also directed the parties to refer the dispute to the Arbitrator to be appointed by mutual consent within a period of two months from the date of the order. Being aggrieved and dissatisfied with the impugned judgement and order passed by the learned District Judge, Kutch at Bhuj by directing the parties to refer the dispute to the Arbitrator in application under Section 9 of the Arbitration and Conciliation Act, the appellants herein - original respondents have preferred the present First Appeal. By interim relief in Civil Application No. 1183 of 2003, the Division Bench of this Court partly allowed the said Civil Application and granted interim stay of further implementation and operation of that part of the order passed by the learned District Court, Kutch at Bhuj by which a direction was issued to refer the dispute to the Arbitrator and did not stay the order for furnishing bank security of Rs. 5,00,000/- (Rupees Five Lacs).

3. Mr. Anjaria, learned advocate appearing on behalf of the appellants has submitted that the appellants do not challenge that part of the order passed by the learned District Court, Kutch, by which by way of bank security, the appellants were directed to furnish Bank Guarantee of Rs. 5,00,000/- (Rupees Five Lacs). It is submitted that the appellants have also furnished the Bank Guarantee of Rs. 5 Lacs with the District Court, Kutch and as directed by this Court today, in IAAP No. 71 of 2007, the appellants shall furnish a fresh Bank Guarantee of Rs. 5,00,000/- (Rupees Five Lacs). Therefore, in the present First Appeal, the only challenge is with respect to direction issued by the learned Appellate Judge, Kutch by which the parties were directed to refer the dispute to the Arbitrator.

4. Mr. Anjaria, learned advocate appearing on behalf of the appellants has submitted that, as such, subsequently the respondent had submitted application for appointment of Arbitrator before this Court and, therefore, the direction issued by learned District Judge, Bhuj does not survive and no other order is required to be passed. It is submitted that even otherwise the said order to refer the dispute to the Arbitrator is required to be quashed and set aside by this Court as the learned District Court, Kutch had no jurisdiction to pass any order directing the parties to refer the dispute to the Arbitrator in application under Section 9 of the Arbitration and Conciliation Act. It is submitted that the directions issued by learned District Judge, Kutch directing the parties to refer the dispute to the Arbitrator is without jurisdiction and beyond the scope of Section 9 of Arbitration Act and, therefore, it is requested to quash and set aside that portion of the order passed by the learned District Court, Kutch by which learned Judge directed to refer the dispute to the Arbitrator.

5. Mr. Nalin Thakkar, learned advocate appearing on behalf of the respondent - original applicant has submitted that as there was a dispute between the parties and considering the arbitration clause in the agreement, learned District Judge, Kutch has rightly directed the parties to refer the dispute to the Arbitrator and to appoint sole Arbitrator and, therefore, it is requested to dismiss the present First Appeal.

6. Heard learned advocates appearing on behalf of the respective parties at length. At the outset, it is required to be noted that in Civil Misc. Application No. 258 of 1999, the District Judge was considering the application under Section 9 of the Arbitration and Conciliation Act and Section 9 of the Arbitration Act confers power upon the Court to issue certain directions by way of interim measure. Therefore, the application under Section 9 of the Arbitration Act is only for interim relief/interim measure and it is not for referring the parties to the Arbitrator and for appointment of Arbitrator. Under the circumstance, when the learned District Court, Kutch passed an order directing the parties to refer the dispute to the arbitrator and to appoint sole Arbitrator in application preferred under Section 9 of the Arbitration Act, it is beyond the scope of Section 9 of the Arbitration Act. While deciding and considering application under Section 9 of the Arbitration Act, the Court could not have passed an order directing the parties to refer the dispute to the arbitration and to appoint sole Arbitrator. Under the circumstance, the impugned order passed by learned District Judge, Kutch in so far as directing the parties to refer the dispute to the Arbitration, cannot be sustained. It is to be noted that as such in the subsequent proceedings under Section 11 of the Arbitration Act, this Court has already appointed the sole Arbitrator.

7. In view of the above and for the reasons stated hereinabove, the present First Appeal succeeds in part. The impugned order passed by learned District Court, Kutch at Bhuj dated 26/07/2002 in Civil Misc. Application No. 258 of 1999 so far as directing the parties to refer the dispute to the arbitration and to appoint sole Arbitrator is hereby quashed and set aside. The rest of the order passed by learned District Judge, Kutch at Bhuj with respect to directing the appellants to furnish the Bank Security in an amount of Rs. 5,00,000/- (Rupees Five Lacs) is hereby confirmed. A separate order is passed in IAAP No. 71 of 2007 to furnish a fresh Bank Guarantee before this Court, to be considered as Bank Guarantee in the present First Appeal and in compliance of the order passed by the learned District Judge, Kutch at Bhuj in Civil Misc. Application No. 258 of 1999.

Registry is hereby directed to keep the copy of this order in IAAP No. 71 of 2007. No costs.