SUPREME COURT OF INDIA

Before:- R.C. Lahoti and B.N. Agrawal, JJ.

Civil Appeal No. .... of 2002 (Arising out of SLP(C) No.15198/2001) D/d. 11.4.2002.

Lea Ronal & Anr. - Appellants

Versus-

R.B.Business Promotions Pvt. Ltd. & Anr - Respondents

Arbitration and Conciliation Act, 1996, Sections 8 and 45 - Arbitration application - Proceeding on wrong premises of law - Failure of justice - Respondent filed a suit against appellants for permanent injunction and rendition of accounts - Parties had an arbitration agreement providing for international arbitration - Appellant in this suit instead of filing application under Section 45, filed application under Section 8 of the Act for referring parties to arbitration - High Court rejected the application - Order set aside - Matter remanded back on two counts :-

(i) Both parties and High Court had belaboured under mis-apprehension as to correct provision of law applicable, which was Section 45 of the Act and not Section 8;

(ii) Important document relied upon by party not produced before High Court.

[Paras 2 and 3]

ORDER

R.C. Lahoti, J. - Leave granted.

The respondents have filed a suit seeking relief of permanent injunction and for rendition of accounts. Therein the appellants filed an application under section 8 of the Arbitration and Conciliation Act,1996 (hereinafter 'the Act for short) seeking a direction referring the parties to arbitration on the ground that there existed between the parties, an arbitration agreement according to which the disputes raised by the respondents before the Court were not available for adjudication except by being referred for arbitration. It was submitted that there was a Technology Transfer Agreement (TTA) dated 20th May, 1995 which contained an arbitration clause and by reference to the letter dated 5th May,1998 written by the appellant No.1 to the respondents, the same agreement became applicable to the parties. The application under Section 8 of the Act was rejected by the learned Judge of Delhi High Court (Original Side). The defendants in the suit have filed this appeal by special leave.

2. During the course of hearing it was pointed out by the learned counsel for the respondents that the arbitration agreement relied on the appellants was for an international arbitration, and therefore, the appellants ought to have invoked Section 45 of the Act and not Section 8. This legal position was not disputed by the learned counsel for the appellants very fairly, and in our opinion, rightly. For two reasons, we are of the opinion that the impugned order dated 27.4.2001 of the Delhi high Court deserves to be set aside and the matter remitted back for the consideration of the High Court. Firstly, the parties, and consequently the High Court, have belaboured under mis- apprehension as to the correct provision of law applicable. The statutory provision which is attracted to the facts on which the relief claimed by the appellants is founded, is Section 45 of the Act is not identical with that under Section 8 of the Act. Secondly, the appellants have placed forceful reliance on a document dated 14.5.1998 which purports to be a letter written by respondent No.2 to the appellant No. 1 and which has been filed in this Court by the respondents herein was not filed by the appellants before the High Court, and in any case, it was certainly not available for the consideration of the High Court when the learned Judge disposed of the application under Section 8 of the Act filed by the appellants.

3. Inasmuch as we are of the opinion that proceeding on fundamentally wrong premises of law has occasioned a failure of justice, we deem it proper to set aside the impugned order of the High Court and sent the matter back to the High Court to hear and decide the application afresh. Without regard to the fact that the application dated August 30,2000 (I.A. No.8993 of 2000 in the High Court) filed by the appellants was labelled as one under Section 8 of the Act, it shall be treated as an application filed under Section 45 of the Act. the appellants (defendants in the High Court) shall have the liberty of supplementing the statement of facts made therein by filing an additional affidavit in support of the application accompanied by such documents as the appellants may propose to place before the Court for its consideration. The respondents (plaintiffs in the High Court) shall have the liberty of filing reply to such application supported by additional affidavit and documents.

4. Thereafter, the High Court shall hear the parties afresh and decide the application. The application may be expeditiously heard and disposed of by the High Court. In the proceedings of the suit and obviously as contemplated by the scheme of the Act, the High Court shall first concentrate at disposing of the application and at the earliest and so long as the application is not disposed of the High Court may not take up for consideration any other application for any other interlocutory relief. In the abovesaid facts and circumstances, the impugned order of the High Court is set aside and the appeal stands allowed and disposed of in the abovesaid terms. Parties, through their respective counsel, are directed to appear before the High Court on 29th April, 2002.

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