Civil Revision Application No. 21 of 2011

11th April, 2011

Petitioner Counsel: Mr. P.M. SHAH,Mr. Kishor C. Sant
Respondent Counsel: Mr. A.P. BHANDARI,Mr. L. D. VAKIL

Cases Cited:
Hindustan Petroleum Corporation Ltd. Vs. Pinkcity Midway Petroleums reported, in 2003 (6) SCC 503 [Para 12,22]
P. Anand Gajapathi Raju & Ors. vs. P. V. G. Raju, reported, in 2000 (4) SCC 539 [Para 12]
Sukanya Holdings (P) Ltd. Vs. Jayesh H. Pandya and another, reported, in 2004(1) Bom.C.R. 413 [Para 13]
Bais Surgical & Medical Institute Pvt. Ltd. (Dr.) and Another Vs. Dhananjay Digambar Pande and Anr, 2007(2) Bom.C.R. 665 [Para 18]
Wellington Associates ltd. Vs. Kirit Mehta, (2000) 4 SCC 272 [Para 19]
Jagdish Chander Vs. Ramesh Chander and others, (2007) 5 SCC 719 [Para 20,22]

JUDGMENT

JUDGMENT :- The petitioner company is registered under the provisions of Companies Act, 1956 and is impleaded as defendant in Special Civil Suit No. 410 of 2010 presented by respondent No.1 original plaintiff. (Hereinafter the parties would be referred to as per their status before the trial court).

2. The instant Civil Revision Application is presented by the original defendant No.1 raising exception to the order passed by the learned 3rd Joint C.J.S.D. Aurangabad in application below Exh.27 in Special Civil suit No. 410 of 2010, decided on 14.12.2010. The application tendered by the defendant No.1, petitioner herein, presented under Section 8 of the Arbitration and conciliation Act, 1996 (hereinafter referred to as the "Arbitration Act"), came to be rejected by the trial court.

3. The original plaintiffs instituted suit claiming declaration that the defendant No.1 has no right and entitlement to invoke and enforce the Bank Guarantee bearing No. 10/9-10 issued by the defendant No.2 Bank and prayed for perpetual injunction restraining the defendant No. 1 and defendant No.2 from dealing with, in any manner, with Bank Guarantee and passing of any consideration under the said Bank Guarantee in favour of defendant No.1.

4. The plaintiff is proprietor of M/s. Sohamm Distributors at Aurangabad and the plaintiff firm was engaged as non exclusive authorized distributor of the products manufactured by defendant No.1 for Latur and Beed Districts. The plaintiff was appointed as non exclusive distributor and Dealership agreement came to be registered between the plaintiff and defendant No.1 on 17.9.2007. The period covered under the Dealership agreement came to an end and thereafter with the consent of both the parties, the agreement was renewed for further period upto 16.9.2011. The terms and conditions of the agreement entered into between the parties on 17.9.2007 remained unchanged. The defendant company claimed certain amount from the plaintiff which was disputed by the plaintiff. Defendant No.1 company therefore proceeded to issue directives to the Bank for enforcement of the Bank guarantee executed by the plaintiff to the tune of Rs.50.00 lacs in favour of defendant No.1 drawn on defendant No.2 Bank. Agreement in respect of Bank Guarantee was executed on 29.8.2009. Action of defendant No.1 company of proceeding to encash the Bank guarantee with a view to recover the amount of Rs. 50.00 lacs gave cause for presentation of suit by the plaintiff in the Court of learned C.J.S.D. at Aurangabad. The suit came to be registered as Special Civil Suit No. 410 of 2010. The plaintiff claimed declaratory decree against defendant No.1 to the effect that the defendant No.1 has no right, title or interest to invoke and enforce the Bank Guarantee No. 10/9-10 dated 29.8.2009 issued by defendant No. 2. A declaratory decree restraining the defendant perpetually from dealing with Bank Guarantee referred to above in any manner, has also been claimed by the plaintiff.

5. The defendant No.1 caused his appearance in the matter and presented an application at Exh.27 under Section 8 of the Arbitration Act requesting the court to dismiss the suit filed by the plaintiff as not maintainable and to refer the parties to Arbitrator. It is contended in the application that the stipulation contained in para 37 of the agreement dated 17.9.2007 executed between the parties i.e. Plaintiff and defendant No.1 mandatorily requires the parties to take recourse to Arbitration proceedings. According to defendant, in view of provisions of Section 8 of the Arbitration Act, the parties are required to be referred to the Arbitrator and the suit in the present form, as presented by the plaintiff is not maintainable. The trial court after considering the rival contentions raised by the parties, proceeded to reject the application presented by defendant No.1 in view of the orders passed on 14.12.2010, which is subjected to challenge in this Revision Application.

6. I have heard arguments advanced Shri P.M. Shah, learned senior counsel appearing for Mr. K.C. Sant, counsel appearing for the petitioner, Shri A.P. Bhandari, counsel appearing for respondent No.1 and Shri. L.D. Vakil, counsel appearing for respondent No.2.

7. Shri Shah, learned senior counsel appearing for the petitioner contends that in view of clear stipulation contained in the dealership agreement executed between the parties, which contains agreement in respect of referring the dispute arising between the parties to the Arbitrator, the suit as presented before the Civil Court is not entertainable. According to the counsel appearing for the petitioner, dispute raised in the suit is arising out of or in connection with the agreement and therefore, it is required to be dealt with in accordance with clause 37 of the Dealership Agreement. The Dealership agreement contains clause requiring the parties to approach the Arbitrator and in view of the agreement, there is no other alternative except to direct the parties to approach the Arbitrator, as per the terms of the agreement.

8. While controverting the contentions raised by the petitioner, it is contended by the counsel appearing for the respondent that agreement in respect of Bank Guarantee which is subsequently executed in favour of defendant No.1 has nothing to do with the dealership agreement. There is no reference in respect of Bank Guarantee in the Dealership agreement and as such issue in respect of encashment of Bank Guarantee is outside the purview of Dealership agreement and therefore, clause 37 contained in the said agreement has no application. It is further contended that the agreement in respect of Bank Guarantee is between the plaintiff, defendant No.1 and defendant No.2 bank. The parties to the Bank guarantee are different than the parties to the Dealership agreement and as such contentions raised by the petitioner that the parties are required to be directed to take recourse to the Arbitration proceedings cannot be accepted.

9. While dealing with the first objection that the Bank Guarantee executed between the plaintiff, defendant No.1 and defendant No.2, has no nexus to the Dealership agreement, it is to be noted that the Dealership agreement entered into by the plaintiff and defendant No.1 relates to supply of products manufactured by the defendant No.1 company. It is not disputed that the plaintiff is appointed as non exclusive distributor under Dealership agreement executed on 17.9.2007. Commercial transaction between plaintiff and defendant No.1 are in pursuance to the Dealership agreement. Liability in respect of amount claimed by the petitioner is in furtherance of commercial transaction between defendant No.1 and the plaintiff. It is true that the Dealership agreement does not make reference to the Bank Guarantee issued by the Bank in favour of defendant No.1 in pursuance to the directives of the plaintiffs. It is recited in the Bank Guarantee agreement thus:-

"In consideration of M/s. Escorts Limited, a corporation organized and existing under the law of the India, having its Corporate Office at 15/5 Mathura Road, Faridabad, Haryana 121 003 (hereinafter called "Supplied") agreement to supply Tractors to Sohamm Distributors, "Pegasus", Plot No. 2 and 3, Jalna Road, N-2, Cidco, Mukundwadi, Aurangabad (hereinafter called 'the Purchaser") on production of Bank guarantee for Rs. 50,00,000/- (Rupees Fifty lacs only). We the Malkapur Urban Co-Op. Bank Limited, (hereinafter referred to as the "Bank" or "We") do hereby covenant and agree with the Supplier as follows:-

We, hereby unconditionally and irrevocably agree to pay a sum of Rs.50,00,000/- (Fifty lacs only), without any demur, cavil or argument and merely on any written demand from the supplier stating that the amount claimed is due and payable. any such demand made on the Bank shall be conclusive as regards the amount due and payable by the bank to the Supplier under this guarantee.

We undertake to pay to the supplier any money so demanded, but subject to an amount not exceeding Rs.50,00,000/- (Fifty lacs only), notwithstanding any dispute and or disputes raised by the purchaser in any suit or proceeding pending before any Court or Tribunal. Bank's liability under this Bank Guarantee is absolute and unequivocal.

10. Defendant No.1 company has been referred to as supplier in the Bank guarantee agreement and the Bank Guarantee is issued on the instructions issued by the plaintiff. Thus issuance of Bank Guarantee in favour of plaintiff cannot be said to be outside purview of commercial transaction between the plaintiff and defendant No.1. Now referring to clause 37 of the Arbitration agreement, it would be evident that the disputed claim or controversy involving the parties and arising out of in connection with the agreement are required to be referred to Arbitrator. The claim raised by the defendants in respect of encashment of Bank Guarantee issued by the Bank at the instructions of the plaintiff in favour of the defendant No.1 is connected with the commercial transaction between the plaintiff and defendant No.1. Thus, the claim of amount by the defendant No.1 in respect of commercial transaction and directions issued for encashment of Bank guarantee is a matter arising out of and in connection with dealership agreement.

11. At this stage, it shall be noted that the dealership agreement entered into between the parties initially for the term ending on 16.9.2009, with consent of the parties was renewed and the same would be valid until 16.9.2011. It is also agreed by the parties that the terms and conditions stipulated in the agreement dated 17.9.2007 shall remain unchanged.

Relevant clause relating to reference of the dispute to the Arbitrator as contained in para 37 of the dealership agreement, reads thus:-

"37. In the event of any dispute or disagreement between the Parties in relation to this Agreement, the parties shall in good faith use their best endeavors to resolve the dispute or disagreement. Any and all claims, disputes, questions or controversies involving the Parties and arising out of or in connection with this Agreement, or the execution, interpretation, validity, performance, breach or termination hereof, which cannot be finally resolved by the parties within thirty (30) calender days arising thereof by amicable negotiation and conciliation shall be referred to arbitration of an Arbitrator to be appointed by the Company and the Distributor shall have no objection to appointment of such Arbitrator. The arbitration proceeding shall be conducted in accordance with the Arbitration and Conciliation Act, 1996 and Rules made thereunder, or any legislative amendment or modification made thereto. The venue of the arbitration shall be Delhi. The award given by the arbitrator shall be final and binding on the Parties. The language of arbitration shall be English."

12. In Hindustan Petroleum Corporation Ltd. Vs. Pinkcity Midway Petroleums reported in 2003 (6) SCC 503 it is held that if the agreement entered into between the parties contains clause for reference of dispute to arbitration, it is mandatory for the civil court to refer the same to Arbitrator. In para 14 of the judgment referring to the judgment in the case of P. Anand Gajapathi Raju Vs. P.V.G. Raju, the Apex Court has observed thus:-

"14. This Court in the case of P. Anand Gajapathi Raju & Ors. v. P. V. G. Raju has held that the language of Section 8 is peremptory in nature. Therefore, in cases where there is an arbitration clause in the agreement, it is obligatory for the Court to refer the parties to arbitration in terms of their arbitration agreement and nothing remains to be decided in the original action after such an application is made except to refer the dispute to an arbitrator. 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. "

The ingredients of Section 8(1) & (2) of Arbitration Act were found to be satisfied, which enable the court to make reference of dispute to arbitrator, in the judgment in the case of P. Anand Gajapathi Raju & Ors. vs. P. V. G. Raju, reported in 2000 (4) SCC 539, and those conditions are (i) Existence of Arbitration agreement, (ii) A party to the agreement bringing an action in the court against other party, (iii) subject matter of the action being same as that of Arbitration agreement and (iv) the other party requesting the court for referring the parties to Arbitration before submission of first statement on the substance of dispute.

13. Counsel appearing for the respondent contends that requirements as specified in the judgment cited supra are not satisfied in the instant case. According to him, subject matter of the action is not same as that of arbitration agreement. It is also contended that the parties to the Bank Guarantee are not same as that of dealership agreement, as such second requirement is not satisfied. Reliance is placed on the judgment in the case of Sukanya Holdings (P) Ltd. Vs. Jayesh H. Pandya and another, reported in 2004(1) Bom.C.R. 413. My attention is invited to para 12 to 15 of the judgment, which read thus:-

"12. For interpretation of Section 8, Section 5 would have no bearing because it only contemplates that in the matters governed by Part-I of the Act, Judicial authority shall not intervene except where so provided in the Act. Except Section 8, there is no other provision in the Act that in a pending suit, the dispute is required to be referred to the arbitrator. Further, the matter is not required to be referred to the arbitral Tribunal, if (1) the parties to the arbitration agreement have not filed any such application for referring the dispute to the arbitrator; (2) in a pending suit, such application is not filed before submitting first statement on the substance of the dispute; or (3) such application is not accompanied by the original arbitration agreement or duly certified copy thereof. This would, therefore, mean that Arbitration Act does not oust the jurisdiction of the Civil Court to decide the dispute in a case where parties to the Arbitration Agreement do not take appropriate steps as contemplated under sub-sections (1) & (2) of Section 8 of the Act.

13. Secondly, there is no provision in the Act that when the subject matter of the suit includes subject matter of the arbitration agreement as well as other disputes, the matter is required to be referred to arbitration. There is also no provision for splitting the cause or parties and referring the subject matter of the suit to the arbitrators.

14. Thirdly, there is no provision as to what is required to be done in a case where some parties to the suit are not parties to the arbitration agreement. As against this, under Section 24 of the Arbitration Act, 1940, some of the parties to a suit could apply that the matters in difference between them be referred to arbitration and the Court may refer the same to arbitration provided that the same can be separated from the rest of the subject matter of the suit. Section also provided that the suit would continue so far as it related to parties who have not joined in such application.

15. The relevant language used in Section 8 is "in a matter which is the subject matter of an arbitration agreement", Court is required to refer the parties to arbitration. Therefore, the suit should be in respect of 'a matter' which the parties have agreed to refer and which comes within the ambit of arbitration agreement. Where, however, a suit is commenced - "as to a matter" which lies outside the arbitration agreement and is also between some of the parties who are not parties to the arbitration agreement, there is no question of application of Section 8. The words 'a matter' indicates entire subject matter of the suit should be subject to arbitration agreement."

15. It is contended in the instant matter that the suit is not in respect of "matter which parties have agreed to refer and which comes within the ambit of arbitration agreement". It is also contended that there is difference in respect of parties. It is pointed out that some of the parties to the suit are not parties to the arbitration agreement and as such reference to Arbitrator in the instant matter is not warranted.

16. As stated earlier that there is commercial transaction for supply of products manufactured by defendant No.1 company in favour of the plaintiff and the plaintiff is appointed as non exclusive distributor and agreement is entered into between the parties i.e. plaintiff and defendant No.1. The said agreement is renewed for further period ending on 16.9.2011 with the consent of the parties. Clause contained in para 37 of the dealership agreement mandates the parties to settle all claims, disputed question, or controversies involving the parties and arising out of or in connection with the agreement by making reference to the Arbitrator. It cannot be construed that the Bank Guarantee tendered in favour of defendant No.1 is outside commercial transaction between the plaintiff and defendant No.1 or that it is de-hors the transaction in respect of supply or sale of parts manufactured by the defendant No.1 company. Although the terms contained in the Dealership agreement do not contemplate issuance of Bank Guarantee in favour of the manufacturer, the fact remains that at the stage of renewal of Dealership agreement, the bank Guarantee was issued in favour of the defendant No.1 by the plaintiff. Except the commercial dealing under Dealership agreement entered into between the plaintiff and defendant No.1, there were no other transaction between the plaintiff and defendant No.1. In these circumstances, it cannot be inferred that issuance of Bank Guarantee is not referable to the dealership agreement. Moreover, as pointed out earlier, the Bank Guarantee itself makes a reference to defendant No.1 as supplier of the products, guarantee is issued towards and in consideration of agreement to supply tractors to the plaintiff firm for onward sale. Argument advanced by the plaintiff that subject matter of suit which relates to encashment of Bank Guarantee has no nexus with the dealership agreement arrived at between the plaintiff and defendant No.1, is devoid of substance.

17. So far as the parties to the suit are concerned, the impleadment of the Bank in the suit does not matter much as subject covered by the suit is relating to transaction referable to the dealership agreement. The bank is party to the suit does not mean that the reference to the Arbitration could not be made. Dispute relating pay-ability of the Bank Guarantee is connected with the dealership agreement which contains Arbitration clause. The argument advanced by the petitioner that there is difference in the party and as such the matter is not referable to the Arbitration does not hold water. This view finds support in the judgment reported in 2003, Calcutta Law Times 381 : AIR 2004 NOC 99.

19. The next argument advanced is relating to interpretation of the arbitration agreement itself. The plaintiff has disputed the existence of arbitration agreement in a sense that according to the plaintiff clause 37 of dealership agreement does not mandatorily require the parties to approach the Arbitrator. Placing reliance on the judgment in the matter of Wellington Associates ltd. Vs. Kirit Mehta, reported in (2000) 4 SCC 272, it is urged that clause 37 contained in dealership agreement does not amount to arbitration clause and as such dispute between parties shall have to be dealt with the Court. It is observed by the Apex Court in the judgment in Wellington Associates Ltd. case (supra) thus:-

The words in sub-clause (1) of section 7, "means an agreement by the parties to submit to arbitration", in my opinion, postulate an agreement which necessarily or rather mandatorily requires the appointment of an arbitrator/ arbitrators. Section 7 does not cover a case where the parties agree that they "may" go to a suit or that they 'may' also go to arbitration.

Thus, unless the document filed by the party before the Chief Justice of India or his designate is an 'arbitration agreement' as defined in section 7 as explained above, requiring a reference in a mandatory sense, no reference, in my view, can be made to the arbitral tribunal. It is, as already stated, indeed implicit - if an objection is raised by the respondent before the Chief Justice of India or his designate that the so called arbitration clause is not an arbitration clause at all falling within section 7 - that such a question will have to be decided in the proceedings under section 11 of the Act. Therefore the contention raised by the learned counsel for the petitioner that the question - whether clause 5 of the agreement amounts to an arbitration clause - is to be decided only by the arbitral tribunal is liable to be rejected.

20. The factors constituting an arbitration agreement are noted in detail in the matter of Jagdish Chander Vs. Ramesh Chander and others, reported in (2007) 5 SCC 719. The relevant observations of the Apex in the aforesaid judgment are found in para 8, which reads thus:-

8. This Court had occasion to refer to the attributes or essential elements of an arbitration agreement in K K Modi v. K N Modi [1998 (3) SCC 573], Bharat Bhushan Bansal vs. U.P. Small Industries Corporation Ltd. [1999 (2) SCC 166] and Bihar State Mineral Development Corporation v. Encon Builders (I)(P) Ltd. [2003 (7) SCC 418]. In State of Orissa v. Damodar Das [1996 (2) SCC 216], this Court held that a clause in a contract can be construed as an 'arbitration agreement' only if an agreement to refer disputes or differences to arbitration is expressly or impliedly spelt out from the clause. We may at this juncture set out the well settled principles in regard to what constitutes an arbitration agreement :

(i) The intention of the parties to enter into an arbitration agreement shall have to be gathered from the terms of the agreement. If the terms of the agreement clearly indicate an intention on the part of the parties to the agreement to refer their disputes to a private tribunal for adjudication and an willingness to be bound by the decision of such tribunal on such disputes, it is arbitration agreement. While there is no specific form of an arbitration agreement, the words used should disclose a determination and obligation to go to arbitration and not merely contemplate the possibility of going for arbitration. Where there is merely a possibility of the parties agreeing to arbitration in future, as contrasted from an obligation to refer disputes to arbitration, there is no valid and binding arbitration agreement.

(ii) Even if the words 'arbitration' and 'arbitral tribunal (or arbitrator)' are not used with reference to the process of settlement or with reference to the private tribunal which has to adjudicate upon the disputes, in a clause relating to settlement of disputes, it does not detract from the clause being an arbitration agreement if it has the attributes or elements of an arbitration agreement. They are : (a) The agreement should be in writing. (b) The parties should have agreed to refer any disputes (present or future) between them to the decision of a private tribunal. (c) The private tribunal should be empowered to adjudicate upon the disputes in an impartial manner, giving due opportunity to the parties to put forth their case before it. (d) The parties should have agreed that the decision of the Private Tribunal in respect of the disputes will be binding on them.

(iii) Where the clause provides that in the event of disputes arising between the parties, the disputes shall be referred to Arbitration, it is an arbitration agreement. Where there is a specific and direct expression of intent to have the disputes settled by arbitration, it is not necessary to set out the attributes of an arbitration agreement to make it an arbitration agreement. But where the clause relating to settlement of disputes, contains words which specifically excludes any of the attributes of an arbitration agreement or contains anything that detracts from an arbitration agreement, it will not be an arbitration agreement. For example, where an agreement requires or permits an authority to decide a claim or dispute without hearing, or requires the authority to act in the interests of only one of the parties, or provides that the decision of the Authority will not be final and binding on the parties, or that if either party is not satisfied with the decision of the Authority, he may file a civil suit seeking relief, it cannot be termed as an arbitration agreement.

(iv) But mere use of the word 'arbitration' or 'arbitrator' in a clause will not make it an arbitration agreement, if it requires or contemplates a further or fresh consent of the parties for reference to arbitration. For example, use of words such as "parties can, if they so desire, refer their disputes to arbitration" or "in the event of any dispute, the parties may also agree to refer the same to arbitration" or "if any disputes arise between the parties, they should consider settlement by arbitration" in a clause relating to settlement of disputes, indicate that the clause is not intended to be an arbitration agreement. Similarly, a clause which states that "if the parties so decide, the disputes shall be referred to arbitration" or "any disputes between parties, if they so agree, shall be referred to arbitration" is not an arbitration agreement. Such clauses merely indicate a desire or hope to have the disputes settled by arbitration, or a tentative arrangement to explore arbitration as a mode of settlement if and when a dispute arises. Such clauses require the parties to arrive at a further agreement to go to arbitration, as and when the disputes arise. Any agreement or clause in an agreement requiring or contemplating a further consent or consensus before a reference to arbitration, is not an arbitration agreement, but an agreement to enter into an arbitration agreement in future."

Inviting my attention to para 8(i) of the judgment, it is contended that arbitration agreement shall disclose determination and obligation to go to arbitration not merely a possibility of going to arbitration. In the instant case, it is contended that clause is worded in such a fashion that it cannot be said that there is mandate to the parties to take recourse to arbitration agreement. My attention is invited to clause 34 of the agreement and it is contended that possibility of presentation of suit cannot be entirely ruled out. As far as clause 37 is concerned, it mandates parties to resolve the dispute among themselves amicably by negotiations and conciliation and in the event of failure of resolution of dispute within 30 calender days, there is mandate to the parties to take recourse to the arbitration. It is also noted in clause 37 that "The venue of the arbitration shall be Delhi" and the award of the arbitrator shall be final and binding on the parties".

21. The argument based on interpretation of clause 34 to the effect that said clause does not rule out possibility of approaching Civil Court and thus reference of dispute to arbitrator is not required cannot be accepted. Clause 34 contained in dealership agreement relates to jurisdiction of the Court and it is prescribed that in the event of dispute, it shall be adjudicated in the court at Delhi. Clause 37, however, makes mandatory for the parties to take recourse to the arbitration as phraseology used is "shall". It is also further provided in clause 37 that award of the arbitrator shall be final and binding on the parties. The language of clause 37 is presumptive and it mandates the parties to take recourse to arbitration so also there is finality attached to the proceeding as it is prescribed that award of the arbitrator shall be final and binding on the parties.

22. In the context, tests laid down by the Apex Court in the judgment of Jagdish Chander (supra) are considered, clause 37 of the dealership agreement in the instant matter satisfies the requirements of an arbitration agreement and parties are required to be directed to take recourse to arbitration. In para 8(2) of the judgment of 'Jagdish Chander' it has been laid that in the event of parties agree to give finality to decision of arbitral tribunal they are required to be referred to such private Tribunal. In the instant matter, clause 37 is couched in mandatory form as the language used is "dispute shall be referred to arbitration" and it is further prescribed that " The distributor shall have no objection to appoint such arbitrator". There is also finality attached to the decision of the private tribunal. Clause 37 of the dealership agreement is in contrast with the agreement referred in the matter of 'Willington Associates' and also in the matter of 'Jagdish Chander', wherein there is expression of possibility of making reference to arbitral Tribunal, as contrasted from clause contained in the agreement, in instant matter, which mandates the parties to approach the Arbitral Tribunal. Thus, applying the law laid down by the Apex Court in the case of Hindustan Petroleum Corporation Limited (supra) and P. Anand Gajapathi Raju (supra) there is no other alternative but to direct the parties to approach the Arbitral Tribunal in consonance with clause 37 of the dealership agreement.

23. Civil Revision Application, therefore, shall have to be allowed.

24. At this stage, it is pointed out that the defendant No.1 has already approached the Arbitrator in consonance with clause 37 of the dealership agreement. The respondent No.1 herein original plaintiff has raised certain objections in respect of entertainability of dispute by the arbitrator and also touching his jurisdiction, which are stated to have been rejected by the Arbitrator. The plaintiff contends that recourse is being taken for raising challenge to the order passed by the Arbitrator in that regard by presenting appropriate proceeding. It would be open for the plaintiff to take appropriate measures before the appropriate forum in accordance with the provision of law for ventilating his grievance. It is also pointed out that the arbitrator is seized of the matter in view of reference having been made by the defendant No.1. It is needless to observe that question involved in the instant matter relating to encashment of bank guarantee would be dealt with by arbitrator as it is integral part of dispute presented before him and as such encashment of Bank Guarantee also would be dependent upon outcome of award of Arbitral Tribunal.

25. In the result, the order passed by the IIIrd Jt. Civil Judge (Senior Division) Aurangabad in application below Exh.27 on 14.12.2010 is quashed and set aside and the application presented by defendant No. 1 at Exh.27 shall be deemed to have been allowed. Rule is accordingly made absolute.

26. In the facts and circumstances of the case, there shall be no order as to costs.

27. The counsel appearing for the plaintiff makes a request for grant of stay to the operation of this judgment, so as to enable the plaintiff to approach higher Court. Considering the request made by the plaintiff/petitioner, implementation and operation of the judgment and order passed in this Civil Revision Application stands suspended for a period of eight weeks from today.

Ordered accordingly.