High CourtDivision Bench2010-07-09Appeals disposed of, with directions to expedit...

H. Srinivas Pai & Anr. v. H.V. Pai (D) Thru Lrs. & Ors.

Case / Petition Number:Civil appeal Nos. B 5220-21 of 2010 (Civil Appeal No. 5220-5221 of 2010)

Neutral Citation:[2010] 8 S.C.R. 413

Case Details & Bench

Court: High Court
Hon'ble Judges: R. V. Raveendran
H. L. Gokhale
Judgment Date: 2010-07-09
Court Decision / Holding: The Appeals are disposed of. The Court set aside the High Court’s observation that the Arbitration and Conciliation Act, 1996, will not apply to civil disputes, clarifying that the Act applies to domestic arbitrations, international arbitrations and conciliations, and that evidence of an arbitration agreement governs arbitrability, not the civil nature of the dispute. However, the Court did not disturb the dismissal of the Section 8 application and directed the trial court to dispose of the suit expeditiously, within three months from the date of the judgment.
Final Disposition: Appeals disposed of, with directions to expedite the underlying suit.

Parties to the Case

Appellants / Petitioners

H. Srinivas Pai
Anr.

Respondents

H.V. Pai (D) Thru LRS. & ORS.

Legal Representation & Advocates

Counsels for Petitioners

• Sampat Anand Shetty
• Rameshwar Prasad Chandrashekar

Counsels for Respondents

• G.V. Chandrashekar
• N.K. Verma
• Anjana Chandrashekar

Case Synopsis & Summary

The case arises from a long-drawn partition suit filed in 1991 by the respondents for partition of joint family properties. The appellants (H. Srinivas Pai & Anr.) had earlier moved for stay of proceedings under Section 34 of the Arbitration Act, 1940, which was dismissed in 1995 and affirmed on appeal and revision, respectively, culminating in finality. Subsequently, the appellants invoked Section 8 of the Arbitration and Conciliation Act, 1996, but the trial court and the High Court rejected this remedy, with the High Court observing that the Act would not apply to civil disputes and would purportedly apply only to commercial or international commercial matters. The Supreme Court, in its special leave petition, held that there is no basis to confine the Act's applicability to commercial disputes, clarifying that the Arbitration Act, 1996, applies to domestic arbitrations, international commercial arbitrations and conciliations, and that the existence of an arbitration agreement—not the civil nature of the dispute—determines arbitrability. The Court set aside the High Court’s observation about civil disputes but did not disturb the dismissal of Section 8, directing the trial court to expedite the suit and dispose of it within three months. The appeals were disposed of overall. The decision emphasizes broad applicability of the 1996 Act and the primacy of arbitration where an agreement exists, while expediting the underlying partition dispute.

Provisions of Law Cited

Arbitration Act, 1940, s.34Arbitration and Conciliation Act, 1996, s.8Arbitration and Conciliation Act, 1996, s.1(2)

Submissions & Arguments

Contentions of Appellants / Petitioners

Appellants contended that the Arbitration and Conciliation Act, 1996, applies to civil disputes where there exists an arbitration agreement, including matters arising from partition of joint family properties. They argued that the dispute is civil in nature but arbitrable, and that Section 8 of the 1996 Act should apply to stay the partition proceedings, notwithstanding the earlier dismissal of Section 34 under the old Act. They asserted that the Act’s applicability does not hinge on the dispute being commercial, and urged the Court to recognize the arbitral route and expedite resolution via arbitration rather than a long civil suit.

Contentions of Respondents

Respondents contended that the 1996 Act should not be stretched to civil disputes absent an arbitration agreement. They argued the partition suit is a civil dispute with no arbitration clause, and that the prior dismissal under Section 34 of the old Act has attained finality, limiting the efficacy of Section 8. They maintained that the High Court correctly held the Act’s applicability restricted to commercial or international matters, and that arbitration cannot be invoked to stay the civil partition proceedings unless a valid arbitration agreement exists.

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Extracted Judgment Text

Exact text extracted from official judgment records.

## [2010] 8 S.C.R. 413 ## H. SRINIVAS PAI & ANR. A _v._ H.V. PAI (D) THR. LRS. & ORS. (Civil appeal No. 5220-5221 of 2010) ## JULY 9, 2010 B **[R.V. RAVEENDRAN AND H.L.** GOKH~LE, **JJ.)** ## _Arbitration Act, 1940:_ _s.34_ - _Application for stay of proceedings in_ a _civil suit_ c - _Rejected_ - _Order upheld in appeal and revision_ - _Thereafter application uls 8 of Arbitration and Conciliation Act, 1996 filed_ - _Application dismissed by trial court_ as _also by High Court_ - _However, High Court observing that the 1996 Act has got application to commercial matters and international_ 0 _commercial matters and the suit relating to partition of joint_ - _family properties, would not attract provisions of the Act HELD: Order dismissing application uls 34 having become final, High Court and trial court rightly negatived the attempt of appellants by filing the application uls 8 of the 1996 Act_ - E _However, the observation of the High Court in para 4 of its judgment that the 1996 Act will not apply to civil disputes is_ - - _set aside Arbitration and Conciliation Act, 1996 s. 8._ ## _Arbitration and Conciliation Act, 1996:_ F - _Applicability of the Act HELD: There is no basis to hold that the Act will not apply to 'civil disputes'. but will apply only to 'commercial disputes' or 'international commercial disputes'_ - _The Act applies to domestic arbitrations, international_ - _commercial arbitrations and conciliations The applicability of the Act does not depend upon the dispute being a_ - _commercial dispute Reference to arbitration and arbitability depends upon the existence of an arbitration agreement, and not upon the question whether it is_ a _civil dispute or_ ## 413 G H 414 SUPREME COURT REPORTS [2010] 8 S.C.R. A _commercial dispute_ - _There can be arbitration agreements in non-commercial civil disputes also_ - _Arbitration Act, 1940_ - _s.34._ CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. B 5220-21 of 2010. From the Judgment & Order dated 03.11.2008 of the High Court of Karnataka in CRP No. 1710 of 2003 and final Judgment and Order dated 17.04.2009 in Review Petition No. 448 of 2008 in CRP No. 1710 of 2003. c ## Sampat Anand Shetty, Rameshwar Prasad Chandrashekar for the Appellants. G.V. Chandrashekar, N.K. Verma, Anjana Chandrashekar for the Respondents. 0 The following order of the Court was delivered ## **ORDER** E 1. Leave granted. Heard the counsel. 2. The first respondent filed a suit for partition in the year 1991. In the said suit, the appellant filed an application for stay of proceedings under Section 34 of the Arbitration Act, 1940 ('old Act' for short). The said application under Section 34 was F dismissed on 15.3.1995 on the ground that the appellant had acquiesced to court's jurisdiction. The appeal filed by the appellants, as also a further revision by them, were dismissed in 2000 and 2001. G H 3. The suit, however, continued to be pending and the appellants thought fit to file an application under Section 8 of the Arbitration and Conciliation Act, 1996 ('Act', for short). That application was dismissed by the trial Court by order dated 29.3.2003. Feeling aggrieved, the appellants filed a revision which was referred by a learned single Judge of the High Court H. SRINIVAS PAI & ANR. _v._ H.V. PAI (D) THR. LRS. & 415 ORS. to a Division Bench. The Division bench, by order dated 3.11.2008, dismissed the application under Section 8 of the Act but while so doing, observed thus: A "In view of Section 1 (2) of the Act, the said Act has got application in respect of commercial agreement matters and international commercial matters. The right claimed by the respondent in the original suit for partition of the joint family properties, is a civil dispute, which does not attract the provisions of the Act." 8 The appellants filed a review petition which was dismissed on 17.4.2009. The said orders dated 3.11.2008 and 17.4.2009 are challenged in this appeal by special leave. C 4. This court while issuing notice granted stay of the said observation and made it clear that there shall be no stay of the suit and that the suit shall proceed expeditiously as it has been pending for 18 years. D 5. There is absolutely no basis for the observation of the High Court that Arbitration and Conciliation Act, 1996 will not apply to 'civil disputes', but will apply only to 'commercial E disputes' or international commercial disputes. The Act applies to domestic arbitrations, international commercial arbitrations and conciliations. The applicability of the Act does not depend upon the dispute being a commercial dispute. Reference to arbitration and arbitability depends upon the existence of an F arbitration agreement, and not upon the question whether it is a civil dispute or commercial dispute. There can be arbitration agreements in non-commercial civil dispµtes also. 6. However, the said observation of the High Court does· G not, in any way, affect the correctness of the said order passed by the High Court. As already noticed, the application under Section 34 of the old Act was dismissed in the year 1995 and affirmed in appeal in 2000 and by the High Court in 2001 and attained finality. The subsequent attempt of the appellants by H 416 SUPREME COURT .REPORTS [2010] 8 S.C.R. - A filing an application under Section 8 of the Act has been rightly negatived by the trial Court and by the High Court. 7. In view of the above, we dispose of these appeals without disturbing the dismissal of the revision by the High 8[Court. We, however, set aside the observation ][of ][the High Court ] in paragraph 4 of its Judgment (extracted in para 3 above) holding that the Act will not apply to 'civil disputes'. We request the trial Court to dispose of the suit expeditiously not later than three months from today. C R.P. Appeals disposed of.