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REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL  APPELLATE  JURISDICTION

CIVIL APPEAL NO.   11604  /2014 [Arising out of S.L.P. (Civil) No. 15314 of 2014]

Anil s/o Jagannath Rana and others …  Appellant (s)   

Versus

Rajendra s/o Radhakishan Rana and others … Respondent  (s)

J U D G M E N T  

KURIAN, J.:

Leave granted.    2. Once a judicial authority takes a decision under Section  

8(1) of The Arbitration and Conciliation Act, 1996 (hereinafter  

referred to as “the Act”) declining to refer the dispute pending  

before it  to arbitration and the said decision having become  

final,  whether either party to the proceedings can thereafter  

invoke the jurisdiction of the Chief Justice under Section 11(6)  

of the Act, is the question arising for consideration in this case.  

The scope of Section 8(3) of the Act is also an ancillary issue.

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3. Appellants are defendant nos. 1, 2, 3 in Special Suit No.  

211  of  2009  on  the  file  of  Civil  Judge  Senior  Division  at  

Aurangabad,  Maharashtra.  The  suit  is  filed  by  a  partnership  

firm, viz., M/s. Rana Sahebram Mannulal and three others. The  

dispute mainly pertains to the partnership business. Following  

are the reliefs claimed:

“A) The special civil suit of the plaintiffs may kindly  be decreed with costs;

B) The  plaintiffs  may  kindly  be  declared  as  valid  partners of the registered partnership firm under  the  name  and  style  M/s  S.M.  Rana  (Rana  Sahebram  Mannulal)  and  further  it  also  may  kindly  be  declared  that,  the  plaintiffs  are  the  owners and possessors of the land gut no. 240  situated at Dahegaon Tq. Gangapur to the extent  of 81R and the land gut No. 237 to the extent of  5H.  85R.  situated  at  Dahegaon  Tq.  Gangapur  dist.  Aurangabad  and  the  land  gut  no.  97/2  admeasuring 1 Acre 34R. situated at Shranapur  Tq.  and  Dist.  Aurangabad  and  Gut  No.  121  admeasuring 1H. 14R. situated at village Tisgaon  Tq. and Dist. Aurangabad and the Plot No. 12 out  of  the  land  Gut  No.  17/2  admeasuring  5.30R.  situated at Garkheda Tq. and Dist.  Aurangabad  and  it  may  also  be  further  declared  the  said  property belongs to the partnership firm and the  plaintiffs  are the owners and possessors of the  said  property  being  the  valid  partners  of  the  registered firm and it may also be declared that  the plaintiffs are the owners of their respective  shares in the said properties.

C) It may kindly be declared that the registered sale  deeds  dated  1.8.2007  executed  by  defendant  no.1  in  favour  of  defendant  no.2  in  respect  of  land gut no.240 to the extent of 81R. situated at  village Dahegaon Tq. Gangapur Dist. Aurangabad  

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bearing  registration  Nos.3942/2007  and  the  registered  sale  deed  dated  6.9.2007  bearing  registration No.4506/2007 in respect of land gut  no.237  to  the  extent  of  2H.  82R,  situated  at  village Dahegaon Tq. Gangapur Dist. Aurangabad  executed  by  defendant  no.1  in  favour  of  defendant  no.7  and  the  registered  sale  deed  dated  30.7.2007  bearing  registration  no.4318/2007  executed  by  defendant  no.2  in  favour of defendant no.1 in respect of land gut  no.97/2  to  the  extent  of  20R.  situated  at  Sharanapur  Tq.  and  Dist.  Aurangabad,  are  null  void, ab-initio and not binding upon the plaintiffs.

D) It  may  kindly  be  declared  that  the  property  purchased  by  the  defendant  no.4  bearing  land  gut  no.17/2  out  of  it  plot  no.1  admeasuring  584.36  sq.mtrs.  Situated  at  Garkheda,  Tq.  and  Dist.  Aurangabad  and  the  land  gut  no.186  admeasuring 12A. 7G. purchased in the name of  defendant  no.4  by  defendant  no.1  situated  at  Dahegaon  Tq.  Gangapur  Dist.  Aurangabad  and  the  land  Gut  No.56  in  the  name  of  defendant  no.3 to the extent of 25R and defendant no.5 to  the extent of 25R. situated at Sharanapur Tq. and  Dist.  Aurangabad  and  the  land  gut  no.213  admeasuring  35R  purchased  in  the  name  of  defendant  no.3,  under  registered  sale  deed  no.1781 dated 25.4.2007 situated at Dahegaon  Tq. Gangapur Dist. Aurangabad and the land gut  no.185 to the extent of 4A, 15G purchased in the  name of plaintiff no.1 and defendant no.1 to the  extent  of  4A,  15G,  situated  at  Dahegaon  Tq.  Gangapur  Dist.  Aurangabad  and  the  land  gut  no.167/2  purchased  in  the  name  of  defendant  no.167/2  purchased  in  the  name  of  defendant  no.5 admeasuring 8A. 22G, situated at Daheaon  Tq. Gangapur Dist. Aurangabad, and the land Gut  No. 6 purchased in the name of defendant no.5  admeasuring 6A,  situated at  Rahimpur  Tq.  and  Dist.  Aurangabad  and  the  land  plot  No.16  admeasuring  419  sq.  mtrs.  Situated  at  Mustafabad Tq. and Dist. Aurangabad purchased  in the name of defendant no.4 is the property of  

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partnership  firm.  As  the  said  properties  are  purchased  from  the  nexus  and  income  of  the  partnership firm and therefore, it may kindly be  declared  that,  the  said  properties  belonging  to  the  partnership  firm  i.e.  M/s  S.M.  Rana  (Rana  Sahebram Mannulal).

E) The  defendants  no.  1  to  7  may  kindly  be  restrained  permanently  from  alienating  and  creating  the  third  party  interest  over  the  suit  properties  by  issue  of  perpetual  injunction  against the defendants no.1 to 7 their servants,  their relatives, their agents or who so ever claims  on their behalf permanently.

F) The profit from the whole sale kerosene business  run through the partnership firm M/s S.M. Rana  (Rana Sahebram Mannulal) pursuant to the whole  sale  kerosene  dealers  license  no.20/88  may  kindly be recovered from the defendant nos.1, 2  and 3 from last three years with 18% interest per  annum and it  may be awarded to the plaintiffs  from the defendant nos. 1, 2 and 3.

G) Any  other  suitable  and  equitable  relief  may  kindly be granted in favour of the plaintiffs."

4. The  defendants/appellants  had  filed  an  application  

under  Section  9A  of  the  Code  of  Civil  Procedure,  19081  

1 “9A. Whereof the hearing of application relating to interim relief  in  a  suit,  objection  to  jurisdiction  is  taken  such  issue  to  be  decided  by  the  court  as  a  preliminary  issue.-(1)  Notwithstanding  anything contained in this Code or any other law for the time being in  force, if at the hearing of any application for granting or setting aside an  order  granting  any  interim  relief,  whether  by  way  of  stay,  injunction,  appointment of a receiver or otherwise, made in any suit, an objection to  jurisdiction  of  the  Court  to  entertain  such suit  is  taken by  any of  the  parties to the suit, the Court shall proceed to determine at the hearing of  such application  the issue as to the jurisdiction  as a preliminary issue  before granting or setting aside the order granting the interim relief. Any  such  application  shall  be  heard  and  disposed  of  by  the  Court  as  expeditiously as possible and shall not in any case be adjourned to the  hearing of the suit.

(2)  Notwithstanding anything contained in  sub-section  (1),  at  the  hearing of any such application, the Court may grant such interim relief as  it may consider necessary, pending determination by it of the preliminary  

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(hereinafter  referred  to  as  “the  CPC”),  as  applicable  to  the  

State of Maharashtra, to dismiss the suit for want of jurisdiction  

since the partnership deed contained a provision for arbitration  

and hence the disputes were liable to be resolved in terms of  

the  Act.  In  other  words,  application  filed  by  defendants,  in  

essence, was to be treated as an application under Section 8(1)  

of the Act.  The same was opposed by the plaintiff.  The trial  

court  upheld  the  objection  and  held  that  it  was  within  the  

jurisdiction of the court to try the dispute and, therefore, it was  

not required under law to refer the same to arbitration.

5. The suit proceeded. The parties have examined all their  

witnesses.

6. While so, the respondents herein approached the Chief  

Justice of the High Court of Judicature at Bombay in Arbitration  

Application No. 12/2013 under Section 11(6) of the Act seeking  

appointment  of  an  arbitrator  as  per  the  terms  of  the  

partnership deed. At paragraph-4 of the application, it is stated  

as follows:

“4. The applicants further states and submits that, as  per clause 6 of the Partnership deed dated 13.12.2008  marked  and  annexed  as  Exhibit-B,  it  was  decided  

issue as to the jurisdiction”.

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between the partners that if  any dispute shall  arise  between  them  in  respect  of  the  conduct  of  the  business  of  partnership  or  in  respect  of  the  interpretation, operation or enforcement of any of the  terms and conditions  of  the deed in  respect  of  any  other  matter,  cause  or  thing  whatsoever,  the  same  shall  be  referred  to  the  arbitration  of  the  person  appointed  by  the  partners  whose  decision  shall  be  final  and  binding  on  all  parties  and  legal  representatives.”

7. And  further  at  paragraph-9  of  the  application,  it  is  

stated as follows:

“9. The  applicant  has  not  filed  any  other  petition,  application or other  proceedings before this  Hon’ble  Court or before the Hon’ble Supreme Court of India,  except the present one touching the subject matter of  this  Arbitration  Application.  However,  the  applicants  deems it  necessary to disclose that applicants have  filed one civil suit for declaration and for other reliefs  before  the  learned  Civil  Judge  Junior  Division  Aurangabad bearing Regular Civil  Suit No.2014/2012  having old special civil suit No.211/2009 which is still  pending for adjudication. However, the subject mater  of  the  suit  involves  some  third  parties  also  and  therefore that would not be an impediment to allow  the  present  application  for  appointment  of  the  sole  arbitrator.  The applicant  craves leave and liberty to  file the copy of the plaint as and when necessary.”

8. The appellants herein opposed the payer. To quote:  

“7. The respondents no.1 to 3 humbly submit  that  from 2009 the parties  are prosecuting the said  spl.  

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C.S.  No.211/09  (now  RCS  No.  2014/2012)  filed  by  applicants/petitioners herein and in fact the evidence  on their part i.e. plaintiffs is closed long back and the  evidence  of  defendants  is  going  on  and  rather  the  defendants are on the verge of closing their evidence  after most probably examining another few witnesses. 8. The respondents no.1 to 3 state that the present  application u/s 11 of the said Arbitration Act filed by  the  applicants  is  nothing  but  to  either  delay  or  overcome  the  proceedings  in  the  suit  pending  between the parties. 9. The respondents no.1 to 3 humbly submit that in  fact the applicants have waived their right of invoking  the arbitration clause the moment they opposed the  application filed by this answering respondent in the  said suit.”

9. The High Court, as per the impugned order, ignored the  

objection and held as follows:

“4. Sub-section (3) of Section 8 of the Act does not  preclude appointment of arbitration during course of  litigation pursuant to agreement. Taking into account  sub-section  (3)  of  Section  8  and  Section  11  of  the  Arbitration  and  Conciliation  Act,  1996,  it  would  be  expedient that pursuant to clause 6 of the partnership  deed, a proper person be appointed as arbitrator to  entertain dispute between the parties.”

10. Heard learned Counsel appearing for both the parties.

11. The facts as narrated by us herein before would show  

that  the  application  filed  by  the  respondents  herein  under  

Section 11 of the Act is nothing but an abuse of process. The  

partnership firm itself is the first plaintiff in the suit. The dispute  

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between the parties is the subject of the suit. Precisely for that  

reason, the appellants sought the matter to be referred to the  

arbitrator. That was opposed by the respondents. When the suit  

is at the final stage, the respondents have sought appointment  

of  an  arbitrator  under  Section  11(6)  of  the  Act.  Having  

approached the civil court and having opposed the reference to  

arbitration under Section 8(1) of the Act and the decision of the  

court  in  that  regard  having  become  final,  the  respondents  

cannot invoke jurisdiction under Section 11(6) of the Act; it is  

hit by the principle of issue estoppel.   

12. There is yet another angle to the issue. Section 8 of the  

Act reads as follows:

“8.  Power  to  refer  parties  to  arbitration  where there is an arbitration agreement.—(1) A  judicial authority before which an action is brought in  a  matter  which  is  the  subject  of  an  arbitration  agreement shall,  if  a party so applies not later than  when submitting his first statement on the substance  of the dispute, refer the parties to arbitration.

(2) The application referred to in sub-section (1)  shall not be entertained unless it is accompanied by  the original arbitration agreement or a duly certified  copy thereof.

(3) Notwithstanding that an application has been  made  under  sub-section  (1)  and  that  the  issue  is  pending  before  the  judicial  authority,  an  arbitration  may  be  commenced  or  continued  and  an  arbitral  award made.”

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13. Under Section 8(1)  of  the Act,  either  party is  free to  

apply  to  the  judicial  authority  within  the  prescribed  time  to  

refer  the  parties  to  arbitration,  in  case  the  matter  pending  

before  it  is  the  subject  matter  of  an  arbitration  agreement.  

Section  8(3)  of  the  Act  however  makes  it  clear  that  

notwithstanding the application under Section 8(1) of the Act  

and the issue pending before the judicial authority, arbitration  

may be commenced or continued and an arbitral  award can  

also  be  made.  In  other  words,  despite  the  pendency  of  an  

application  under  Section  8(1)  of  the  Act  before  the  judicial  

authority,  Section  8(3)  of  the  Act  permits  the  parties  to  

commence  and  continue  the  arbitration  and  the  arbitral  

tribunal  is  free  to  pass  an  award.  That  alone  is  what  is  

contemplated under Section 8(3) of the Act.  

14. In  the  suit  instituted  by  the  firm  and  some  of  the  

respondents, the order passed by the civil court that it was well  

within  its  jurisdiction  to  try  the  suit,  despite  the  objection  

regarding the existence of a clause for arbitration, has become  

final. Thereafter, Section 11(6) jurisdiction of the Chief Justice  

cannot be invoked by either party. The principle of res judicata  

will also be attracted in such a case.

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15. In Satyadhyan Ghosal and others v. Deorajin Debi  

(Smt.)  and another2, this  principle  was discussed in  detail  

and it has been settled as follows. To quote:

“7. The principle  of  res  judicata  is  based on the  need of giving a finality to judicial decisions. What it  says  is  that  once  a  res  is  judicata,  it  shall  not  be  adjudged again. Primarily it applies as between past  litigation  and  future  litigation.  When  a  matter  —  whether on a question of fact or a question of law —  has been decided between two parties in one suit or  proceeding and the decision is final, either because no  appeal  was taken to  a  higher  court  or  because the  appeal was dismissed, or no appeal lies, neither party  will be allowed in a future suit or proceeding between  the same parties to  canvass  the matter  again.  This  principle of res judicata is embodied in relation to suits  in Section 11 of the Code of Civil Procedure; but even  where Section 11 does not apply, the principle of res  judicata has been applied by courts for the purpose of  achieving finality in litigation. The result of this is that  the original court as well as any higher court must in  any  future  litigation  proceed  on  the  basis  that  the  previous decision was correct.

8. The  principle  of  res  judicata  applies  also  as  between  two  stages  in  the  same  litigation  to  this  extent that a court, whether the trial court or a higher  court having at an earlier stage decided a matter in  one way will  not  allow the parties  to  re-agitate the  matter  again  at  a  subsequent  stage  of  the  same  proceedings. …”

16. In  Hope  Plantations  Ltd. v.  Taluk  Land  Board,  

Peermade  and  another3, it  was  held  that  the  general  

principle underlying the doctrine of  res judicata is  ultimately  

2  AIR 1960 SC 941 3 (1999) 5 SCC 590

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based  on  considerations  of  public  policy.  One  important  

consideration of public policy is that the decisions pronounced  

by courts of competent jurisdiction should be final, unless they  

are modified or reversed by appellate authorities; and the other  

principle is that no one should be made to face the same kind  

of  litigation  twice  over,  because  such  a  process  would  be  

contrary to considerations of fair play and justice.

17. The principles as discussed above on res judicata have  

been  consistently  followed  by  this  Court.  And  the  recent  

judgments in that regard are in Dr. Subramanian Swamy v.  

State of Tamil Nadu and others4 and in  Surjit Singh and  

others v. Gurwant Kaur and others5. Thus, once the judicial  

authority takes a decision not to refer the parties to arbitration,  

and the said decision having become final, thereafter Section  

11(6) route before the Chief Justice is not available to either  

party.

18. With  great  respect,  the  designated  Judge  has  gone  

wholly wrong in passing the order under Section 11 of the Act  

when  the  civil  court  is  in  seisin  of  the  dispute  and  where  

arbitration has already been declined by the said court.  

4 (2014) 5 SCC 75 5 2014 (9) SCALE 768

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19. The impugned order is hence set aside. The appeal is  

allowed with costs of Rs.25,000/-.

                                                   .....…..…..………… J.                                      (ANIL R. DAVE)

                                                           ..………..……………J.                    (KURIAN JOSEPH)

New Delhi; December 18, 2014.  

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