Hima Kohli, J.
1. The present application is filed by the defendants No. 1 and 2 under Section 8 of the Arbitration and Conciliation Act, 1996 (for short `the Act') praying inter alia for rejection of the plaint and for reference of all the disputes between the defendants No. 1 & 2 and the plaintiff to arbitration on the ground that the parties are governed by an arbitration clause, in terms of Article 8 of the Agreement.
2. A brief reference to the facts of the case is necessary. The plaintiff has filed the present suit against the defendants for permanent and mandatory injunction. It is the case of the plaintiff that the defendant No. 1 appointed the plaintiff as its Sole Carrier Cargo Sales Agent in the Indian territory for a period of four years vide Carrier Cargo Sales Agent Agreement dated 20.10.2004. The grievance of the plaintiff is that during the currency of the Agreement, the defendants No. 1 & 2 have appointed the defendant No. 3 as their Cargo Agent within entire Indian territory as assigned exclusively to the plaintiff and thus breached the Agreement governing the parties. The relief sought by the plaintiff in the prayer clause is reproduced herein below for ready reference:
a) A decree for permanent injunction be passed in favour of the plaintiff and restraining the defendants No. 1 & 2 from appointing any agent in the territory of the defendants during the pendency of the agreement dated 20.10.2004 or as may be extended;
b) Decree for mandatory injunction be granted in favour of the plaintiff and against defendants thereby directing defendants to withdrawing the appointment of agency given to M/s Air Shagoon Network Private Limited/defendant No. 3 and not to permit to continue any further as detailed above;
c) To restrain the defendants No. 1 and 2 from giving any space for cargo booking to defendant No. 3;
d) To restrain defendant No. 3 to project itself as the agent of defendant No. 1 to others or to represent the defendant No. 1 as its agent;
e) To restrain defendant No. 3 from carrying on any business as an agent of defendant No. 1 within the territory of India;
f) Any other order/s which is deemed fit and proper may also be passed.
3. Counsel for the applicants/defendants No. 1 & 2 submitted that Article 8.1 of the Agreement dated 20.10.2004 provides that in case of any dispute or claims concerning the scope, meaning, construction or effect of the Agreement, or arising in any manner relating to the Agreement, such dispute/claim shall be submitted for consideration and final settlement to the International Commercial Arbitration Court at the Chamber of Commerce of Ukraine, Kiev. The said Article further provides that all the disputes and claims between the parties shall be governed by the laws of Ukraine and the Rules of International Commercial Arbitration Court at the Chamber of Commerce of Ukraine. It was stated that as the disputes raised by the plaintiff in the present suit are in connection with the Agreement which specifically provides for a remedy by way of arbitration, the present suit be rejected and all the disputes between the defendants and the plaintiff be referred for adjudication to arbitration. Thus it was stated that the suit instituted by the plaintiff in connection with the disputes arising out of the Agreement is not maintainable against the defendants, and the jurisdiction of this Court is barred.
4. It was further submitted by the counsel for defendants No. 1 & 2 that while the present application is filed under the provisions of Section 8 of the Act, it is actually one under Section 45 of the Act. In this regard, reference was made to the order dated 18.12.2007.
5. Reference was also made to the provisions of Section 45 of the Act. It was urged that in view of the non-obstinate clause contained in Section 45 of the Act, this Court is under a mandate to refer the parties to arbitration for the reason that it is not even the case of the plaintiff that the Agreement between the plaintiff and the defendants No. 1 & 2 is null and void, or inoperative or incapable of being performed. Counsel for defendants No. 1 & 2 thus submitted that the disputes between the parties ought to be referred to arbitration. He relied on the judgment rendered by the Punjab & Haryana High Court in the case of Sterling Publishers Pvt. Ltd. v. Haryana State Industrial Development Corporation Ltd. and Anr. reported as to urge that even if the defendant No. 3 is not a party to the agreement, the nature of the dispute between the parties is such that the entire matter falls within the scope of the arbitration clause, contained in the agreement governing the plaintiff and the defendants No. 1 & 2 and therefore the entire dispute is required to be decided by the arbitrator alone. Reliance was also placed on a judgement of the High Court of Bombay entitled Zenith Ltd v. M.V. Ponto Poros and Ors. reported as : 2005(4)BomCR452 to contend that the liability of defendant No. 3 as the Agent of defendant No. 1 had arisen from the same cause of action and as it has not been sued in its independent capacity, the arbitration clause governing the plaintiff and the defendants No. 1 & 2, would also cover defendant No. 3, in the capacity of the Agent of the Principal, in view of the provision of Section 45 of the Act.
6. Counsel for the applicants further fortified his argument that the entire subject matter of the present suit ought to be referred to the Arbitral Tribunal by claiming that the defendant No. 3 is willing to submit itself to the Arbitral Tribunal for resolving the interse disputes between the parties. This fact was confirmed by the learned Counsel for the defendant No. 3 who stated that his client has no objection to the present application being allowed.
7. The aforesaid application was however strongly opposed by the counsel for the plaintiff who contended that the same is liable to be rejected on the ground that as there is no arbitration agreement governing the plaintiff and the defendant No. 3, hence the matter cannot be referred to arbitration and the relief sought by the plaintiff against the said defendant cannot be granted by the Arbitral Tribunal. He submitted that the cause of action for instituting the suit against the defendant No. 3 is an independent one and so is the nature of the relief sought against the said defendant. It was urged that there is no absolute bar imposed on the plaintiff for invoking the jurisdiction of the Civil court having territorial jurisdiction. In this regard, counsel for the plaintiff sought to place reliance on Article 8.3 of the Agreement which authorizes a Carrier to enforce his rights against the General Agent in any Court having jurisdiction to deal with a suit against the General Agent. Relying on the aforesaid clause, counsel for the plaintiff stated that just as the defendants No. 1 & 2 have the option to institute a suit against the plaintiff in a Court having jurisdiction to deal with such a suit, similarly, the plaintiff is also entitled to institute a suit against the defendants No. 1 & 2 which it has done in the present case. In support of his contention, he placed reliance on a judgment in the case of Babu Lall Seth and Ors. v. Gopi Lal Seth and Ors. reported as : AIR1957Pat490 . He submitted that Article 8.3 of the Agreement contains a non-obstante clause as it starts with the words 'Notwithstanding the provisions contained above' and thus the said Article has an overriding effect on the provisions of Article 8.1 which contains the arbitration clause.
8. In support of his contention that independent relief has been sought by the plaintiff against the defendant No. 3, counsel for the plaintiff referred to prayers (d) & (e) of the prayer clause and paras 21 & 23 of the plaint. He submitted that a bare reading of Section 7 along with Section 2(b) of the Act makes it manifest that the arbitration agreement has to be in writing and contained in a document signed by the parties. He stated that in the present case, there is no arbitration agreement governing the plaintiff and the defendant No. 3 and hence any reference of the disputes between the applicants and the plaintiff as sought by the applicants herein is not permissible. In support of his contention that the arbitration clause cannot be invoked in the present case because the cause of action between the defendants No. 1 & 2 and the defendant No. 3 cannot be bifurcated and to establish fraud against the defendant No. 3, the presence of the said defendants is necessary in the present suit, counsel for the plaintiff relied on the following judgments:
(i) Sukanya Holdings (P) Ltd. v. Jayesh H.Pandya and Anr. : [2003]3SCR558
(ii) India Household and Healthcare Ltd. v. LG Household and Healthcare Ltd. : AIR2007SC1376
(iii) Atul Singh and Ors. v. Sunil Kumar Singh and Ors. : AIR2008SC1016
9. In response to the submission of the counsel for the defendants No. 1 & 2 that the defendant No. 3 is ready and willing to submit itself to the arbitration proceedings, counsel for the plaintiff stated that the plaintiff cannot be compelled to agree to such a proposal as there is no arbitration agreement governing the plaintiff and the defendant No. 3. In response to the submission of the counsel for the defendants No. 1 & 2 that its application be taken as one filed under the provisions of Section 45 of the Act and that in view of the fact that the plaintiff has not claimed that the agreement governing the plaintiff and the defendants No. 1 & 2 is null and void, inoperative or incapable of being performed, the matter ought to be referred to arbitration by this Court, counsel for the plaintiff submitted that the premise of Section 45 is that there is an arbitration agreement between all the parties which is not so in the present case. He further submitted that the provisions of Section 45 cannot be read in isolation and have to be read in conjunction with Section 2(b) and Section 7(3) of the Act which define an arbitration agreement.
10. In rebuttal, counsel for the defendants No. 1 & 2 submitted that the objection of the plaintiff to submit itself to the Arbitral Tribunal is nothing but an attempt on its part to wriggle out of the arbitration clause. He urged that the plea taken by the plaintiff that the cause of action against the defendant No. 3 is independent of the cause of action against the defendants No. 1 & 2, is misconceived as a bare reading of the plaint makes it evident that the plaintiff has not raised any independent claim against the defendant No. 3. He submitted that the relief sought by the plaintiff against the defendant No. 3 as contained in prayers (d) & (e) are nothing but consequential in nature to the relief sought against the defendants No. 1 & 2 and hence it is not open to the plaintiff to raise an objection to the effect that the plaintiff had an independent claim against the defendant No. 3. He submitted that once the Arbitral Tribunal gave an award in respect of prayers (a), (b) & (c) as prayed for by the plaintiff in the present suit, it would automatically cover the relief sought by the plaintiff against the defendant No. 3, as contained in prayers (d) and (e).
11. In so far as the status of the defendant No. 3 is concerned, counsel for the applicants/defendants No. 1 & 2 submitted that the defendant No. 3 is an agent of the defendant No. 1 and in terms of Section 45 of the Act, can be termed as 'any person claiming through or under him' and thus even though the defendant No. 3 is not a signatory to the arbitration agreement governing the plaintiff and the defendants No. 1 & 2, it is not open to the plaintiff to raise an objection to the participation of the defendant No. 3 in the arbitration proceedings in view of the provisions of Section 45 of the Act, the defendant No. 3 being a person claiming under defendant No. 1. In response to the claim of the counsel for the plaintiff that the disputes between the parties cannot be bifurcated and part of the disputes cannot be referred to arbitration while leaving the remaining part to be decided by a civil Court, counsel for the applicants/defendants No. 1 & 2 submitted that the judgment of the Supreme Court in the case of Sukanya Holdings (P) Ltd. v. Jayesh H.Pandya and Anr. reported as : [2003]3SCR558 has no application to the facts of the present case as in the said case, the plaintiff therein had an independent claim against the defendant No. 3 who was not a party to the arbitration agreement whereas in the present case, referring the dispute between the parties shall not result in bifurcation of issues as the cause of action is common. He contended that the present dispute between the parties is strictly confined to the interpretation of the terms of the agreement, to establish as to whether the defendant No. 1 had appointed the plaintiff as its exclusive cargo sales agent or whether the appointment of the plaintiff was on a non-exclusive basis, for a limited period of four years. He further submitted that the contention of the counsel for the plaintiff that the allegation of fraud against the defendant No. 3 without placing any material before the Court to substantiate its claim, would not automatically result in establishing fraud. In support of his contention that breach of contract does not automatically result in fraud, counsel for the defendants No. 1 & 2 relied on a judgment of the Supreme Court in the case of ITC Limited v. Debt Recovery Appellate Tribunal and Ors. reported as : AIR1998SC634 .
12. Lastly, it was stated that reliance placed by the plaintiff on Article 8.3 of the Agreement is misplaced as the said provision entitles the defendant No. 1 alone to invoke jurisdiction of the civil Court and not to the plaintiff and in any case, the plaintiff has not taken any such plea while instituting the present suit or for that matter, even in its reply to the present application.
13. I have heard the learned Counsels for the parties and have perused the documents as also the judgments relied upon by them. Before dealing with the respective contentions of the parties, it is necessary to refer to the relevant arbitration clause, i.e. Article 8.1 governing the plaintiff and the defendant No. 1, as contained in the Carrier Cargo Sales Agent Agreement dated 20.10.2004. The said Article is reproduced herein below for ready reference:
8.1 Any disputes or claims concerning the scope, meaning, construction or effect of this Agreement or arising in any manner relating to this Agreement shall be settled by means of prompt and direct negotiations and each party shall in good faith take all practical measures to achieve such prompt settlement. Should the parties arrive at no consent, a dispute or difference shall be submitted for consideration and final settlement to International Commercial Arbitration court at the Chamber of Commerce of Ukraine (Ukraine, Kiev). The present Agreement and all the disputes and discrepancies related hereto shall be governed by the laws of Ukraine, as well as Rules of International Commercial Arbitration Court at the Chamber of Commerce of Ukraine (Ukraine, Kiev). The arbitration shall be held in the Russian language.
14. It is not denied by the plaintiff that the aforesaid arbitration clause governs the plaintiff and the defendant No. 1. However, the application of the defendants No. 1 & 2 invoking the said clause is resisted mainly on the ground that the defendant No. 3 is not a party to the arbitration agreement between the plaintiff and the defendant No. 1 and the claim of the plaintiff against the defendant No. 3 is an independent one, based on fraud and collusion between the defendants No. 1 & 2 and defendant No. 3. It was further contended that the liability of the defendant No. 3 is independent to that of defendants No. 1 & 2 and hence bifurcation of the subject matter of the suit by referring the plaintiff and the defendants No. 1 & 2 to arbitration while proceedings against the defendant No. 3 in the civil suit is not contemplated by the legislature and hence, the application filed by the defendants No. 1 & 2 is liable to be rejected.
15. To examine the aforesaid submissions of the plaintiff, one must carefully examine the relief prayed for in the plaint. While prayers (a) to (c) are directed against the defendants No. 1 & 2, by seeking a decree for permanent and mandatory injunction against them from appointing any agent in the territory of the said defendants during the validity of the agreement dated 20.10.2004 and withdrawing the appointment of defendant No. 3 as an agent, prayers (d) & (e) are directed against the defendant No. 3 who is sought to be restrained by the plaintiff from projecting itself and carrying on business as an agent of the defendant No. 1. Thus, it is manifest that there is a unison of the cause of action against both, the defendants No. 1 & 2 and the defendant No. 3. Merely because the plaintiff has alleged collusion between the defendants No. 1 & 2 and defendant No. 3 and made a passing reference to fraud on the part of defendant No. 3 does not mean that the plaintiff has sued the defendant No. 3 in its independent capacity.
16. As the main grievance of the plaintiff is that the defendant No. 1 has illegally appointed the defendant No. 3 as its agent for the territory of India during the currency of the alleged exclusive Agreement dated 20.10.2004 with the plaintiff, it cannot be stated that the cause of action against the defendant No. 3 is different from the cause of action against the defendants No. 1 & 2. In fact, the cause of action against all the defendants is one and the same and is so inextricably intertwined with each other that it cannot be said that the same can be bifurcated.
17. Now, coming to the next plea of the plaintiff that the defendant No. 3 is not a signatory to the arbitration agreement between the parties, reference is to be made to Sections 44 & 45 of the Act. It is relevant to note that the aforesaid provisions form a part of Chapter-I of Part-II of the Act which deals with 'Enforcement of Foreign Awards.' While Section 44 of the Act defines the term 'foreign award', Section 45 is the non-obstante clause which is reproduced hereinbelow:
45. Power of judicial authority to refer parties to arbitration:- Notwithstanding anything contained in Part I or in the Code of Civil Procedure, 1908 (5 of 1908), a judicial authority, when seized of an action in a matter in respect of which the parties have made an agreement referred to in Section 44, shall, at the request of one of the parties or any person claiming through or under him, refer the parties to arbitration, unless it finds that the said agreement is null and void, inoperative or incapable of being performed.
18. The aforesaid provision makes it mandatory for any judicial authority when seized of an action in a matter in respect of which an arbitration agreement subsists, to refer the parties to arbitration at the request of one of the parties or any of the persons claiming through or under him to arbitration unless and until it is found that the agreement between the said parties is null and void, inoperative or incapable of being performed. It is not the case of the plaintiff that the Agreement dated 20.10.2004 containing the arbitration clause is null and void, inoperative or incapable of being performed. The plea raised on behalf of the plaintiff is that the defendant No. 3 is an independent entity and relief sought against the said defendant cannot be a subject matter of the arbitration proceedings, the latter not being a signatory to the agreement between the plaintiff and the defendants No. 1 & 2. It is the plaintiff's own case that the defendant No. 3 has been illegally appointed by the defendants No. 1 & 2 as their agent. Defendant No. 3 being nothing more than an agent of the Principal i.e. defendant No. 1, it has to be held that the action on the part of the agent and that of the Principal is one and the same. Therefore, the arbitration agreement contained in the Carrier Cargo Sales Agent Agreement would apply to both the Principal and the agent because the cause of action is synonymous and the claim of the plaintiff against the defendants is not different and distinguishable but arising under the same contract.
19. The plea of the plaintiff that the provisions of Section 7 of the Act cannot be overlooked and there is no written arbitration agreement with the defendant No. 3 is answered by a bare perusal of Section 45 of the Act which starts by clarifying that nothing contained in Part-I of the Act or in the Code of Civil Procedure shall be applicable to the said provision, thus making it mandatory for a judicial authority seized of an action in a matter where the parties have made an agreement as in the present case, to refer them to arbitration, except in three circumstances specified therein. Furthermore, the intention of the legislature can also be gathered by perusing Section 7 of the Act which starts by stating that for the purposes of Part I of the Act, the definition of arbitration agreement is as contained therein. It is the admitted position that the relationship of the plaintiff and the defendants No. 1 & 2 is governed by Part II of the Act and hence, the provisions of Part I cannot be imported into Part II while dealing with an application under Section 45 of the Act. It therefore has to be held that Section 7 has no application to a case covered under Section 45 of the Act and the definition of 'Arbitration Agreement' as contained in Section 7, cannot be expanded and read into Section 45 of the Act. For the aforesaid reason, the judgement in the case of Atul Singh (Supra) cannot take the case of the plaintiff further.
20. The 'agreement' referred to in Section 44 of the Act is defined as one arising out of a legal relationship whether contractual or not, considered as commercial under the law in force in India. It is not the case of the parties that the agreement governing the parties is not one that falls under Section 44 of the Act. In the present case, the defendants No. 1 & 2 have made the request for referring the parties to arbitration. However, in case such a request was forwarded by any person claiming through or under one of such parties who had entered into an agreement as defined under Section 44 of the Act, like the defendant No. 3 herein, the same was also required to be referred by the judicial authority to arbitration.
21. Fact remains that while defendant No. 3, who is the agent of defendant No. 1 supports defendants No. 1 & 2 and has expressed its willingness to submit itself to arbitration, it is only the plaintiff who is resisting the said request. The expression 'claiming through or under' as finds mention in Section 45 of the Act cannot be construed so narrowly as to exclude the agent of the defendants No. 1 & 2. The defendants and their actions are so closely interrelated that it has to be held that the defendant No. 3 being an agent of defendants No. 1 & 2 falls within the purview of the arbitration clause, irrespective of the fact that it is not an independent signatory to the arbitration agreement.
22. Once it is held that the liability of the defendant No. 3 as the agent of the defendant No. 1 and that of defendant No. 1 as the principal of defendant No. 3 arises from the same cause of action and that the defendant No. 3 has not been sued in its independent capacity, but only in the capacity of an agent of defendant No. 1, and there is an arbitration agreement governing the plaintiff and the defendant No. 1, then it follows that the plaintiff would not have any independent cause of action against the defendant No. 3. This principal grievance of the plaintiff is the action on the part of the defendants No. 1 & 2 in appointing defendant No. 3 as an agent for the same territory during the currency of the allegedly exclusive agreement with the plaintiff. This dispute which forms the basis of the suit instituted by the plaintiff against the defendants can be resolved through arbitration under Section 45 of the Act as the same hinges on the interpretation of the Agreement dated 20.10.2004. If the arbitral tribunal ultimately arrives at the conclusion that the action of the defendants No. 1 & 2 in appointing defendant No. 3 as its agent in the territory of India during the currency of the Agreement dated 20.10.2004 with the plaintiff is illegal or invalid, the direct outcome thereof would be that the appointment by the defendants No. 1 & 2 of the defendant No. 3 shall be held to be invalid. As a result, the relief sought by the plaintiff against the defendant No. 3 in the suit shall be automatically available to it, even in the absence of defendant No. 3 before the arbitration tribunal. The relief sought by the plaintiff against the defendant No. 3 cannot be stated to be 'independent' merely because the plaintiff has made a passing allegation of fraud against the defendant No. 3 without substantiating it with any cogent averment in the plaint.
23. Reliance placed by the learned Counsel for the plaintiff on the judgment in the case of Sukanya Holdings (P) Ltd. (supra) is misplaced as the factual matrix of the said case is entirely different from that of the present case. In the case of Sukanya Holdings (P) Ltd. (supra) some of the defendants were sued in their independent capacity and they were not parties to the arbitration agreement. In the present case, a perusal of the plaint shows that the defendant No. 3 has not been sued in its independent capacity but only as an agent of the defendants No. 1 & 2. In other words, 'through a person who is a party to the arbitration agreement.' The impleadment of the defendant No. 3 in the suit proceedings seems to be an attempt on the part of the plaintiff to avoid the arbitration agreement governing it and the defendant No. 1. The fulcrum of the dispute between the parties is the Agreement dated 20.10.2004. The case of the parties shall stand or fall on the interpretation of the clauses of the agreement as to the exclusivity or the non-exclusivity of the agreement, which is all within the realm of the same agreement. It is therefore, not a case splitting the cause or the parties, as contended by the counsel for the plaintiff.
24. The last plea of the learned Counsel for the plaintiff that the arbitration clause governing the parties is not mandatory but optional and that the plaintiff is equally entitled to invoke Article 8.3 of the Agreement which entitles the defendants No. 1 & 2 to enforce its rights against the General Agent in any court of law having jurisdiction to deal with suits against the General Agent, is mis-conceived as a plain reading of Article 8.3 shows that it does not provide for any such option to the plaintiff, but only to the defendant No. 1. Parity sought by the plaintiff with the defendant No. 1 on the strength of the judgement in the case of Babul Lall Seth (supra) is impermissible as the subject matter of the said case was the right of the lessor and lessee of a tenancy-at-will, as against the present case, where the subject matter is an International commercial contract, the clauses of which have to be read as they exist as the rights and obligations of the parties to the contract are clearly defined therein. In any case, as rightly pointed out by the counsel for the defendants No. 1 & 2, the said ground has not been taken by the plaintiff either in the plaint, or in the reply to the application filed by the defendants No. 1 & 2 under Section 45 of the Act.
25. Taking into consideration the entire conspectus of the matter, the application filed by the defendants No. 1 & 2 is allowed. It is held that the dispute between the plaintiff and the defendants hinges on the interpretation of the terms and conditions of the Carrier Cargo Sales Agent Agreement dated 20.10.2004 containing an arbitration clause which covers the defendant No. 3 in its capacity as the agent of defendant No. 1 and the same is required to be decided by the arbitral tribunal. The parties are accordingly directed to approach the International Commercial Arbitration Court at the Chamber of Commerce of Ukraine (Ukraine, Kiev) as stipulated in Article 8.1 of the Agreement. They shall be entitled to raise all their disputes subject matter of the Agreement, including those raised in the plaint, before the aforesaid arbitral tribunal for adjudication. It is clarified that any observations made above are strictly for the purpose of deciding the present application and ought not to be taken as an observation on the merits of the case.
26. The application is disposed of.