VIJAY KUMAR SHARMA @ MANJUversusRAGHUNANDAN SHARMA @ BABURAM & ORS.

                         [2010) 1 S.C.R. 582

A               VIJAY KUMAR SHARMA @ MANJU
                                   V.
         RAGHUNANDAN SHARMA @ BABURAM & ORS.
                (Civil Appeal No. 89 of 2010)
                          JANUARY 5, 2010
B
    [R.V. RAVEENDRAN AND K.S. RADHAKRISHNAN, JJ.]

         Arbitration and Conciliation Act, 1996:

c       ss. 8(1), (3), 11 and 15(2) - Appointment of arbitrator
  pending appeal filed against dismissal of suit under Or. 7, r. 11
   CPC read withs. 8(1) of the Act- HELD: An application uls
   11 or s. 15(2) of the Act, for appointment of an arbitrator, will
  not be barred by pendency of an application uls 8 in any suit,
0 nor will the Designate of the Chief Justice be precluded from
  considering and disposing of an application uls 11 or s. 15(2)
  - Thus, if an arbitrator is appointed by the Designate of the
  Chief Justice u/s 11, nothing prevents the arbitrator from
  proceeding with the arbitration - Therefore, the mere fact that
E an appeal from order dismissing the suit under Or. 7 r. 11 CPC
  (on the ground that the disputes require to be settled by
  Arbitration) is pending before the High Court, will not come
  in the way of appointment of an arbitrator uls 11 read with
  s. 15(2), if the authority uls 11 finds it necessary to appoint an
  arbitrator - Practice and Procedure.
F
       s. 7 - Arbitration agreement - Declaration by father that
  any future disputes among his sons should be settled by an
  arbitrator - HELD: Cannot be considered as an arbitration
  agreement among the children or such of the children who
G became parties to a dispute - Even if the Will provided for
  reference of disputes to arbitration, it would be merely an
  expression of a wish by the testator that the disputes should
  be settled by arbitration and cannot be considered as an
  arbitration agreement among the legatees - Such a wish,
H                              582
  VIJAY KUMAR SHARMA@ MANJU v. RAGHUNANDAN 563
               SHARMA@ BABURAM

even if proved, cannot be construed as an agreement in               A
writing between the parties to the dispute, agreeing to refer
their disputes to arbitration - Will.

    Raj Kumar vs. Shiva Prasad Gupta AIR 1939 Cal. 600,
held inapplicable.                                                   B
                   Case Law Reference :
     AIR 1939 Cal. 500            held inapplicable Para 11

     CIVIL APP ELLATE JURISDICTION : Civil Appeal No. 89
of 2010.                                                             C

     From the Judgment & Order dated 16.05.2008 of the High
Court of Judicature for Rajasthan at Jaipur Bench is SB Civil
Arbitration Application No. 72 of 2007.
                                                                     D
       P.N. Mishra, K.N. Tripathy, R.M. Patnaik, H.P. Sahu and
V . K. Sidharthan for the Appellant.

    K.V. Vijwanthan, Neha, Sanjeeb Panigrahi, Vikas Mehta,
Jayanat K. Mehta and Amit Bhandari for the Respondents.
                                                                     E
     The Order of the Court was delivered by

                            ORDER

     R.V. RAVEENDRAN, J. 1. Leave granted. Heard the
learned counsel.                                                     F

     2. The first respondent and appellant are brothers. The first
respondent filed a suit (Civil Suit No.100 of 2006) against the
appellant alleging that their father Durganarayan Sharma died
on 20.10.2005 leaving a will dated 21.10.2003 bequeathing            G
portions of property bearing No.B-133, Bapu Nagar, Jaipur (for
short the suit premises) to him, and that the appellant who was
in possession of the said portions, was liable to deliver
possession thereof to the first respondent on the basis of the
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   584      SUPREME COURT REPORTS                  [2010) 1 S.C.R.


A said will. The Executors of the said will were impleaded as
  defendants 2 and 3 (respondents 2 and 3 herein).

       3. The appellant herein, in turn filed a Civil Suit No.53 of
  2007 for partition and separate possession of his one-sixth
8 share  in the ancestral properties. He also sought a declaration
  that the will dated 21.10.2003 propounded by the first
  respondent was fabricated, null and void. In the said partition
  suit, first respondent and his son were impleaded as
  defendants 1 and 6; appellant's another brother and three
C sisters were impleaded as defendants 2 to 5; the son of
  another brother who had been given away in adoption was
  impleaded as defendant no.7; and the executors under the will
  were impleaded as defendants 8 and 9.

        4. The two suits were consolidated for trial. Respondents
D 2 and 3 claiming to be the executors of the will of Durganarayan
  Sharma filed an application under section 8 of the Arbitration
  & Conciliation Act, 1996 ('Act' for short) in the said suits
  alleging that the deceased Durganarayan Sharma had made
  a declaration on 15.10.2005, shortly before his death, that if
E there was any dispute in connection with the will, the same
  should be decided by Shri U.N. Bhandari, Advocate; that the
  parties to the two suits being children and grandchildren of
  Durganarayan Sharma were bound by the said declaration and
  the disputes which were the subject matter of the two suits
F should therefore be decided by arbitration. The trial court heard
  the said application and by order dated 19.9.12007, held that
  in view of the said provision for resolution of disputes by
  arbitration, its jurisdiction was barred by the provisions of the
  Act. Consequently, the trial court dismissed both the suits, under
G Order 7 rule 11 of the Code of Civil Procedure ('Code' for
  short).
      5. Feeling aggrieved by the order dated 19.9.2007, the
  appellant herein filed an appeal (SB Civil Appeal No.664 of
  2007) contending that there was no agreement for arbitration
H and that there was no ground for dismissal of his suit and a
  VIJAY KUMAR SHARMA@ MANJU v. RAGHUNANDAN                    585
     SHARMA@ BABURAM [R.V. RAVEENDRAN, J.]

Division Bench of the High Court, while issuing notice to show        A
cause why the appeal should not be admitted, stayed the order
dated 19.9.2007 passed by the trial court, by order dated
14.11.2007.

      6. The first respondent accepted the decision of the trial
                                                                      B
 court and filed a claim statement on 20.10.2007 before Shri
 U.N. Bhandari, the sole Arbitrator named in the declarations
 of his father, the reliefs earlier sought by him in Civil Suit No.
 100/2006. The said U.N. Bhandari issued notices to the
 appellant and other non-petitioners in the claim. The appellant      C
 appeared before Shri U.N. Bhandari, and objected to his
jurisdiction to act as an arbitrator, contending that there was
 no arbitration agreement between the parties. He also pointed
out that neither he nor first respondent had signed the
declaration of his father giving consent to Shri U.N. Bhandari
being the Arbitrator. He also brought to the notice of Shri           D
 Bhandari, that the order dated 19.9.2007 passed by the trial
court had been stayed by the High Court. He also challenged
the continuation of Shri Bhandari as an arbitrator by alleging
bias against him. In these circumstances on 17.11.2007, Shri
Bhandari withdrew himself from the arbitrator. On such                E
withdrawal, the first respondent filed an application under
section 11(6) read with section 14(1)(b) and 15(2) of the Act
for appointment of an independent arbitrator. The designate
of the Chief Justice who heard the matter, allowed the said
application by the impugned order dated 16.5.2008, and                F
appointed an Arbitrator to resolve the disputes. The said order
is challenged in this appeal by special leave.

    7. The first contention raised by the appellant is that when
the question (whether there is a valid arbitration agreement          G
between the appellant and first respondent) is pending
consideration by the High Court in S.B. Civil First Appeal
No.664 of 2007, the designate of the Chief Justice could not
have entertained or decided an application under Sections 11,
14 and 15 of the Act involving the same question. It is
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    586      SUPREME COURT REPORTS                   [2010) 1 S.C.R.


A  submitted that the order of the trial court dated 19. 9.2007
   holding that the parties should resolve their disputes by
   arbitration had been stayed by the High Court in the pending
   appeal. In view of the pendency of S.B. Civil first Appal No.664
   of 2007 and the interim stay of the order dated 19.9.2007,
B granted by the High Court on 14.11.2007, the appellant
   submitted that the learned designate of the Chief Justice ought
   not to have proceeded to decide the application for
   appointment of a fresh arbitrator, but ought to have awaited the
   decision in the first appeal. It was submitted that in the pending
c first appeal (against the decision dismissing his suit under
   Order 7 Rule 11 of the Code), if it is held that there is no
   arbitration agreement between the parties or if the court refuses
   to refer the parties to arbitration, the suits will have to proceed
 • and that will lead to conflicting decisions.
D         8. Section 8 of the Act which is relevant is extracted below:

          "8. Power to refer parties to arbitration where there is an
          arbitration agreement. - (1) A juridical authority before
          which an action is brought in a matter which is the subject
E         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
F
          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
G         continued and an arbitral award made."

        9. It is evident from sub-section (3) of section 8 that the
  pendency of an application under section 8 before any court
  will not come in the way of an arbitration being commenced or
H continued and an arbitral award being made. The obvious
' VIJAY KUMAR SHARMA@ MANJU v. RAGHUNANDAN                       587
     SHARMA@ BABURAM [R.V. RAVEENDRAN. J.]
 intention of this provision is that neither the filing of any suit by   A
 any party to the arbitration agreement nor any application being
 made by the other party under section 8 to the court, should
 obstruct or preclude a party from initiating any proceedings for
appointment of an arbitrator or proceeding with the arbitration
 before the Arb1tral Tribunal. Having regard to the specific             8
provision in section 8(3) providing that the pendency of an
application under section 8(1) will not come in the way of an
arbitration being commenced or continued, we are of the view
that an application under section 11 or section 15(2) of the Act,
for appointment of an arbitrator, will not be barred by pendency         C
of an application under Section 8 of the Act in any suit, nor will
the Designate of the Chief Justice be precluded from
considering and disposing of an application under Section 11
or 15(2) of the Act. It follows that if an arbitrator is appointed
by the Designate of the Chief Justice under section 11 of the
Act, nothing prevents the arbitrator from proceeding with the            D
arbitration. It also therefore follows that the mere fact that an
appeal from an order dismissing the suit under Order 7 Rule
11 CPC (on the ground that the disputes require to be settled
by Arbitration) is pending before the High Court, will not come
in the way of the appointment of an arbitrator under section 11          E
read with section 15(2) of the Act, if the Authority under section
11 finds it necessary to appoint an Arbitrator. Therefore the first
contention of the appellant is liable to be rejected.

     10. The appellant next contended that the parties to the            F
dispute have not entered into an arbitration agreement, there
is no arbitration agreement in existence as contemplated under
section 7 of the Act, and the Authority under section 11 of the
Act was not justified in appointing an arbitrator.

     11. The learned Designate held that an arbitration                  G
agreement need not be signed by the parties and if a provision
for arbitration is incorporated by a Testator in his Will, such a
provision will be binding on his children/legatees, after his
death. He held that a provision in a Will providing for arbitration,
in the event of a dispute among the legatees, is an arbitration          H
    588       SUPREME COURT REPORTS                     [2010] 1 S.C R.


A agreement under section 7 of the Act, for the purposes deciding
  any disputes among the legatees. He relied upon a decision
  of the Calcutta High Court in Raj Kumar v. Shiva Prasad Gupta
  - [AIR 1939 Cal. 500] where it was observed that a father has
  the power to refer to arbitration the disputes relating to a joint
B family property, provided such reference was for the benefit of
  the family, and that an award made by an arbitrator upon such
  reference, will be binding upon all members of the family,
  including any minors.

          12. We are of the view that the said decision has no
C relevance to the question on hand and at all events, is not of
  any assistance to determine whether there was any arbitration
  agreement, as contemplated under section 7 of the Act.
  Section 7 defines 'arbitration agreement' as meaning an
  agreement by the parties to submit to arbitration all or certain
D disputes which have arisen or which may arise between them
  in respect of a defined legal relationship, whether contractual
  or not. Sub-sections (2) and (3) of section 7 require that an
  arbitration agreement shall be in writing (whether it is in the form
  of an arbitration clause in a contract or in the form of a separate
E agreement). Sub-section (4) of section 7 enumerating the
  circumstances in which an arbitration agreement will be
  considered as being in writing, is extracted below:

          "7(4). An arbitration agreement is in writing if it is contained
F         in -

          (a) a document signed by the parties;

          (b) an exchange of letters, telex, telegrams or other means
          of telecommunication which provide a record of the
G         agreement; or
          (c) an exchange of statements of claim and defence in
          which the existence of the agreement is alleged by one
          party and not denied by the other.

H         13. In this case, admittedly, there is no document signed
  VIJAY KUMAR SHARMA@ MANJU v. RAGHUNANDAN                 589
     SHARMA@ BABURAM [R.V. RAVEENDRAN, J.]

by the parties to the dispute, nor any exchange of letters, telex, A
telegrams (or other means of telecommunication) referring to
or recording an arbitration agreement between the parties. It
is also not in dispu\e that there is no exchange of statement of
claims or defence Vihere the allegation of existence of an
arbitration agreement by one party is not denied by the other. B
In other words, tQ.ere -isrno arbitration agreement as defined in
section r. between thC..parties. In Jagdish Chander vs.
Ramesh Chander- 2007 (5) SCC 519, this Court held:

    "The existence of an arbitration agreement as defined
    under section 7 of the Act is a condition precedent for C
    exercise of power to appoint an arbitrator/Arbitral Tribunal,
    under section 11 of the Act by the chief Justice or his
    designate. It is not permissible to appoint an arbitrator to
    adjudicate the disputes between the parties, in the
    absence of an arbitration agreement of mutual consent." D
      14. While the respondents rely upon the Will, the appellant
denies the existence of any such Will. The validity of the Will is
pending consideration in the two civil suits filed by the appellant
and the first respondent, referred to above. The alleged Will, E
admittedly, does not contain any provision for arbitration, though
the learned Designate has proceeded on an erroneous
assumption that the Will provides for arbitration. Even if the Will
had provided for reference of disputes to arbitration, it would
be merely an expression of a wish by the testator that the F
disputes should be settled by arbitration and cannot be
considered as an Arbitrator agreement among the legatees.
In this case, according to the respondents, the provision for
arbitration is not in the Will but in a subsequent declaration
allegedly made by Durganarayan Sharma, stating that if there
is any dispute in regard to his Will dated 28.12.2003, it shall G
be referred to his friend, U.M. Bhandari, Advocate, as the sole
arbitrator whose decision shall be final and binding on the
parties. A unilateral declaration by a father that any future
disputes among the sons should be settled by an arbitrator
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    590       SUPREME COURT REPORTS                   [2010] 1 S.C.R.


A named by him, can by no stretch of imagination, be considered
  as an arbitration agreement among his children, or such of his
  children who become parties to a dispute. At best, such a
  declaration can be expression of a fond hope by a father that
  his children, in the event of a dispute, should get the same
B settled by arbitration. It is for the children, if and when they
  become parties to a dispute, to decide whether they would
  heed to the advice of their father or not. Such a wish expressed
  in a declaration by a father, even if proved, cannot be construed
  as an agreement in writing between the parties to the dispute
c agreeing to refer their disputes to arbitration.
           15. We are therefore of the view that there is no arbitration
  agreement between the parties and the learned Designate
  committed a serious error in allowing the application under
  sections 11 and 15(2) of the Act and holding that there is an
D arbitration agreement between the parties to the dispute and
  appointing an arbitrator.
       16. What has been considered and decided above is only
  the question whether there is an arbitration agreement or not.
E We have not examined or recorded any finding as to the
  existence or validity of the Will dated 21.10.2003 or the
  declaration dated 15.10.2005 said to have been made by Mr.
  Durganarayan Sharma, propounded by the respondents and
  denied by the appellant.
F       17. In view of the foregoing, this appeal is allowed and the
    impugned order of the Designate of the Chief Justice
    appointing an Arbitrator is set aside.

    R.P.                                              Appeal allowed.