http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 3  

PETITIONER: SUPREME CO-OPERATIVE GROUPHOUSING SOCIETY

       Vs.

RESPONDENT: M/S. H.S. NAG & ASSOCIATES

DATE OF JUDGMENT:       09/05/1996

BENCH: RAMASWAMY, K. BENCH: RAMASWAMY, K. FAIZAN UDDIN (J) G.B. PATTANAIK (J)

CITATION:  JT 1996 (6)   592        1996 SCALE  (5)343

ACT:

HEADNOTE:

JUDGMENT:                   THE 9TH DAY OF MAY, 1996 Present:           Hon’ble Mr.Justice K. Ramaswamy           Hon’ble Mr.Justice Faizan Uddin           Hon’ble Mr.Justice G.B.Pattanaik K.Madhava Reddy, Sr.Adv., U.U.Lalit and Satish Vig, Advs. with him for the Petitioner.                          O R D E R The following Order of the court was delivered: Supreme Co-operative Group Housing Society. V. M/s. H.S. Nag & Associates (P) Ltd.                          O R D E R      This special  leave petition  arises from  the order of the Division  Bench of  the High  Court  of  Delhi  made  on 8.3.1996 in  F.A.O.. (OS)44/96.  The petitioner  had entered into a contract on September 4,1996 with the respondent with covenant contained therein as under:      "And  whereas  the  contractor  has      also agreed  to execute the work or      seven  towers  with  100%  external      works with the said contract amount      in the  first instance  and further      work of  the  balance  towers  that      would be  entrusted to him within 4      months of the date of award of work      at the same per sq.m. rates arrived      at the  above lump  sum  price  for      each tower  and for  the  alternate      specifications.      And  whereas   the   employer   has      accepted   the    offer   of    the      contractor the said contract amount

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 3  

    subject to the terms and conditions      set  forth   herein  and   mutually      agreed to by both the parties" Therein clause  32  relates  to  settlement  of  dispute  by arbitration which read as under:      "32-Settlement   of   Disputes   by      Arbitration:      If   any   dispute,   question   of      controversy,  the   settlement   or      which is  not  herein  specifically      approved for,  shall  at  any  time      arise between  the  owner  and  the      contractor   relating    to    this      contract or  any  clause  or  thing      contained   or   the   construction      thereof or  any portion of the same      or  the   rights   or   duties   or      liabilities of  either party,  then      in every  such cases  the matter in      dispute shall  be referred  to  the      Arbitration of  the Hony. Director,      owner  or   his  nominee   and  his      decision shall be final and binding      on      both       the      parties      .................................."      In furtherance  of the  agreement, apart  from 7 towers entrusted for  construction,  the  construction  of  3  more towers was awarded on December 12, 1988 and 4 more towers on March 12,  1990.  Dispute  and  differences  had  arisen  in construction of the latter 7 towers. The respondent invoking clause 32  or the  agreement filed application under Section 20 of  the Arbitration  Act, 1940  (for short the ’Act’) for calling upon  the petitioner to produce the agreement and to have the dispute referred to arbitration. It was numbered as a suit  on the original side of the High Court. Therein, the petitioner filed  I.A. No.7860  of 1994  in Suit  No.2760/93 under Order  7 Rule 11, CPC to dismiss the suit. Two grounds were mainly  pressed for  consideration in  support thereof. The first  contention urged  was that the petitioner being a co-operative society registered under the Delhi Co-operative Societies Act,  1972 the dispute is arbitrable under Section 60 of that Act and Section 93 thereof puts an embargo on the power of  the civil  Court to  decide the  dispute and that, therefore, the  suit is not maintainable. The learned single Judge and the Division Bench negatived the contention and in our view  rightly, on  the ground  that Section  60  of  the Cooperative Societies  Act would  apply to  a dispute  among members, past-members  or persons  claiming through  them or between them and the society or the members of the committee or officers  or agents  etc. as  envisaged in clauses (a) to (d) of  Section 60(1)  of the Co-operative Societies Act. By operation of  the non  obstante  clause,  the  bar  of  suit attracts only  if the dispute falls within the parameters of clauses (a)  to (d)  thereof and  the bar of jurisdiction of the Court  under Section 93 gets attracted in respect of the specified subjects in sub-section (1) of Section 93 thereof. Therefore, the  plea of  the bar  of Sections  60 and  93 is devoid of substance.      It is  then contended  in this  Court  that  notice  as required under  Section 90,  is a  pre-condition to  lay the suit. Since  the proceedings under Section 20 of the Act was a suit,  absence of notice meets with dismissal the suit. We find no  force in  the contention.  As per  ratio in  Kalyan Peoples’  Co-operative   Bank  ltd.  vs.  Dullhanbibi  Aqual Aminsaheb Patil & Ors. [AIR 1966 SC 1066] prior to CPC 1976

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 3  

Amendment Act, insistence upon a notice under Section 80 CPC in a  suit under  Order 21  Rule 63 renders no assistance to the petitioner.  Even analogy  of Section 80 CPC  sought for in support  of reference  is of  no avail,  since rigour  of notice under  Section  80  CPC  was  softened  by  CPC  1976 Amendment Act  directing, in  an appropriate case, post-suit notice. Though  application under  Section 20  or the Act is treated as  suit, in  proceedings under  the Act,  it  is  a procedural part.  The mandatory  requirement of  Section  90 does not  get attracted to proceedings laid under Section 20 of the Act.      A serious  contention raised  by Shri K. Madhava Reddy, learned senior  counsel for the petitioner, is that contract for arbitration  is a  pre-condition to  avail  arbitration, Since the  agreement for  the 7 towers does not contain such arbitration clause, the application under Section 20 is not maintainable  and   therefore,  the   suit  deserves  to  be dismissed. We  find no force in the contention. Undoubtedly, jurisdiction to  arbitrate the  dispute is  founded upon  an agreement entered  with consensus  ad idem  under which  the parties excluded  established courts  and submitted  to  the jurisdiction of the arbitrator for settlement of differences and having  arisen thereunder. Otherwise, court is devoid of jurisdiction to  refer such  disputes under  Section 20  for arbitration. It  is seen  that the above quoted terms of the agreement and  clause  32  of  the  contract  read  together clearly indicate  that the  award of  the  work  during  the course of  execution is  a part  of the agreement originally entered  into.   Therefore,  clause   32  of  the  agreement containing settlement  of  disputes  by  arbitration  is  an arbitration agreement within the meaning of Section 2 (a) of the Act.  Therefore, application  under Section  20 would be maintainable. We  do not  find any  substance in the special leave petition.      The special leave petition is accordingly dismissed.