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

PETITIONER: SUPREME CO-OPERATIVE GROUP, HOUSING SOCIETY

       Vs.

RESPONDENT: M/S. H.S. NAG & ASSOCIATES (P) LTD.

DATE OF JUDGMENT:       09/05/1996

BENCH: K. RAMASWAMY, FAIZAN UDDIN, G.B. PATTANAIK

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:      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  work  of      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 the him within 4      months of the date of award of work      at the same per sq.m. rates arrived      at the  above lump sm rice for each      tower   and   for   the   alternate      specifications.      And  whereas   the   employer   has      accepted   the   officer   of   the      contractor the said contract amount      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 reads as under:      "32-Settlement   of   Disputes   by      Arbitration;      If   any   dispute,   question   of      controversy,  the   settlement   of      which is  not  herein  specifically      approved for,  shall  at  any  time

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

    arise between  the  owner  and  the      contractor   relating    tot    his      contract or  any  clause  or  thing      contained   or   the   construction      thereof or  any portion of the same      or  the   rights   of   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   him  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,  1990.   Dispute  and   difference  had   arisen  the construction of the latter 7 towers. The respondent invoking clause 32  of 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 1, 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 Societies  Act, 1972, the dispute is arbitrable under Section  60 of  the 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 the Section 60  of the Co-operative 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 of 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 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 in directing,  in an  appropriate  case,  post-suit  notice. Though application under Section 20 of 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 proceeding 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  precondition  to  avail  arbitration.

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

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 disputes  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.