When civil court can split causes of action?

It is true that the Arbitration and Conciliation Act, 1996 does not provide for splitting up of the causes of action and reference of the split up causes of action which is capable of resolution through the mechanism of arbitration, to the arbitrator, but the Court's power to split up the causes of action for convenience of trial of the suit is well-recognized under Order 2 Rule 6 of the Civil Procedure Court and as such the Court can split up the causes of action and retain only that part of the causes of action which can be resolved by the Court and by releasing the other part of the causes of action which is not triable by the Civil Court so that, that part of the dispute between the parties can be resolved by different forum competent to decide the dispute in accordance with law. 

Calcutta High Court (Appellete Side)

Lafarge India Pvt. Ltd vs Emami Realty Ltd. & Anr on 15 September, 2016

Present:
The Hon'ble Justice Jyotirmay Bhattacharya
           AND
The Hon'ble Justice Ishan Chandra Das

                  Citation:AIR 2017 (NOC) 92 Cal

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When court should not grant anti-arbitration injunction?

Our focus is on the question whether an anti-arbitration injunction

could at all have been granted in the facts and circumstances of the present

case. We have already explained as to how, if the arbitration agreement

was taken to be one which was covered under Section 44 of the 1996 Act,

the arbitration proceedings could not be injuncted because the same was

neither null or void, inoperative or incapable or being performed. Even if

we assume that Part I of the 1996 Act was to apply, then also, because of

the provisions of Section 8, the judicial authority would be obliged to refer

the parties to arbitration. We may point out that Section 8 and, in

particular, sub-section (1) thereof has been recently amended with

retrospective effect from 23.10.2015 to read as under:-

―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 to the arbitration

agreement or any person claiming through or under him, so

applies not later than the date of submitting his first statement 

on the substance of the dispute, then, notwithstanding any

judgment, decree or order of the Supreme Court or any Court,

refer the parties to arbitration unless it finds that prima facie no

valid arbitration agreement exists.

xxxx xxxx xxxx xxxx xxxx‖

58. Thus, there is now a mandate to refer the parties to arbitration unless

the court finds that prima faice no valid arbitration agreement exists. This

is clearly not the case here. Therefore, in any eventuality, in the facts and

circumstances of the case and applying the principles, as indicated above,

the learned single Judge could not have restrained the appellant from

pursuing the arbitration proceedings before the arbitral tribunal.

59. There is a very interesting observation in paragraph 7.01 of Redfern

and Hunter on International Arbitration: Sixth Edition: Oxford University

Press. The observation is as follows:-

―The relationship between national courts and arbitral tribunals

swings between forced cohabitation and true partnership.

Arbitration is dependent on the underlying support of the courts,

which alone have the power to rescue the system when one

party seeks to sabotage it. …‖

Courts need to remind themselves that the trend is to minimize interference

with arbitration process as that is the forum of choice. That is also the 

policy discernible from the 1996 Act. Courts must be extremely

circumspect and, indeed, reluctant to thwart arbitration proceedings. Thus,

while courts in India may have the power to injunct arbitration proceedings,

they must exercise that power rarely and only on principles analogous to

those found in sections 8 and 45, as the case may be, of the 1996 Act. We

have already indicated that the circumstances of invalidity of the arbitration

agreement or it being inoperative or incapable of being performed do not

exist in this case.

THE HIGH COURT OF DELHI AT NEW DELHI

 Judgment delivered on: 21.07.2016

 FAO (OS) 9/2015 and CM No. 326/2015

MCDONALD’S INDIA PRIVATE LIMITED 

versus

VIKRAM BAKSHI & ORS 

CORAM:-

HON’BLE MR JUSTICE BADAR DURREZ AHMED

HON’BLE MR JUSTICE SANJEEV SACHDEVA

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Whether Indian court should grant anti-arbitration injunction?

Our focus is on the question whether an anti-arbitration injunction
could at all have been granted in the facts and circumstances of the present
case. We have already explained as to how, if the arbitration agreement
was taken to be one which was covered under Section 44 of the 1996 Act,
the arbitration proceedings could not be injuncted because the same was
neither null or void, inoperative or incapable or being performed. Even if
we assume that Part I of the 1996 Act was to apply, then also, because of
the provisions of Section 8, the judicial authority would be obliged to refer
the parties to arbitration. We may point out that Section 8 and, in
particular, sub-section (1) thereof has been recently amended with
retrospective effect from 23.10.2015 to read as under:-
―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 to the arbitration
agreement or any person claiming through or under him, so
applies not later than the date of submitting his first statement 
on the substance of the dispute, then, notwithstanding any
judgment, decree or order of the Supreme Court or any Court,
refer the parties to arbitration unless it finds that prima facie no
valid arbitration agreement exists.
xxxx xxxx xxxx xxxx xxxx‖
58. Thus, there is now a mandate to refer the parties to arbitration unless
the court finds that prima faice no valid arbitration agreement exists. This
is clearly not the case here. Therefore, in any eventuality, in the facts and
circumstances of the case and applying the principles, as indicated above,
the learned single Judge could not have restrained the appellant from
pursuing the arbitration proceedings before the arbitral tribunal.
59. There is a very interesting observation in paragraph 7.01 of Redfern
and Hunter on International Arbitration: Sixth Edition: Oxford University
Press. The observation is as follows:-
―The relationship between national courts and arbitral tribunals
swings between forced cohabitation and true partnership.
Arbitration is dependent on the underlying support of the courts,
which alone have the power to rescue the system when one
party seeks to sabotage it. …‖
Courts need to remind themselves that the trend is to minimize interference
with arbitration process as that is the forum of choice. That is also the 
policy discernible from the 1996 Act. Courts must be extremely
circumspect and, indeed, reluctant to thwart arbitration proceedings. Thus,
while courts in India may have the power to injunct arbitration proceedings,
they must exercise that power rarely and only on principles analogous to
those found in sections 8 and 45, as the case may be, of the 1996 Act. 
THE HIGH COURT OF DELHI AT NEW DELHI
Judgment delivered on: 21.07.2016
FAO (OS) 9/2015 and CM No. 326/2015
MCDONALD’S INDIA PRIVATE LIMITED ... Appellant
versus
VIKRAM BAKSHI & ORS ... Respondents

CORAM:-
HON’BLE MR JUSTICE BADAR DURREZ AHMED
HON’BLE MR JUSTICE SANJEEV SACHDEVA

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