1. The matter is being argued in the background of earlier adjudication in Arbitration Application no. 4 of 2007 on 19/3/2008 by this Court holding that said application filed before it by the present Applicants was premature because as per agreement between parties the arbitration was contemplated only after failure of conciliation held in terms of Section 62 of Indian Arbitration and Conciliation Act, 1996, hereinafter referred to as 1996 Act or Arbitration Act. This Court then left present Applicants i.e. M/s Tulip free to invoke said proceedings and all other contentions raised before it open. The two appeals against orders under Section 9 of 1996 Act earlier ordered to be heard with this application have been separated with consent of parties on 17/7/2009. The respective Senior Advocates have completed their arguments after this order.

2. In view of this position and as contesting parties are before this Court through their respective learned Senior Advocates and existence of the arbitration clause vide clause no. 19 in the agreement is not in dispute, I have tried to find out the areas in dispute so as to curtail unnecessary lengthy arguments. It appears that the Respondents claim a right in them to refuse to conciliate and thereby the frustration of arbitration clause itself and bar of limitation as also the non-referrability of disputes to arbitration i.e. absence of arbitrable disputes in/as their defence. In the alternative, a Civil Suit filed by them in the matter claiming reliefs against the Applicants and strangers is also being pointed out stating that strangers who are necessary parties to that Suit, being not parties to arbitration agreement, can not be subjected to the arbitration. Accordingly, I have heard both the Senior Advocates. It can not be disputed that the earlier conciliation conducted by one Mr. Om Navani is already declared to be not in terms of clause 19 of the agreement.

3. Shri Dessai, Senior Advocate for Tulips has pointed out that clause 19 envisaged completion of the conciliation proceedings within one month and failing it, the agreement presumed failure thereof leaving parties to take recourse to the arbitration. After judgment dated 19/3/2008 of this Court, the Applicants issued a notice dated 21/6/2008 calling upon the Respondents to conciliate before either of two retired Honble Judges named therein and to communicate their acceptance within 10 days. Respondents replied to it on 21/6/2008 pointing out Section 62 required 30 days notice and that there were no hopes from conciliation. They also did not agree to any of the names suggested by the Applicants. The Applicants then sent their rejoinder notice on 9/7/2008 agreeing to wait for 30 days. However, on 10/7/2008 Respondents sent their negative response thereby making it clear that conciliation between the parties was not possible. Hence, after this failure of conciliation, Applicants again sought appointment of Arbitrators under said clause 19 and approached this Court.

4. After inviting attention to the points of disputes and in order to show that the same are covered by the agreement our attention is invited to the memorandum of understanding i. e. MOU dated 26/4/2000 and Share Holding Agreement i.e. SHA dated 24/6/2000 between the parties. Senior Counsel Shri Dessai states that the Applicants were supposed to purchase 50% share capital of M/s Trade Wings Hotels Ltd. i.e. TWHL before completion date as contemplated by the agreement between parties. He states this purchase was scheduled after paying 13.50 Crores to TWHL and against physical delivery of the shares. However, as 100% share holding and equipment of TWHL were then mortgaged/pledged with Tourism and Finance Corporation Of India i.e. TFCI the sale itself was not possible. Because of efforts made by the Applicants, OTS i.e. one time settlement of loan amount was reached between TWHL and TFCI and out of amount of Rs. 16.50 Crores paid by the Applicants, OTS amount of Rs. 12 Crores was paid. Thereafter, when Applicants demanded the necessary shares, the Respondents demanded more amount of Rs. 13.50 Crores which gave rise to this controversy. As per the MOU Applicants are entitled to run and manage the Hotel for period of 10 years i.e. upto 2010. He invites our attention to various clauses of SHA particularly clauses 14, 17, clause (F) ,(G),(H) at Page 33, clause 2.1 at Page 36 , clause 3 at Page 37, clause 17.4 at Page 50, clause 19 at Page 51, clause 8.2 at Page 40 to show complete understanding between the parties. He also states that as per this SHA the MOU was recognised and treated as its part and parcel. Therefore for violation of any provision of the MOU also the conciliation /arbitration clause can be invoked. Clause 8.2 is pointed out to show what parties have understood as fundamental matters and it is argued that matters contemplated thereby are all after the commencement of the business after Applicants get 50% share holding of TWHL. As this stage never came, as yet there is nothing like "fundamental matters on which parties have positive vote" in the field.

5. Importance and consequence of completion date "7/9/2000" envisaged in SHA is sought to be explained by pointing out what is envisaged by the phrase "completion". The joint venture company i.e. JVC could never be constituted. It is stated that pledged shares are released on 28/7/2006 by TFCI to TWHL when it gave no dues certificate. Said certificate is at Page 162 of Appeal No. 1/2008 which was placed for hearing with this matter. It is stated that therefore transfer of shares "on spot delivery basis" as required by clause 37 of SHA could not take place. Completion date is stated to be subject to process of completion as stipulated in clause 4 and as that date could not have been fixed before 28/7/2006, completion date also stood extended automatically. Thus the bar of limitation being pointed out by the Respondents is misconceived. It is urged that thus after no dues certificate was issued by the TFCI, the Respondent turned around and chose to issue the notice of termination dated 27/1/2007 to put an end to all previous agreements either in writing or oral and MOU dated 26/4/2000. The malafides of Respondents are sought to be shown by pointing out that even after "7/9/2000" the amounts were accepted from the Applicants and after the loan was cleared, MOU dated 26/4/2000 was terminated. It is pointed out that Applicants have paid Rs. 12 Crores directly to TFCI as OTS amount. The contention of Applicants that amount of Rs. 16.50 Crores paid by them is shown as share application money in accounts of TWHL is accepted by TWHL. Provisions of Section 77 of Arbitration Act are pointed out to show that bar mentioned therein does not apply to Section 9 Arbitration Act proceedings. The Applicants filed their application under Section 9 of arbitration Act before the court of Civil Judge, Senior Division on 7/2/2007 and within two or three days thereof, the full Bench of this High Court resolved the then prevailing controversy and declared the court of Principal District Judge to be the Principal Court of original jurisdiction. Applicants then obtained the return off matter for its presentation to competent forum which came to be granted and that application under Section 9 was then presented to the Principal District Judge. The Respondents filed their civil suit on 8/2/2007 i.e. after the Applicants.

6. It is thus urged that in view of express provision contained in Section 62(3) of the Arbitration Act, the conciliation is deemed to have failed and recourse to arbitration by the Applicants can not be faulted. The Respondents, after directly pointing out need of conciliation, can not now back out by claiming alleged right to refuse to conciliate. Such refusal ought to have been indicated to this Court in earlier Section 11(6) filed and now they are estopped. In any case, because of their refusal or rejection the agreement as per its scheme has to proceed further in direction of resolution of dispute through alternate forum. Its spirit and purpose in the light of various statutory provisions need to be protected against such mischief and the Respondents cannot be allowed to further delay dispute resolution. The Respondents have accepted money even after "7/9/2000" and allowed Applicants to pay OTS amount and are now invoking the limitation. As the completion was rendered impossible within stipulated time for their fault and for no fault on part of the Applicants, they can not be allowed to take advantage of their own wrong. The JVC could not come up and as business as per MOU or SHA could never start, the stage of legal completion never arrived and said completion got extension by the conduct of parties. Hence defence of disputes being on "fundamental matters" is malafide. MOU is part and parcel of SHA and is covered by the arbitration clause no. 19. The argument about non-arbitrability of the disputes is also misconceived. There is no question of conciliator working out any "residue" here for arbitration. It is urged that the civil suit filed by the Respondents is only by way of farce and with a view to use it to delay the reference to arbitration. It is contended that the civil suit can continue effectively independently without the Applicants or then, even without so called strangers. It is stated that the so called strangers are legally bound by the agreement between Applicants and the Respondents as they are alleged to be in the field either because of Applicants or the Respondents. Lastly, it is urged that the approach of Respondents in the matter is not honest. All objections being raised at their instance are misconceived and aimed at defeating the provisions of the 1996 Act. It is urged that this Court has only to record only prima-facie conclusions and all objections can be raised and finally decided in proceedings before the Arbitrator as per the scheme of Section 16 of 1996 Act. Senior Counsel Shri Dessai, therefore requests this Court to appoint the Arbitrator and leave every thing open before him/her.

7. Learned Senior counsel has urged that Cl.12 or particularly its sub-clause (4) contemplates termination only if it is at the instance of or because of non-cooperation of a 3rd party i.e. person or party whose conduct can not be controlled by the parties to SHA. He states that here because of its own fault and conduct that M/s TWHL could not complete its part and physical delivery of shares was rendered impossible and consequently, formation of JVC also could not materialize. The Applicant was in management and continued to manage the Hotel Bogmoro Beach Resort (Resort-hereafter) and performed its obligation by depositing requisite 50% price of share capital to be purchased. He argues that this deposit was/is in furtherance of SHA only and even thereafter, some more amounts have been accepted from Applicant according to it. Time was never the essence of SHA for parties and when, M/s TWHL was/is at fault, it can not take advantage of its own wrong. He has placed reliance upon AIR 2004 S.C. 32 = (2004) 1 SCC 1 [LQ/SC/2003/1096 ;] ">(2004) 1 SCC 1 [LQ/SC/2003/1096 ;] [LQ/SC/2003/1096 ;] --State of U.P. vs. Lalji Tandon and (1989) Suppl. (1) SCC 487 [LQ/SC/1989/211] = AIR 1989 S.C. 18 Provash Chandra Dalui vs. Biswanth Banerjee to buttress his submissions that due to conduct of parties, the SHA continued and in facts here, the provision for automatic termination therein was not attracted and came into play.

8. Senior Counsel Shri Jagtiani, for Respondent clarified that M/s TWHL ( Mittal group) was opposing the Applicants (i.e. A.B.K. group) prayer under S.11(6) on following 4 grounds:-- A- Clause 19 in SHA permits unwilling party to block invocation of arbitration. B- Last date of SHA was 7/9/2000 and as per Section 43 of Arbitration Act, 1996 the civil suit could have been filed only within 3 years therefrom, C- Relationship after 7/9/2000 was regulated by subsequent arrangements which lack any arbitration clause and all disputed questions between parties are not arbitrable, and D- In any case civil suit filed by M/s TWHL is more comprehensive and some individuals not party to SHA or subsequent agreements are necessary parties thereto. Separation of parties and splitting of causes is not permissible.

9. Learned Senior Counsel points out that there is no arbitration clause in MOU dated 26/4/2000 and after expiry of SHA, the recourse to arbitration is not possible. It is urged that starting of JVC to manage Resort was very essential and Applicant was then expected to bring other hotels also for management under said JVC. MOU envisaged period of 120 days therefor which expired on 7/9/2000 itself. SHA dated 9/6/2000 again contemplated period of 90 days and that period was also to expire and did expire on 7/9/2000. In this background, attention is invited to definitions or interpretation of "completion" and "completion date" in SHA which according to Counsel reveals the understanding between parties about importance of time limit. Clause 4 of SHA is pointed out to urge that conditions stipulated therein are condition precedent and only stage one therein was over as it was done by M/s TWHL. Conditions 2 to 4 therein could not be fulfilled by the Applicant and language of said clause does not contemplate any extension of time. Clause 12 is argued to be ushered to take care of lapses or faults due to 3rd party role and extension of time is expressly ruled out even in that contingency. Because of the nature of the arrangement and its implications, parties gave specified time for it and maintained its sanctity throughout by highlighting it. Clause 12.5 is pointed out to show how the scheme of self destruction is embodied in agreement by parties. Clause 17.4 treats the agreement to be complete code and negates theory of any implied extension or oral agreement therefor. Because of the express provision in SHA prescribing particular procedure for its renewal or amendment, plea of its continuation by any oral understanding or by conduct the SHA can not survive after 7/9/2000. It is argued that there can not be any oral understanding extending the time and no such inference can be drawn from alleged conduct of parties. In any case, the arbitration clause cannot survive after 7/9/2000 and even if, MOU dated 26/4/2000 is presumed to survive or revive after 7/9/2000, it does not contain arbitration clause.

10. It is urged that after 7/9/2000 neither MOU dated 26/4/2000 nor SHA dated 9/6/2000 is available to Applicant in the matter. No payment is made by Applicants to M/s TWHL before 7/9/2000. Though the relationship between parties continued till 2006, it is dehors clause 17.4 of SHA and it did not contain any arbitration clause. Payment of Rs. 16.50 Crores by Applicant in excess of liability of Rs. 13.50/- Crores undertaken in SHA is urged to be for certain reasons and due to some arrangement. Attempt of Applicant to pay amount of Rs. 9,79,00,000/- on 1/11/2006 towards purchase of shares is also pointed out as an indication of arrangement independent of MOU or SHA but cheque therefore was dishonoured. M/s TWHL then terminated on 27/1/2007 the entire prevailing agreements or understandings and filed Special Civil Suit No. 7/2007 for declaration that MOU stood terminated, for recovery or reimbursement of money and pointing out siphoning of its huge amounts by employees of Applicant or strangers at instance of the Applicant. Thus only part of controversy in pending civil suit is sought to be raised under Section 11(6). As all parties in Civil Suit can not be parties in arbitration and Suit is more comprehensive in nature, because of judgments of Honble Apex Court in Sukanya Holdings and India House, (see below) as no bifurcation of parties or splitting of cause is permissible, present application deserves dismissal.

11. Language of clause 19 employed in SHA is stated to be with some purpose and it contains some "filters" to avoid unnecessary matters or undesired issues from reaching the arbitrator. Conciliation is therefore made condition precedent so that such matters can be sorted out privately by parties without any statutory compulsions. The matters to be referred to arbitration are required to be "set out" after conciliation and generally, represent residue left thereafter. The words "set out" are urged to be words of limitation as against words like--"in connection therewith" or "about" or "relating to" or "concerning" etc. which receive wide interpretation. The scheme of SHA to exclude fundamental matters is also relied upon for this argument. Refusal to conciliate by Respondent can not in this background be construed as "rejection" but must be seen as lawful exercise of its recognised rights and as avoiding arbitration. Judgment delivered earlier by this Court on similar application of Applicant is pointed out to show how actual holding of conciliation as per S. 62 of Arbitration Act is found essential and how arbitrable issues can not legally surface till it is physically conducted. According to learned Senior Advocate Shri Jagtiani the scheme of SHA itself recognised the fact that arbitration and conciliation are the concepts warranting the consent of parties and hence, right has been given to them to block arbitration. Unlike in arbitration; in conciliation, there can be no compulsion by law. Conciliation proceedings begin only after appointment of conciliator while arbitration begins only with service of notice under Section 21 of Arbitration Act. Provisions of Sections 62 and 63 are shown in this light and Shri Desais argument based on "fiction of failure" is stated to be misconceived. It is argued that refusal to conciliate results in "no conciliation" and not in "failure of conciliation" and the arbitration, therefore, can not be resorted to. As entire arbitration jurisprudence is consensual one, the result flowing from careful arrangement inserted vide clause 19 must be honoured as desired by the parties and when, in changed circumstances and for valid reasons, Respondent is refusing to conciliate, clause 19 itself becomes inoperative.

12. Elaborate arrangement as made in clause 4 and 12 of SHA even after taking into account the 3rd party defaults is stated to be self serving and deliberate one. Relationship continuing between Applicant and Respondent thereafter is stated to be independent either of MOU or SHA. SHA died its own death after 7/9/2000 and as MOU had merged with it, it also ceased to exist. By way of abundant precaution and in alternative, it is urged that even if MOU is presumed to have survived or revived, still, there is no arbitration clause in it. Arbitration clause was in SHA and due to Section 43 of Arbitration Act r/w Article 54 of Limitation Act, any action in pursuance of SHA was permissible within 3 years. It is pointed out that in notice of termination dated 27/1/2007, Respondent has terminated all arrangements or agreements including MOU dt.26/4/2000 but it does not mention SHA. Learned Counsel contends that this is not omission either "intelligent" (word used by Sr.Adv. Dessai) or "accidental" but as SHA had already expired, there was no need or occasion to terminate it. After 7/9/2000, the relationship between the Applicant and Respondent is regulated by subsequent agreements or arrangements and not by SHA. The management of Resort after 7/9/2000 by Applicant is not under SHA and it was due to subsequent agreements between parties. He points out that in none of the correspondence between parties after 7/9/2000, there is mention of SHA and this is on account of the fact that it had already expired and was no more in reckoning. Reliance by Applicant on tripartite agreement dated 4/12/2005 [Vol. 1, pg.154 of Section 9 Appeal] to show that SHA continued to operate is labeled as erroneous by pointing out that Resort was not managed by JVC and its clause 3 and 4 are pointed out in support. Attention is also invited to letter dated 6/2/2004 [Vol. 1, pg.152 of Section 9 Appeal] referred to in its clause 6 to urge that even then shares were pledged with TFCI and not available for sale. Therefore SHA can not be treated as revived by tripartite agreement and for same purpose, its clause 8 is also pointed out.

13. Minutes of meeting dated 19/10/2005 [p.193/189 of bound vol. in Appeal no. 4/2007] in which Applicant accepted liability to pay Rs. 13.50 Crores towards purchase of 50% share to Respondent, is also pressed into service to urge that it indicates new arrangement containing no reference to MOU or SHA. Letter of Applicant [pg. 280] inviting Respondent to arbitration is pointed out to show that it in para 5 and para 7 mentions revised understanding and not SHA. Para 9 at page 284 is also pointed out to show that it again mentions "new understanding" as source. It is pointed out that clients mentioned therein are not JVC but third persons viz. Applicants. Reasons for dishonour of cheque in this letter dated 31/7/2008 are stated as false and contrary to page 225. Letter dated 16/10/2006 at page 129 of vol. 1 of Appeal 4/2007 is also shown to reveal this falsehood with comment that it is addressed to third person i.e. Shri Om Navani and fabricated to suit the need. (The letter mentions that its writer A.B. Kerkar dictated the letter on telephone and it was then sent to Shri Navani, the person who conducted earlier conciliation between parties. Some correspondence after 7/9/2000 also mentions him as person present in joint meetings held to resolve disputes.) Notice at page 266 dated 11/6/2008 issued to Respondent to conciliate is also pointed out to urge that it contains vague description of disputes in its clause "b,c and f". It is pointed out that right to manage Resort was being claimed by "the clients" named therein while SHA extended that right to JVC. Clause "d" mentions revised agreement and not SHA while demand or grievance in clause "e" can not spring from SHA. Thus attempt is to show that the relationship between parties after 7/9/2000 is regulated by the subsequent oral understanding or revised understanding and parties were aware of limited life of SHA and knew that it ceased to operate after 7/9/2000. Hence, none of the parties even refer to it after 7/9/2000 and Respondent only terminated all other understandings or agreements including MOU. The silence by both parties about SHA after 7/9/2000 is stated to be a "studied silence". The Applicant therefore has to demonstrate the arbitration clause in MOU or in subsequent agreements and if reliance is to be placed on clause 19 in SHA, the attempt ought to have been made within 3 years of 7/9/2000.

14. It is further urged that because of causes pleaded and relief sought as also parties joined, the Special Civil Suit by the Respondent is more comprehensive. Grievance made and relief sought against Defendants 3 to 6 therein are independent as they are henchmen of Applicants through whom the siphoning has been arranged and they are severally and jointly liable to Respondent to make good the losses. It is argued that their presence is essential to prove this mismanagement or maladministration.

15. Shri Dessai, learned Senior Advocate has argued that tenor of clause 19 of SHA is general and it is not confined either to Share Holding Agreement or MOU. Fundamental matters only in which parties are given affirmative vote have been excluded from the scope of said clause and it is no bodys case that present dispute relates to any such matter. He invites attention to provisions of Section 16 (1) (a) of 1996 Act to urge that clause 19 is an independent contract which survives even for adjudication of disputes in future and its life is not restricted because of any other stipulation to the contrary in the agreement. In support of his contention he has relied upon (2007) 5 SCC page 510--India Household and Health care Ltd vs LG Household and Health care Ltd -- paragraph 10 and (2007) 5 SCC page 692-- National Agricultural Corporation Marketing Federation of India Ltd vs Gains Trading Ltd paragraphs 6 and 9. He adds that argument of Respondent that SHA dies of its own is totally misconceived because here relationship between parties continued for over seven years after the alleged date of termination and during that period never such stand of "self termination" was taken by them. On the other hand, they accepted amount of Rs 16.50 Crores as share application money without any protest. He points out that if this argument of self-destruction is overlooked, then the Respondent has not pointed out any other termination of SHA and hence SHA is still alive. Our attention has been invited to clause 12 of the SHA to urge that determination of completion date is left to parties and there is arrangement for mutual partition. Clause 12.5 is stated to be serving the need of Section 55/73 and 74 of Indian Contract Act. Section 14 of 1996 Act is also pointed out to show that arbitration agreement survives for the benefit of legal heirs. He states that issue therefore does not arise and even if it arises it needs to be left for determination of Arbitral Tribunal.

16. Dealing with the objection of limitation it is urged that in present dispute it is a mixed question of law and fact requiring recording of evidence and must be left to Arbitral Tribunal as this court has to only prima facie expresses opinion. Reliance is being placed upon judgment of Honble Apex Court reported at (2009) 2 SCC page 55-- Visa International Ltd vs Continental Resources (USA) Ltd, M/s Nandan Biometrics Ltd vs D 1 Oils Ltd. -- JT 2009 (2) SC 478 [LQ/SC/2009/306 ;] ">JT 2009 (2) SC 478 [LQ/SC/2009/306 ;] [LQ/SC/2009/306 ;] and (2007) 8 SCC page 321--DHV BV vs. Tahal Consulting Engineers Ltd. Cause of action accrued in favour of Applicant when notice of termination dated 27/1/2007 was issued by Respondent. Shri Dessai argues that cheque tendered by Applicant to Respondent on 1/11/2006 was towards full and final satisfaction of all dues i.e. 13.50 Crores and interest on it from 7/9/2000 till then. The said cheque was subject to removing from their balance sheet by Respondents all claims/entries against Applicant. There cannot be any other agreement and Applicant continued to run the Hotel or Resort for seven years after alleged date of completion. The profits were being shared 50-50 between parties and there could not be and could not have been any oral understanding or contract.

17. He invites our attention to tripartite agreement dated 4/1/2005 between Applicant, Respondent and TFCI Ltd. to urge that this was in pursuance of MOU and SHA. Therein Applicant has been referred to as "Operator" while Respondent is mentioned as "Borrower". TFCI Ltd is mentioned as "the Lenders". Communication dated 4/2/2006 sent by Respondent to Applicant is also pointed out to show how there was meeting between parties and how interest has been calculated. Emphasis is placed upon the total consideration of Rs 27 Crores and 50 % amount i.e. Rs 13.5 Crores payable by Applicant to Respondent and also that said payment was to be made by 28/10/2005. Communication dated 25/11/2000 sent by Respondent to TFCI Ltd. is also pointed out to show that how Respondent represented that agreement entered into on 9/6/2000 would help it in repaying the loan on top priority. It is urged that story of self termination on 7/9/2000 is thus misconceived and by way of afterthought and another communication dated 4/12/2000 on same lines is also pressed into service for said purpose. It is pointed out that on 28/2/2001 Respondent sought clearance of the TFCI Ltd for disposing of 50% stake in Hotel or Resort to Applicant. Letter dated 25/2/2006 written by Applicant to Respondent is also shown to buttress the stand that MOU as also SHA are in force and Applicant had succeeded in proceedings before DRT in obtaining one time settlement about dues of TFCI Ltd. All this is stated to be extension of arrangement/agreement between parties by conduct and support is being taken from (2008) 1 SCC page 503-- Bharat Petroleum Corporation Ltd vs Great Eastern Shipping Company Ltd.

18. Shri Dessai, learned Senior Counsel states that Civil suit filed by Respondent is not comprehensive and has been filed tactically to defeat Arbitration proceedings. Applicants filed proceedings under Section 9 of 1996 Act in the Court of Senior Division as per legal advice on 7/2/2007 and then on 8/2/2007 Respondent filed its civil suit. It is pointed out that suit refers to SHA and Defendants 3 to 6 alleged to be strangers are in fact subordinate employees or Directors of Respondent or sister concern of present Applicant. Defendant No 3 is sister concerns of Applicant, Defendant No 4 is employee of Respondent while Defendant No 5 and 6 are directors of Respondent (Plaintiff in suit) helping present Applicant. Plaint paras 6 and 7 show subsequent payment of Rs 9.79 Crores by Applicant by cheque. Judgments of Honble Apex Court reported in (2006) 4 SCC page 372-- You One Engineering and Construction Company Ltd vs National Highway Authority of India, (2007) 5 SCC page 692=AIR 2007 S.C. 2327 -- National Agricultural Corporation Marketing Federation of India Ltd vs Gains Trading Ltd, (2007) 5 SCC page 703-- AIR 2007 S.C. 2064 Iron and Steel Company Ltd vs Tiwari Road Lines and (2007) 5 SCC page 510 -- India Household and Health care Ltd vs LG Household and Health care Ltd -- paragraph 10 and relied upon by Respondent are sought to be distinguished on facts contending that because of allegation of fraud there, existence of Arbitration clause itself was doubtful and hence civil suit has been held to be maintainable. Judgment in case of Suknya Holdings (P) Ltd. vs. Jayesh H. Pandya-- (2003) 5 SCC 531 [LQ/SC/2003/495] is stated to be not applicable because there Honble Apex Court did not permit splitting of causes of action through an application under section 8 of 1996 Act. Learned Senior Advocate Shri Dessai therefore urged that objections as raised are misconceived and application under Section 11 (6) moved by Applicant needs to be allowed.

19. Learned Senior Advocate Shri Jagtiani for Respondent with leave of Court contended that clause 12.5 of SHA cannot be read as an independent agreement itself as parties did not intend it and it would defeat the arrangement in its clause 17.4. According to him Section 16 (1) (a) of 1996 Act only permits Arbitrator to find out whether he possesses jurisdiction or not and it does not in any way enlarge the scope of understanding or contract between parties. He points out provisions of Section 7 read with Section 2 (4) of said Act to show that Defendants who are not signatories to SHA, are not bound by it and need to be sued in Civil Court as independent recovery from them is very essential. Judgments relied upon i.e. (2009) 2 SCC page 55 paragraph 11--Visa International Ltd vs Continental Resources (USA) Ltd and (2007) 8 SCC page 321 para 14--DHV BV vs. Tahal Consulting Engineers Ltd, M/s Nandan Biometrics Ltd vs D 1 Oils Ltd.paragraph 23 by Applicant are attempted to be distinguished by pointing out that in first judgment conciliation was the mode prescribed while in latter case facts are different. He places strong reliance upon judgment in case of Suknya Holdings (P) Ltd. vs. Jayesh H. Pandya-- (2003) 5 SCC 531 [LQ/SC/2003/495] and concludes by stating that present proceedings are misconceived and erroneous.

20. Before proceeding further, I find it proper to point out how the approach has to be while deciding applications under Section 11 (6) of 1996 Act. 1996 Act clearly indicates the legislative intent to minimize supervisory role of courts to ensure that intervention of Court is minimal. In Shree Subhlaxmi Fabrics Pvt. Ltd., v. Chand Mal Baradia and others, A.I.R. 2005 SC 2161, [LQ/SC/2005/406 ;] ">2005 SC 2161, [LQ/SC/2005/406 ;] [LQ/SC/2005/406 ;] Honble Apex Court states as under:-

"14. The consistent view taken by this Court, therefore, is that contentious issues should not be gone into or decided at the stage of appointment of an arbitrator and no time should be wasted in such an exercise. The remedy of the aggrieved party is to raise an objection before the arbitral tribunal as under Section 16 of theit is empowered to rule about its own jurisdiction. It is, therefore, open to the plaintiff to raise all the pleas before defendant No.2 including a plea that there is no arbitration agreement between the parties for referring any dispute for arbitration before the Hindustan Chamber of Commerce, Mumbai. It is also important to note that in response to the notice issued by defendant No.2 the plaintiff had sent a communication raising certain pleas and had also remitted an amount of Rs. 200/- as fee for arbitration. In such circumstances we are of the opinion that the view taken by the City Civil Court was just and proper and the High Court erred in granting an injunction in favour of the plaintiff and staying the proceedings before defendant No.2."

Following observations in Speech and Software Technologies (India) Pvt. Ltd vs Neos Interactive Ltd -- JT 2009 (1) SC 157 are also important:-

"7. By now it is well settled that exercise of power under Section 11 (6) of theis judicial power. After the decision of this Court in SBP and Company vs Patel Engineering Ltd (JT 2005 (9) SC 219 [LQ/SC/2005/1104] : 2005 (8) SCC 618 [LQ/SC/2005/1104] ) the Designated Judge has to consider the claim of both the parties to the matter and pass a reasoned order. It is also well settled that existence of arbitration agreement is a condition precedent before exercise of power under Section 11 (6) of the. The preliminary matters to be considered by the Court are (1) existence of arbitration agreement, (2) territorial jurisdiction, (3) whether there are live issues to be referred to the arbitrator, and (4) whether application is filed within the period of limitation prescribed by the law. If the court finds that the arbitration agreement does not exist or is rescinded then the prayer for referring the dispute to the arbitrator will have to be rejected."

In AIR 2005 S.C. 3766 "Shin-Etsu Chemical Co. Ltd. v. M/s. Aksh Optifibre Ltd., it is found that the object of arbitration including international commercial arbitration is expedition. The object of the would be defeated if the international commercial disputes remain pending to Court for months and years before even commencement of arbitration. In AIR 1972 S.C. 1 "Naraindas v. Vallabhdas" Honble Apex Court has expressed that where no suit is pending with respect to the subject matter of dispute and the parties choose to refer a dispute to arbitrators, it is not essential that the parties should signify their consent to the award before the same can be enforced. Any other view would run counter to the entire scheme and object of arbitration for the settlement of disputes according to which agreement and consent are imperative only at the stage of referring the dispute to arbitrators but not at the stage of the award.

21. Even on limitation aspect, I find following observations of Honble Apex Court in AIR 2007 S.C.3113 "DHV BV v. Tahal Consulting Engineers Ltd. (Israel) = (2007) 8 SCC page 321 important:--

"16. The arbitration agreement is in clear terms and brings within its ambit any dispute between the parties as to matters arising pursuant to the main contract which cannot be settled amicably. Admittedly, the liability to pay the taxes flows from the contract and not otherwise. Having found that it was obligatory upon TNPWD to discharge the tax liability in respect of the payments made to the sub-consultants and DHV being a signatory to the main contract, I am of the opinion that claim made by DHV in respect of the Income tax dues would fall within the ambit of the arbitration agreement between the parties.

17. As regards the question as to whether the said claim can be said to be stale in the sense that after the last payment in January, 2003, none of the three parties herein had any pending claims against each other insofar as the payments under the main contract were concerned, I am of the view that notwithstanding the fact that payments against all the invoices raised by DHV stood paid, in the light of the agreement between the parties in terms of clause 1.10, subsequent creation of an additional payment by the Income tax department in respect of the payments made by TNPWD to DHV through Tahal, has given rise to a live dispute requiring settlement between the parties in terms of the arbitration agreement. For the view I have taken, it is axiomatic that prima facie, the claim made by DHV is not barred by limitation."

22. Following questions therefore need to be prima facie considered in present matter.

(i) Whether clause 19 in SHA permits unwilling party to avoid arbitration

(ii) Is recourse to clause 19 time barred

(iii) Whether Civil suit filed by M/s TWHL is more comprehensive and due to its subject matter recourse to arbitration is not permissible

23. It would be first beneficial to reproduce clause 19 in SHA which reads:--

19. Conciliation and Arbitration.

19.1----- All disputes and differences, between the parties hereto in respect of any matters except those relating to the fundamental matters in respect of which the Parties have been given affirmative vote, set out in this Agreement shall first be tried to be resolved through the intervention of a conciliator appointed by the Parties to the dispute, who shall initiate through Conciliation to raise all the dispute. If, however, the dispute is not resolved within one month after the matter of dispute is referred to the conciliator or conciliation, the same shall be referred for arbitration to panel of Arbitrators comprising an arbitrator appointed by each party to the dispute and the arbitrators so appointed may appoint one more arbitrator as an umpire, however, the total number of arbitrators shall be 3 number. The conciliation and arbitration proceeding shall be governed by the Arbitration and Conciliation Act, 1996 (26 of 1996). The venue of the Conciliation and Arbitration proceedings shall be in the city of Mumbai. The award given by the umpire shall be final and binding on all the parties to the arbitration.

24. Earlier judgment of this Court in similar application moved by present Applicant is important in this respect. In said judgment, because of express language of Section 62 of 1996 Act invocation of Arbitration clause was found to be premature. In AIR 2007 S.C. 2954 "You One Maharia-JV v. National Highways Authority of India" while considering the question of appointment of presiding arbitrator when the Arbitrators appointed by parties had disagreed on 3rd Arbitrator and terms of arbitration agreement provided for specified authority to appoint Presiding Arbitrator in such case; an application made to Court to appoint Presiding Arbitrator was held liable to be dismissed. It is declared that in view of specific term in arbitration agreement party can neither insist nor can Court direct specified authority to appoint a retired Judge who is senior to Judge-Arbitrator as Presiding Arbitrator. In AIR 2007 S.C. 2064 "Iron and Steel Company Ltd. v. M/s. Tiwari Road Lines", Honble Apex Court states that the legislative scheme of S. 11 is very clear. If the parties have agreed on a procedure for appointing the Arbitrator or Arbitrators as contemplated by sub-section (2) thereof, then the dispute between the parties has to be decided in accordance with the said procedure and recourse to the Chief Justice or his designate cannot be taken straightway. A party can approach the Chief Justice or his designate only if the parties have not agreed on a procedure for appointing the Arbitrator as contemplated by sub-section (2) of Section 11 or the various contingencies provided for in sub-section (6) have arisen. In said case the agreement executed between the parties contained an arbitration clause and Cl. 13.1 clearly provided that all disputes and differences whatsoever arising between the parties out of or relating to the construction, meaning and operation or effect of the contract or the breach thereof would be settled by arbitration in accordance with the Rules of Arbitration of the Indian Council of Arbitration and the award made in pursuance thereof would be binding on the parties. This clause is found in accordance with sub-section (2) of S. 11. There being an agreed procedure for resolution of disputes by arbitration in accordance with the Rules of Arbitration of the Indian Council of Arbitration sub-sections (3), (4) and (5) of S. 11 are held to have no application. The stage for invoking sub-section (6) of S. 11 had also not arrived. In these circumstances, the application for appointment of Arbitrator moved by the respondent before the City Civil Court, which was a Designated Authority in accordance with the scheme framed by the Chief Justice was held not maintainable. The City Civil Court was found to have no jurisdiction or authority to appoint an Arbitrator.

25. In this view of legal position, can it be said that Respondent TWHL possesses a right to refuse to conciliate and therefore a right to defeat the arbitration. Nature of jurisdiction under 1996 Act and un-enforceability of the conciliation are the planks taken support of with contention that important event i.e. crystallization of referable disputes (i.e. residue left unresolved) in conciliation is first and unavoidable stepping stone . If that stage is not taken, no arbitrable disputes arise and recourse to S. 11(6) is not open. In AIR 2008 S.C. 2398 "United India Insurance Co. Ltd. v. Ajay Sinha" it is held that S.22-C(1) of Legal Services Authorities Act (39 of 1987) relating to cognizance of cases by Permanent Lok Adalat must be interpreted in expansive manner and terms "relating to an offence" should be given wider meaning. In para 23 Honble Apex Court has made following observations:--

"Whereas on the one hand, keeping in view the Parliamentary intent, settlement of all disputes through negotiation, conciliation, mediation, Lok Adalat and Judicial Settlement are required to be encouraged, it is equally well settled that where the jurisdiction of a court is sought to be taken away, the statutory provisions deserve strict construction. A balance is thus required to be struck. A court of law can be created under a statute. It must have the requisite infrastructure therefor. Independence and impartiality of Tribunal being a part of human right is required to be taken into consideration for construction of such a provision. When a court is created, the incumbents must be eligible to determine the lis." In para 25 it is stated "25. Sub-section (1) of Section 22-C speaks of settlement of disputes. The authority has to take recourse to conciliation mechanism. One of the essential ingredients of the conciliation proceeding is that nobody shall be forced to take part therein. It has to be voluntary in nature. The proceedings are akin to one of the recognized ADR mechanism which is made of Medola. It may be treated at par with Conciliation and Arbitration. In such a case the parties agree for settlement of dispute by negotiation, conciliation or mediation. The proceedings adopted are not binding ones, whereas the arbitration is a binding procedure. Even in relation to arbitration, an award can be the subject matter of challenge. The provisions of the Arbitration and Conciliation Act, 1996 shall apply thereto. The jurisdiction in terms of Section 34 of the Arbitration and Conciliation Act, 1996 is wide."

26. Thus when conciliation is not binding on parties and still parties provided for it as first step towards dispute resolution, it can not be said that parties wanted to avoid dispute resolution through alternate means or procedures. It can not be overlooked that they provided for arbitration also as next or last step in that direction. Parties are in trade and business and therefore are aware of every possibility of the disputes arising between them because of the relationship which they entered into. They have therefore made arrangement for its speedy resolution through alternate procedures well known in such relationships. It can not be accepted that the parties had no intention to make such provision or then they deliberately made provisions in a way conducive to defeat the alternate dispute resolution in certain situations. Initial step of conciliation agreed for by them clearly shows the confidence which parties had in each other. They also felt and accepted that in conciliation all disputes may not be resolved and hence, differences left unresolved even after conciliation are and were agreed to be referred to arbitration. This is obviously because of non-binding character of conciliation. Even if conciliation is held to be binding still it does not mean that when it is not allowed to take place, the arbitration clause can not be resorted to. Scheme of clause 19 does not permit invocation of arbitration clause till the conciliation is first sought. Only if it takes place, the residue or same i.e. unsettled disputes can then be placed before the arbitrator. However, if it is avoided by one of the parties that does not mean that the other party is rendered a helpless spectator. Dispute resolution is the aim of clause 19 and it can not be frustrated by any unwilling party. Language of clause 19 requires the disputes to be first tried to be resolved through the intervention of a conciliator appointed by the Parties to the dispute with utmost speed. If it is not resolved within one month, then appointment of arbitrator is envisaged. Thus primacy given to fast resolution and hence non binding mode of dispute resolution is explicit. It is only because of the confidence which parties reposed in each other. Present Applicants having duly invoked the conciliation clause, because of negative response or no response from the Respondents they are fully justified in calling upon the them to appoint the arbitrator. Earlier judgment of this Court on application under S. 11(6) only means that till the efforts to conciliate in terms of S. 62 of 1996 Act are not made, arbitration can not be resorted to. Clause 19 does not clothe the Respondents with right to frustrate the dispute redressal mechanism agreed to between parties. Such procedure of dispute resolution is one of the essential part of the arrangements reached between them and every effort will have to be made to make it real and meaningful. Interpretation which tends to defeat its right spirit and purpose needs to be avoided. It is not in dispute before me that the disputes could not have been referred to conciliation or to arbitration.

27. A brief reference to order dated 19 March 2008 of this Court in application for appointment of arbitrator number 4 of 2007 is necessary here. Said application was filed by present Applicants and it was found there that this precondition of trying the dispute settlement in conciliation was not satisfied. Words "first be tried" and "the same shall be referred" have been found to be keywords and it appears that "identity" of what was placed before conciliator and before arbitrator was also not established. It was also found that no material was produced before Court to disclose either the nature of the dispute which was sought to be resolved through intervention of conciliator. It is held that conciliation ought to have been conducted in terms of 1996 Act and as that was the procedure chosen by parties, no other procedure for conciliation could have been resorted to. It was found that there was no prior compliance of prerequisites in relation to conciliation proceedings in terms of 1996 Act. Besides it is also found that actually there was no conciliation proceeding held between parties. After said adjudication, on 11/6/2008, Applicants sent legal notice raising certain disputes for conciliation and sought consent of Respondents to any one of two suggested by them for acting as sole conciliator. The response was sought within 10 days and on 21/6/2008, Respondents wrote and informed that they were not willing to have the dispute resolved through arbitration. They contended that because of conduct and acrimony displayed by Applicants during various legal proceedings, no meaningful purpose could have been achieved in attempted conciliation and notice sent by Applicants was only to satisfy the requirement of clause 19 (1) to enable them to invoke the arbitral clause. They also dealt with claims as raised on merits without prejudice to their rights and pointed out that Section 62 (4) gave them time limit of 30 days to respond to Applicants notice. On 9/7/2008 Applicants sent another communication through their advocate and gave them period of 30 days to respond mentioning that said period of 30 days would expire on 13/7/2008. Request for reference to conciliation was repeated and it was communicated that in default arbitration proceedings would be initiated. On 10/7/2008, Respondents wrote to learned counsel for Applicants and informed him that they were under mistaken impression about their liberty to pursue arbitral proceedings. On 31/7/2008 in this background, Applicants sent another legal notice invoking arbitration in terms of clause 19.1 of SHA dated 9/6/2000 and also appointed their arbitrator. They called upon Respondents to nominate their arbitrator and informed that in default, Applicants would approach High Court for such appointment. There are no arguments about the correctness of the procedure followed or about the arbitratability of disputed issues between parties. The only contention is as conciliation has not been held physically, stage to appoint arbitrators cannot come.

28. At this stage reference to Section 62 of 1996 Act is called for. Party initiating conciliation has to send to other party a written invitation to conciliate under part III of 1996 Act and it has to briefly state the subject of the dispute. This stage contemplated by Section 62 (1) is fulfilled in present matter. Subsection 2 declares that conciliation proceedings commence when other party accepts in writing invitation received by it under subsection 1. In present facts, there is no such written acceptance. On the contrary, futility of conciliation proceedings has been pointed out in their reply dated 21/6/2008 by Respondents who expressly communicated that they were not willing to go for arbitration also. They also communicated that SHA had already lapsed and there was no basis for conciliation proceedings. In further notice, Applicants communicated that SHA was still valid and Respondents were informed that if there was failure to respond, Applicants would presume that invitation to conciliate was rejected by Respondents. They also communicated that in that event they would invoke arbitration proceedings. Reply of Respondents dated 10/7/2008 does not contain any different stand except for mentioning that Applicants had no liberty to pursue arbitral proceedings and clause 19.1 of SHA could not have been invoked by them. Subsection 4 of Section 62 States that if no reply is received within 30 days, party initiating conciliation may treat it as rejection of the invitation to conciliate and if it so elects, it has to inform accordingly in writing to other side. Subsection 3 stipulates that if other party rejects the invitation, there cannot be conciliation. Here, it is apparent that Respondent has expressly rejected the invitation and has also tried to give certain reasons for its rejection. Respondents also expressed their intention not to participate in arbitration. Thus, conciliation could not be conducted physically because of the stance taken by Respondents. Respondents themselves rendered holding of conciliation impossible and they cannot be permitted to take advantage of their own mistake by urging that as conciliation did not take place physically, arbitration also cannot take place. Even if it is accepted that because of strained relations the conciliation was not possible at all, that reason is not valid to avoid arbitration. Provisions of Part III of 1996 Act dealing with conciliation are not introduced in statute book to defeat the otherwise valid agreement for arbitration. If in a given case recourse to conciliation becomes impossible, that does not mean that arbitration arrangement automatically falls to ground. Reasons given by Respondents for avoiding conciliation proceedings show that as Applicants did not receive any positive reply from Respondents, there is no rejection of invitation under Section 62 (3). Still because of stand of respondents and express warnings given by Applicants, applicants are entitled to presume rejection in these facts. The intention to proceed in arbitration was already communicated by Applicants to Respondents in advance. Attempted use of conciliation clause in agreement i.e. SHA by present Respondents to defeat arbitration arrangement itself is contrary to spirit of 1996 Act and also to understanding between parties and cannot be countenanced. I therefore do not find any merit in the objection to availability of arbitration in the matter by Respondent.

29. Important question is whether recourse to clause 19 time barred Coupled with it is another question whether said clause 19 is a available/holds the field, as according to M/s TWHL, SHA has already expired after 7/9/2000. MOU dated 26 April 2000 and SHA dated 9/6/2000 are stated to be either two independent arrangements or agreements by M/s TWHL. They contend that MOU merged with SHA and lost its existence or then is irrelevant for present purposes, as it does not contain any arbitration clause. Certain clauses of the SHA were relied upon to show that recourse to clause 19 is now time barred in view of Section 43 of 1996 Act. Clause 1 dealing with interpretation states "Completion" means the completion of matters provided in clause 4. "Completion date" means 7th September 2000 being the expiry of 135 days referred to in clause 2 of the MOU. "Effective Date" means the date on which all statutory approvals required under the laws of India shall have been obtained, including but not limited to the approvals on that Agreement, Articles of Association and any other agreement;. As per its clause 2.1 TWHL has to sale to THPL 50% of the issued subscribed and paid-up equity share capital for total consideration as set out in MOU. Clause 2 states that time is the essence of contract. As per clause 3 this sale is to be completed before completion date on a spot delivery contract basis. Clause 12 deals with termination and it reads: -- "12.1. -- The parties may by mutual consent agree to terminate this Agreement upon such terms and conditions and at such time as may be decided by the parties. 12.2 -- In the event of TWL. and THPL. agree to terminate the Agreement (and the other party is also willing to terminate the agreement) but there is a dispute on the price at which the Shares may be or are to be transferred then such price shall not be less than the price to be determined by the statutory authorities of the Company at the relevant time taking all factors into consideration. The party which is willing to pay the higher price to the other party shall purchase the shares of the other party i.e. each party shall bid for the purchase of the shares of the other party. 12.3 In the event of however, the parties not agreeing to terminate the Agreement on mutual terms and conditions the parties agree that company shall be wound up and after paying off all the liabilities the cash and unrealised assets shall be distributed between the parties in the ratio of shareholding between the parties. Clause 12.4 speaks of arrangement in case of insolvency /bankruptcy etc. of a party and hence is not being reproduced here. Clause 12.5 on which parties rely is as under: -- "In the event of Completion not taking place latest by the completion date on account of; (i) Any statutory or other approval of a third party required for Completion of the transaction herein contemplated not available or on account of circumstances beyond control of a party, the Agreement shall stand terminated on the completion date without any claim for damages by the party on the other party. (ii) Any default, on account of circumstances attributed to a party, the party not responsible for such default shall at its option shall be entitled to terminate this Agreement with effect from a date specified in Notice of such termination given by a party to the defaulting party. Such termination shall be without prejudice to the rights of the non defaulting party to claim damages and other remedies available to it under law and contract as against the defaulting party; in order,". Clause 17.4 with heading "The Agreement constitutes entire Agreement" reads:--- "This Agreement (together with all Agreements and documents executed contemporaneously with it or referred to in it) constitutes the entire Agreement between the Parties in relation to its subject matter and supersedes all prior Agreement and understandings whether oral or written with respect to such subject matter and no variation of or any amendment to this Agreement shall be effective unless reduced to writing and signed by each of the Parties to this Agreement." Clause 17.7 which has heading "Time to be essence" reads: -- "Time shall be of the essence for the purposes of any provision of this Agreement."

30. In Speech and Software Technologies (India) Pvt. Ltd vs Neos Interactive Ltd -- JT 2009 (1) SC 157, it has been found that services agreement dated 15 July 2006 was never a schedule to the Tripartite share purchase agreement and automatic termination of Tripartite share purchase agreement had nothing to do with the existence of said services agreement which was already separately executed between the parties before the said Tripartite agreement. The existence of services agreement was not dependent upon completion of events as contemplated by the Tripartite share purchase agreement. Similarly it is also found that there was no question of novation or rescinding or revocation of Tripartite share purchase agreement on account of letter of intent because said letter of intent constituted an agreement to enter into another agreement and such an agreement is not enforceable and does not confer any right upon parties. In M/s Nandan Biometrics Ltd vs D1 Oils Ltd. -- JT 2009 (2) SC 478 [LQ/SC/2009/306 ;] ">JT 2009 (2) SC 478 [LQ/SC/2009/306 ;] [LQ/SC/2009/306 ;] , applicant and non applicant entered into seed supply agreement on 10/8/2004 through which the applicant agreed to establish nurseries and prepare seeds catering to the requirement of the non applicant. The non applicant promised to make investment and its clause 15.1 contains Arbitration clause. Applicant also entered into a joint venture agreement with non applicant on 30/9/2004 which envisaged incorporation of a joint venture company and it did not contain an arbitration clause. The applicant however had no claim against non applicant under this second agreement with third agreement known as research and development agreement was also entered into between them on 26/11/2004. Between latter two agreements termination agreement was entered between parties on 16/10/2004. One of the contentions raised by non applicant was that if the applicant genuinely believed that the said supply agreement had not been terminated by the termination agreement dated 16/10/2004, it would not have entered into research and development agreement. Honble Apex Court noticed that number of issues arose for determination and in paragraph 23 some of those issues have been mentioned as, whether the deed of termination stood forged as claimed by the applicant If not, whether it has been signed by the two directors who were not authorised to sign on behalf of applicant Effect of the research and development agreement and its implementation on the seed supply agreement Whether joint venture agreement replaced the seed supply agreement Whether the supply agreement should be read along with the joint venture agreement and the research and development agreement or whether the supply agreement should be read as a stand-alone item Whether the claim for alleged expenditure incurred by the applicant for supply of seedlings under the seed supply agreement stood extinguished by the deed of termination dated 16/10/2004 Whether claims, if any, under the seeds supply agreement had ceased in view of the termination agreement dated 16/10/2004 In paragraph 24 it has been held that the questions to be looked into revealed that case involved a live claim between the parties. The applicant claimed compensation/damages for supply of seeds to the non applicant under the seeds supply agreement and that was basic claim made by him. It is to be noted that in paragraph 21 of the report, Honble Apex Court recorded a finding that there existed a valid Arbitration agreement between parties vide clause 15.1 in the seed supply agreement dated 10/8/2004 and contention of non applicant was that said agreement was put to an end by termination agreement with it 16/10/2004. Thus dispute whether seed supply agreement was replaced by joint venture agreement or whether termination agreement put end to seed supply agreement had arisen there for determination and Court found that there was a live claim between parties. State of U.P. vs. Lalji Tandon (supra) cited by the Applicants, considers the question of second renewal of lease deed in view of renewal clause in original lease providing for exercise of option and renewal for 50 years thereafter. The Honble Apex Court holds that such clause can be read into lease renewed on first occasion and not when it is again renewed. Thus the intention of parties and legal provisions are found to be guiding factors. AIR 1989 S.C. 1834 "Provash Chandra Dalui v. Biswanath Banerjee" (relied upon by the Applicants) is the matter where a clause in a lease stipulated that at the first instance the period of lease was made 10 years and in case the lessee acted in accordance with what was expected of him under another specified clause the period of the lease would be extended for a further period of five years at stated enhanced rent per month, and if the lessee continued to act in accordance with what was expected of him under the said specified clause during the period of five years the period of the lease would be extended for a further period of five years, at further enhanced monthly rent and in case the lessee continued to act during this period as expected of him under the specified clause till the end of the period of 20 year he would be entitled by serving a notice to obtain an extension for a further maximum period of one year at still further enhanced rent per month and the Schedule specifically mentioned the lease as "for a stipulated period of twenty years" , Honble Apex Court held that the lease was not for a period of less than twelve years and as such, the lessee did not become a Thika tenant. What is to be noted is that the word used was extension and not renewal. The word extension when used in its proper and usual sense in connection with a lease means a prolongation of the lease.

31. In M.P. Housing Board vs Progressive Writers and Publishers JT 2009 (4) SC 219 [LQ/SC/2009/618] , question whether time is an essence of agreement has been decided in proceedings arising under Arbitration Act, 1940. There were two building agreements between housing Board and depositors and dispute had arisen resulting into litigation. Then third agreement was entered into and according to it upon the payment of costs of housing complex and loan by depositors, all suits were to be withdrawn. Clause 4 thereof provided for cancellation of third agreement if payments were not made before 31/10/1980. It has been held that onus to plead and prove the same is upon person alleging time to be essence. In paragraph 23, earlier view of Honble Apex Court that time is presumed not to be of the essence of contract relating to immovable property, but it is of essence in contracts of re conveyance or renewal of lease has been reiterated. It is held to be a question of fact and the real test is stated to be intention of parties. Intention can be ascertained from I -- the express words used in the contract, II -- the nature of property which forms the subject matter of the contract, III -- the nature of the contract itself and IV the surrounding circumstances. On the question whether arbitration clause lapsed in AIR 2007 S.C. 2327 "National (Agrl.) Co-op. Marketing Federation India Ltd. v. Gains Trading Ltd.", Honble Apex Court observes as under:-

"6. Respondent contends that the contract was abrogated by mutual agreement; and when the contract came to an end, the arbitration agreement which forms part of the contract, also came to an end. Such a contention has never been accepted in law. An arbitration clause is a collateral term in the contract, which relates to resolution disputes, and not performance. Even if the performance of the contract comes to an end on account of repudiation, frustration or breach of contract, the arbitration agreement would survive for the purpose of resolution of disputes arising under or in connection with the contract. [Vide : Heymen vs. Darwins Ltd., 1942 (1) All ER 337, Union of India vs. Kishori Lal Gupta and Bros., AIR 1959 SC 1362 [LQ/SC/1959/140] and The Naihati Jute Mills Ltd. vs. Khyaliram Jagannath, AIR 1968 SC 522 [LQ/SC/1967/300] ]. This position is now statutorily recognized. Sub-section (1) of section 16 of themakes it clear that while considering any objection with respect to the existence or validity of the arbitration agreement, an arbitration clause which forms part of the contract, has to be treated as an agreement independent of the other terms of the contract; and a decision that the contract is null and void shall not entail ipso jure the invalidity of the arbitration clause. The first contention is, therefore, liable to be rejected."

Thus all these judgments show that intention of parties is of paramount importance and it can be gathered from material becoming available in each case.

32. From the legal position which emerges, it is apparent that if any dispute on facts having bearing on the question of limitation arises, this Court has to only prima facie record its finding leaving final decision on the issue to the arbitrator. The clauses mentioned above and dealing with automatic termination of SHA because of the expiry of completion date are being relied upon by Respondents to show that after 7/9/2000 clause 19.1 ceased to operate and as there is no further written agreement or written amendment, further operation of said SHA or clause cannot be presumed. Applicants contend that because of subsequent acceptance of the payment from them and their continuation in management of Resort or Hotel though no joint venture company was formed, SHA has continued in force and that can be inferred from conduct of parties. They point out that by notice of termination, MOU dated 26/4/2000 and all other arrangements or agreements were terminated and not SHA while according to Respondents, SHA had died its own death and along with it a MOU had also expired, however, in order to clear any confusion in this respect and by of abundant precaution, notice of termination dated 27/1/2007 was issued by them mentioning MOU. and all other arrangements or agreements. It is specific contention that in entire correspondence exchanged between parties there is no mention of SHA and learned Senior Advocate for Respondents has used the word "studied silence" to highlight this deliberate omission as SHA had already expired and expiry was also acknowledged by parties. It is argued that though relationship between parties continued in 2006 it was dehors the SHA. Here it needs to be mentioned that as per paragraph 2 of this notice dated 27/1/2007 the termination is with effect from 1/11/2006 by stating that it is the date on which Applicants issued cheque for Rs 92970000/--i.e. Nine Crores Twentynine Lakhs Seventy Thousand only, purportedly towards purchase transaction of 50% shares of M/s TWHL which came to be dishonoured. I do not find it necessary to go into reasons for this dishonour as the same form subject matter to be looked into by the arbitrators if reference is made to them. At this stage it is also not in dispute that amount of Rs 16.50 Crores has been received by Respondents from Applicants which they have shown and appropriated as share application money. According to Applicants cheque dated 1/11/2006 was towards full and final satisfaction of balance dues of Respondent and it included interest amount also from 7/9/2000 till then and Respondents were under obligation to delete all entries in balance sheets with them against the Applicants. It is not in dispute that the Applicants continued with management of Resort for about 7 years even after 7/9/2000 and considering the fact that parties are artificial persons, prima facie it is difficult to assume that all this was under some oral arrangement or understanding and not in pursuance of SHA. It needs to be pointed out that Applicants themselves have in their communication dated 25/2/2006 made reference to MOU as also SHA. In communication dated 4/4/2006 sent by Respondents (Trade Wings Ltd) to Applicant, it is mentioned that intervention of Om Navani was sought to resolve the matter by them. It is apparent that Respondents nowhere expressly communicated to Applicants that SHA had died its own death and by this communication prima facie indicated Conciliation in terms thereof. M/s TWHL had written on 25/11/2000 to TFCI that in June 2000 they had revoked contract with earlier company and given it to present Applicants and assured of their intentions to repay loan back to TFCI have on top parity. Thus Respondents did not point out that contract in June i.e. contract dated 9/6/2000 had come to an end on 7/9/2000. Communication dated 4/12/2000 by Respondents to M/s TFCI is again on same lines and it states that Applicants, particularly Mr. Kerkar were to bring in extra business and also extra investment. They sought leave to clear the said financing institutions dues in monthly installments of Rs 50 Lakhs or so till 31/3/2001. On 28/2/2001, they sought permission from TFCI to dispose of their 50 percent stakes in Resort to Applicants. Thus at least till this date the Respondents had not revealed the automatic death of SHA and acted as if it was alive. Tripartite agreement between parties is dated 4/1/2005. It is no doubt true that it mentions only MOU dated 26/4/2000 and does not carry any reference of SHA. However, question then arises who is responsible for not fulfilling the obligations undertaken under SHA. As per its clause 12.5 (ii) if completion does not take place for any default, on account of circumstances attributed to a party, the party not responsible for such default has option to terminate that agreement with effect from a date specified in notice of such termination given by it to the defaulting party. No such notice is given by Respondent to Applicant and according to Applicant, 50% amount towards the cost of shares was to be paid against physical delivery. Applicant contends that this amount has been paid by them after bringing out one time settlement with the TFCI and it also appears that there were some recovery proceedings before DRT. Evidence about what is the exact impact of all these facts on various clauses in SHA, meaning and interpretation of the documents and hence intention or understanding of parties about whole thing is necessary to correctly answer the question whether Arbitration clause ceased to be available after 7/9/2000 or then whether cause of action in favour of Applicants accrued on 7/9/2000 and proceedings as filed by them are time barred. It is at once apparent that the disputed questions of facts arise for determination. Looking to the various dates mentioned above, Section 16(1) of 1996 Act and conduct of parties, prima facie I am satisfied that SHA dated 9/6/2000 did not automatically expire on 7/9/2000 and payments made by Applicants or then steps taken by it cannot be said to be barred by limitation. Arguments of Adv. Jagtiani that as conciliation can be compelled against the wish of the Respondents, arbitration which is consequential and dependent on it also can not be compelled is misconceived. Physical holding of conciliation proceedings is not sine qua non and can not be so in present facts. Respondents who did not permit conciliation to be conducted actually, can not use it as lever to stop arbitration which can, here, go on even against their wish. Earlier application under Section 11 (6) of 1996 Act was filed by Applicants in 2007 itself. However all these aspects can be answered definitely and with certainity only after facts crystallize before Arbitrators. Scrutiny in more depths at this stage is not necessary and observations made above are only for the purposes of deciding application under Section 11 (6) of 1996 Act. It is apparent that the same cannot prejudice the arbitrators who are free to reach their own findings on facts emerging before them as also on law. I therefore prima facie find that Respondents objection on the ground of limitation and also on the ground that SHA which alone contained Arbitration Clause had expired on 7/9/2000 are insufficient to reject prayer for reference under Section 11 (6). In any case a live dispute on all these issues is existing between the parties which can be referred to arbitration.

33. Special Civil Suit No 7 of 2007 in present matter came to be filed on 8/2/2007 by Respondents while application under Section 9 of 1996 Act was filed by present Applicants before wrong forum on 7/2/2007. The contention of Applicant that said Suit came to be filed to defeat Arbitration clause is hardly relevant. Perusal of said plaint shows that apart from Applicants who are Defendants No 1 and 2 in it, third Defendant is Tulip Star Leisure and Health Resorts Ltd. Defendant number 4 is one Mr. Bopanna Dwarkanath, Defendant No.5 is Mr. Vasant Ramrao Agnihotri, while Defendant No.6 or last Defendant is Mr. Sudhanshu P. Purohit. Admittedly Defendants 3 to 6 are not parties to either the MOU or SHA. The plaint states that Defendant No. 3 is the company incorporated under Companys Act, 1956 and it is promoted by Defendant number 1 and 2. It is engaged in business of promoting timeshares. Plaintiff number 3 Trade Wings Hotels Ltd is stated to be owner of Resort i.e. Bogmallo Beach Resort, Goa and Defendant number 4 is described as its ex General manager who has been terminated by Plaintiffs. Defendant 5 and 6 are stated to be ex Directors of Plaintiff number 3 who resigned from their respective posts. Briefly stated, grievance of Plaintiffs is that Defendants were clandestinely and secretly running a timeshares scheme in respect of said Resort and misappropriated revenues generated therefrom. In breach of their fiduciary duties, Defendants 1,2,4 and 6 kept the funds so collected out of reach of Plaintiff number 2 and 3 and Plaintiffs estimate said amount to be in excess of Rs 30 Crores They claim that they came across time share agreements signed by Defendant 6 on behalf of Plaintiff number 3 enrolling said Plaintiff as member of Interval International and thereby accepting commitments on behalf of Plaintiff 3. They contained that on 30/11/2006 Defendant 4 made false statement that Tulip Star Group and its associates were having 50 percent equity ownership in said Resort and they entered into several agreements in collusion to collect huge amounts by misusing MOU dated 26/4/2000. They also pointed out incidence dated 14/1/2007 in which Defendant number 1 and 4 along with their colleagues forcibly entered Resort premises and snatched keys of five rooms. They also pointed out some other similar instances and sought direction against all Defendants to pay amount in excess of Rs 16.25 Crores to Plaintiffs. They sought declaration that MOU dated 26/4/2000 stood terminated and became inoperative from 1/11/2006 and sought direction to Defendants to produce/surrender it in trial court along with SHA and other documents/agreements. They also prayed for a direction to render full and complete accounts and an injunction restraining them, their associates, employees, partners, servants, subordinates from entering into Resort. They also sought interim injunctions on same lines. They contend that Defendant 4 was found more loyal to Defendant 1 than his employer and also complain that Defendant 3 had unauthorizedly converted one of the offices in said Resort as its own office premises by naming it "Tulip Holiday Club" along with a conference hall by name "Neptune 3" which was renamed by Defendants as "Leisure Lounge" for the purpose of selling timeshares. Thus, Plaintiffs claim abuse of MOU or SHA by all Defendants by coming together in collusion and relief is sought against all of them. It is not possible to prima facie hold that addition of Defendants 3 to 6 as parties to said special civil suit is unnecessary or only with a view to avoid arbitration agreement. Grievance made against these Defendants who are not parties to MOU or SHA does not appear to be either artificial or unjustified at this stage. Even if grievance as contained in said Suit is held to be covered by SHA, still any award passed by arbitrator will not bind other Defendants who are independent and distinct parties. In fact Applicants have contended that Defendant 3 is their own subsidiary but then that by itself will not make award of arbitrator binding on it. Defendant 3 has not joined Applicants in issuing any legal notice either for conciliation or for Arbitration to Respondents i.e. Plaintiffs in this civil suit. Status of other Defendants either as ex-employee or ex-directors of Plaintiffs is also not in dispute. Section 2 (1) (h) of 1996 Act defines a party to mean a party to an arbitration agreement. Section 7 (1) states that in part I in which Section 1 to Section 43 occur, "Arbitration agreement" means an agreement by the parties to submit to Arbitration all or certain disputes which had arisen on which may arise between them in respect of a defined legal relationship, whether contractual or not. Thus, 1996 Act contemplates agreement between parties and here, Applicants are parties along with Respondents to such agreement in the shape of SHA but Defendants 3 to 6 are not parties to it. Pleadings in plaint justify the effort of Plaintiffs i.e. present Respondents to secure joint and several decree against all the Defendants capable of execution independently against each of them.

34. The Applicants raised following points in their notice dated 11/6/2008:--- Disputes concerning the rights, liabilities and obligations arising under MOU dated 26/4/2000, Disputes concerning the rights, liabilities and obligations arising under SHA dated 9/6/2000, Dispute concerning the rights of Applicants to management, possession and control of Resort and right to conduct business therefrom for 10 years from 9/6/2000, Dispute concerning transfer of 50% shares of M/s TWHL to M/s THPL , price/consideration thereof and interest calculation thereon, Dispute regarding clearing of balance sheet of TWHL before above transfer of 50% shares to THPL, Dispute concerning interference by Respondents with conduct of business of Resort by Applicants as well as with their management, possession and control of Resort, all such other disputes incidental, ancillary and arising out of or connected with the above disputes. Thus in arbitration proceedings the entitlement of Respondents (Plaintiffs in S.C. Suit 7/2007) to relief or recovery from Defendants 3 to 6 and mismanagement or fraud in collusion with Applicants can not be gone into. The Suit may not contain express reference to SHA or arbitration clause therein but the issue about it squarely falls for determination in that Suit. Only to that extent the proposed Arbitration and the Suit may overlap with each other but then controversy in Suit is more wider and pervasive. Said S.C. Suit 7/2007 is therefore more comprehensive and entire dispute therein can not be subjected to arbitration.

35. In AIR 2003 S.C. 2252 "Sukanya Holdings Pvt. Ltd. v. Jayesh H. Pandya", Honble Apex Court holds:--

"15. The relevant language used in S. 8 is - "in a matter which is the subject matter of an arbitration agreement." Court is required to refer the parties to arbitration. Therefore, the suit should be in respect of "a matter" which the parties have agreed to refer and which comes within the ambit of arbitration agreement. Where, however, a suit is commenced - "as to a matter" which lies outside the arbitration agreement and is also between some of the parties who are not parties to the arbitration agreement, there is no question of application of S. 8. The words a matter indicates entire subject matter of the suit should be subject to arbitration agreement.

16. The next question which requires consideration is - even if there is no provision for partly referring the dispute to arbitration, whether such a course is possible under Section 8 of the In our view, it would be difficult to give an interpretation to Section 8 under which bifurcation of the cause of action that is to say the subject matter of the suit or in some cases bifurcation of the suit between parties who are parties to the arbitration agreement and others is possible. This would be laying down a totally new procedure not contemplated under the. If bifurcation of the subject matter of a suit was contemplated, the legislature would have used appropriate language to permit such a course. Since there is no such indication in the language, it follows that bifurcation of the subject matter of an action brought before a judicial authority is not allowed.

17. Secondly, such bifurcation of suit in two parts, one to be decided by the arbitral tribunal and other to be decided by the civil Court would inevitably delay the proceedings. The whole purpose of speedy disposal of dispute and decreasing the cost of litigation would be frustrated by such procedure. It would also increase the cost of litigation and harassment to the parties and on occasions there is possibility of conflicting judgments and orders by two different forums."

This further finds support in AIR 2007 S.C.1376 "India Household and Healthcare Ltd. v. LG Household and Healthcare Ltd.", where Honble Apex Court reiterates:--

"20. Furthermore, the applicant herein has also prayed for inter alia the following reliefs:

"c. Whether the issue of use of LG logo is a valid and tenable ground for the termination of agreements between the parties d. Whether the petitioner is entitled under the agreements to continue with the production of the "Products" with LG logo as agreed between the parties"

21. The said prayers fall outside the arbitration agreement since LG Logo belongs to LG Corporation which is the owner of the trade mark. It is not a party to the arbitration agreement. It allegedly has filed a separate suit. In a case of this nature, a Division Bench of this Court in Sukanya Holdings (P) Ltd. v. Jayesh H. Pandya and another:

"Secondly, there is no provision in the that when the subject-matter of the suit includes subject-matter of the arbitration agreement as well as other disputes, the matter is required to be referred to arbitration. There is also no provision for splitting the cause or parties and referring the subject-matter of the suit to the arbitrators."

Then paras 16 and 17 of said judgment in Sukanya Holdings (P) Ltd (supra) already reproduced above are quoted.

36. In this background the question which arises is whether after filing of civil suit, application under Section 11 (6) can be entertained or then, party seeking arbitration has to only move under Section 8 of 1996 Act. Here, notice terminating MOU and all other arrangements/agreements (except SHA) has been issued on 27/1/2007. Applicants filed their application under Section 9 before Civil judge, senior division on 7/2/2007 which later turned out to be a wrong forum. Respondents filed their Special Civil Suit 7/2007 on 8/2/2007. After filing of this Suit, on 16/4/2007 Applicants sought appointment of arbitrator and there earlier application under Section 11 (6) of 1996 Act registered as application No 4/2007 came to be filed on 27/6/2007 and decided on 19/3/2008. In short, this High Court was approached after Civil Suit was already instituted. Relevant dates and developments after 19/3/2008 are already mentioned above. Section 11 contemplates appointment of Arbitrators by parties to agreement and upon failure or omission of any of the parties, by Honble Chief Justice of High Court or his delegate. Thus both provisions operate in distinct fields and normally there should not be any occasion for conflict of orders passed under Section 8 or then under Section 11 (6) of 1996 Act. As the Civil Suit was/is already pending, had Applicants moved application under Section 8, Court of Civil judge senior division would have been in better position to apply mind in the light of judgments of Honble Apex Court mentioned above to find out whether subject matter of Suit before it was also subject matter of arbitration agreement. It is apparent that after such Trial Court decides such application under Section 8 either way, there cannot be any application under Section 11 (6) before High Court and aggrieved party has to challenge that order of Trial Court. If there are three or more parties to arbitration agreement possibility of their applying to different forums can not be overlooked. Consideration of such parallel remedies in the backdrop of Constitutional provisions in AIR 2007 S.C. 903 "State of Himachal Pradesh v. 52 Surinder Singh Banolta" is relevant here. In it S.122(1)(2), S.162, S.175 of H.P. Panchayati Raj Act (4 of 1994) Art.243-O of the Constitution of India are looked into. Section 122 of theprovides for disqualifications. Encroachment on Govt. land is a disqualification provided in Cl. (c) to S. 122 (1). Section 122 (2) provides for two different authorities (Authorised Officer and Deputy Commissioner) to determine the question of disqualification depending upon the stage at which such question is raised. It is no doubt true that Section 122 contemplates both the situations, viz., where a person shall be disqualified for being chosen as also for being an office-bearer of panchayat inter alia if he has encroached upon any land belonging to any authority mentioned therein. In view of the language of the said provision an issue falling under clause (1) of sub-section (2) of Section 122 of themust be determined before the Authorised Officer if a person is declared to be an encroacher prior to the date on which he has been declared as elected and if the said order has attained finality. Disqualification due to any order of encroachment passed after the election process is over would be determined by the Deputy Commissioner. In para 18 Honble Apex Court observes:--

18. If a candidate or a voter had the knowledge that the elected candidate was disqualified in terms of Section 122 of the Act, he may file an application. The order of eviction may come to the notice of some other person after the election process is over. A situation, thus, may arise where two different proceedings may lie before two different authorities at the instance of two different persons. Two parallel proceedings, it is well settled, cannot be allowed to continue at the same time. A construction of a statute which may lead to such a situation, therefore, must be avoided. It will also lead to an absurdity if two different Tribunals are allowed to come to contradictory decisions.

Since bifurcation of the subject matter of an action brought before a judicial authority is not allowed and all defendants to such action are not parties to arbitration agreement, it is difficult to apply different yardstick in present matter. As respective learned Senior Advocates did not raise the issue of either maintainability or propriety of filing present proceedings after the institution of Civil Suit, Im not finally concluding the question of law. But then facts here are squarely covered by the law laid down in India Household and Healthcare Ltd. v. LG Household and Healthcare Ltd." and in Sukanya Holdings (P) Ltd. v. Jayesh H. Pandya and another (supra) and such an application under Section 8 could not have been granted by civil court.

37. It is obvious that as Defendant No 3 to 6 are not parties to arbitration agreement, even if arbitration is held; result thereof cannot bind them. They can successfully resist execution of award against them and if simultaneous parallel proceedings i.e. Arbitration and Suit between parties to arbitration agreement and against those who are not parties to it are permitted, it would result in multiplicity of proceedings raising other complex questions like stay of one proceeding or then resjudicata etc. thereby further delaying the settlement of dispute. Such a course of action will definitely adversely affect the spirit of 1996 Act and tend to defeat speedy resolution of disputes. These observations are in the background of the finding that Respondents are not unjustified in seeking relief against Defendants 3 to 6 in their Special Civil Suit 7/2007 on same cause of action.

38. Hence, though I find that clause 19.1 in SHA does not permit unwilling party to avoid arbitration; that recourse to clause 19 is not prima facie time barred and aspect of limitation or lapsing of SHA is required to be decided by the Arbitrators as it is a mixed question of law and fact here, still the present Application can not be allowed. As the Civil suit filed by M/s TWHL/Respondents is more comprehensive in sense that it covers all disputes on same cause of action arising between Plaintiffs and Defendants therein and all Defendants are not parties to arbitration agreement and because its subject matter and subject matter of arbitration agreement is not same, recourse to clause 19.1 by the present Applicants is not permissible.

39. The present application for appointment of Arbitrators is therefore dismissed, however without any order as to costs.