Divya Enterprises v. Capri Global Capital Limited

High Court of Bombay, Bombay (Original)
2025:BHC-OS:18363

Discusses arbitrability of disputes, interpretation of arbitration agreements, and the interplay between arbitration and court proceedings.

Legal Discussion:

  1. The Arbitration and Conciliation Act, 1996: The judgment extensively discusses Section 8 of the Arbitration and Conciliation Act, 1996. It analyzes the power of a judicial authority to refer parties to arbitration when there is an arbitration agreement. The judgment refers to the 2015 Amendment to Section 8 and its effect on the court's power to examine the validity of the arbitration agreement. It notes that Section 8 requires the referral court to look into the prima facie existence of a valid arbitration agreement. The judgment also discusses Section 11 of the Act, contrasting its scope of inquiry with that of Section 8. The court notes that the scope of enquiry under Section 11 is narrower than Section 8. The judgment refers to Section 2(3) of the Act, which states that Part I of the Act shall not affect any other law for the time being in force by virtue of which certain disputes may not be submitted to arbitration. The judgment also mentions Section 9 of the Act, regarding seeking interim measures during the pendency of arbitral proceedings. The court also refers to Section 37 of the Arbitration Act which allows an appeal from the order of an arbitral tribunal refusing to refer the parties to arbitration Under Section 8, but not from Section 11.
  2. The Stamp Act, 1899: The judgment mentions "Interplay Between Arbitration Agreements under Arbitration and Conciliation Act, 1996 and Stamp Act, 1899, in RE". However, the judgment does not provide any specific details or discussion about any particular section or article of the Stamp Act, 1899.
  3. The Transfer of Property Act: The judgment discusses the provisions of the Transfer of Property Act in conjunction with Order 34 of the Code of Civil Procedure, relating to the procedure prescribed for adjudication of mortgage suits, the rights of mortgagees and mortgagors, the parties to a mortgage suit, and the powers of a court adjudicating a mortgage suit. It states that these provisions make it clear that such suits are intended to be decided by public fora (Courts) and therefore, impliedly barred from being referred to or decided by private fora (Arbitral Tribunals).
  4. The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act): The judgment mentions that the Plaintiff issued notices under section 13(2) of the SARFAESI Act. The court also notes that SARFAESI proceedings are in the nature of enforcement proceedings whereas Arbitration is in the context of adjudicatory proceedings and that both can proceed parallely.
  5. The Code of Civil Procedure, 1908: The judgment discusses Order 34 of the Code of Civil Procedure, 1908, in relation to mortgage suits. It mentions that Order 34 provides for preliminary and final decrees to satisfy the substantive rights of mortgagees with reference to their mortgage security. It also mentions Rule (1) of Order 34, which provides that all persons having an interest either in the mortgage security or in the right of redemption shall have to be joined as parties to any suit relating to mortgage. The judgment also refers to Order XXXIV of the Code of Civil Procedure, 1908.
  6. General Principles of Law: The judgment discusses the concept of "rights in rem" and "rights in personam" in the context of arbitrability. It explains that actions enforcing rights in rem, such as mortgage suits, are generally considered non-arbitrable, while actions based on rights in personam may be arbitrable. The judgment also discusses the principle of "res judicata" in relation to judgments in rem and judgments in personam. It also discusses the principle that the legislation has overwritten the contractual right to arbitration.

List of Laws: The Arbitration and Conciliation Act, 1996; The Stamp Act, 1899; The Transfer of Property Act; The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act); The Code of Civil Procedure, 1908; General Principles of Law

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