M.SASIDHARAN NAMBIAR v. M/s.Sreeram TransportFinance Company Ltd. (W.P.(C) No.9831 of 2008) had consideredthe scope

M.SASIDHARAN NAMBIAR, J.-------------------------------C.R.P.No.382 of 2008-------------------------------Dated this the 4th August, 2008.

O R D E R First defendant, M/s.Shriram Transport Finance Co. Ltd, in O.S.No.324 of 2007, on the file of Additional Munsiff Court, Kannur, is the petitioner. Respondent is the plaintiff. The suit was instituted for permanent prohibitory injunction restraining defendants from forcibly taking possession of the bus KL 13J 691 except in accordance with due process of law. Petitioner on appearance filed I.A.No.2657 of2007, an application under Section 8(1) of Arbitration and Conciliation Act, 1996 (for short 'the Act') producing the original agreement allegedly executed by the respondent, which contains an arbitration clause and sought for referring the parties to arbitration, as provided under the Act. Respondent filed an objection contending that he did not execute any agreement and defendants obtained his signature in blank papers and created the agreement purporting to bea hypothication agreement, and, therefore, parties cannot be referred to arbitration.

CRP.No.382 OF 200822. Learned Munsiff under order dated 7.2.2008dismissed the application holding that when execution of thehypothication agreement is disputed, the arbitration clause in the agreement cannot be invoked and parties cannot be referred to arbitration as provided under Section 8(2) of the Act. It is challenged in this petition filed under Section 115 of the Code of Civil Procedure. 3. Learned counsel appearing for the petitioner and respondent were heard. 4. Learned counsel appearing for the petitioner argued that respondent, though did not admit execution of the agreement, admitted the transaction as well as his signatures and only contended that he had given the signatures in blank papers and in such circumstances, when the original agreement itself was produced and the agreement contains an arbitration clause, learned Munsiff should have referred the parties to arbitration, as provided under Section 8(2) of the Act.

The learned counsel also argued that as provided under Section 16 of the Act, arbitral tribunal is entitled to decide even existence of the arbitration agreement and its validity, and, learned CRP.No.382 OF 20083Munsiff was not justified in dismissing the application. 5. Learned counsel appearing for the respondent argued that without establishing that respondent executed the agreement, arbitration clause in the agreement cannot be invoked, and, therefore, learned Munsiff was justified in dismissing the application. 6. Sub-section (1) of Section 8 of the Arbitration and Conciliation Act, 1996, provides that a judicial authority before which an action is brought in a matter, which is the subject of an arbitration agreement and a party thereto applies to refer the parties to arbitration, not later than submitting his first statement, on the substance of the dispute, producing the original agreement or a duly certified copy thereof, Court shall refer the parties to arbitration.

Thequestion whether there exist a valid arbitration agreement is to be decided by the court before invoking the power under Section 8 to refer the parties to arbitration. For the sole reason that respondent contended that he did not execute the agreement, and instead contended that his signature was obtained in a blank paper, it cannot CRP.No.382 OF 20084be said that court has no jurisdiction to decide whether there exist avalid arbitration agreement. It is also true that before referring the parties to arbitration, as provided under Section 8(1) of the Act, Courtshall find that there exists a valid arbitration agreement. 7. This Court in Prakash v. M/s.Sreeram TransportFinance Company Ltd. (W.P.(C) No.9831 of 2008) had considered the scope of section 8 of the Act and held that before relying on the arbitration clause in the agreement, court has to decide whether the agreement was executed by the parties and that aspect could be decided by recording necessary evidence or based on affidavits orother sufficient materials.

In such circumstances, instead of dismissing the application, learned Munsiff should have considered the question whether the disputed agreement produced by the petitioner was validly executed by the respondent. If it is found that it was executed by the respondent, learned Munsiff is bound to refer the parties to arbitration, under Section 8(2) of the Arbitration and Conciliation Act,1996. The impugned order is therefore quashed. Learned Munsiff isdirected to consider I.A.No.2657 of 2007 afresh and dispose the matter, in accordance with law. CRP.No.382 OF 200858. Parties are permitted to adduce evidence. LearnedMunsiff to decide the petition before proceeding with the suit. Civil Revision Petition is disposed as above. M.SASIDHARAN NAMBIAR, JUDGEnj.