The Gujarat High Court clarified that any party under the arbitration process can withdraw their consent as per Section 89(2)(a) of the Code of Civil Procedure (CPC), anytime before the court takes any action. The Single Bench of Justice Umesh A. Trivedi was dealing with a Special Civil Application under Article 227 against an order of the Civil Judge whereby the application jointly given by the parties to the proceedings to refer the dispute to the Arbitrator under Section 89(2)(a).
The petitioner claimed that both the parties agreed to send the dispute to the arbitrator under Section 89 of CPC, therefore, the Court could not reject the application on the mere ground that the respondent withdrew its consent. Justice Trivedi rejected the argument of the petitioner and directed that merely because a party had initially agreed to have the matter referred to the arbitrator cannot be presumed to have submitted to the jurisdiction of the arbitrator and it is well within its right to withdraw its consent anytime before the court takes up the matter and refers the parties.
The petitioner further contended that once the respondent had consented to the appointment of an arbitrator and after the filing of an application under Section 89, he cannot withdraw from the arbitration because of Section 4 of the Arbitration and Conciliation Act.
The Court held that reference to Section 4 of the Act read with Section 89 of the Code is misconceived. The Court held that Section 4 of the Act that provides for a deemed waiver would only apply when the parties have an arbitration agreement and it cannot be applied when a reference is being made under Section 89 of the Code. Accordingly, the Court dismissed the petition.
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