Bombay High Court
Inox Leisure Limited, Nagpur vs Indo Pacific Projects Limited, Nagpur on 7 August, 2019
Equivalent citations: AIRONLINE 2019 BOM 2474
Author: Z.A.Haq
Bench: Z.A.Haq
Judgment 1 wp3512.19.odt
IN THE HIGH COURT OF JUDICATURE AT BOMBAY,
NAGPUR BENCH, NAGPUR.
WRIT PETITION NO. 3512 OF 2019
INOX Leisure Limited,
Registered office at ABS Towers,
Old Padra Road, Vadodara,
Gujrat - 390007.
Also at :
Jaswant Tuli Mall,
Kamptee Road, Indora Chowk,
Nagpur - 440 017, India.
.... PETITIONER.
// VERSUS //
Indo Pacific Projects Limited,
Registered Office at 1st Floor,
B, Poonam Chambers, Byramji Town,
Chhindwara Road, Nagpur-13,
Maharashtra, India.
.... RESPONDENTS.
___________________________________________________________________
Shri M.G.Bhangde, Sr.Adv. a/b. Ms Gauri Venkatraman, Adv.for Petitioner.
Shri S.P.Dharmadhikari, Sr.Adv. a/b. Shri D.V.Chauhan, Adv. and
Shri S.P.Bodalkar, Advocate for Respondent.
___________________________________________________________________
CORAM : Z.A.HAQ, J.
DATED : AUGUST 07, 2019.
ORAL JUDGMENT :
1. Heard.
2. RULE. Rule made returnable forthwith.
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Judgment 2 wp3512.19.odt 3. The relevant facts are :
The petitioner filed suit praying for decree for recovery of amount of security deposit, for directions to the defendant to permit the plaintiff to remove assets, equipments and machinery from the premises, and for other reliefs. This suit is registered as Commercial Suit. In this civil suit, the petitioner/plaintiff had filed an application (Exh.5) for interim relief under the Commercial Courts Act 2015 read with Order 39 Rules 1 and 2 and Section 151 of the Code of Civil Procedure praying that the defendant be directed to permit the plaintiff to remove assets, equipments and machinery from the premises as per the list annexed to the plaint as document "MM" and "LL". The plaintiff had prayed for some other interim reliefs also.
The defendant had opposed the application for interim relief by filing its reply. The defendant had filed an additional affidavit in support of the reply to oppose the claim of the plaintiff for interim relief. The defendant pleaded that the civil suit filed by the plaintiff was not maintainable and the Civil Court had no jurisdiction to entertain the dispute in view of the arbitration clause in the agreement between the plaintiff and the defendant. The trial Court had passed an order on 3 rd November 2018 and had dismissed the application filed by the plaintiff praying for interim relief. The trial Court accepted the objection raised on behalf of the defendant about maintainability of the civil suit in view of the arbitration ::: Uploaded on - 07/09/2019 ::: Downloaded on - 16/04/2020 10:09:26 ::: Judgment 3 wp3512.19.odt clause in the agreement between the parties, and referred the parties to arbitration. This order was challenged by the plaintiff before this Court in Writ Petition No. 1107 of 2019 which was decided by the judgment dated 6 th March 2019. This Court found that the trial Court committed an error by referring the parties to arbitration, accepting the objection raised on behalf of the defendant in that regard, in the reply filed by the defendant to oppose the application filed by the plaintiff for interim relief. This Court recorded that the parties could not have been referred to the arbitration without there being written application as per Section 8 of the Arbitration and Conciliation Act 1996 (hereinafter referred to as "the Act of 1996"). However, the submission made on behalf of the defendant that proper opportunity was not granted to it to file written application under Section 8 of the Act of 1996 was accepted. Similarly, the grievance made by the plaintiff that the trial Court had not granted proper opportunity to it to point out that the dispute was not required to be referred for arbitration, was also accepted. This Court had set aside the order dated 3 rd November 2018 and the proceedings of the civil suit and the application (Exh.5) were restored. The submission made on behalf of the defendant that it would be filing application under Section 8 of the Act of 1996 was accepted and the trial Court was directed to decide the application which the defendant proposed to file under Section 8 of the Act of 1996.
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4. After remand, the defendant filed application (Exh.59) under Section 8 of the Act of 1996, which is decided by the impugned order. The trial Court has allowed the application (Exh.59) and has referred the parties to arbitration and the application (Exh.5), filed by the plaintiff praying for interim relief, is dismissed.
Being aggrieved by the above order, the plaintiff has filed this petition.
5. The plaintiff has not disputed existence of the arbitration clause in the agreement between the parties, as pleaded by the defendant. The plaintiff does not claim that the dispute is not covered by the arbitration clause in the agreement between the parties. The plaintiff is not contending that the defendant has submitted to the jurisdiction of the trial Court and therefore, it has forfeited its right to file application under Section 8 of the Act of 1996.
The order passed by the trial Court, allowing the application under Section 8 of the Act of 1996 and referring the parties to arbitration is challenged on the ground that the application (Exh.59) was filed after the period prescribed for filing of such application.
6. According to the petitioner/ plaintiff, as per Section 8 of the Act of 1996, the application praying for referring the dispute for arbitration ::: Uploaded on - 07/09/2019 ::: Downloaded on - 16/04/2020 10:09:26 ::: Judgment 5 wp3512.19.odt cannot be made later than the date of submitting the first statement on the substance of dispute. This submission is based on the contention that after amendment of Rule 1 of Order VIII of the Code of Civil Procedure, in its application to Commercial Disputes, by the Act No.4 of 2016, after 120 days of service of summons, defendant forfeits the right to file written statement and the Court cannot allow the written statement to be taken on record and therefore, even the application under Section 8 of the Act of 1996 cannot be entertained and the defendant forfeits the right to move such application after 120 days of service of summons.
7. In the present case, the civil suit was filed on or about 21 st June 2018, along with the application (Exh.5) praying for interim relief. The defendant was on caveat and had put in appearance on 22 nd June 2018. The defendant had filed its reply to the application (Exh.5) on or about 30 th June 2018. The defendant had filed additional affidavit on or about 13 th July 2018 raising objection to the jurisdiction of the trial Court to entertain and decide the civil suit, on the ground that the dispute was required to be referred for arbitration as per the agreement between the parties. The application under Section 8 of the Act of 1996 was filed on or about 12 th March 1999 i.e. much after 120 days of service of summons. In these facts, the plaintiff argues that after 120 days of service of summons, the defendant forfeited its right to file application under Section 8 of the Act of 1996. ::: Uploaded on - 07/09/2019 ::: Downloaded on - 16/04/2020 10:09:26 :::
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8. Section 8(1) of the Act of 1996, after its amendment by Act No.3 of 2016 reads as follows:
"8. Power to refer parties to arbitration where there is an arbitration agreement -
(1) A judicial authority, before which an action is brought in a matter which is the subject of an arbitration agreement shall, if a party to the arbitration agreement or any person claiming through or under him, so applies not later than the date of submitting his first statement on the substance of the dispute, then, notwithstanding any judgment, decree or order of the Supreme Court or any Court, refer the parties to arbitration unless it finds that prima facie no valid arbitration agreement exists."
As per Section 8(1) of the Act of 1996, application under Section 8 of the Act of 1996 cannot be filed beyond the date of submitting first statement on the substance of dispute. Section 8(1) of the Act of 1996 does not lay down that application under Section 8 of the Act of 1996 cannot be filed beyond the period prescribed for submitting the first statement on the substance of the dispute. In the judgment given in the case of Rashtriya Ispat Nigam Ltd., Vs. Verma Transport Co. , reported in (2006) 7 SCC 275, Hon'ble Supreme Court has pointed out that the expression "first statement on the substance of the dispute" contained in Section 8(1) of the Act of 1996 must be contra-distinguished with the expression "written statement". Hence, the bar created by the amended provisions of Rule (1) of Order VIII of the Code of Civil Procedure, in its application to the commercial disputes, for filing written statement beyond 120 days will not ipso facto apply to the filing of the first statement on the substance of the dispute. According to the ::: Uploaded on - 07/09/2019 ::: Downloaded on - 16/04/2020 10:09:26 ::: Judgment 7 wp3512.19.odt petitioner/ plaintiff, the bar created by the proviso below Rule 1 of Order VIII of the Code of Civil Procedure (as amended) has to be applied for filing of the application under Section 8 of the Act of 1996 by inference. According to the petitioner/ plaintiff, if the defendant is not permitted to place on record its written statement after the period of 120 days, then the defendant cannot be permitted to submit the statement on the substance of the dispute after the period of 120 days, and therefore, it has to be treated that the bar created by the proviso below Rule 1 of Order VIII of the Code of Civil Procedure (as amended) would apply to the filing of the first statement on the substance of the dispute also, and it being so, the defendant cannot be permitted to file application under Section 8 of the Act of 1996 after the period of 120 days of service of summons. It is submitted that if the defendant is permitted to file statement on the substance of the dispute after 120 days of service of summons, then it will amount to permitting the defendant to indirectly raise defence which right it has forfeited as per the proviso below Rule (1) of Order VIII of the Code of Civil Procedure (as amended).
9. On behalf of the respondent/defendant it is argued that Section 8 of the Act of 1996 provides limitation for filing application seeking reference of dispute for arbitration, but the limitation provided is not fixed by specific period, but the limitation is provided on happening of event i.e. on filing of first statement on the substance of the dispute, and unless the ::: Uploaded on - 07/09/2019 ::: Downloaded on - 16/04/2020 10:09:26 ::: Judgment 8 wp3512.19.odt event happens i.e. the first statement on the substance of the dispute is filed, right to file application under Section 8 of the Act of 1996 is not lost.
On behalf of the respondent/defendant it is submitted that in the present case, the objection raised on behalf of the plaintiff is academic inasmuch as immediately within three weeks the defendant raised objection to the jurisdiction of the trial Court on the ground that the dispute is to be resolved by arbitration as per the agreement between the parties. It is submitted that though the application under Section 8 of the Act of 1996 was filed and the objection was raised while opposing the application (Exh.5) filed by the plaintiff for interim relief, this Court while deciding Writ Petition No.1107 of 2019 permitted the defendant to file application under Section 8 of the Act of 1996 even after 120 days of service of summons on the defendant and accordingly the application came to be filed. It is argued that the Act of 1996 is enacted to consolidate and amend the laws relating to domestic arbitration in India, commercial arbitration and enforcement of foreign arbitral awards as also to define the law relating to consolidation and for matters connected therewith or incidental thereto and to promote fair and efficient settlement of disputes by the Alternate Dispute Resolution System and keeping this object of the Act of 1996 in mind, its provisions should be interpreted to promote the object of the Act. ::: Uploaded on - 07/09/2019 ::: Downloaded on - 16/04/2020 10:09:26 :::
Judgment 9 wp3512.19.odt
10. On behalf of the petitioner/ plaintiff, following judgments are referred :
i) Judgment given by this Court in the case of Garden Finan. Ltd.
Vs. P. Industries Ltd., reported in 2001(4) Mh.L.J. 425;
ii) Judgment given by this Court in the case of Pamvi Consultancy Vs. Global Syntex, reported in 2002(4) Mh.L.J. 748;
iii) Judgment given by this Court in the case of Harvestdeal Securities Ltd..vs. P.N.B., reported in 2016(4) Mh.L.J. 273;
iv) Judgment given by this Court in the case of Bholanath Vs. Kersi, reported in 2010(5) Mh.L.J. 684;
v) Judgment given by the Hon'ble Supreme Court in the case of Booz Allen & Hamilton Inc...vs. SBI Home Finance Ltd , reported in (2011)5 SCC 532;
vi) Judgment given by Hon'ble Supreme Court in the case of Anil Vs. Rajendra, reported in (2015) 2 SCC 583;
vii) Judgment given by the Hon'ble Supreme Court in the case of Amit Lalchand Shah vs. Rishabh Enterprises , reported in (2018) 15 SCC 678;
viii) Judgment given by the Hon'ble Supreme Court in the case of SCG Contracts India Pvt. Ltd. vs. K.S. Chamankar Infrastructure Pvt. Ltd. & oth., reported in 2019 SCC OnLine SC 226;
ix) Judgment given by the Hon'ble Supreme Court in the case of Krishan Radhu vs.. The Emmar MGF Construction Pvt. Ltd. , reported in 2016 SCC OnLine Del 6499;
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x) Judgment given by the Hon'ble Supreme Court in the case of
Rashtriya Ispat Nigam Ltd. vs. Verma Transport Co., reported in (2006) 7 SCC 275;
xi) Judgment given by the Hon'ble Supreme Court in the case of Greaves Cotton Ltd...vs.. United Machinery & Appliances , reported in (2017) 2 SCC 268;
xii) Judgment given by the Hon'ble Supreme Court in the case of Kinnari Mullic & anr.vs.. Ghanshyam Das Damani , reported in (2018) 11 SCC 328;
In the judgment given in the case of Garden Finance Limited, Pamvi Consultancy Services Ltd., Harvestdeal Securities Ltd. And Bholanath Ramjas Yadav (supra), it is laid down that request for referring the dispute for arbitration has to be by written application.
In the judgment given in the case of Booze Alien Hamilton Inc. and in the judgment given in the case of Rashtriya Ispat Nigam (supra), the Hon'ble Supreme Court has pointed out some situations when it has to be considered that the defendant had submitted to the jurisdiction of the trial Court for adjudication of the dispute, and situations in which it cannot be said that the defendant cannot be submitted to the jurisdiction of the trial Court.
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Judgment 11 wp3512.19.odt In the judgment given in the case of Anil Jagannath Rana (supra), the Hon'ble Supreme Court considered the issue as to whether the party can invoke jurisdiction under Section 11(6) of the Act of 1996 after judicial authority exercising jurisdiction under Section 8(1) of the Act of 1996 refuses to refer the dispute for arbitration.
In the judgment given in the case of Kinnari Mullick (supra), the Hon'ble Supreme Court considered the question as to whether Section 34(4) of the Act of 1996 empowers the Court to relegate the parties to arbitral Tribunal after setting aside the arbitral award.
In the judgment given in the case of Ameet Lalchand Shah (supra), the Hon'ble Supreme Court has explained that by the amendment to sub-section (1) of Section 8 of the Act of 1996 cut-off date for filing application under Section 8 of the Act of 1996 has been defined to mean the date of submitting the first statement on the substance of the dispute.
In the judgment given in the case of Emaar MGF Land Limited (supra), again the issues which arose for consideration by the Hon'ble Supreme Court were totally different as is evident from paragraph No.12 in which issues are framed as follows:
"12. ....
(i) Whether NCDRC committed error in rejecting the application of the appellant filed under Section 8 of ::: Uploaded on - 07/09/2019 ::: Downloaded on - 16/04/2020 10:09:26 ::: Judgment 12 wp3512.19.odt 1996 Act praying for reference to the arbitrator as per Arbitration clause in the builders agreement?
(ii) Whether after the amendments made in Section 8 by the Arbitration and Conciliation (Amendment) Act, 2015 the application filed under Section 8 by the appellant could not have been rejected in view of substantial changes brought in the statutory scheme by inserting the words "notwithstanding any judgment, decree or order of the Supreme Court or any Court" in sub-section (1) of Section 8?
(iii) Whether NCDRC as well as this Court committed error in not adverting to the above statutory amendment which completely changed the legal position as was earlier existing prior to the aforesaid amendment?
(iv) Whether by the insertion of words "notwithstanding any judgment, decree or order of the Supreme Court or any Court" under Section 8(1)by the (Amendment) Act, 2015 legislature intended to do away with the decision of judgments of Supreme Court laying down that Consumer Protection Act being special remedy can be initiated and continued despite there being any arbitration agreement between the parties?
In the judgment given in the case of SCG Contracts India Pvt. Ltd. (supra), the Hon'ble Supreme Court has examined the amended provisions of Order VIII Rule 1 of the Code of Civil Procedure in its applicability to the commercial dispute and has held that the defendant forfeits right to file written statement after 120 days of service of summons on it and the Court should not allow the written statement to be taken on record.
The judgment given in the case of Krishan Radhu (supra), the Delhi High Court examined the argument made on behalf of the plaintiff ::: Uploaded on - 07/09/2019 ::: Downloaded on - 16/04/2020 10:09:26 ::: Judgment 13 wp3512.19.odt therein that the amended Act No.3 of 2016 by which sub-section (1) of Section 8 of the Act of 1996 has been amended w.e.f. 23 rd October 2015 would apply retrospectively and it was not permissible for the defendant to file application under Section 8 of the Act of 1996 after the time for filing written statement had lapsed. Though it is recorded in paragraph No.17 of this judgment that sub-section (1) of Section 8 of the Act of 1996 (as amended) sets out limit for filing application seeking reference of the dispute for arbitration and the limitation prescribed for invoking Section 8 of the Act of 1996 cannot be later than the date of submitting the written statement, the expression "not later than the date of submitting" is examined in the background of the dispute before the Court and as stated earlier the dispute before Delhi High Court was whether the Amendment Act No.3 of 2016 would operate retrospectively. With due respect to the judgment delivered in the case of Krishan Radhu, in my view the point which is required to be considered in the present case had not fallen for consideration in that matter.
In the judgment given in the case of Rashtriya Ispat Nigam and in the judgment given in the case of Greaves Cotton Ltd. (supra), the issue which is required to be considered in the present case has not been examined.
11. Learned Senior Advocate appearing for the respondent/ defendant has referred the following judgments:
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i) Judgment given by the Hon'ble Supreme Court in the case of
Rashtriya Ispat Nigam Ltd. vs. Verma Transport Co., reported in (2006) 7 SCC 275;
ii) Judgment given by this Court in the case of Drive India Enterprises Solution Ltd. vs. Haier Telecom India Ltd. , reported in 2018 (3) Mh.L.J. 60;
iii) Judgment given by Division of this Court in the case of Haier Telecom India Ltd. vs. Enterprises Solution Ltd. , reported in 2018 SCC OnLine Bom 1014;
In the judgment given in the case of Rashtriya Ispat Nigam Ltd., the Hon'ble Supreme Court has examined the situations when it can be said that the party forfeits its right to file application under Section 8 of the Act of 1996.
In the judgment given in the case of Drive India Enterprises Solution Ltd. (supra) the learned single Judge of this Court has again examined the situations under which the party loses its right to file application under Section 8 of the Act of 1996. This judgment is maintained by the Division Bench of this Court (reported in 2018 SCC OnLine Bom. 1014).
12. After considering the arguments made by the Senior Advocates representing the respective parties, I am of the view that the submission ::: Uploaded on - 07/09/2019 ::: Downloaded on - 16/04/2020 10:09:26 ::: Judgment 15 wp3512.19.odt made on behalf of the petitioner/ plaintiff that the respondent/ defendant forfeited its right to file application under Section 8 fo the Act of 1996 after 120 days of service of summons of the civil suit or in this case, after 120 days of putting in appearance on caveat, cannot be accepted. As recorded earlier, in the judgment given in the case of Rashtriya Ispat Nigam (supra) it is held that the expression "first statement on the substance of the dispute"
contained in Section 8(1) of the Act of 1996 must be contra-distinguished with the expression "written statement". It is clear that while amending sub- section (1) of Section 8 of the Act of 1996 by the Act No.3 of 2016, the legislature did not intend to prescribe limitation of 120 days for submitting the first statement on the substance of the dispute. When the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act 2015 (Act No.4 of 2016) came to be enacted and was brought into force on 23rd October 2015, certain provisions of the Code of Civil Procedure in their application to the commercial disputes came to be amended. A proviso came to be added below Rule 1 of Order VIII of the Code of Civil Procedure prescribing limit for filing of the written statement by the defendant and laying down that after 120 days of service of summons, the defendant would forfeit the right to file written statement and Court would not take the written statement on record. If the legislature intended to prescribe any period/time for filing first statement of defence, it would have provided for it. In my view, it will not be possible for this Court to interpret the expression "not later than the date of submitting his first ::: Uploaded on - 07/09/2019 ::: Downloaded on - 16/04/2020 10:09:26 ::: Judgment 16 wp3512.19.odt statement on the substance of the dispute" as "not later than the date of submitting the written statement", and to lay down that the defendant has forfeited its right to file first statement on the substance of the dispute after 120 days of the service of summons on it. Any provision should not be interpreted to curtail the rights of the parties unless the provision cannot be interpreted in any other manner.
13. In view of the findings recorded above, I hold that it can not be said that the application filed by the respondent/defendant under Section 8 of the Act of 1996 was not maintainable having been filed after 120 days of appearance in the civil suit.
Hence, the writ petition is dismissed. In the circumstances, the parties to bear their own costs.
After the order dated 8th April 2019 was passed by the Commercial Court and application (Exh.59) filed by the defendant under Section 8 of the Arbitration and Conciliation Act, 1996 was allowed, the plaintiff had filed an application praying that the effect and operation of the order passed below application (Exh.59) be stayed to enable the plaintiffs to take appropriate steps in the matter. On this application, the Commercial Court passed an order on 8th April 2019 directing the parties to maintain status quo till 3rd May 2019. This order is continued by this Court by order dated 3rd May 2019 in Writ Petition No. 3123 of 2019. ::: Uploaded on - 07/09/2019 ::: Downloaded on - 16/04/2020 10:09:26 :::
Judgment 17 wp3512.19.odt Considering the facts of the case, the interim order granted by this Court on 3rd May 2019 directing the parties to maintain status quo shall continue till 4th October 2019.
JUDGE RRaut..
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