Delhi High Court - Orders
Madhu Sudan Sharma & Ors vs Omaxe Ltd on 7 October, 2022
Author: C. Hari Shankar
Bench: C. Hari Shankar
$~42 (Appellate)
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ RFA 823/2019 & CM APPL. 41007/2019
MADHU SUDAN SHARMA & ORS ..... Appellants
Through: Mr. J.Sai Deepak, Mr. Vineet
Sinha and Mr. Avinash Sharma, Advs.
versus
OMAXE LTD ..... Respondents
Through: Mr. Shalabh Singhal, Adv.
CORAM:
HON'BLE MR. JUSTICE C. HARI SHANKAR
ORDER
% 07.10.2022
1. Mr. J. Sai Deepak, learned Counsel for the appellants, has essentially assailed para 20 of the impugned judgment dated 15th July 2019, passed by the learned Additional District Judge ("the learned ADJ") in CS 10977/2016, which reads thus:
"20. Before dwelling upon the issues, it is pertinent to mention here that defendant has taken an objection with respect to continuation of the proceedings before this court despite having an arbitration clause in the agreement. In this respect, it is stated that the objection with respect to the arbitration clause is to be taken before submitting the first statement of defence before the court which was never done by defendants in the present case and therefore, this objection cannot be taken now. Now I shall proceed to decide the issues"
2. Mr. Sai Deepak submits that, the view expressed by the learned Signature Not Verified Digitally Signed RFA 823/2019 Page 1 of 4 By:SUNIL SINGH NEGI Signing Date:11.10.2022 11:20:00 ADJ in para 20 is directly contrary to Section 8 1 of the Arbitration and Conciliation Act, 1996, which requires the plea of Section 81 of the 1996 Act to be taken not later than in the written statement of defence.
3. Relying on the judgment of a Division Bench of this Court in Sharad P Jagtiani v. M/s Edelweiss Securities Ltd.2, Mr. Sai Deepak submits that, as the objection predicated on Section 81 of the 1996 Act had been taken by the appellants in the written statement in response to the suit instituted by the respondent, the learned ADJ was in error in failing to adjudicate on the objection.
4. Arguing per contra, Mr. Shalabh Singhal, learned Counsel for the respondent, submits that (i) the appellants had not applied, under Section 81 of the 1996 Act, for reference of the dispute to arbitration, but had merely raised an objection regarding maintainability of the suit, predicated on Section 81 of the 1996 Act, in the written statement which was insufficient compliance with the said provision and (ii) the appellants had, by allowing the trial in the suit to continue and having reserved the plea of Section 81 for argument only at the final stage in the suit, effectively acquiesced to the continuation of the suit without referring the dispute to arbitration. He has also pressed into service Section 21 3 of the CPC, along with the judgments of the Supreme 1
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 so applies not later than when submitting his first statement on the substance of the dispute, refer the parties to arbitration.
(2) The application referred to in sub-section (1) shall not be entertained unless it is accompanied by the original arbitration agreement or a duly certified copy thereof. (3) Notwithstanding that an application has been made under sub-section (1) and that the issue is pending before the judicial authority, an arbitration may be commenced or continued and an arbitral award made.2
(2014) SCC OnLine Del 949 3 Objections to jurisdiction-Signature Not Verified Digitally Signed RFA 823/2019 Page 2 of 4 By:SUNIL SINGH NEGI Signing Date:11.10.2022 11:20:00
Court in Sukanya Holdings Pvt. Ltd v. Jayesh H. Pandya & Anr.4 and Chairman, State Bank of India v. M J. James.5, of which reliance has essentially been placed on the latter decision to explain the concept of acquiescence, in which regard, Mr. Singhal draws attention to para 39 of the report in the said case.
5. Mr. Singhal also relies on SPML Infra Ltd. v. Trisquare Switchgears Pvt. Ltd.6
6. Mr. J. Sai Deepak, responding to the said contention, submits that Section 213 of the CPC is of no application in the present case, as it applies at the appellate or revisional stage and itself recognises the right of the appellant to raise the objection before the court of first instance which the appellants in the present case did. He submits that there is no specific format for applying for reference of dispute to arbitration under Section 81 and relies, in this context, on Order X Rule 1A of the CPC, which reads thus:
"ORDER X Examination of Parties by the Court (1)No objection as to the place of suing shall be allowed by any appellate or Revisional Court unless such objection was taken in the Court of first instance at the earliest possible opportunity and in all cases where issues or settled at or before such settlement, and unless there has been a consequent failure of justice. (2) No objection as to the competence of a Court with reference to the pecuniary limits of its jurisdiction shall be allowed by any Appellate or Revisional Court unless such objection was taken in the Court of first instance at the earliest possible opportunity, and in all cases where issues are settled, at or before such settlement, and unless there has been a consequent failure of justice. (3) No objection as to the competence of the executing Court with reference to the local limits of its jurisdiction shall be allowed by any Appellate or Revisional Court unless such objection was taken in the executing Court at the earliest possible opportunity, and unless there has been a consequent failure of justice.4
(2003) 5 SCC 531 5 (2022) 2 SCC 301 6 2022 SCC OnLine Del 1914 Signature Not Verified Digitally Signed RFA 823/2019 Page 3 of 4 By:SUNIL SINGH NEGI Signing Date:11.10.2022 11:20:00 1A. Direction of the Court to opt for any one mode of alternative dispute resolution.- After recording the admissions and denials, the Court shall direct the parties to the suit to opt either mode of settlement outside the court as specified in sub-section 1 of section 89. On the option of the parties the Court shall fix the date of appearance before such forum or authority as maybe be opted by the parties"
7. The objection relating to Section 81, as raised in the written statement, according to Mr. Sai Deepak, suffices as compliance with the said provision. He also relies, in this context, on the judgment of a Division Bench of this Court in Alok Kumar Lodha and Ors. v. Asian Hotels (North) Ltd. & Ors. 7, which essentially holds that any application under Section 81 has to be in writing and not in oral.
8. For continuation of arguments, re-notify on 13th October 2022 as part-heard.
9. Learned Counsel for the parties are requested, in case they seek to rely on any decision, to email a duly indexed compilation thereof, indicating the relevant paragraph numbers in the index, at least 24 hours in advance of the next date of hearing to the Court Master, after exchanging copies with each other. The compilation would also be separately filed in the Registry.
C. HARI SHANKAR, J.
OCTOBER 7, 2022 dsn 7 MANU/DE/2338/2020 Signature Not Verified Digitally Signed RFA 823/2019 Page 4 of 4 By:SUNIL SINGH NEGI Signing Date:11.10.2022 11:20:00