Whether the dispute between licensor and licensee will be arbitrable even if the defendant has not filed application U/S 8 of Arbitration Act?

Objection of learned counsel for the plaintiffs that since no application under Section 8 of the Act has been filed by the defendant, hence the plea for rejection of the plaint cannot be accepted, deserves to be rejected in view of the decision of this Court dated 15th January, 2018 in CS (SO) No. 125/2017 Parasramka Holdings Pvt. Ltd. vs. Ambience Pvt. Ltd. and another, wherein this Court held that party invoking the arbitration clause does not have to file a formal application seeking a specific prayer for reference of the dispute to arbitration as long as it raises an objection in the written statement that the present suit is not maintainable in view of the arbitration clause in the agreement.

33. Keeping in view the aforesaid judgments as well as the judgment in Eastern Medikt (supra) and judgments of the learned Single Judge and Division Bench of this Court in Sharad P. Jagtiani (supra), this Court is of the view that the party invoking the arbitration clause does not have to file a formal application seeking a specific prayer for reference of the dispute to arbitration as long as it raises an objection in the written statement that the present suit is not maintainable in view of the arbitration clause in the agreement.

57. In the present case the defendant on the first day of the appearance itself even before filing of the written statement has raised the objection under Section 8 of the Arbitration and Conciliation Act and hence this objection cannot be summarily rejected on the ground that no application has been filed by the defendant under Section 8 of the Act.

In view of the discussion above, prima facie the plaintiffs have a right in their favour and interest in land which is more than that of a lessee or at least that of an irrevocable licensee. In MANU/SC/0359/1999 : (1999) 5 SCC 651 Olympus Superstructures vs. Meena Vijay, Supreme Court held that the relief of specific performance of an agreement can be awarded by an arbitrator. Thus if the arbitrator can direct creation of an interest in a property, the arbitrator can also award declaration of the interest of the parties in the property. Further, as held in Booz Allen in paragraph 46, an agreement to sell or an agreement to mortgage does not involved any transfer of right in rem but creates a personal obligation and, therefore, the claim for specific performance will be arbitrable contrary to a mortgage which is a transfer of a right in rem. Moreover, as noted in Vidya Drolia, there is nothing in the Transfer of Property Act or the Specific Relief Act which forbids the rights of the parties being decided by arbitration. The rights of the plaintiffs herein at best governed by the Transfer of Property Act or the Specific Relief Act, or that of an irrevocable licensee under the Easements Act can still be decided in arbitration. Consequently the present suits are not maintainable and the parties may avail the remedy of arbitration.

IN THE HIGH COURT OF DELHI

CS (COMM) 184/2020, 

Decided On: 21.07.2020

 Dharamvir Khosla  Vs. Asian Hotels (North) Ltd.

Hon'ble Judges/Coram:

Mukta Gupta, J.

Citation: MANU/DE/1394/2020

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