Whether plaintiff can file application for reference of case to arbitration?

 A perusal of the above provisions would indicate that the application under Section 8(1) of the Act is envisaged by the defendant only and that sub-section (3) provides that even if application has been made under sub-section (1) and the issue is pending before the judicial authority, the arbitration may be commenced, continued and arbitral award could be made. The said situation can only arise once an application under Section 8(1) of the Act, 1996 is pending before the judicial authority before which action is brought and the plaintiff itself after having filed the suit, without there being any application by the defendant under Section 8 of the Act, cannot seek reference of the action/dispute to arbitration. The legal position regarding filing of the application under Section 8 of the Act, 1996 is clear as laid down in Ardy International (P) Ltd. vs. Inspiration Clothes & U & Anr. : (2006) 1 SCC 417, wherein, the Hon'ble Supreme Court inter alia laid down as under:

"The situation contemplated by Section 8 can arise only at the first instance of an opponent and defendant in a judicial proceeding, or, at the highest, suo moto at the instance of the judicial authority, when the judicial authority comes to know of the existence of an arbitration agreement."

It is also well settled that so long as the defendant has chosen not to file an application under Section 8, the civil court is entitled to proceed to deal with the matters at issue in the suit notwithstanding the existence of an arbitration clause in the contract.

The observations made by Hon'ble Supreme Court cannot be interpreted to mean that even after filing of the suit pertaining to a contract containing arbitration clause and wherein no application under Section 8 of the Act, 1996 is pending, the plaintiff itself can file an application under Section 11 of the Act seeking reference of the dispute to arbitration, as sought to be projected by learned counsel for the applicant.

REPORTABLE

Rajasthan High Court - Jodhpur

M/S Damani Shipping Pvt. Ltd vs M/S Hindustan Zinc Ltd. Co on 23 August, 2018

Bench: Arun Bhansali

Citation: AIR 2018 Raj 168

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Whether court can refer dispute to arbitration even if non signatory to arbitration agreement is party to suit?

The next contention raised by learned counsel for Respondent Nos. 1 and 2 is about the CIDCO, i.e. Respondent No. 3 herein, not being party to the 'Arbitration Agreement'. Again this contention was not raised before the Trial Court, but then, in order to resolve the dispute, even if this contention is taken up at this stage, as both the parties have argued thereon, the perusal of the plaint clearly goes to show that, Respondent No. 3 - CIDCO is merely a formal party. Only a consequential relief of injunction is claimed against the CIDCO, it being the owner of the said plot.

25. It is pertinent to note that, in the similar facts of the case, in Special Civil Suit No. 252 of 2008, the Trial Court has allowed the 'Reference', under Section 8 of the Arbitration Act, to the 'Arbitrator' and when the said 'Reference' was challenged before this Court in the case of Narayan Shankar Thakur v. Sitabai Sitaram Thakur (Since Deceased), through Legal Heirs, in Writ Petition No. 1882 of 2010, dated 1st August 2013, on the ground that, the CIDCO was a party to the Suit, but was not party to the 'Agreement', it was held by this Court that, as the CIDCO is the owner of the property, it has been joined as necessary and proper party in the Suit. As the specific performance of the 'Agreement of Sale' is sought after obtaining allotment from the CIDCO, it was necessary to include CIDCO as party to the Suit, but as no relief was claimed against the CIDCO and there was specific averment in the plaint that Plaintiff has no claim against it, reference made to the 'Arbitrator' by the Trial Court cannot be set aside. Though the said order of this Court was challenged in Special Leave Petition No. 27231 of 2013, the said Special Leave Petition came to be dismissed.

26. Here in the case, though it is true that, a relief is claimed against the CIDCO, it is merely of an ancillary or of a consequential nature. Such relief can be granted or refused, depending on whether Plaintiff's Suit for specific performance can be decreed or not. As held by another Single Bench of this Court in the case of M/s. Fiza Construction v. Smt. Parvati K. Thakur and Ors., in Writ Petition No. 943 of 2010, dated 10th February 2010, CIDCO being a Statutory Authority, would be required to consent to the transfer, once the Suit is decreed. It is, therefore, a formal party and would abide by the decision of the 'Arbitrator' and the decision of the 'Court'. Like in the said Suit, the main dispute in this case is also between the Petitioner and Respondent No. 1.

IN THE HIGH COURT OF BOMBAY

Civil Writ Petition (Stamp) No. 35221 of 2017

Decided On: 20.03.2018

 Suman Baburao Thapa Vs.  Jigar K. Mehta and Ors.

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Whether court can refer dispute to arbitration even if application for reference is made after date of submission of written statement?

 As to the next contention raised by learned counsel for Respondent Nos. 1 and 2, which was, admittedly, not taken up before the Trial Court, pertains to the application under Section 8 of the Arbitration Act, not being filed before the Trial Court within the prescribed time. In the first place, it is submitted that, in view of the amendment made to Section 8 of the Arbitration Act, w.e.f. 23rd October 2015, by Act No. 3 of 2016, such application for reference to arbitration has to be made, not later than the date of submitting the first written statement on the substance of dispute by the Defendants.

18. Reliance is placed by learned counsel for Respondent Nos. 1 and 2 on the decision of Delhi High Court in the case of Krishan Radhu v. The Emmar MGF Construction Pvt. Ltd., MANU/DE/3422/2016 : 2016 Supreme(Del) 4484, wherein this relevant clause was interpreted to mean that, after the amendment of Section 8 of the Arbitration Act, such application for reference to arbitration cannot be entertained, once the period prescribed for filing of the written statement has expired. It is submitted that, in this decision of Delhi High Court, it was held that, as per the earlier Section 8(1) of the Arbitration Act, prior to amendment, the party was permitted to apply for reference to arbitration, even while submitting the reply or written statement. However, now such application for reference has to be made within the time stipulated for filing of written statement. In the present case, therefore, as the application is made after the time stipulated for filing of written statement has expired, such application cannot be allowed.

19. However, in my considered opinion, this Judgment of Delhi High Court cannot be made applicable to the facts of the present case, as the said case, particularly, pertains to the commercial dispute. In respect of commercial dispute, as observed in this Judgment, in view of amendment to Order 8 Rule 1 of CPC, in the year 2015, the period of 120 days is stipulated for filing of the written statement and such period, as observed in this authority, cannot be extended. Therefore, the discretion, which the Court has in the Suits, other than commercial disputes, of extension of this period of 90 days also for filing of written statement, is not at all available in the commercial disputes. In that view of the matter, it was held that, the application for reference to the 'Arbitrator', if not made in the time stipulated for filing of written statement, it cannot be entertained.

20. This is an ordinary Suit, to which the provisions of commercial disputes are not applicable and hence, in this Suit, the Court has discretion to extend the time stipulated for filing of written statement, as held by the Hon'ble Supreme Court in number of its decisions that, the provisions of Order 8 Rule 1 of CPC are not of mandatory nature but of a directory nature. Hence, the contention raised by learned counsel for Respondent Nos. 1 and 2 in this respect cannot be accepted.

IN THE HIGH COURT OF BOMBAY

Civil Writ Petition (Stamp) No. 35221 of 2017

Decided On: 20.03.2018

 Suman Baburao Thapa Vs.  Jigar K. Mehta and Ors.

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Whether Incorrect Reference Regarding Applicability Of Indian Arbitration Act, 1940 Would Render Entire Arbitration Agreement Invalid?

Viewed thus, the High Court was not right in observing that there
could be no arbitration at all in the present case. In situations where the
relevant clause made reference to the applicability of “the provisions of the
Indian Arbitration Act and Rules made thereunder” as was the case in
MMTC Ltd. (Supra), on the strength of Section 85(2)(a) the governing
provisions in respect of arbitral proceedings which had not commenced
before 1996 had came into force would be those of 1996 Act alone. On the
same reasoning even if an arbitration agreement entered into after 1996 Act
had come into force were to make a reference to the applicable provisions
of those under Indian Arbitration Act or 1940 Act, such stipulation would be
of no consequence and the matter must be governed under provisions of
1996 Act. An incorrect reference or recital regarding applicability of 1940
Act would not render the entire arbitration agreement invalid. Such
stipulation will have to be read in the light of Section 85 of 1996 Act and in
our view, principles governing such relationship have to be under and in tune
with 1996 Act. As observed earlier, the requirements of “arbitration
agreement” as stipulated in Section 7 of 1996 Act stand completely satisfied
in the present matter nor has there been any suggestion that the agreement
stood vitiated on account of any circumstances in the realm of undue
influence, fraud, coercion or misrepresentation. In the circumstances, the
attempt must be to sub-serve the intent of the parties to resolve the disputes
by alternative disputes resolution mechanism. The High Court was,
therefore, completely in error.
Reportable
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO.4664 OF 2018
(Arising out of SLP (Civil) No.14589 of 2016)

Purushottam s/o Tulsiram Badwaik  V Anil & Ors.

Uday Umesh Lalit, J.
Dated:May 2, 2018

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