IMPORTANT POINT
Filing of an application without reply to allegations of plaint does not constitute first statement on substance of dispute.

JUDGMENT :

Prafulla C. Pant, J.

1. Leave granted.

2. This appeal is directed against order dated 16.09.2015, passed by the High Court of Judicature at Calcutta in GA No. 2998 of 2015 (in CS No. 2 of 2015), whereby said Court has rejected the application moved under Section 5 read with Section 8 of the Arbitration and Conciliation Act, 1996, to get the dispute referred to arbitral tribunal.

3. Brief facts of the case are that appellant Greaves Cotton are manufacturers of, inter alia, diesel engines. Respondent United Machinery and Appliances are manufacturers of diesel generator sets. An agreement containing arbitration clause was executed between them for supply of diesel engines by the appellant to the respondent for using the same in the diesel gensets. Arbitration clause contained in Article 10.1 of agreement dated 02.07.2007 (copy Annexure P-1) reads as under:-

“10.1 Any dispute or difference whatsoever arising between the parties out of or relating to the construction, meaning, scope, operation or effect of this Agreement or the validity or the breach thereof shall be referred to a Sole Arbitrator to be appointed by Greaves. The decision of the Arbitrator shall be final and binding upon the parties. The venue of arbitration shall be Mumbai. The arbitration proceedings shall, in all other aspects, be governed by the provisions of the Arbitration and Conciliation Act, 1996 or any subsequent statutory enactment in place thereof.”

The plaintiff-respondent filed civil suit (CS No. 2 of 2015) seeking decree for an amount of Rs.4,92,76,854/- towards the loss and damages suffered by it on account of alleged breach of contract on the part of defendant-appellant. The High Court, in its original side, issued summons in the suit on 06.01.2015 to the appellant. On the other hand, the appellant sent communication to the respondent claiming that it was the respondent who has to pay outstanding dues of Rs.1,04,53,103/- to the appellant. The appellant, in response to the summons, on 07.07.2015 moved an application (copy Annexure P-6) before the High Court seeking extension of time for eight weeks to file written statement and invoked the arbitration clause contained in the agreement dated 02.07.2007 by sending a letter dated 08.07.2015 (copy Annexure P-7) to the respondent, in response to which, vide communication dated 13.07.2015 (copy Annexure P-7), it denied the claim of the appellant, and objected to invocation of arbitration clause on the ground of pendency of civil suit before the High Court. Thereafter, the appellant moved Application GA No. 2998 of 2015 (copy Annexure P-10) under Section 5 read with Section 8 of the Arbitration and Conciliation Act, 1996 (for short “the 1996 Act”), in the suit seeking reference of the disputes between the parties forming the subject-matter of the suit, for arbitration, which is rejected by the High Court on the ground that the appellant has, by moving application for extension of time to file written statement, waived its right to seek arbitration. Hence, this appeal through special leave.

4. We have heard learned counsel for the parties.

5. Before further discussion, it is just and proper to refer to relevant provisions of law applicable to the case. Section 5 of the 1996 Act provides that notwithstanding anything contained in any other law for the time being in force, in matters governed by Part I, no judicial authority shall intervene except where so provided in the said Part of the Act. Sub-section (1) of Section 8 of the 1996 Act, as it existed prior to 23.10.2015, provided that a judicial authority before which an action is brought in a matter which is the subject of an arbitration 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.

6. The issue before us for consideration is whether filing of an application for extension of time to file written statement before a judicial authority constitutes – ‘submittin