A party's previous unrelated legal action does not waive their right to invoke arbitration if the subsequent application under Section 8 is filed before their first substantive statement in a related suit.

JUDGMENT :

RAVI NATH TILHARI, J.

Heard Sri Nidhi Epur, learned Counsel representing Sri Kailashnath P.S.S., learned Counsel for the appellant, through virtual mode and Sri Gundapu Rajesh Kumar, learned Counsel for the respondent.

2. This appeal under Section 37 of the Arbitration and Conciliation Act, 1996 (in short 'the Act, 1996'), has been filed by the defendant, in OS No.368 of 2022 pending in the Court of learned II Additional Senior Civil Judge, Visakhapatnam (in short 'the Trial Court'), challenging the order dated 19.09.2023 passed in IA No.209 of 2023 in the said suit.

I. Facts :

3. The plaintiff is the respondent. He filed OS No.368 of 2022 against the appellant for recovery of amount and other reliefs inter alia on the allegations that the appellant had to pay bills raised by the respondent pertaining to the delivery of consignment goods. The consignments were bound by the terms and conditions specifically mentioned on the consignment notes.

4. In the suit, the appellant filed IA No.209 of 2023 under Section 8 of the Act, 1996, to refer the parties to the arbitration as per clause (8) of the consignment notes.

5. The respondent/plaintiff filed objection/counter. It was submitted that the appellant had filed a suit in S.No.1777/2022 against the respondent before the City Civil Court, Mumbai, which was being contested by filing written statement and was pending. The appellant had waived the right to invoke arbitration clause in approaching the City Civil Court and in not invoking the arbitration clause. If the appellant was interested in arbitration proceedings, he ought not to have filed S.No.1777/2022 in the City Civil Court. Objection was also raised that the consignment notes which contained the arbitration clause were not duly stamped and hence, unenforceable and it could not be said that there existed an arbitration agreement. It was requested to reject IA No.209 of 2023.

II. Order of the Trial Court :

6. The learned Trial Court framed the following point for determination :

"Whether the petitioner is entitled for the relief to refer the matter to arbitration as per clause (8) of the consignment notes issued by the plaintiff, as prayed for?"

7. The learned Trial Court took a view that the appellant, filed S.No.1777 of 2022 before City Civil Court, Mumbai, basing on the same consignment notes and so he had waived the arbitration clause. It was further observed that the appellant did not disclose in his written statement about the S.No.1777 of 2022, which was considered as the first statement of the substance on the dispute under Section 8 of the Act, 1996 and so, the application under Section 8 (1) of the Act, 1996 was not maintainable under law.

8. The learned Trial Court was of the further view that the consignment notes were not stamped as per Section 35 of the Indian STAMP ACT , so, based on those consignment notes, the arbitration clause could not be invoked and proceeded further. In this respect, the learned Trial Court relied in N.N. Global Mercantiles Private Limited v. Indo Unique Flame Limited , (2023) 7 SCC 1 = (2023) 3 SCC (Civ.) 564.

9. Thus considered, the learned II Additional Senior Civil Judge, Visakhapatnam, by order dated 19.09.2023, rejected IA No.209 of 2023.

III. Submissions of the learned Counsel for the appellant :

10. Learned Counsel for the appellant submitted that the impugned order cannot be sustained on th