Important Point – Even in absence of application for leave to defend, application under Section 8 of Arbitration and Conciliation Act, 1996 could be entertained by Trial Court.

1. Admit. Heard finally by consent of the learned Advocates appearing for the parties.

2. The respondent/plaintiff Pramod s/o Deshraj Budhraja has filed Summary Civil Suit No. 108 of 2015 under Order XXXVII of the Code of Civil Procedure on 10-8-2015 for a decree in the sum of Rs.3,51,26,250/- along with future interest at 21% per annum compounded quarterly from the date of filing of the suit till its payment, against the appellant-defendants, alleging that the defendants had issued four cheques dated 25-2-2015, 25-3-2015, 25-4-2015 and 25-5-2015 for an amount of Rs.1,00,00,000/- each in favour of the plaintiff to discharge their liability, and all the four cheques were dishonoured due to insufficient funds. The first cheque dated 25-2-2015 was presented on 26-2-2015, and upon its dishonour, it was returned to the defendant No.1, who made the payment of Rs.70,00,000/- and assured to make the balance payment of Rs.30,00,000/-, which he has failed to make. The other three cheques were dishonoured on 13-6-2015 upon presentation, and no payment has been made. Thus, the claim was for the principal amount of Rs.3,30,00,000/- with interest at the rate of 21%. The parties shall hereinafter be referred accordingly to their status as the plaintiff and the defendants.

3. In response to the suit summons, the defendants at the very first opportunity produced an arbitration agreement dated 9-4-2014 along with an application Exhibit 23 filed under Section 8 of the Arbitration and Conciliation Act, 1996 read with Section 9A of the Code of Civil Procedure on 30-9-2015 for referring the matter to the Arbitrator named therein. The plaintiff filed his reply on 7-10-2015, opposing this application. The Trial Court has, by an order dated 27-10-2015, rejected the application at Exhibit 23 and hence the defendants have approached this Court by filing this appeal under Section 37(1) of the Arbitration and Conciliation Act.

4. The controversy involved in the present appeal is restricted to the claim of the defendants to seek reference of the matter to the Arbitrator in terms of clause 11, in the agreement dated 9-4-2014, styled as “Sale Agreement/Memorandum of Understanding” (hereinafter referred to as “the said agreement”), executed between the defendants and the plaintiffs, who are described therein as PARTY NO. ONE and PARTY NO. TWO respectively. In order to appreciate the factual controversy involved in the matter, the terms of the said agreement will have to be looked into.

5. The salient features of the said agreement, to which the learned Advocates appearing for the parties have invited my attention, are stated as under :

(1) The defendants are the owners of separate block Nos. 301A, 301B, 301C and 301D, admeasuring totally about 5000 sq.ft. carpet area, and terrace of about 12000 sq.ft. carpet area, situated on the third floor, bearing N.M.C. House No.64/301A to 301D, Ward No. 65, Khasra No. 101/3, City Survey No. 1866, Sheet No.34, Mouza Sitabuldi, at SV Patel Marg, Kingsway, Sadar, Nagpur (hereinafter called as “the said property”), which is the subject-matter of the said agreement.

(2) The plaintiff has agreed to purchase and the defendants have agreed to sell the said property on 9-4-2014 for a total consideration of Rs.6,50,00,000/-, out of which the plaintiff had paid an amount of Rs.4,50,00,000/- by two cheques dated 27-3-2014 for Rs.2,50,00,000/- and dated 29-3-2014 for Rs.2,00,00,000/- to the defendants, and an amount of Rs.1,50,00,000/- by a cheque dated 22-4-2014. The balance consideration of Rs.2,00,00,000/- was agreed to be paid at the time of registration of the sale-deed within a period of six months, on or before 30-9-2014.

6. Clauses 8 and 11 of the said agreement were heavily relied upon by both the parties, and hence the same are reproduced below :

“8. That the PARTY No. ONE shall Execute and Register the Sale Deed in the name of PARTY No. TWO or his nominee and the PARTY No. TWO or his nominee shall take the Sale Deed on o