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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
M.M. SATHAYE, J.
RBL Bank Ltd. – Petitioner
Versus
Sohanlal V. Jain (HUF) – Respondent
Writ Petition No. 4193 of 2024
Decided On : 26-09-2024
Arbitration - Commercial Dispute - Arbitration and Conciliation Act, 1996 - Sections 8
Fact of the Case:
The petitioner filed a commercial suit for recovery of a deposit amount under a Leave and License Agreement. The respondents, after an ex-parte decree, sought to refer the matter to arbitration under Section 8 of the Arbitration and Conciliation Act, 1996.
Finding of the Court:
The court found that the respondents had sufficient cause for their absence and that the arbitration clause was valid. The court held that the respondents did not forfeit their right to apply for arbitration despite the delay in filing a written statement.
Issues: Whether the respondents forfeited their right to file an application under Section 8 of the Arbitration and Conciliation Act due to the delay in filing a written statement.
Ratio Decidendi: The court concluded that the intervening event of setting aside the ex-parte decree and restoring the suit allowed the respondents to apply for arbitration, as they had not forfeited their rights.
Result: The court upheld the order referring the dispute to arbitration and quashed certain clauses of the impugned order.
JUDGMENT :
M.M. SATHAYE, J.
1. Heard learned counsel for the Petitioner. Learned counsel for the Respondents waives service. Taken up for final disposal with consent.
2. This petition under Article 227 of the Constitution of India, takes exception to order dated 29th January 2024 by which Notice of Motion No. 102415 of 2023 filed by the Respondents, seeking reference of the dispute to Arbitrator, under section 8 of The Arbitration and Conciliation Act, 1996 (‘the said Act’ for short) is allowed, in commercial suit filed by Petitioner.
CASE:
3. The Petitioner is plaintiff in Commercial Suit No. 100234 of 2022 filed against the Respondents seeking recovery of the ‘deposit amount’ paid under Leave and License Agreement dated 31.08.2018 (‘the said L&L Agreement’ for short) between the Petitioner as licensee and Respondents as licensor. Respondent No. 1 HUF is the landlord of the subject matter commercial premises at Borivali (W), Mumbai situated on the ground floor along with basement.
4. The suit summons was issued to the Respondents which was duly served, however, Respondents remained absent and pursuant to order dated 07.07.2022, suit proceeded ex-parte. The Trial Court on 31.10.2022, decreed the suit ex-parte, directing the Respondents to jointly and severally pay Rs.65,02,100/- along with interest @ 36% per annum till realization. The Respondents filed Notice of Motion No. 4692 of 2022 (‘the first motion’ for short) praying for setting aside ex-parte decree and condonation of delay in filing written statement. It is important to note here that in the affidavit in support of this motion itself, the Respondents placed on record therein case of existence of arbitration clause between parties and need to refer the matter as per mandate under Section 8 of he said Act.
5. The Trial Court by order dated 21.06.2023 allowed the first motion thereby setting aside ex-parte decree on the condition that Respondents deposit Rs.36 Lakh in the Court within 2 months and the Respondents were directed to pay costs to the Plaintiff within same time limit. It was directed that after compliance of the said condition, the said suit will be restored and parties were directed to appear on 21.07.2023. The Respondents challenged this order dated 21.06.2023 passed in the first motion by filing Commercial from Order Appeal No. 17 of 2023, which was dismissed by this Court under order dated 01.08.2023.
6. In the meantime, on 05.07.2023 the Respondents filed Notice of Motion No. 102415 of 2023 (‘the second motion’ for short) in the Trial Court for referring the parties to arbitration under clause 15 of the said Agreement u/s. 8 of the Arbitration and Conciliation Act, 1996 (‘the said Act’ for short). The Respondents complied with the conditional order passed in the first motion by depositing Rs. 36 Lakh as directed and by order dated 09.11.2023, the suit was restored at the stage of evidence. Thereafter, the Trial Court after hearing both sides, by the impugned order dated 29.01.2024, allowed the second motion, thereby referring the matter to the Arbitration under Section 8 of the said Act. The parties were directed to comply with the concerned clause of the said Agreement. In these circumstances, the Petitioner/original plaintiff has filed the present petition. The said L&L Agreement is not disputed.
SUBMISSIONS:
7. Learned counsel Mr. Naphade appearing for the Petitioner submitted that the Respondents have admitted that writ of summons was duly served and they had engaged one Advocate. However, the said Advocate was negligent and therefore, the Respondents were not represented in the suit. He submitted that though the Respondents had sought permission to file written statement in the first motion, the said relief was not granted. He submitted that as per law laid down in Mira Gehani vs. Axis Bank Limited, 2019 SCC Online Bom 358 written statement cannot be filed after 120 days of service of writ of summons. He submitted that the order in first motion is confirmed
The court established that a party does not forfeit its right to apply for arbitration under Section 8 even after the expiration of the time to file a written statement, provided there are intervenin....
The court held that disputes regarding settled amounts are not arbitrable under the Arbitration and Conciliation Act, 1996, unless specifically covered by the arbitration agreement.
An application under Section 8 of the Arbitration and Conciliation Act must be filed before the first written statement and within the prescribed limitation period; otherwise, it is not maintainable.
A party forfeits the right to apply under Section 8 of the Arbitration and Conciliation Act if it fails to file within the time allowed for submitting a written statement.
Rejection of plaint – When a statute prescribes to do certain thing in a certain manner, the thing has to be done in same manner or not at all – All other modes are expressly forbidden.
The court emphasized strict adherence to procedural requirements for references to arbitration under the Arbitration Act, dismissing applications that do not explicitly comply.
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....
The court ruled that a vague arbitration clause does not necessitate arbitration, enabling the plaintiff to attach defendants' assets due to the admission of debt and the defendants' failure to compl....
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