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IN THE HIGH COURT OF DELHI AT NEW DELHI
Neena Bansal Krishna, J.
Chadha Motor Transport Company Pvt. Ltd. – Appellant
Versus
Barinderjit Singh Sahni – Respondent
RP 20 of 2023 in ARB.P.762 of 2019
Decided On : 14-03-2023
ABANDONMENT - Arbitration Petition - Section 11 of the Act, 1996 - Section 8 of the Act, 1996
Fact of the Case:
The petitioner sought a procedural review of the Order allowing the Arbitration Petition under Section 11 of the Act, 1996, contending that the respondent had abandoned its right to arbitration by participating in the civil suit and not filing an Application under Section 8 of the Act, 1996.
Finding of the Court:
The court found that the participation in the civil suit did not amount to abandonment of the right to seek resolution of disputes through arbitration. The relief sought in the civil suit was not amenable to arbitration, and the application under Section 8 of the Act, 1996 could not have been maintainable when some defendants were not signatories to the arbitration agreement. The court also held that participation in the civil suit did not debar the respondent from seeking arbitration for future disputes.
Issues: The issues involved the abandonment of the right to arbitration, the amenability of the relief sought in the civil suit to arbitration, and the maintainability of the application under Section 8 of the Act, 1996 when some defendants were not signatories to the arbitration agreement.
Ratio Decidendi: The court held that participation in the civil suit did not amount to abandonment of the right to seek resolution of disputes through arbitration. The relief sought in the civil suit was not amenable to arbitration, and the application under Section 8 of the Act, 1996 could not have been maintainable when some defendants were not signatories to the arbitration agreement. The court also ruled that participation in the civil suit did not debar the respondent from seeking arbitration for future disputes.
Final Decision: The Review Petition was found to be without merit and was dismissed.
JUDGMENT
Neena Bansal Krishna, J.
REVIEW PETITION 20/2023
1. The present Review Petition under Order XXXXVII Rule 1 read with Section 151 of the Code of Civil Procedure, 1908 (hereinafter referred to as "CPC, 1908") has been made by the Petitioner (who was the Respondent in the main petition) for procedural review of the Order dated 27.09.2022 passed in the Arbitration Petition bearing No. ARB.P. 762/2019 under Section 11 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the "Act, 1996").
2. The facts in brief are that Arbitration Petition under Section 11 of the Act, 1996 was filed on behalf of the Respondent wherein amongst other objections, one objection taken by the Petitioner was that the Respondent had not raised any issue on the maintainability of the Civil Suit bearing No. 306/2018 filed by the respondent, or it being barred by the Arbitration but had vehemently contested the suit by filing the Written Statement. The Suit was taken up on twelve occasions and at no point of time did the Respondent file any Application under Section 8 of the Act, 1996 for Invocation of Arbitration proceedings or for resolving the disputes through Arbitration. The Respondent by filing the Written Statement had waived off the right to Arbitration. This issue is fundamental and goes to the root of the matter and thus, the impugned Judgement/Order dated 27.09.2022 allowing the Arbitration Petition under Section 11 of the Act, 1996, is liable to be reviewed.
3. The petitioner had challenged the impugned Judgement/Order dated 27.09.2022 before the Supreme Court vide Special Leave Petition (Civil) No. 23169/2022, wherein liberty had been granted to the petitioner to seek review of the Order/Judgement dated 27.09.2022 for considering its objections in regard to the maintainability of the Arbitration Petition under Section 11 of the Act, 1996. Hence, the present Review Petition has been filed on the ground that despite the specific plea of abandonment of the right of Arbitration by the respondent which was noted in the impugned Judgement/Order dated 27.09.2022, no finding has been given on this aspect.
4. The main contention of the petitioner is that by participating and by filing the Written Statement in the proceedings before the civil court and attending the matter on twelve dates, the respondent is now estopped from resorting to Arbitration and the impugned Judgement/Order dated 27.09.2022 is liable to be set aside.
5. The Respondent in its Reply has taken the preliminary objection that the present Review Petition is not maintainable as it has not been filed by the competent person on behalf of the Petitioner company as there is no resolution in favour of Mr. Harpreet Singh Chadha who claims himself to be one of the Director to sign and file the present petition.
6. It is further claimed that the ground that the answering respondent was not entitled to seek Arbitration under Section 11(6) of the Act, 1996 was not canvassed before this Court. The only ground taken was that the Partnership Firm was not registered and that on the demise of Late Harbans Singh, father of the answering respondent, the partnership stood dissolved as there were only two partners. These grounds were duly considered while allowing the Arbitration Petition under Section 11(6) of the Act, 1996 for appointment of the Arbitrator.
7. Furthermore, the Civil Suit bearing No. CS(OS) 309/2018 had been filed against the respondent and three other defendants who admittedly did not claim themselves to be the partners of the firm or the legal heirs of Late Harbans Singh Sahni, and therefore, the respondent could not have taken the plea of appointment of an Arbitrator in the presence of three other parties who were not a signatory to the Partnership Deed containing the arbitration clause and, therefore, the application under Section 8 of the Act,1996 for referral of disputes to arbitration could not be resorted to in the said suit. Moreover, the parties
Participation in a civil suit does not necessarily amount to abandonment of the right to seek resolution of disputes through arbitration. The amenability of relief sought in a civil suit to arbitrati....
The main legal point established in the judgment is that waiver of rights and the application of arbitration laws are crucial in determining the jurisdiction of the Commercial Court in commercial dis....
A party to an arbitration agreement or any person claiming through or under him is entitled to apply for referring the dispute before the arbitrator, unless it is found that prima facie no valid arbi....
The mere existence of an arbitration clause does not automatically oust the jurisdiction of civil courts unless explicitly stated in law.
The court emphasized strict adherence to procedural requirements for references to arbitration under the Arbitration Act, dismissing applications that do not explicitly comply.
Arbitration agreements are binding and must be adhered to, even amidst concurrent civil suits unless substantive legal fraud is alleged.
The civil court cannot adjudicate disputes covered by an arbitration agreement; such disputes must be referred to arbitration.
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