Mr. G.S. Sandhawalia J.(Oral) - This order shall dispose of Civil Revision No.746 of 2007 and 6904 of 2006 as common questions of law and facts are involved in both these petition. However, for dictating the judgment, facts have been taken from Civil Revision No.746 of 2007.

2. The issue which arises for consideration before this Court is that whether in view of the fact that the parties had an arbitration agreement interse whether the trial Court was justified in dismissing the application under Section 8 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as “the Act”) vide order dated 6.1.2007 on the ground that defence of the petitioner-defendant had already been struck off on the same day on account of not filing written statement in view of the mandatory provisions of Order 8 Rule 1 CPC.

3. A perusal of the paper-book would go on to show that the respondent-plaintiff filed a suit for mandatory injunction and consequential relief of permanent injunction on 30.8.2006 against the petitioner-financier on the ground that he was owner in possession of truck bearing No.HR-26-GA-1465 Model 1997. The truck had been financed to the tune of Rs. 2,00,000/- and instalments were to be paid at the rate of Rs.11,438/- per month. All the instalments had been paid and the last receipt dated 11.4.2006 was of Rs.17,000/-. Since the loan amount had been cleared, NOC was asked for. The petitioner-financier had asked for more amount and threatened to snatch the truck leading to filing of the civil suit in order to protect the possession of the vehicle.

4. It is pertinent to mention that in the plaint there was no reference to Clause 10.14 of the loan-cum-hypothecation agreement made on 21.6.2004 which provided all the disputes, differences and/or claims etc. were to be settled by the named arbitrator Mr. Navin Kumar. The case of the petitioner is that service was effected on 1.9.2006 and the petitioner-defendant had put in appearance on 20.9.2006 through counsel by filing power of attorney. Thereafter, case was adjourned to 23.10.2006. A perusal of the impugned order would go on to show that injunction was in operation in favour of the plaintiff which was extended on the said date. On 23.10.2006 the date fixed since the Presiding Officer was not holding the Court the case was taken up on an earlier point of time i.e. on 19.10.2006 and adjourned to 24.11.2006. In a similar situation, the file had been taken up on 23.11.2006 since the Presiding Officer was to be on leave and the case was adjourned to 6.1.2007. On the said date, the impugned order was passed by coming to the conclusion that neither the written statement had been filed and nor the reply to the stay application had been filed. Adjournment was opposed by the counsel for the plaintiff, and on account of mandatory period for filing written statement having expired, the defence of the defendant-petitioner was struck off. On the same day, application under Section 8 of the Act was filed which was also dismissed on the ground that defendant had lost its right to move any application and issues were framed. Resultantly, the present revision petition has been filed and further proceedings were stayed before the trial Court vide order dated 24.9.2007.

5. A perusal of the application filed under Section 8 of the Act would go on to show that in view of the loan-cum-hypothecation agreement containing arbitration clause, the suit was not maintainable and therefore, the matter was liable to be referred to the Arbitrator. However, unfortunately the trial Court failed to even consider the application in its true perspective keeping in view the ambit of the Act. Sub Clause (1) of Section 8 of the Act provides that where an action is brought in matter which is subject matter of an arbitration agreement before submitting his first statement on the substance of the dispute, a party can apply for referring the matter to arbitration. Sub Clause (2) provides that the applicati