An application under Section 8 of the Arbitration and Conciliation Act must be filed before the first statement on the substance of the dispute, and if filed after the limitation for a written statement, it is not maintainable.

ORAL ORDER

The petitioner-plaintiff challenges the order dated 22.08.2019 passed by the XIX Additional City Civil and Sessions Judge, Bangalore, in O.S. No. 6370/2017, by which the application filed by the respondent No.1 (defendant No.1) under Section 8(1) of the Arbitration and Conciliation Act, 1996 , came to be allowed. The said order was affirmed vide order dated 06.01.2022 passed in I.A. No. 4 in the O.S. No. 6370/2017, preferred by the petitioner seeking a review of the earlier order.

2. The suit filed by the petitioner-plaintiff was for the recovery of a sum of Rs.16,29,311.74 along with interest at the rate of 18% per annum, and was decreed ex parte on 10.04.2018. Thereafter, the defendant No.1 filed M.A. 358/2018 under Order IX, Rule 13 of the CPC , 1908, and the trial court restored the suit by order dated 20.02.2019. Subsequently, on 20.03.2019, defendant No.1 filed an application under Section 8(1) of the Arbitration and Conciliation Act, 1996 , seeking referral of the dispute to arbitration, as stipulated in Clause 12 of the partnership deed dated 26.02.2006. Aggrieved by the order allowing the application on 22.08.2019 and the dismissal of the review petition by order dated 06.01.2022, the petitioner has filed the present petition.

3. Before the ex-parte decree, defendant No.1 had entered appearance on 27.10.2017 and sought time to file a written statement. Defendant No.2, though served with notice, remained absent and was subsequently placed ex parte. Since defendant No.1 failed to file a written statement, the trial court posted the matter for the plaintiff’s evidence on 01.01.2018. Due to the failure of the defendants to contest the suit, the trial court decreed the suit, directing the defendants to pay Rs.16,29,311.74 along with interest at the rate of 10% per annum.

4. Subsequently, defendant No.2 filed an application under Order IX, Rule 13 CPC to set aside the ex parte decree and restore the suit. The trial court, by order dated 20.02.2019, allowed the application, set aside the ex parte decree, and restored the suit to its original file. On 05.03.2019, the defendant filed an application under Section 148 CPC seeking an extension of time to file a written statement. The trial court allowed the application and granted time to file the written statement. However, defendant No.1 failed to file the written statement, and consequently, the trial court took the written statement of defendant No.1 as nil and posted the matter for cross-examination of the plaintiff. On 20.03.2019, defendant No.1 filed an application under Section 8(1) of the Arbitration and Conciliation Act, 1996 , read with Section 151 CPC , seeking the matter to be referred to arbitration. The trial court, after hearing the parties, passed the impugned order referring the matter to arbitration and directed the respondent to appoint an arbitrator within 15 days.

5. The learned counsel for the petitioner argues that the application under Section 8(1) of the Arbitration and Conciliation Act, 1996 , should have been filed before the first written statement is filed. The written statement was required to be filed within 30 days, extendable by an additional 60/90 days. Therefore, the application filed under Section 8(1) after the prescribed period of limitation is not maintainable. In support of this, he relies on the following decisions:

i) SSIPL Lifestyle Pvt Ltd vs. Varma Apparels (India) Private Limited , 2020 SCC Online Del 1667

ii) SPML Infra Ltd vs. Trisquare Switchgears Pvt Ltd , 2022 SCC Online Del 1914 .

6. In response, the learned counsel for the respondents argues that since the defendant did not file a written statement, there is no bar to filing an application under Section 8 of the Act, as Section 8 allows filing the application before the first statement is made. He relies on the decision of the High Court of Madras in the case of G.T.L. Infrastructure Limited (GIL) vs. Amaladoss, 2023 SCC Online Mad 1684 .

7. Additionally, he contends