Allahabad High Court
Pramod Kumar Rao @ Munna Singh vs Legal Head Sahara India Commercial ... on 25 August, 2025
HIGH COURT OF JUDICATURE AT ALLAHABAD
?Neutral Citation No. - 2025:AHC:146796
A.F.R.
HIGH COURT OF JUDICATURE AT ALLAHABAD.
FIRST APPEAL No. - 143 of 2025
Court No. - 35
HON'BLE SANDEEP JAIN, J.
1. This first appeal under Section 96 C.P.C. has been filed by the plaintiff-appellant against the impugned judgment and decree dated 24.01.2025 passed by the court of Civil Judge, Senior Division, Gorakhpur in Original Suit No.120 of 2020 (Pramod Kumar vs. Sahara India and others), whereby the application of the defendants under Order 7 Rule 11 C.P.C. has been allowed on the ground that there is an arbitration agreement between the parties and as such, the Court has no jurisdiction to decide the suit.
2. Learned counsel for the plaintiff-appellant submitted that the order impugned is erroneous because the trial court has not applied its mind to the controversy in issue. Learned counsel submitted that the plaintiff is in possession of the disputed property, which has been allotted to the plaintiff by the defendants and as such, the plaintiff has a right to defend its possession. The plaintiff can only be evicted by adopting due procedure, in accordance with law. Learned counsel further submitted that the relief of injunction sought in the suit, cannot be granted by the arbitral tribunal, as such, the trial court had the jurisdiction to decide the suit. It was further submitted that the plaintiff has been allotted the disputed property, which has not been cancelled by the defendants, as such, the plaintiff cannot be dispossessed. The defendants are adamant to dispossess the plaintiff from the disputed property, as such, the plaintiff had filed a suit for the relief of permanent injunction, which has been illegally dismissed at the initial stage vide impugned order, holding that the trial court has got no jurisdiction to decide the suit keeping in view the arbitration agreement between the parties.
3. Learned counsel for the caveator defendant-respondents submitted that upon an application been made by the plaintiff, a flat was allotted to the plaintiff for about Rs.71,00,000/- consideration, out of which the plaintiff paid Rs.7,50,000/- on application and further Rs.3,50,000/- on allotment, but since the remaining consideration of the flat was not paid by the plaintiff, as such, the defendants after serving legal notice on him, had cancelled the allotment of the disputed flat and had subsequently allotted that flat to third party and had also returned the consideration amount of Rs.10,00,000/- to the plaintiff. Learned counsel further submitted that since there is an existing arbitration agreement between the parties, as such, the matter in issue, can be referred to a duly appointed arbitrator and for this reason, the defendants had moved an application under Section 8 of the Arbitration and Conciliation Act, 1996 read with Order 7 Rule 11 (d) C.P.C., which has been rightly allowed by the impugned order. Learned counsel further submitted that the arbitrator is competent to grant interim injunction also. Learned counsel submitted that in view of the above legal position, appeal is meritless and is liable to be dismissed at the admission stage.
4. I have heard, learned counsel for both the parties and perused the record.
5. It is well settled that while disposing an application under Order 7 Rule 11 C.P.C. only the averments in the plaint are to be examined and at this stage, the pleadings in the written statement of the defendant are not to be considered. It is also well settled that if the case of the plaintiff is barred by any law, then the plaint has to be rejected under Order 7 Rule 11 C.P.C.
6. Section 8 of the Arbitration and Conciliation Act,1996 reads as under:-
(1) A judicial authority, before which an action is brought in a matter which is the subject of an arbitration agreement shall, if a party to the arbitration agreement or any person claiming through or under him, so applies not later than the date of submitting his first statement on the substance of the dispute, then, notwithstanding any judgment, decree or order of the Supreme Court or any Court, refer the parties to arbitration unless it finds that prima facie no valid arbitration agreement exists.
(2) The application referred to in sub-section (1) shall not be entertained unless it is accompanied by the original arbitration agreement or a duly certified copy thereof:
Provided that where the original arbitration agreement or a certified copy thereof is not available with the party applying for reference to arbitration under sub-section (1), and the said agreement or certified copy is retained by the other party to that agreement, then, the party so applying shall file such application along with a copy of the arbitration agreement and a petition praying the Court to call upon the other party to produce the original arbitration agreement or its duly certified copy before that Court.
(3) Notwithstanding that an application has been made under sub-section (1) and that the issue is pending before the judicial authority, an arbitration may be commenced or continued and an arbitral award made.
7. The Apex Court in the case of Booz Allen And Hamilton Inc. vs. SBI Home Finance Limited and Others (2011) 5 SCC 532, stated the principles which the Court will have to decide before referring the parties to Arbitration, which reads as under-:
?19. Where a suit is filed by one of the parties to an arbitration agreement against the other parties to the arbitration agreement, and if the defendants file an application under Section 8 stating that the parties should be referred to arbitration, the court (judicial authority) will have to decide:
(i) whether there is an arbitration agreement among the parties;
(ii)whether all the parties to the suit are parties to the arbitration agreement;
(iii) whether the disputes which are the subject-matter of the suit fall within the scope of arbitration agreement;
(iv)whether the defendant had applied under Section 8 of the Act before submitting his first statement on the substance of the dispute; and
(v) whether the reliefs sought in the suit are those that can be adjudicated and granted in an arbitration.?
8. The Apex Court in the case of Sundaram Finance Limited and Another vs. T. Thankam (2015) 14 SCC 444, held as under:-
?8. Once there is an agreement between the parties to refer the disputes or differences arising out of the agreement to arbitration, and in case either party, ignoring the terms of the agreement, approaches the civil court and the other party, in terms of Section 8 of the Arbitration Act, moves the court for referring the parties to arbitration before the first statement on the substance of the dispute is filed, in view of the peremptory language of Section 8 of the Arbitration Act, it is obligatory for the court to refer the parties to arbitration in terms of the agreement, as held by this Court in P. Anand Gajapathi Raju v. P.V.G. Raju [(2000) 4 SCC 539 : (2000) 2 SCR 684] .
9. The position was further explained in Hindustan Petroleum Corpn. Ltd. v. Pinkcity Midway Petroleums [(2003) 6 SCC 503]. To quote: (SCC pp. 510-11, para 14)
?14. This Court in P. Anand Gajapathi Raju v. P.V.G. Raju has held that the language of Section 8 is peremptory in nature. Therefore, in cases where there is an arbitration clause in the agreement, it is obligatory for the court to refer the parties to arbitration in terms of their arbitration agreement and nothing remains to be decided in the original action after such an application is made except to refer the dispute to an arbitrator. Therefore, it is clear that if, as contended by a party in an agreement between the parties before the civil court, there is a clause for arbitration, it is mandatory for the civil court to refer the dispute to an arbitrator. In the instant case the existence of an arbitral clause in the agreement is accepted by both the parties as also by the courts below but the applicability thereof is disputed by the respondent and the said dispute is accepted by the courts below. Be that as it may, at the cost of repetition, we may again state that the existence of the arbitration clause is admitted. If that be so, in view of the mandatory language of Section 8 of the Act, the courts below ought to have referred the dispute to arbitration.?
10. In Magma Leasing and Finance Ltd. v. Potluri Madhavilata [(2009) 10 SCC 103 : (2009) 4 SCC (Civ) 57], the position has been restated holding that no option is left to the court, once the prerequisite conditions of Section 8 are fully satisfied.
13. Once an application in due compliance with Section 8 of the Arbitration Act is filed, the approach of the civil court should be not to see whether the court has jurisdiction. It should be to see whether its jurisdiction has been ousted. There is a lot of difference between the two approaches. Once it is brought to the notice of the court that its jurisdiction has been taken away in terms of the procedure prescribed under a special statute, the civil court should first see whether there is ouster of jurisdiction in terms or compliance with the procedure under the special statute. The general law should yield to the special law- generalia specialibus non derogant. In such a situation, the approach shall not be to see whether there is still jurisdiction in the civil court under the general law. Such approaches would only delay the resolution of disputes and complicate the redressal of grievance and of course unnecessarily increase the pendency in the court.?
9. It is apparent that the defendants had moved an application under Order 7 Rule 11 C.P.C. read with 151 C.P.C. and Section 8(1) of the Arbitration and Conciliation Act, 1996 in the trial court, wherein they submitted that the plaintiff has defaulted in making the full payment of the allotted flat within the stipulated time period and as such, they had given notice to the plaintiff to comply with the terms and conditions of the agreement but still the plaintiff failed to comply. It is mentioned in this application that since the disputes between the parties are to be decided through arbitration, as such, it was prayed that the matter be referred to arbitration. It has been specifically mentioned in this application that since there is an arbitration clause in the agreement executed between the parties, as such, the present suit is not maintainable.
10. The plaintiff opposed the above application in the trial court on the ground that the suit has been filed for the relief of permanent injunction which can only be granted by the competent civil court, as such, the relief sought cannot be granted by an arbitrator appointed under the Arbitration and Conciliation Act, 1996. It was further alleged that the plaintiff has bonafidely paid substantial consideration of the flat but the defendants are deliberately not executing the sale deed of the flat, in favour of the plaintiff.
11. From the plaint averments, it is apparent that on an application made on 3.08.2018 by the plaintiff, a flat had been allotted by the defendants to the plaintiff, for a consideration of about Rs.71.57 lacs, out of which the plaintiff has only paid an amount of Rs.11 lacs and the remaining amount is outstanding, which has not been paid to the defendants. It is also apparent that the sale deed of the flat has not been executed by the defendants in favour of the plaintiff. The plaintiff has concealed the fact whether he has paid the whole amount of agreed consideration to the defendants or not. According to the plaintiff, the defendants have not provided the facilities in the flat, which were promised, regarding which he had informed the defendants but still the defendants failed to rectify the defects in the flat. According to the plaintiff, he is in possession of the disputed flat and the defendants are adamant to dispossess him, hence the plaintiff had sought the relief of permanent injunction for restraining the defendants from dispossessing him from the disputed flat.
12. It is apparent that there is a dispute between the parties regarding the flat allotted to the plaintiff by the defendants. The defendants have filed the original application form submitted by the plaintiff along-with the terms and conditions of the agreement, which disclose that there is Clause-16 in the terms and conditions, which reads as under:-
?16. Jurisdiction
In case of any dispute arising out of this contract, it shall be referred to an Arbitrator appointed by the Company, whose decision shall be final and binding on both parties. The jurisdiction of Court shall be at Kolkata.?
13. Since, there is an arbitration agreement between the parties to decide all the disputes arising out of the contract between the plaintiff and the defendants, regarding the allotment of the disputed flat, which has not been denied by the plaintiff, as such, in view of the law laid down by the Apex Court in the case of Booz Allen(supra) and Sundaram Finance Limited(supra), the civil court has got no jurisdiction in this matter. Further, the Arbitral Tribunal is competent to grant the relief of injunction under Section 9 of the Arbitration and Conciliation Act, 1996. In view of this, the trial court has rightly allowed the defendant?s application under Order 7 Rule 11 C.P.C. read with Section 8(1) of the Arbitration and Conciliation Act,1996 by holding that the Court has got no jurisdiction in this matter, since there is an arbitration agreement between the parties pertaining to the subject-matter of the suit.
14. Accordingly, the instant first appeal under Section 96 C.P.C. is meritless and is dismissed at the admission stage. Consequently, the impugned judgment and decree dated 24.01.2025 passed in Original Suit No.120 of 2020 (Pramod Kumar vs. Sahara India and others) is affirmed.
15. Interim order granted by this Court on 7.03.2025, stands vacated.
16. Both the parties shall bear their respective costs of this appeal.
August 25, 2025
Jitendra
