[Cites 8, Cited by 0]
Chattisgarh High Court
M/S Rose Construction vs The Manager on 8 April, 2026
1
2026:CGHC:16060-DB
AFR
HIGH COURT OF CHHATTISGARH AT BILASPUR
First Appeal No. 421 of 2018
1 - M/s Rose Construction, Through Its Proprietor - Sardar Mohammad
S/o Shri Mohammad Ismile, Aged About 69 Years, R/o Devendra Nagar,
Near Nehru Nagar, Beside C S E B Office, Ameri Road Bilaspur Tahsil And
District Bilaspur Chhattisgarh., District : Bilaspur, Chhattisgarh
... Appellant/Plaintiff
versus
1 - The Manager M/s Jayaswal Neco Industries Limited, Village -
Vankheta, Tahsil And District Tamnar, District Raigarh Chhattisgarh.,
District : Raigarh, Chhattisgarh
... Respondent/Defendant
For Appellant : Mr. Sudeep Verma, Advocate
For Respondent : Mr. Ashish Surana, Advocate
(through video conferencing)
DB- Hon'ble Shri Justice Sanjay K. Agrawal
Hon'ble Shri Justice Sachin Singh Rajput
Judgment On Board
08.04.2026
1. Invoking jurisdiction of this Court under Section 96 of the CPC, the
appellant/plaintiff has preferred this appeal against the impugned
judgment and decree dated 09/08/2017 (Annexure A/1) passed by
learned 4th Additional District Judge, Raipur in Civil Suit No.
17-A/2013 whereby the application filed by the
respondent/defendant under Order 7 Rule 11 of CPC read with
Section 8 of the Arbitration and Conciliation Act, 1996 (hereinafter,
"the Act of 1996) has been allowed and consequently, the suit filed
by the appellant/plaintiff has been rejected.
2. The aforesaid challenge has been made on the following factual
backdrop :-
2.1. Appellant/plaintiff filed a suit for recovery of Rs. 11,00,000/-
along with 18% interest from 14/05/2009 stating inter alia that the
appellant/plaintiff is a construction company and they were given
work order for construction of underground tunnel on 15/03/2008
and the total cost of work was Rs. 24,00,000/-. Even after
completion of entire work, payment of Rs. 11,00,000/- is still
outstanding and it is not being paid by the respondent/defendant
despite several demands being made by the appellant/plaintiff,
hence, the civil suit had to be filed vide Annexure A/2.
2.2. Respondent/defendant filed its written statement (Annexure
A/3) and opposed the suit filed by the appellant/plaintiff on merits
and further filed an application under Order 7 Rule 11 of CPC read
with Section 8 of the Act of 1996 on 18/07/2016 (Annexure A/4)
submitting in substance that the suit filed by the appellant/plaintiff
is not maintainable for the reason that as per clause 15 of the work
agreement executed between the parties, there is provision for
settlement of dispute through arbitration in accordance with the
provisions contained under the Act of 1996, as such, the plaint filed
by the appellant/plaintiff deserves to be rejected.
2.3. Appellant/plaintiff filed reply (Annexure A/5) and opposed the
application filed by the respondent/defendant under Order 7 Rule
11 of CPC read with Section 8 of the Act of 1996 stating that
though there is an arbitration clause in the agreement executed
between the parties, but there is no provision in the agreement to
establish that the dispute cannot be dispose of by the Civil Court,
as such, the Civil Court has the jurisdiction to entertain the suit and
therefore, the application filed by the respondent/defendant is
liable to be rejected.
2.4. Learned trial Court, vide its impugned judgment and decree
dated 09/08/2017 (Annexure A/1), rejected the plaint filed by the
appellant/plaintiff by allowing the application filed by the
respondent/defendant under Order 7 Rule 11 of CPC read with
Section 8 of the Act of 1996 holding that as per clause 15 of the
agreement, the dispute has to be settled through arbitration.
Feeling aggrieved and dissatisfied by the impugned judgment and
decree, this appeal has been preferred by the appellant/plaintiff.
3. Mr. Sudeep Verma, learned counsel for the appellant/plaintiff,
would submit that the trial Court is absolutely unjustified in
rejecting the plaint by granting the application filed by the
respondent/defendant under Order 7 Rule 11 of CPC read with
Section 8 of the Act of 1996. He would further submit that if
Section 8(1) of the Act of 1996 has to be invoked, matter has to be
referred to the Arbitrator after ascertaining that there exists a valid
arbitration agreement between the parties, as such, the impugned
judgment and decree passed by the trial Court dismissing the plaint
of the appellant/plaintiff is liable to be set aside.
4. Mr. Ashish Surana, learned counsel for the respondent/defendant
appearing through video conferencing, would support the
impugned judgment and decree and submit that the instant is
liable to be dismissed.
5. We have heard learned counsel for the parties, considered their
rival submissions made herein-above and went through the records
with utmost circumspection.
6. At this stage, it would be appropriate to notice the provision
contained under Section 8(1) of the Act of 1996, which states as
under :-
"8. Power to refer parties to arbitration where there is an
arbitration agreement. - (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."
7. From a careful perusal of the aforesaid provision, it appears that for
the application of Section 8, it is absolutely essential that there
should be an agreement between the parties (see: Atul Singh v.
Sunil Kumar Singh1). The expression 'first statement on the
substance of the dispute' contained in sub-section (1) of Section 8
must be contra-distinguished with the expression 'written
statement'. It employs submission of the party to the jurisdiction of
the judicial authority. What is, therefore, needed is a finding on the
part of judicial authority that the party has waived his right to
invoke the arbitration clause. If an application is filed before
actually filing the first statement on the substance of the dispute,
the party cannot be said to have waived his right or acquiesced
himself to the jurisdiction of the Court (see: Rashtriya Ispat Nigam
Ltd. v. Verma Transport Company2).
8. Similarly, the language of Section 8 is peremptory in nature.
Therefore, in cases where there is an arbitration clause in the
1 2008 (2) SCC 602
2 AIR 2006 SC 2800
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
{see: P. Anand Gajapathi Raju v. P.V.G. Raju (Dead)3}.
9. Reverting to the facts of the instant case in light of the provision
contained under Section 8(1) of the Act of 1996 which has been
considered by their Lordships of the Supreme Court in the
aforesaid judgments (supra), undisputedly, there is an arbitration
clause being clause 15 in the work order dated 15/03/2008 issued
by the respondent/defendant in favour of the appellant/plaintiff,
which states as under :-
"15. Arbitration between parties : In case of any dispute,
a sole arbitrator appointed by JNL; shall settle the same.
Arbitration proceedings shall be conducted in accordance
with the provision of the Arbitration and reconciliation Act
1996 or any statutory modification thereof. The Venue of
arbitration shall be Raipur (C.G.) India."
10. As such, there is no dispute with regard to valid arbitration
agreement existing between the parties on the date of the filing of
the suit i.e. 02/05/2011. However, though in its first statement
(written statement) dated 15/03/2012, the respondent/defendant
has taken a specific plea that the matter has to be adjudicated in
arbitration proceeding as there is an arbitration clause in the shape
of clause 15 present in the work agreement but later the
3 2000 (4) SCC 539
respondent/defendant filed an application under Order 7 Rule 11
of CPC read with Section 8 of the Act of 1996 on 18/07/2016
stating that the suit filed by the appellant/plaintiff is not
maintainable in view of Clause 15 of the work order and the trial
Court, ultimately, allowed the application filed by the
respondent/defendant and thereby, rejected the plaint filed by the
appellant/plaintiff. In our considered opinion, the trial Court has
committed a grave legal error in rejecting the plaint filed by the
appellant/plaintiff as though he has invoked Section 8(1) of the Act
of 1996, but instead of straightway rejecting the plaint, the trial
Court could have referred the parties to an Arbitrator. The power of
Court under Section 8(1) of the Act of 1996 to refer parties for
arbitration would and must necessarily include, imply and inhere in
it the power and jurisdiction to appoint Arbitrator also.
11. In view of the aforesaid analysis, the impugned judgment and
decree passed by the trial Court is partly set aside and matter is
referred for arbitration. With the consent of the parties, in exercise
of power conferred under Section 8(1) of the Act of 1996, we
hereby appoint Hon'ble Shri Justice Deepak Tiwari (Retired), former
Judge of this Court, as an Arbitrator to resolve the dispute between
the parties in accordance with the provisions of the Act of 1996.
Registry is directed to communicate this order to Hon'ble Shri
Justice Deepak Tiwari, at his address - 22, Dharampura, IAS Colony,
Raipur (C.G.), to enter upon reference after complying with the
provisions contained under Section 12(1) and (2) of the Act of 1996
and adjudicate the dispute expeditiously in accordance with the
Act of 1996.
12. Accordingly, this first appeal is allowed to the extent indicated
herein-above. No order as to cost(s).
13. A decree be drawn-up accordingly.
Sd/- Sd/-
(Sanjay K. Agrawal) (Sachin Singh Rajput)
Judge Judge
Harneet
