Delhi High Court
K.V. Prateek Enterprises vs Il&Fs; Engineering & Engineering ... on 11 May, 2017
$~22
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ CS(COMM) 84/2017
K.V. PRATEEK ENTERPRISES ..... Plaintiff
Through: Mr. R.K. Kohli, Adv.
Versus
IL&FS ENGINEERING & ENGINEERING
CONSTRUCTION COMPANY LIMITED ..... Defendant
Through: Mr. Manu Seshadri, Ms. Sahiba
Ahluwalia and Mr. Ishan Bisht, Advs.
CORAM:
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW
ORDER
% 11.05.2017
IA No.5455/2017 (of defendant u/S 8 of arbitration Act)
1. The plaintiff has instituted this suit for recovery of Rs.1,99,89,359/-
with pendente lite and future interest.
2. The suit was entertained and summons ordered to be issued. The
counsel for the defendant appeared before the Joint Registrar (JR) on 19 th
April, 2017 and sought time to file written statement and which was granted.
However instead of filing the written statement, this application was filed
which came up before this Court on 3rd May, 2017, when the counsel for the
plaintiff inspite of advance notice did not appear.
3. It was the contention of the counsel for the defendant on 3rd May,
2017 that though Clause 62 of the agreement between the parties provides
for arbitration of the disputes as are subject matter of the present suit but the
plaintiff in the plaint has not only concealed the arbitration clause but there is
no explanation whatsoever in the plaint, as to why the dispute subject matter
of the suit is not covered by the arbitration clause.
4. Notice of the application was issued to the plaintiff through counsel
for today.
5. Today, the counsel for the plaintiff has appeared and seeks time to file
reply.
6. The counsel for the plaintiff having not appeared inspite of advance
notice on 3rd May, 2017 and considering the nature of the application, reply
is not required and the counsel has been asked to disclose as to why the
disputes subject matter of the suit are not covered by the arbitration clause in
the agreement between the parties.
7. The counsel for the plaintiff states that he is prepared to address
arguments and has drawn attention to para 25 of the plaint, where it is
pleaded that the counsel for the plaintiff vide notice dated 18th September,
2015 to the defendant called upon the defendant to appoint sole arbitrator to
decide all the disputes and differences. Attention has also been invited to
para 26 of the plaint, where it is pleaded that the defendant vide its reply
dated 19th October, 2015 to the Advocate for the plaintiff denied the claim of
the plaintiff and further stated that there is no cause of action for any
disputes for commencement of arbitration.
8. The counsel for the plaintiff states that the plaintiff, prior to institution
of the suit having called upon the defendant to refer the disputes to
arbitration and the defendant having failed to do so, the plaintiff had no
option but to institute the suit for recovery of its dues.
9. I have however enquired from the counsel for the plaintiff, whether
not he is making arguments as available under the erstwhile Arbitration Act,
1940 ('1940 Act') and not on the basis of Section 8 of the Arbitration and
Conciliation Act, 1996 ('1996 Act'). The language of Section 8 of the 1996
Act is different from the language of 1940 Act. The language of Section 8 of
the 1996 Act does not permit the contention as raised in opposition to an
application under Section 8 of the 1996 Act. Under Section 8 of the 1996
Act, it is no defence to an application under Section 8 that the
defendant/applicant had earlier refuted arbitration. The question in any case
is no longer res integra and stands adjudicated in Maruti Udyog Ltd. Vs.
Classic Motors Ltd. 2016 SCC OnLine Del 5860. Reference, in addition to
the judgments referred therein, may also be made to Kalpana Kothari Vs.
Sudha Yadav (2002) 1 SCC 203.
10. Under the 1996 Act, as long as according to the plaintiff also the
action brought before the Court is the subject matter of arbitration
agreement, even if the defendant has not taken steps for commencement of
arbitration which the defendant ought to have taken, the plaintiff has to
invoke Section 11 of the 1996 Act and cannot for said reason treat the
arbitration clause as abandoned and invoke the jurisdiction of the Civil
Court.
11. The counsel for the plaintiff has next contended that the defendant,
before the JR on 19th April, 2017 sought time to file written statement and
has besides this application filed IA No.5454/2017 under Order VII Rule 11
of the Code of Civil Procedure, 1908 (CPC).
12. Again, the aforesaid argument is of the nature permissible under the
1940 Act. Under the 1996 Act, the defendant is permitted to take a plea
under Section 8 of 1996 Act at any time not later than the date of submitting
first statement on the substance of the dispute. Admittedly the first statement
on the substance of the dispute i.e. written statement has not been filed by
the defendant as yet. Merely seeking time to file the written statement
cannot amount to waiver. Reference if any required can be made to Greaves
Cotton Limited Vs. United Machinery and Appliances (2017) 2 SCC 268
and Rashtriya Ispat Nigam Ltd. Vs. Verma Transport Co. (2006) 7 SCC
275.
13. The counsel for the defendant/applicant has drawn attention to the
reply aforesaid dated 19th October, 2015 copy whereof has been filed by the
plaintiff along with its documents and has contended that the plaintiff in para
26 of the plaint has only reproduced a part of the said letter. It is contended
that the defendant otherwise in the reply has stated that the arbitration
proceedings as per the agreement have to be at Hyderabad and not at
Gurgaon as claimed by the plaintiff in the legal notice dated 21 st September,
2015 aforesaid.
14. The counsel for the defendant also states that the counsel for the
defendant on 19th April, 2017 before the JR had stated that an application
would be filed but the JR in the order has recorded that time was sought to
file the written statement.
15. The counsel for the plaintiff has lastly argued that it will be highly
inequitable to refer the parties to arbitration when the defendant had earlier
refused.
16. Equity cannot be contrary to express provisions of law.
17. No other argument has been addressed by the counsel for the plaintiff.
18. The application is allowed and disposed of.
IA No.5454/2017 (of defendant u/O VII R-11 CPC)
19. In view of the aforesaid, this application is infructuous and disposed
of.
CS(COMM) 84/2017
20. Consequent to IA No.5455/2017 aforesaid under Section 8 of the 1996
Act having been allowed, the suit is disposed of by referring the parties to
arbitration.
21. The date of 12th July, 2017 before the JR is cancelled.
No costs.
RAJIV SAHAI ENDLAW, J.
MAY 11, 2017
bs
