Karnataka High Court
Sri R Nataraj vs Smt R Punitha on 23 November, 2024
Author: H.P.Sandesh
Bench: H.P.Sandesh
1
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 23RD DAY OF NOVEMBER, 2024
BEFORE
THE HON'BLE MR. JUSTICE H.P. SANDESH
MISCELLANEOUS FIRST APPEAL NO.6586 OF 2024 (AA)
BETWEEN:
1. SRI R. NATARAJ
AGED ABOUT 62 YEARS
S/O LATE M.K. RADHAKRISHNA REDDY
R/AT NO.35, RBD LAYOUT
NEAR WIPRO CORPORATE OFFICE
SARJAPURA MAIN ROAD
BANGALORE-560035. ... APPELLANT
(BY SRI VIJAY SIMHA M.D., ADVOCATE)
AND:
1. SMT. R. PUNITHA
AGED ABOUT 47 YEARS
D/O LATE M.K. RADHAKRISHNA REDDY
R/AT NO.143,
RAINBOW RESIDENCY LAYOUT
OPPOSITE WIPRO CORPORATE OFFICE
SARJAPURA MAIN ROAD
BANGALORE-560035.
2. SRI. R. SOUNDARAJAN
AGED ABOUT 58 YEARS
S/O LATE M.K. RADHAKRISHNA REDDY
R/AT NO.113 AND 114, GREEN VILLAS,
OPPOSITE TO WIPRO CORPORATE OFFICE
SARJAPURA MAIN ROAD
BANGALORE-560035.
2
3. M/S. ASTRO LAND DEVELOPERS
A PARTNERSHIP FIRM HAVING
REGISTERED OFFICE AT NO.117/1,
RAKSHITHA COMPLEX, 1ST FLOOR,
NEAR WIPRO CORPORATE OFFICE
SARJAPURA MAIN ROAD
BANGALORE-560035
REPRESENTED BY ITS PARTNERS
SMT. R.PUNITHA AND
SRI. R.SOUNDARAJAN.
4. SRI. R. RAVICHANDRA
MAJOR IN AGE
S/O LATE M.K. RADHAKRISHNA REDDY
R/AT NO.35, RBD LAYOUT,
NEAR WIPRO CORPORATE OFFICE
SARJAPURA MAIN ROAD,
BANGALORE-560035.
... RESPONDENTS
(BY SRI KESHAVA BHAT S.N., ADVOCATE FOR R1 & R3)
THIS M.F.A. IS FILED UNDER SECTION 37(1)(c) OF THE
ARBITRATION AND CONCILIATION ACT, 1996, AGAINST THE
JUDGMENT DATED 26.07.2024 PASSED IN O.S.NO.1705/2023
ON THE FILE OF THE VII ADDITIONAL SENIOR CIVIL JUDGE AND
JMFC, BENGALURU RURAL BENGALURU, DISMISSING THE IA
FILED UNDER SECTION 8 OF ARBITRATION AND CONCILIATION
ACT, R/W SECTION 9 OF CPC.
THIS APPEAL HAVING BEEN HEARD AND RESERVED FOR
JUDGMENT ON 14.11.2024 THIS DAY, THE COURT
PRONOUNCED THE FOLLOWING:
3
CORAM: Hon'ble'BLE MR JUSTICE H.P.SANDESH
CAV JUDGMENT
Heard the learned counsel for the appellant and learned
counsel for respondent Nos.1 and 3.
2. This miscellaneous first appeal is filed praying this
Court to set aside the order dated 26.07.2024 passed on I.A.
filed under Section 8 of the Arbitration and Conciliation Act, 1996
(for short 'the Act') read with Section 9 of CPC in
O.S.No.1705/2023 on the file of the VII Additional Senior Civil
and JMFC, Bengaluru Rural District, Bengaluru and allow the
application filed under Section 8 of the Act and grant such other
relief.
3. In the suit in O.S.No.1705/2023, the respondents
have sought for the relief to declare that "deed of arrangement
and confirmation" dated 29.12.2021 in Book No.1 as null and
void for want of majority decision of partners of plaintiff No.3,
consequently, declare that schedule property vested to the
absolute ownership of plaintiff No.3, so as to ensure all the
partners exercising their equal rights on the said capital asset
and also consequently direct the Sub-Registrar, Bidarahalli to
cancel the entry made in Book No.1 and pass an order of
injunction prohibiting the defendant No.1 from developing,
alienating or otherwise creating any encumbrances on the
schedule property.
4. In the said suit, appellant filed the application under
Section 8 of the Act seeking for a direction to direct the parties
to appear and adjudicate their matter before arbitration as there
is an arbitration agreement between the parties. It is contended
that he is the partner of plaintiff No.3 and filed written statement
that may be read as part and parcel of the affidavit. It is
contended that the plaintiff Nos.1 and 2 along with defendant
Nos.1 and 2 are the partners of plaintiff No.3 as per the
registered deed of admission of new partner and reconstitution
of partnership deed dated 12.12.2022. As per Clause No.15 of
the said deed, it is clearly stated that, in case of any dispute
between the parties in respect of any matter relating to or
arising out of the deed, same shall be referred to arbitration of
single arbitrator to be appointed by their mutual consent. The
plaintiffs without invoking/complying to the above agreement
have filed the present suit which is not maintainable.
5. On the other hand, the plaintiffs filed objections to
the application stating that the said application is filed to drag
the proceedings and the same is devoid of merits. It is also
contended that defendant No.1 has conceded to the jurisdiction
of this Court by filing written statement. The defendant No.1
has no locus to file interim application of present nature. The
defendant has filed application because of misconception of
provisions of the Act. It is further contended that the defendant
by filing written statement has abundant the power so conferred
in the provisions of the Act. It is contended that the application
has been filed without accompanied by original arbitration
agreement of certified copy thereof and submitted that there is
no absolute bar on the Civil Courts exercising jurisdiction. Hence,
prayed the Court to reject the application.
6. The Trial Court having considered the application and
statement of objection, comes to the conclusion that Section 8 of
the Act states that the submissions for referring to arbitration
should be made not later than the date of submitting his
statement on the substance of the disputes. In the present
case, the above application is filed by the defendant No.1 on the
same day of filing his first statement before this Court. If at all
the defendant No.1 is filing the present application, then for
what reason he has putforth his defence by filing written
statement in the above suit. Hence, the defendant No.1 cannot
invoke Section 8 of the Act. Being aggrieved by the order of the
Trial Court, present miscellaneous first appeal is filed before this
Court.
7. Learned counsel for the appellant would vehemently
contend that the conclusion arrived by the Trial Court is
erroneous and Section 8 of the Act has been misinterpreted by
the Trial Court in passing such an order and the Trial Court failed
to appreciate the basic condition contemplated under Section 8
of the Act and erroneously failed to understand that the parties
are governed by arbitration agreement. The counsel also brought
to notice of this Court Clause No.15 of the said registered
partnership deed.
8. Learned counsel for the appellant, in support of his
argument, relied upon judgment of Division Bench of this Court
in PRICEWATERHOUSE COOPERS SERVICE VS. MR. MOHAN
KUMAR THAKUR passed in M.F.A.NO.8750/2019 dated
05.11.2020, wherein an elaborate discussion is made as
regards Section 8 of the Act and so also discussed the judgment
of the Apex Court in RASHTRIYA ISPAT NIGAM LIMITED
AND ANOTHER VS. VERMA TRANSPORT COMPANY reported
in (2006) 7 SCC 275, wherein this Court has extracted
paragraph Nos.36 and 42 of the said judgment and also the
judgment of the Apex Court in P. ANAND GAJAPATHI RAJU
AND OTHERS VS. P.V.G. RAJU (DEAD) AND OTHERS
reported in (2000) 4 SCC 539 and extracted paragraph No.5
and observed that defendant filed his written statement along
with an application invoking Section 8 of the Arbitration Act.
This Court in paragraph No.48 of the judgment discussed that
the term 'not later than' used in Section 8(1) of the Act permits
the filing of an application seeking for reference of the parties
along the written statement and the filing of the written
statement and application for reference under Section 8
simultaneously cannot and should not lead to an inference that
the defendant had submitted to the jurisdiction of the Civil Court
and had waived its right to seek for reference to arbitration as
provided under Section 8 of the Act. It is also observed in
paragraph No.49 of the judgment that the Legislature has used
the term 'not later than' consciously and deliberately to convey
the meaning that a party is required to apply for reference to
arbitration at the earliest point in time and a party so applying
was essentially indicating his intent to abide by the terms of the
agreement, which was to get the disputes resolved by means of
arbitration and such an application is required to be accepted.
9. Learned counsel for the appellant referring this
judgment would contend that, in similar set of facts, the Division
Bench of this Court delivered the judgment and set aside the
order of the Trial Court and remanded the matter to the Trial
Court for fresh consideration and the contentions of both the
sides on the application filed under Section 8 of the Act was kept
open. Therefore, the order passed by the Trial Court in the case
on hand requires interference of this Court.
10. Per contra, learned counsel for respondent Nos.1 and
3 would vehemently contend that when the written statement
and an application is filed, the Trial Court in detail discussed the
same and in paragraph No.7 of the order, given reasons in
coming to the conclusion that by filing written statement, the
defendant No.1 has abandoned the power so conferred in the
provisions of the Act without referring the dispute for
adjudication to the arbitrator and relied upon the judgment of
the Apex Court in GREAVES COTTON LIMITED VS. UNITED
MACHINERY AND APPLIANCES reported in (2017) 2 SCC
268. Hence, it does not require any interference.
11. Having heard learned counsel for the appellant and
learned counsel for respondent Nos.1 and 3, there is no dispute
with regard to Clause No.15 of the registered partnership deed
about arbitration. Further, having considered the reasons given
by the Trial Court and so also the judgment of the Division
Bench of this Court which has been relied upon by the learned
counsel for the appellant, the Division Bench of this Court relied
upon the judgment of the Apex Court in P. ANAND GAJAPATHI
RAJU's case and RASHTRIYA ISPAT NIGAM LIMITED's case
and extracted paragraph No.36, wherein it is observed that
expression "first statement on the substance of the dispute"
contained in Section 8(1) of the 1996 Act must be
contradistinguished 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
the judicial authority that the party has waived its right to invoke
the arbitration clause. If an application is filed before actually
filing the first statement on the substance of the dispute, in our
opinion, the party cannot be said to have waived its right or
acquiesced itself to the jurisdiction of the Court. Hence, the
same cannot be understood that he had waived his right, since
both the written statement and application is filed
simultaneously and the same cannot and should not lead to an
inference, since the defendant had submitted to the jurisdiction
of the Trial Court and waived his right. The Apex Court also
observed that the Legislature has used the term 'not later than'
consciously and deliberately to convey the meaning that a party
is required to apply for reference to arbitration at the earliest
point in time. In the case on hand, the application is filed and
simultaneously written statement is also filed and in the
judgment of the Division Bench of this Court, in similar set of
facts and circumstances, this Court set aside the order of the
Trial Court and remanded the matter for fresh consideration on
the application filed under Section 8 of the Act.
12. Having taken note of the principles laid down in the
judgment of the Apex Court and elaborate discussion made by
the Division Bench of this Court and also having taken note of
the discussion made with regard to the term 'not later than' used
under Section 8(1) of the Act, the appeal filed by the appellant
requires to be allowed and the order passed by the Trial Court
requires to be set aside and matter is remanded to consider the
same afresh since the same is not considered on merits and only
dismissed on the ground of technicality.
13. In view of the discussion made above, I pass the
following:
ORDER
(i) The miscellaneous first appeal is allowed.
(ii) The impugned order of the Trial Court dated
26.07.2024 passed on I.A. filed under Section
the matter is remanded to the Trial Court to
consider the application filed invoking Section
8 of the Act afresh on merits.
(iii) The Trial Court is directed to consider the
application within a period of one month from
today.
(iv) The contentions of both sides on the
application filed under Section 8 of the Act are
kept open.
Sd/-
(H.P. SANDESH)
JUDGE
ST
