Section 8 of AA – If arbitration agreement is brought to the notice of Commercial Court in written statement, it is sufficient compliance and its jurisdiction perishes even in the absence of formal separate application.
Section 8 of the Arbitration Act – Two important questions – whether the respondent has to take objection first prior to the filing of the written statement or defence in the suit and whether separate formal application under Section 8 of the AA is necessary.
MOU dated 2.5.2005 between the appellants and the respondent for acquisition of the land. However, the appellants did not fulfil their obligations and cheque of Rs.65 lakhs given by the appellants was dishonoured. The respondent, therefore, filed suit under Order XXXVII of CPC for recovery of Rs.87,42,500/-.
The appellants filed application under Order XXXVII Rule 3(5) for leave to defend the suit and in the first para of the statement of defence specifically took an objection to the maintainability of the suit on the ground of arbitration agreement in the contract. This objection was also taken in the written statement.
However, the trial Court rejected the said objection on the ground that such an objection is to be taken before filing the first statement of defence before the Court.
By the judgment dated 15.7.2019 of the Additional District Judge, the special civil suit of the respondent filed under Order XXXVII of CPC was decreed against the petitioner.
HELD that extraction of the arbitration clause in the written statement itself indicates that the appellants relied thereon, mere fact that the appellants did not separately request for reference of dispute to arbitration would of little consequence since the arbitration agreement itself provided for such a reference, there was no specific format for filing an application under Section 8(1) of AA in the suit and an objection in the written statement to the maintainability of suit is substantial compliance of said provision.
It matters not that while drafting written statement, it was stated that the “Court lacks jurisdiction to entertain and decide the suit in view of the arbitration agreement” instead of “to refer the parties to arbitration
The requirement of making an application to refer disputes to the arbitration is more a requirement of form than of substance.
The jurisdiction of the Commercial Court perishes the very instant the arbitration agreement is brought to its notice. Absence of formal request for reference to the arbitration makes no difference.
Madhu Sudan Sharma and others Vs. Omaxe Ltd (RFA No.823 of 2019 and CM NO.41007 of 2019) decided on 6.11.2023
