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2024 DIGILAW 679 (TS)

Object Technology Solutions India Private Limited v. Ganga Hitech City 2 Society

2024-09-06

M.G.PRIYADARSINI, MOUSHUMI BHATTACHARYA

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JUDGMENT : Moushumi Bhattacharya, J. The Appeal arises out of an order passed by the Commercial Court on 06.10.2023 dismissing the appellant’s application under section 8(1) of The Arbitration and Conciliation Act, 1996. 2. The appellant is the defendant in a Suit filed by the respondent herein for handing over the peaceful possession of the suit schedule property to the plaintiff and for payment of outstanding rents and other charges including maintenance with regard to the suit schedule property. 3. The appellant obtained an interim order from a Co-ordinate Bench on 27.12.2023 whereby the Co-ordinate Bench directed the Commercial Court/Trial Court not to insist on filing of the Written Statement by the appellant. 4. Learned counsel appearing for the appellant/defendant argues that the Commercial Court disregarded the mandate under section 8(1) of the Act whereby the parties have to be referred to arbitration in the presence of a valid Arbitration Agreement forming the subject matter of the dispute. Counsel also submits that the application under section 8(1) of the Act was filed before the Written Statement of the appellant. 5. Learned counsel appearing for the respondent/plaintiff urges that the appellant has approached this Court with unclean hands and has suppressed several facts which are relevant to the matter. Counsel submits that the appellant has not complied with the requirement of section 8(2) of the Act and that there is delay and laches on the part of the appellant. 6. We have heard learned counsel appearing for the parties and considered the documents on record. 7. The material dates brought to our notice on behalf of the appellant are as follows: 7.1 The appellant filed an application under section 9 of the Act on 11.08.2016 which however lost its efficacy since the appellant did not take steps for constitution of the Arbitral Tribunal under section 9(2) of the Act. The respondent thereafter filed the Suit (O.S.No.1336 of 2016) on 13.12.2016. The appellant filed an application purportedly under section 8 (1) of the Act on 31.03.2017 and the Written Statement on 10.04.2017. The Trial Court thereafter transferred the Suit to the Commercial Court and the Suit was renumbered on 06.08.2019. The appellant’s application for amendment of the section 8 (1) petition was allowed on 11.07.2023. The Commercial Court dismissed the said application by the impugned order dated 06.10.2023. 8. The Trial Court thereafter transferred the Suit to the Commercial Court and the Suit was renumbered on 06.08.2019. The appellant’s application for amendment of the section 8 (1) petition was allowed on 11.07.2023. The Commercial Court dismissed the said application by the impugned order dated 06.10.2023. 8. What the appellant has however not indicated in the narration of events is that the appellant, despite getting an order in the section 9 proceedings on 11.08.2016 failed to take any steps for constitution of the Arbitral Tribunal under section 9(2) of the said Act. Section 9(2) of the Act mandates that the applicant must take steps within 90 days from the date of obtaining an order under section 9(1) of the Act. 9. The narration of events, as presented by the appellant, also does not state that the appellant filed an application for amendment of the initial application filed under section 8 of the Act in 2021 i.e., 4 years after the filing of the first application. Further, both these applications failed to comply with the requirement of section 8(2) of the Act that is appending the original or a duly certified copy of the Arbitration Agreement to the application under section 8(1) of the Act. 10. The Court is also informed that Clause 18.5 of the 2 Lease Agreements dated 24.06.2013 and 02.08.2014 was subsequently superseded by an arrangement entered into between the parties. The Court however is not inclined to enter into the merits of the dispute including on the subsistence or supersession of the Lease Agreements for the reasons as stated below: 11. Section 8(1) of The Arbitration and Conciliation Act, 1996 contemplates a judicial authority referring the parties to arbitration on an application being made by a party to an Arbitration Agreement which forms the subject matter of the action pending before the judicial authority subject to existence of a valid Arbitration Agreement. 12. Section 8(1) of The Arbitration and Conciliation Act, 1996 contemplates a judicial authority referring the parties to arbitration on an application being made by a party to an Arbitration Agreement which forms the subject matter of the action pending before the judicial authority subject to existence of a valid Arbitration Agreement. 12. In this case, the first application, under section 8(1) of the Act made by the appellant, which has been disclosed by the respondent in its counter, contains the prayer which is reproduced below : “It is, therefore, prayed that the Hon’ble Court may be pleased to appoint an arbitrator to resolve the dispute between the parties hereto, as provided in Clause No.18 of the Agreement of Lease, under the Arbitration and Conciliation Act, 1996 in the interest of justice, as prayed for in the accompanying petition.” 13. From the above prayer, it is clear that the application itself was misconceived and cannot be treated as an application under section 8(1) of the Act. It is in the nature of an application under section 11 of the Act which can only be made to the High Court under section 11(6) of the Act. 14. Further, section 8(1) of the Act mandates that an application must be made for referring the parties to arbitration on or before the date of submitting the first statement on the substance of the dispute. It has been judicially settled that the ‘first statement’ in section 8(1) of the Act would mean a Written Statement. Hence, the admitted position, as would appear from the dates brought to the notice of the Court, is that as on the date of filing of the Written Statement, there was no application under section 8(1) of the Act on the record before the Commercial Court. 15. Therefore, the appellant disentitled itself to any statutory relief/orders under section 8(1) of the Act also for the reason that the appellant (the defendant in the Suit) filed its Written Statement/First Statement before filing the application under section 8(1) of the Act which is contrary to the sequence provided under section 8(1) of the Act. 16. Not only this, even the second application filed by the appellant in 2021 does not contain the prayer as contemplated under section 8(1) of the Act. 16. Not only this, even the second application filed by the appellant in 2021 does not contain the prayer as contemplated under section 8(1) of the Act. The prayer in the second application is reproduced below : “It is, therefore, prayed that the Hon’ble Court may be pleased to refer to arbitration to resolve the disputes between the parties hereto, as provided in Clause No.18 of the Agreement of Lease, under the Arbitration and Conciliation Act, 1996 in the interest of justice, as prayed for in the accompanying petition.” 17. Therefore, there is no application as on date before the Commercial Court for referring the parties to arbitration under section 8(1) of the Act. 18. The other submissions made by the appellant and the respondent with regard to the non-compliance of section 8(2) or supersession of the Lease Agreements or even that the Lease Agreement not forming the subject matter of the dispute, therefore loses relevance. 19. Vidya Drolia v. Durga Trading Corporation, (2021) 2 SCC 1 , relied upon by learned counsel for the appellant, for the proposition that landlord-tenant disputes are arbitrable and that the Court must refer the parties to arbitration under section 8 of the Act does not assist the appellant in light of the finding that the appellant has not filed any application under section 8(1) of the Act as on date. 20. The reasons given by the Commercial Court in dismissing the appellant’s application proceed on the termination of the Lease Agreement and the fact that all issues should be decided in the Suit by reason of such termination. The Commercial Court was also of the view that the prolonged differences between the parties and the non-registration of the Lease Agreements are also factors against arbitrability of the disputes. 21. Although we agree with the conclusion of the Commercial Court in dismissing the appellant’s application, our reasons for holding that the application should have been dismissed at the very outset have been indicated in the foregoing paragraphs. 22. We accordingly hold that there is no merit in the Appeal and the Appeal deserves to be dismissed. 23. COM.C.A.No.55 of 2023, along with all connected applications, is accordingly dismissed. The interim order stands vacated. There shall be no order as to costs.