Madhu Sudan Sharma & Ors. v. Omaxe Ltd

10. The appellants challenged the said judgment and decree before the Division Bench of this Court by way of RFA (OS) 93/2012. By order dated 8 October 2012, the Division Bench allowed the appellants to withdraw RFA (OS) 93/2012 with liberty to approach the learned Single Judge for review of the order dated 10 July 2012. Defiance Knitting Industries Pvt Ltd v. Jay Arts, (2006) 8 SCC 25 Madhu Sudan Sharma v. Omaxe Ltd

11. The appellants, accordingly, filed Review Petition RP 703/2012 before the Single Judge, seeking review of his order dated 10 July 2012. By order dated 4 December 2012, the learned Single Judge dismissed the Review Petition.

12. The appellants assailed this order before the Division Bench by way of RFA (OS) 139/2012. By order dated 25 February 2013, the Division Bench allowed RFA (OS) 139/2012 subject to costs of ₹ 55,000/– being paid by the appellants. The appellants were granted permission to file written statement within one week.

13. In the written statement, the appellants reiterated their objection to the maintainability of the suit in view of the existing arbitration agreement between the appellants and the respondent, citing Section 8 of the 1996 Act in their support. The averments in the written statement relatable to Section 8 read thus:

14. Vide order dated 13 September 2013, the learned ADJ framed the following issues as arising in the suit:

1. Whether this Court does not have the requisite territorial jurisdiction to adjudicate upon the present plaint? OPD

2. Whether the Defendants fulfilled their obligations under the MOU dated 2nd May 2005? OPD

3. Whether the Plaintiff fulfilled its obligations under the MOU dated 2nd May, 2005? OPP

4. Whether the Cheque No. 502870 has been forged and fabricated by the Plaintiff? OPD

5. Whether the Defendants have suffered losses due to breach on part of the Plaintiff? OPD

6. Whether the Plaintiff is entitled to recover any amount from the Defendants? If yes the quantum thereof? OPP

7. Whether the Plaintiff is entitled to interest? If yes, on what rate on what amount and for what period? OPP

8. Relief.

15. The suit came to be finally decreed vide the impugned judgment dated 15 July 2019. As already noted towards the commencement of this judgment, the learned ADJ refused to consider the objection of the appellants, predicated on Section 8 of the 1996 Act, on the ground that it was not taken before submitting the first statement of defence before the Court.

16. The defendants in the suit are in appeal. Rival Contentions

17. Arguments have been advanced by Mr. J Sai Deepak, instructed by Mr. Vineet Sinha and his colleagues for the appellants and Mr. Ramesh Singh, learned Senior Counsel, instructed by Mr. Shalabh Singhal for the respondent. Submissions of Mr. Sai Deepak

18. Mr. Sai Deepak submits that Section 8 of the 1996 Act requires the party, applying under the said provision for referring the dispute to arbitration, to do so “not later than when submitting his first statement of the substance of the dispute”. The appellants had, in the present case, raised a Section 8 objection not just in the written statement filed consequent to the liberty granted by the order dated 25 February 2013 passed by the Division Bench in RFA (OS) 139/2012, but, even prior thereto, in the application under Order XXXVII Rules 3(5) of the CPC, whereby the appellants sought leave to defend the suit. As such, the learned ADJ could not have declined to consider the objection raised by the appellants.

19. Mr. Sai Deepak also addressed the issue of whether the objection to jurisdiction, raised in the application seeking leave to defend the suit and in the written statement that came to be subsequently filed, answered the requirements of Section 8 of the 1996 Act. He relies, for this purpose, on the judgment of Division Benches of this Court in Sharad P. Jagtiani v. Edelweiss Securities Ltd[5] and Alok Kumar Lodha v. Asian Hotels (North) Ltd[6] and of a learned Single Judge of this Court in Parasramka Holdings Pvt. Ltd. v. Ambience Pvt. Ltd.7. Submissions by Mr. Ramesh Singh by way of reply

20. Mr. Ramesh Singh did not seriously contest Mr. Sai Deepak’s assertion that the learned ADJ had erred in failing to consider the appellants’ objection on the ground that it had been raised belatedly. He, however, contends, firstly, that the mere raising of an objection regarding the maintainability of the suit and citing, in support thereof, Section 8 of the 1996 Act, does not amount to compliance with the requirements of the said provision; secondly, that, even if it were to be assumed that the objection, as raised by the appellants, sufficed as compliance with Section 8, the appellants had, subsequently, by contesting the suit and allowing it to proceed to trial and final judgment, waived and abandoned their right to seek recourse to Section 8, for which purpose Mr. Ramesh Singh also relies on Section of the 1996 Act; and, thirdly, by granting conditional leave to 2014 SCC OnLine Del 4015 277 (2020) DLT 1 (DB) (2018) 167 DRJ 637 (DB)

4. Waiver of right to object. – A party who knows that – (a) any provision of this Part from which the parties may derogate, or (b) any requirement under the arbitration agreement, has not been complied with and yet proceeds with the arbitration without stating his objection to such noncompliance without undue delay or, if a time-limit is provided for stating that objection, within that period of time, shall be deemed to have waived his right to so object. defend on 7 May 2010, the learned ADJ had, in fact, considered the appellants’ objection under Section 8 and, in the appeal against the said order, the appellants did not invoke either Section 5 or Section 8; and, fourthly, that no issue relatable to Section 8 was framed in the suit. In support of his submissions, Mr. Ramesh Singh relies on paras 12 and 18 of the judgment of the Supreme Court in Sukanya Holdings (P) Ltd v. Jayesh H. Pandya[9], para 33 of Tarapore & Co. v. Cochin Shipyard10 and paras 7 and 9 of U.O.I. v. Kishori Lal Gupta11, from this Court, paras 6 and 33 to 45 of Alok Kumar Lodha and para-16 to 19 of SPML Infra Ltd v. Trisquare Switchgears Pvt. Ltd12, both by Division Benches of this Court. He also cites para 33 to 35 of the judgment of the Supreme Court in World Sport Group (Mauritius) Ltd v. MSM Satellite (Singapore) Pte Ltd13, para 25 and 29 of the decision in Booz Allen & Hamilton Inc. v. SBI Home Finance Ltd14 and paras 5 to 9 of the judgment of a learned Single Judge of this Court in India Infoline Ltd v. Dana Singh Bisht15.

21. Mr. Sai Deepak submits, in rejoinder, that the plea of waiver, advanced by Mr. Ramesh Singh, is without substance, as the impugned order specifically notes, in para 20, the objection of the appellants to the continuation of the suit despite the existence of an arbitration agreement. Said objection, he points out, was also

22. Kishori Lal Gupta, submits Mr. Sai Deepak, applies only where the defendant sought to contend that the contract between the parties was null and void. Insofar as the requirement of a separate application under Section 8 of the 1996 Act is concerned, he submits that the issue stands covered by the decision in Parasramka Holdings, from which he specifically cites paras 6, 7, 13, 22 and 34. Alok Kumar Lodha, he submits, merely held that an oral request would not suffice for Section 8, and the required plea had at least to find place in the written statement. Sharad P. Jagtiani, he submits, cannot be distinguished, as Mr. Ramesh Singh has attempted to do, by restricting the decision to non-statutory arbitrations, as the principle that it lays down applies across the board to the 1996 Act. Besides, he points out that Sharad P. Jagtiani was followed in Parasramka Holdings.

23. Both sides have also placed detailed written submissions, elucidating their respective arguments, on record.

24. The only issue which arises for determination in the present case, given the arguments that have been advanced at the Bar, is whether the learned ADJ was in error in proceeding to decide the suit on merits in view of the objection raised by the appellants predicated on Section 8 of the 1996 Act. Analysis

25. Clearly, the Court is, in this case, not traversing virgin territory. The issues of the stage when a Section 8 objection has to be raised, and the requisites of such an objection, have both been examined, and discussed, in prior decisions. Both sides have relied on judicial precedents. They, in my view, answer the issues in controversy. The Court has merely to ferret out the answers from the judgments. Was the plea raised belatedly?

26. The impugned order refuses to consider the appellants’ application under Section 8 of the 1996 Act on the sole ground that it was filed belatedly. This finding is obviously incorrect. Mr. Sai Deepak is justified in his contention that Section 8(1) of the 1996 Act requires the application, under the said provision, to be made not later than the date of submission, by the Section 8 applicant, of his first statement of defence on the substance of the dispute. Strictly speaking, the first statement on the substance of the dispute, by the appellant, would be in the written statement filed by him by way of response to the suit instituted by the respondent, consequent to grant of leave to defend the suit. This position stands concluded by para 15 of the judgment of the Division Bench of this court in Sharad P. Jagtiani, which reads thus:

27. In the present case, the Section 8 objection was taken by the appellants, not just in the written statement, but even prior thereto, in the application under Order XXXVII Rule 3(5) for grant of leave to defend the suit. The learned Commercial Court was, therefore, clearly in error in holding that the Section 8 objection had been raised at a stage later than that envisaged by the provision.

28. As already noted, Mr. Ramesh Singh, quite fairly, did not contest this point.

29. It has, therefore, to be held that the appellants’ objection, predicated on Section 8 of the 1996 Act, could not have been rejected on the ground that it was raised belatedly and that, therefore, the learned Commercial Court erred in so holding. Did the appellants comply with Section 8?

30. The issue of whether the Section 8 objection, as raised, would suffice as compliance with the provision itself still remains, however, to be decided. Mr. Ramesh Singh’s principal contention is that Section 8 requires an application to be made, seeking reference of the dispute to arbitration. A mere objection to the effect that the suit was not maintainable as the MOU between the parties contained an arbitration clause would not suffice. Mr. Sai Deepak submits, on the other hand, that there is no specified format stipulated for the application under Section 8(1) and that, so long as the appellants had raised an objection to the effect that the suit was not maintainable in view of the arbitration clause, it had necessarily to be held that there was substantial compliance with the provision.

31. Kishori Lal Gupta, cited by Mr. Ramesh Singh, has nothing to do with Section 8 of the 1996 Act. Paras 7 and 9 of the said decision, on which Mr. Ramesh Singh placed especial reliance, dealt with the issue of whether, after the original contract had come to an end, the arbitration clause nonetheless survived. As such, this decision is of no particular relevance to the issue in controversy.

32. Paras 12 and 18 of Sukanya Holdings, on which, too, Mr. Ramesh Singh relies, read thus:

33. Mr. Ramesh Singh submits that in para 12 of Sukanya Holdings, the Supreme Court clearly requires compliance with Section 8 of the 1996 Act to be by a specific application seeking reference of the disputes between the parties to arbitration. In the absence of such an application, the Civil Court would be competent to continue with the matter. A mere objection, in the written statement, to the effect that the agreement between the parties contained an arbitration clause does not, he submits, ipso facto, amount to an application to refer the dispute to arbitration. The appellants having merely raised an objection that the suit was not maintainable in view of the arbitration agreement between the parties, no proper application under Section 8(1) had been preferred by it.

34. As elucidated by Mr. Ramesh Singh, the submission is undoubtedly attractive.

35. There are, however, three reasons why it cannot be accepted.

36. The first is that the manner in which the objection relatable to the arbitration agreement has been taken by the appellants in their written statement. The appellants had specifically extracted the arbitration clause between the parties. That clause, as extracted, clearly envisages reference of the dispute between the parties to arbitration. Once the clause has been extracted, in my opinion, the appellants were not required to again reproduce the contents of the clause. Extraction of the arbitration clause itself indicates that the appellants were placing reliance thereon. Inasmuch as the arbitration clause envisaged reference of the disputes between the parties to arbitration, the mere fact that the appellants did not separately request that the dispute between the parties be referred to arbitration, would be of little consequence. By extracting and relying on the clause, which specifically envisages reference of the dispute to arbitration, and simultaneously contesting the maintainability of the suit on the basis of the said clause, the appellants clearly evinced their intent to seek reference of the dispute to arbitration. Once the arbitration clause had been extracted, it would be too hypertechnical to hold that, for want of a separate request to refer the dispute between the parties to arbitration, there was no compliance with Section 8(1) of the 1996 Act.

37. The second reason why the submission of Mr. Ramesh Singh cannot be accepted, is the decision of the Division Bench of this Court in Sharad P. Jagtiani, specifically paras 14 to 17 thereof, which read thus:

38. The objection by Mr. Ramesh Singh is clearly covered by the afore-extracted passages from Sharad P. Jagtiani which, having been rendered by a Division Bench of this Court, binds me. The Division Bench has clearly held that, even if there is no specific request to refer the dispute between the parties to arbitration, the raising of an objection to the effect that the suit is not maintainable in view of the arbitration clause, can be read as an implied request to refer the dispute to arbitration.

39. Sharad P. Jagtiani, I may note, is not really in conflict with para 12 of Sukanya Holdings. Para 12 of Sukanya Holdings requires the making of a request for referring the dispute to arbitration, as envisaged by Section 8 as one of the conditions for the Civil Court to cede jurisdiction in the matter and for the dispute to be referred to arbitration. Sharad P. Jagtiani does not say otherwise. It only clarifies that, where an objection regarding maintainability of the suit, predicated on the arbitration agreement between the parties, is raised in the written statement, given the principle that what matters is the form and not the substance of the pleadings, such objection would be entitled to be treated as a deemed request for referring the dispute to arbitration. Thus, Sharad P. Jagtiani merely supplements the principle contained in para 12 of Sukanya Holdings, and does not, in any manner, supplant, or rule contrary to it.

40. Even otherwise, the decision of the learned Single Judge of this Court in Sharad P. Jagtiani v. Edelweiss Securities Ltd16, from which the aforesaid appellate judgment of the Division Bench emanated, specifically notes the decision of the Supreme Court in Sukanya Holdings. The opinion in that regard, expressed by the learned Single Judge is thus captured in the following passages:

18. Similarly, in Kalpana Kothari v. Sudha Yadav19, it was held that in contrast to Section 34 of 1940 Act, Section 8 of the 1996 Act not only mandates that the judicial authority before which an action has been brought in respect of the matter which is the subject matter of an arbitration agreement, shall refer the parties to arbitration but also provides that notwithstanding the pendency of proceedings before the judicial authority or making of an application under Section 8(1), the arbitration proceedings are enabled, under Section 8(3), to be commenced or continued and an arbitral award also made, unhampered by such pendency and that having regard to the said purpose, scope and object of Section 8, the plea of estoppel can have no application to deprive a party from invoking an all comprehensive provision of mandatory character like Section 8, to have the matter relating to the disputes referred to arbitration in terms of the arbitration agreement. The said binding dicta also remained to be noticed in Arti Jethani.

19. In my opinion, it matters not that the counsel for the defendant while drafting the written statement, instead of using the words “refer the parties to arbitration” used the words “that the Court lacks jurisdiction to entertain and decide the suit in view of the arbitration agreement”. It is the substance of the plea and not the nomenclature which matters and just like citing of wrong provision of law, in The Bombay Metal Works (P) Ltd. v. Tara Singh20 has been held by the Division Bench of this Court to be not an obstacle for granting the relief, so can non use of the language as used in the statute not be a ground to hold that inspite

20. Reference may further be made to: - (A) Eastern Media Ltd. v. R.S. Sales Corporation21 where it was held that where a written statement is filed but with strings attached, by challenging the maintainability of the suit in view of the arbitration agreement, in such circumstances, the preliminary objection in the written statement can be treated as an application under Section 8. Though the said judgment was considered in R.R. Enterprises22 but not followed since in that case the plaintiff had given his no objection for the matter to be referred to arbitration. In my respectful opinion, merely because in that case the plaintiff had agreed to reference to arbitration, would not take away from what was held as aforesaid therein.

Ltd.23 where also it was held that a plea by way of preliminary objection in written statement, contesting the jurisdiction of Civil Court to proceed with the suit for arbitration even though referring to Section 5 and not Section 8 of the Arbitration Act, is a plea within the meaning of Section 8 of the Act and the defendant cannot be said to have waived or abandoned the arbitration.

C. APL Polyfab Pvt. Ltd. v. Technology Information,

Forcasting and Assessment Council24 negativing the plea in opposition to a petition under Section 11 of the 1996 Act of the petitioner therein having lost his right to invoke arbitration by, in a suit filed by the opposite party, having not filed a separate application under Section 8 though having taken the plea of Section 8 in the written statement. However I must mention that the same learned Single Judge subsequently in V.M. Mehta v. Ultra Agro Securities Pvt. Ltd.25, following R.R. Enterprises (supra) held the plea of Section 8 in the written statement to be not sufficient. 137 (2007) DLT 626 R.R. Enterprises v. CMD of Garware-Wall Ropes Ltd., 2013 (2) RAJ 532 157 (2009) DLT 712 MANU/DE/3186/2011 MANU/DE/3135/2013

Ltd.26 where, following Roshan Lal Gupta supra, a plea of Section 8 contained in the written statement was held to be tenable.

21. I may further add that in Arti Jethani, what the Court was concerned with, was an application under Section 8 filed after the filing of the written statement and not with the question whether the reference could be on the basis of the plea contained in the written statement.

22. As far as Sukanya Holdings (P) Ltd. (supra) is concerned, in my respectful view the same was not concerned with the issue as has arisen herein, as in that case there was no such plea in the written statement. Similarly, Rashtriya Ispat Nigam Ltd.27 referred to in extenso in Arti Jethani, was not concerned with the said issue but is a precedent on, an application under Section 8 being not barred by filing a detailed reply to an application for interim relief.

23. I am therefore of the view that the defendant, inspite of having not filed an application under Section 8, but in view of the preliminary objection in the written statement, even though not referring to Section 8 and not expressly seeking the relief of reference to a arbitration, has invoked Section 8 of the Act and it is the bounden duty of this Court to refer the parties to arbitration.”

41. Sharad P. Jagtiani, therefore, examines, in detail, the issue of whether a specific application, or even a request to refer the parties to arbitration, is a non-negotiable prerequisite for Section 8(1) of the 1996 Act. The issue was answered in the negative, specifically holding that “….it matters not that the counsel for the defendant while drafting the written statement, instead of using the words “refer the parties to arbitration” used the words “that the Court lacks jurisdiction to entertain and decide the suit in view of the arbitration agreement”.” It is obvious that these passages are not obiter dicta, as Mr. Ramesh MANU/DE/0146/2014 Rashtriya Ispat Nigam Ltd. v. Verma Transport Co., (2006) 7 SCC 275 Singh would seek to urge, but clearly constitute the ratio decidendi of the concerned decisions. In the light of the judgment of the Division Bench in Sharad P. Jagtiani (which binds me), the objection of Mr. Ramesh Singh, predicated on paras 12 and 18 of Sukanya Holdings, cannot sustain.

42. The third reason why the objection of Mr. Ramesh Singh cannot be accepted is to be found in para 16 of the judgment of the seven Judge Constitution Bench of the Supreme Court in SBP & Co. v. Patel Engineering Ltd28, which reads as under:

43. Para 16 of the decision in SBP & Co. holds, unequivocally, that where, in ignorance of the arbitration agreement between the parties, a suit is instituted, and opposite party raises an objection predicated on

Section 8 of the 1996 Act, the Court is bound, if the objection is found to be sustainable, to refer the parties to arbitration. This statement of law completely covers the present case.

44. The position in law, thus, is clear and does not brook of ambiguity. The requirement of making of an application seeking reference of the disputes between the parties to arbitration, as engrafted in Section 8(1) of the 1996 Act, is more a requirement of form than of substance. What matters is whether there is, in fact, an arbitration agreement between the parties, which is valid and subsisting. If such an agreement is in place, the jurisdiction of the Civil Court to hear and adjudicate subsists only so long as its attention is not invited to the arbitration agreement. Its jurisdiction perishes the very instant the arbitration agreement is brought to its notice, and a jurisdictional objection, on that ground, is raised – as has indisputably been done in the present case. The absence of any formal request for referring the dispute to arbitration makes no difference. An objection, predicated on Section 8 of the 1996 Act, in the light the existence of the arbitration agreement, ipso facto denudes the Court of its power to continue with the suit. It is rendered coram non judice. All future acts by the Court, in continuing to entertain the suit are, therefore, rendered ipso facto without jurisdiction.

45. There was, indisputably, an arbitration clause between the parties. An objection, predicated on the arbitration clause, was specifically raised by the appellants, firstly in the application under Order XXXVII Rule 3(5) for grant of leave to defend the suit and, consequent to grant of leave, in the written statement. That being so, the learned ADJ was bound to refer the dispute between the parties to arbitration. The plea of acquiescence

46. Mr. Ramesh Singh has also placed reliance on the decision of the Supreme Court in Tarapore and Company, World Sport Group and Booz Allen & Hamilton to contend that the appellants had, by conduct acquiesced to the conducting of the arbitral proceedings and had, thereby, waived the Section 8 objection.

47. The passages from Tarapore and Company, World Sport Group and Booz Allen & Hamilton, on which Mr. Ramesh Singh relies, may be reproduced thus: Tarapore and Co.

34. Albert Jan Van Den Berg in an article titled "The New York Convention, 1958 — An Overview" published in the website of ICCA (www.arbitrationicca.org/media/0/12125884227980/new_york_convention_of- 1958_overview.pdf), referring to Article II(3) of the New York Convention, states: “The words 'null and void' may be interpreted as referring to those cases where the arbitration agreement is affected by some invalidity right from the beginning, such as lack of consent due to misrepresentation, duress, fraud or undue influence. The word 'inoperative' can be said to cover those cases where the arbitration agreement has ceased to have effect, such as revocation by the parties. The words 'incapable of being performed' would seem to apply to those cases where the arbitration cannot be effectively set into motion. This may happen where the arbitration clause is too vaguely worded, or other terms of the contract contradict the patties' intention to arbitrate, as in the case of the so-called co-equal forum selection clauses. Even in these cases, the courts interpret the contract provisions in favour of arbitration." (emphasis in original)

35. The book Recognition and Conferment of Foreign Arbitral Awards: A Global Commentary on the New York Convention by Kronke, Nacimiento, et al.(ed.) (2010) at p. 82 says: "Most authorities hold that the same schools of thought and approaches regarding the term null and void also apply to the terms inoperative and incapable of being performed. Consequently, the majority of authorities do not interpret these terms uniformly, resulting in an unfortunate lack of uniformity. With that caveat, we shall give an overview of typical examples where arbitration agreements were held to be (or not to be) inoperative or incapable of being performed. The terms inoperative refers to cases where the arbitration agreement has ceased to have effect by the time the court is asked to refer the parties to arbitration. For example, the arbitration agreement ceases to have effect if there has already been an arbitral award or a court decision with res judicata effect concerning the same subject-matter and parties. However, the mere existence of multiple proceedings is not sufficient to render the arbitration agreement inoperative. Additionally, the arbitration agreement can cease to have effect if the time-limit for initiating the arbitration or rendering the award has expired, provided that it was the parties' intent no longer to be bound by the arbitration agreement due to the expiration of this time-limit. Finally, several authorities have held that the arbitration agreement ceases to have effect if the parties waive arbitration. There are many possible ways of waiving a right to arbitrate. Most commonly, a party will waive the right to arbitrate if, in a court proceeding, it fails to properly invoke the arbitration agreement or if it actively pursues claims covered by the arbitration agreement." (emphasis in original)” Booz Allen & Hamilton

48. The facts, in the case at hand, are completely at variance with those in the afore-noted decisions. Booz Allen & Hamilton, in fact, supports the appellants, in that it merely requires the Section 8 objection to be raised at the earliest stage, not later than the submission of the first statement on the dispute30. By failing to raise the objection at the earliest stage, the defendant allows the Civil Court to proceed with the suit, as it indisputably can, and submits himself to Though Booz Allen & Hamilton uses the words “before the submission of the first statement on the dispute”, it is obvious that the word “before” has to be understood as “not later than”, in view of the clear words of Section 8(1) of the 1996 Act. its jurisdiction. In the absence of any Section 8 objection, the Civil Court is not foreclosed from hearing and deciding the suit. It does not, therefore, act coram non judice. The submission to jurisdiction by the defendant is, therefore, submission to jurisdiction of a Court which possesses jurisdiction to proceed with the matter. The entire demographics, however, change if the Section 8 objection is taken at the initial, and appropriate, stage. The Court is, then, ipso facto denuded of jurisdiction to proceed. All proceedings by the Civil Court, towards hearing and deciding the suit on merits are, therefore, in excess of jurisdiction. They cannot be sanctified by acquiescence, or any other conduct of parties. In relying on Booz Allen & Hamilton, Mr. Ramesh Singh has, I am constrained to observe, albeit with great respect, failed to notice this distinction.

49. In the present case, a specific objection predicated on Section 8 of the 1996 Act was taken in the application under Order XXXVII Rule 3(5) seeking leave to defend the suit. That objection, thereafter, was reiterated in the written statement filed by way of response to the suit. The objection was reiterated during arguments before the learned ADJ. It cannot, therefore, be said that the appellants had waived the said objection. The afore-noted decisions, therefore, have no application to the facts of the present case. Non-framing of any issue regarding Section 8

50. The only other argument that Mr. Ramesh Singh urged was that, at the time of framing of issues, no issue to the effect as to whether the suit was incompetent on account of the arbitration clause between the parties, or whether the dispute was required to be referred to arbitration, was raised. This submission, again, is based on a fundamentally erroneous premise. The issues, which are struck in a suit, are the issues which are to be decided if the suit were to proceed. The objection under Section 8 is an independent objection, which if found to be sustainable, renders the Civil Court coram non judice. The decisions in Sukanya Holdings as well as A. Ayyasamy v. A. Paramasivam31 specifically hold that, if the defendant in a suit invokes Section 8 of the 1996 Act, and if there is an arbitration agreement between the parties, the Civil Court cannot continue with the suit and has necessarily to refer the dispute to arbitration. Once, therefore, in the light of a valid arbitration agreement, a Section 8 objection is raised by the defendant, a Civil Court becomes coram non judice in the matter. As such, the decision on the Section 8 application cannot be circumscribed by the issues which are struck in the suit as, even if no such issue is struck, the Civil Court is bound, nonetheless, in view of the law laid down by the Supreme Court in Sukanya Holdings, SBP & Co. and other aforesaid decisions, to refer the dispute to arbitration. AIR 1989 SC 1530

51. That apart, it has been held in Mhd. Kareemuddin Khan v. Syed Azam32 that the power of the Civil Court to pass orders is not necessarily circumscribed by the issues which are framed and that the Court is not denuded of its power to decide a point which arises in the case, even if no specific issue in that regard has been framed.

52. This objection of Mr. Ramesh Singh, too, has no substance. Applicability of arbitration clause not in question

53. Mr. Ramesh Singh did not seek to contest the applicability of the arbitration agreement, contained in the MOU, to the dispute between the parties. Even otherwise, with kompetenz kompetenz having been conferred statutory colour in the form of Section 16(1)33 of the 1996 Act, the arbitral tribunal would be competent even to rule on its own jurisdiction.

54. In view of the aforesaid discussion, the point for determination as framed in para 24 supra is answered in the affirmative by holding that the learned ADJ could not have proceeded to adjudicate on the 1997 (2) ALT 625

16. Competence of arbitral tribunal to rule on its jurisdiction. – (1) The arbitral tribunal may rule on its own jurisdiction, including ruling on any objections with respect to the existence or validity of the arbitration agreement, and for that purpose,— (a) an arbitration clause which forms part of a contract shall be treated as an agreement independent of the other terms of the contract; and (b) a decision by the arbitral tribunal that the contract is null and void shall not entail ipso jure the invalidity of the arbitration clause. suit on merits. The impugned judgment and decree are liable to be quashed and set aside.

55. The reasons for the afore-noted decision are already set out in the discussions hereinabove. They may briefly be enumerated thus:

(i) A specific objection to the maintainability of the suit had been raised by the appellants, predicated on Section 8 of the 1996 Act.

(ii) This objection was raised at the very first stage when it could be raised firstly, in the application filed under Order XXXVII Rule 3(5) of the CPC seeking leave to defend the suit and, thereafter, in the written statement filed by way of reply to the suit.

(iii) The learned Commercial Court was, therefore, in error in holding that the objection had not been raised at the appropriate stage.

(iv) The objection, as raised, satisfies the requirement of

(v) The plea of the respondent, to the effect that the appellants had acquiesced to the adjudication of the suit by the learned Commercial Court is bereft of substance.

(vi) The fact that no specific issue predicated on Section 8 of the 1996 Act was framed by the learned Commercial Court would not alter the above position.

56. In view of the aforesaid, the impugned order dated 15 July 2019, passed by the learned ADJ, insofar as it proceeds to adjudicate the suit on merits, despite a valid Section 8 objection having been raised by the appellants, cannot sustain. It is accordingly quashed and set aside.

57. The dispute between the parties would, therefore, be referable to arbitration.

58. The parties are at liberty, therefore, to initiate arbitral proceedings in accordance with law.

59. The appeal is accordingly allowed, albeit without costs.

C.HARI SHANKAR, J NOVEMBER 6, 2023