The Calcutta High Court reiterated that an Application under Section 8 of the Arbitration and Conciliation Act, 1996 (A&C Act) must be filed before filing of the first statement on the substance of the dispute.

The Court reiterated thus in an Appeal filed by the Plaintiff in a Suit for a specific performance of contract.

A Division Bench comprising Justice Sabyasachi Bhattacharyya and Justice Subhendu Samanta noted, “It was specifically held by the Supreme Court in the case of Sukanya Holdings (P) Ltd. Vs. Jayesh H. Pandya reported at (2003) 5 SCC 531 that an application under Section 8 of the 1996 Act has to be filed before the filing of the first statement on the substance of the dispute.”

Advocate Sourav Kumar Mukherjee represented the Appellant while Advocate Rajdeep Bhattacharya represented the Respondents.

Factual Background

The Trial Court in a Suit for a specific performance of contract filed by the Plaintiff i.e., Appellant, allowed an Application of the Respondent/Defendant under Section 8 of the A&C Act and dismissed the Suit itself. Hence, this was challenged before the High Court. The counsel for the Appellant argued that even Section 8 A&C Act does not contemplate a dismissal of the Suit but merely speaks about reference to arbitration.

It was further contended that in any event, the Application under Section 8 filed subsequent to the filing of the written statement in the Trial Court ought to have been dismissed by the Trial Judge. On the other hand, the counsel for the Respondent claimed that even if an Application under Section 8 was not filed but a proper objection as to jurisdiction of the Civil Court on the ground of existence of an arbitration clause was taken in the written statement, the matter ought to be referred to arbitration.

Reasoning

The High Court after hearing the contentions of the counsel, observed, “There is a gulf of difference between an objection that the learned Civil Court does not have jurisdiction to entertain a suit at all and that the suit should be dismissed on such ground, and an objection that the subject matter of a civil suit, being also the subject matter of an arbitration agreement, ought to be referred to arbitration.”

The Court said that Section 8 of A&C Act contemplates a reference to arbitration of a dispute regarding which there is an arbitration clause and does not operate as a bar to the Civil Court’s jurisdiction as such and even if a reference is made to the arbitrator, the Civil Court does not lose the subject jurisdiction.

“In the event no application for reference to arbitration under Section 8 of the 1996 Act is made by either party, the civil court may very well entertain the suit and proceed with the adjudication of the same on merits in accordance with law”, it added.

The Court concluded that the Suit could not have been dismissed under Section 8 and the Section 8 Application, having not been filed before or even simultaneously with the written statement of the Defendant, could not have been entertained at all by the Trial Judge.

Accordingly, the High Court allowed the Appeal and set aside the impugned Judgment.

Cause Title- Gitarani Maity v. Krishna Chakraborty and Others

Appearance:

Appellant: Advocates Sourav Kumar Mukherjee, Kaushik Chowdhury, and Sahana Pal.

Respondents: Advocates Rajdeep Bhattacharya and Adrija Bhattacharya.

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