Madhya Pradesh High Court
Govind Prasad Garg vs Vishnu Prasad Garg on 7 January, 2025
Author: Hirdesh
Bench: Anand Pathak, Hirdesh
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IN THE HIGH COURT OF MADHYA PRADESH
AT G WA L I O R
BEFORE
HON'BLE SHRI JUSTICE ANAND PATHAK
&
HON'BLE SHRI JUSTICE HIRDESH
ON THE 07th OF JANUARY 2025
ARBITRATION APPEAL No. 203 OF 2024
GOVIND PRASAD GARG
Versus
VISHNU PRASAD GARG
AND
CIVIL REVISION NO. 108 OF 2024
GOVIND PRASAD GARG
Versus
VISHNU PRASAD GARG
Appearance:
Shri P.C. Chandil and Shri Chetan Kanungo- learned Counsel for
appellant in Arbration Appeal No. 203 of 2024 and Shri P.C. Chandil and
Shri Yogsh Singhal- learned Counsel for revisionist in Civil Revision No.
108 of 2024
Shri Prashant Sharma and Shri Kamal Mangal- learned Counsel for
respondent in Arbitration Appeal as well as in Civil Revision.
ORDER
Per: Justice Hirdesh:-
Arbitration Appeal No.203 of 2024 under Section 37(1)(a) of
Arbitration and Conciliation Act, 1996 [hereinafter it would be referred to as
” Act of 1996”] and Civil Revision No.108 of 2024 have been been preferred
by Govind Prasad Garg (hereinafter referred to as ”defendant”) challenging
the order dated 7th of March, 2024 and the order dated 01-02-2024 passed by
215th District Judge, Gwalior in Civil Suit No.92-A of 2022, whereby the
application filed by defendant under Section 8 of the Act of 1996 read with
Section 151 of CPC has been rejected as well as the application filed by
defendant under Order 7 Rule 11 read with Section 115 of CPC has been
rejected.
(2) Since the factual matrix of both arbitration appeal and civil revision is
same, therefore, they are heard together and disposed of by this common
order for the sake of convenience, facts of Arbitration Appeal No.203/2004
are taken into consideration.
(3) In short, facts of the case are that plaintiff- Vishnu Prasad
(respondent herein) filed a plaint for getting vacant possession of property
i.e. Kothi No.1, Building No.64, Ward No.27, area 21,840 sq.ft (hereinafter it
would be referred to as ”disputed property”) situated in Usha Colony, Jhansi
Road, Gwalior and for getting amount of mesne profit. It is pleaded that
plaintiff and defendant are real brothers. They both are residing on the
disputed property on the basis of verbal Agreement. It is pleaded that
defendant has no ownership and development work on the disputed property
which is being carried out by defendant without permission of plaintiff.
Defendant is harassing the plaintiff through his relatives by filing false
complaint and causing nuisance. Defendant has wrongfully retained
possession of the disputed property owned by plaintiff and due to such
malicious act, plaintiff sent a legal notice dated 24-12-2021 to defendant to
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vacate the disputed property by cancellation/revocation of oral Agreement
and hand over the vacant possession of disputed property to plaintiff because
plaintiff was in need of property for his own. Even after receiving the notice
on 28-12-2021, defendant has not vacated the disputed property and handed
over the vacant possession. It is further pleaded that defendant is wrongfully
occupying the disputed property owned by plaintiff and possessed without
any right and title due to which, he is suffering financial loss of Rs.10 lac per
month. The period of notice submitted by plaintiff for revoking the verbal
agreement and handing over the vacant possession of disputed property to
plaintiff, which is expiring on 28-01-2022. Therefore, it is prayed that
defendant be directed to handover vacant possession of disputed property
from 28-01-2022 along-with mesne profit @ Rs.10 lac per month.
(4) In reply, defendant filed an application under Order 11 Rule 12 & 14 of
CPC on 9th of May, 2022, so also filed an application under Order 7 Rule 11
read with Section 151 of CPC on 10 th of January, 2024, inter alia stating that
plaintiff did not file document which is necessary for just decision of the case
and further, averred that a MoU was signed on 28 th of June, 2012 between the
parties regarding division of disputed property in question. As per Clause 14
of MoU, there is an arbitration clause and if any dispute arises, the decision
of Arbitrator shall be final and binding on both the parties.
(5) It is further averred that plaint filed by plaintiff deserves to be rejected
on the ground that plaintiff must bring his claim before the Arbitrator. The
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application filed under Order 7 Rule 11 of CPC was dismissed vide order
dated 01-02-2024 on the ground that plaint allegations are to be seen. The
defendant also filed an application under Section 8 of the Act 1996 read with
Section 151 of CPC on the same pretext of MoU seeking referral of dispute
to Arbitration.
(6) In counter, plaintiff filed his reply and denied averments of application
and pleaded that as per Clause 9 of MoU, the agreement could be performed
within a period of thirty days and since the earlier application of defendant
under Order 7 Rule 11 of CPC has been dismissed and the agreement is time-
barred, therefore, the application filed under Section 8 of the Act 1996 read
with Section 151 of CPC deserves to be dismissed on the same ground.
(7) After hearing the pleadings of both the parties and documents available
therein, the Court below vide impugned order dated 7th of March, 2024 as
well as order dated 1st February, 2024 dismissed application under Section 8
of the Act of of 1996 read with Section 151 of CPC and application under
Order 7 Rule 11 read with Section 151 of CPC of defendant. Hence, both the
Arbitration Appeal as well as civil revision filed at the instance of defendant.
(8) It is contended on behalf of defendant that the impugned order dated
07.03.2024 passed by the trial Court is illegal and against the provisions of
Section 8 of the Act of 1996, as the same is not sustainable in the eyes of law.
Relying on the decision of Hon’ble Apex Court in the matter of M/s.
Sundaram Finance Ltd. Vs. T. Thankam (2015) 14 SCC 444 and Vidya
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Drolia vs. Durga Trading Corporation (2021) 2 SCC 1, it is contended that
since there is an inter se dispute between the parties as per agreement (MoU)
regarding the disputed property, therefore, in view of provisions of Section 8
of the Act of 1996, it was obligatory on the part of the Trial Court to refer the
dispute to Arbitration and whether a particular dispute is arbitrable or non-
arbitrable, is within the jurisdiction of Arbitral Tribunal and the Arbitrator is
competent to decide the issue as per provisions of Arbitration and
Conciliation Act and the decision of sole Arbitrator is final and binding on
both the parties.
(9) Placing reliance on the decision of Hon’ble Apex Court in the cases of
Sushma Shivkumar Daga vs. Madhurkumar Ramkrishnaji Bajaj 2023
SCC Online SC 1683, Ramdev Food Products Pvt. Ltd vs. Arvind Bhai
Rambhai Patel (2006) 8 SCC 726, M/s. Uttarakhand Purv Sainik Kalyan
Nigam Limited vs. Northern Coal Field Limited (2020) 2 SCC 455 and
Hari Shankar Singhania and Others vs. Gaur Hari Singhania and others
(2006) 4 SC 658, it is contended that plaintiff has instituted the plaint for
recovery of possession which is governed by Specific Relief Act, 1963 for
the purpose of enforcing the individual civil rights and the lis instituted by
the plaintiff is an action in personam and cannot be construed to be an action
in rem.
(10) The agreement (MoU) dated 28 th of June, 2012 is not an ordinary
commercial agreement, rather it is a family settlement. A valid family
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settlement is binding on the parties and the same does not expire or lapse
with the passage of time. Since, neither there is any cancellation or
revocation of Agreement (MoU) nor there is any challenge in any Court of
law, therefore, the limitation is a mixed question of fact and law and the same
can be decided by the Arbitrator only.
(11) The Trial Court did not consider relevant Clause 12 of Agreement
(MoU) which shows successful completion of payment and transfer of
immovable property as the same shall be full and final settlement of all
disputes inter se between the parties. Clause 9 of agreement (MoU) does not
express that if any agreement is not carried out or performed within 30 days,
the Agreement (MoU) shall come to an end or will cease to operate.
(12) Relying on the decision of Apex Court in the cases of Ameet Lal
Chand Shah and Others vs. Rishabh Enterprises and Another (2018) 15
SCC 678, State of Bihar vs. Bihar Rajya Bhumi Vikas Bank Samiti (2018)
9 SCC 472, M/s. Hema Khattar and Anr. Vs. Shiv Khera (2017)7 SCC 716,
A. Ayyaswamy vs. A. Parmasivam (2016) 10 SCC 386 and M/s Sundaram
Finance Limited and Another vs. T. Thankam (2015) 14 SCC 444, it is
contended that since there is no consequence provided in Section 8 of the Act
of 1996 of filing application after a period of limitation, the said ”cut-off
date” cannot be considered as mandatory and the limitation period of 90 days
for filing the WS under CPC is only directory; and is itself flexible and it is
not appropriate to fix the ”cut off date” for filing the application under
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Section 8 of the Act of 1996 within 90 days. In the instant case, defendant
had filed an application under Section 8 of the Act of 1996 within the ”cut-off
date” and there is ouster of jurisdiction of the judicial authority.
(13) Relying on the decision of Hon’ble Apex Court in the cases of M/s.
Asian Avenues Pvt. Ltd. Vs. Sri Syed Shoukat Hussain (2024) 6 SCC 630,
Mathura Prasad Bajoo Jaiswal and Ors vs. Dossibai N. B. Jeejeebhoy AIR
1971 SC 2355, Smt. Isabella Johnsn vs. MA Susai AIR 1991 SC 993 ad
Shakuntala Devi vs. Kamla (2005) 5 SCC 390, it is contended that the
impugned order dated 01-02-2024 passed by the Trial Court rejecting the
application filed by defendant under Order 7 Rule 11 read with Section 151
of CPC is unlawful, as the rejection of said application has occasioned filing
of application under Section 8 of the Act of 1996, which essentially goes to
root of jurisdiction of the Court. The power of referring the parties to
Arbitration under Section 8 of the Act of 1996 is not restricted by the ”cut off
date”, more particularly in the context of the suit instituted before the Civil
Court. Defendant has filed the application on 9 th of May, 2022 and reply was
filed by plaintiff on 4th of January, 2024, therefore, it cannot be said that
defendant has waived off the right to object. The Trial Court vide order dated
01-02-2024 specifically concluded that delay in filing WS cannot be
attributed to the defendant and it would not appropriate to close the right of
the defendant to file WS.
(14) Therefore, in the light of the decision of Hon’ble Apex Court in the
8
case of Afcons Infrastructure Limited vs. Cherian Varkey Construction
Company Private Limited and Others (2010) 8 SCC 24, the Trial Court
ought to have referred the matter to Arbitration even if the application under
Section 8 of the Act of 1966 is filed after the “cut-off date”. Hence, prayed
for setting aside the impugned orders by referring the dispute to Arbitration.
(15) On the other hand, while supporting the impugned orders passed by
Trial Court, it is the contention of respondent plaintiff that learned Trial
Court has rightly dismissed the application filed by defendant under Order 7
Rule 11 read with read with Section 151 of CPC vide order dated 01-02-2024
on the ground that at the stage of consideration of application, only plaint
averments are to be seen.
(16) It is further contended that defendant appeared before the Civil Court
on 17th of February, 2022 after issuance of notice and although filed an
application under Order 11 Rule 12 & 14 of CPC read with Section 151 of
CPC on 09th of May, 2022 but no WS was filed. Instead, on 10 th of January,
2024 an application under Order 7 Rule 11 of CPC was filed by defendant for
the first time the plea of existence of MoU and had pleaded arbitration
clause. The MoU was executed in the year 2012 wherein, several reciprocal
promises were there including the property in dispute to be transferred to he
defendant, however, said promises under the MoU were to be performed
within thirty days of execution of MoU.
(17) It is further contended that time limit for filing application under
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Section 8 of the Act of 1966 is the same as the time limit provided for filing
WS under the provisions of CPC. Since application under Section 8 of the
Act of 1996 was filed by defendant beyond the period of 90 days from the
date of service, which is the period of limitation for filing the WS, therefore,
defendant has already waived off right to move an application under Section
8 of the Act of 1996 because the said application was filed after much delay
i.e. almost two years.
(18) It is further contended that the cause of action to appoint an Arbitrator
would commence from the ”breaking point” at which reasonable party would
abandon efforts for arriving at a settlement and contemplate referral of the
dispute for Arbitration. ”Breaking point” should be treated as the date at
which the cause of action arose for the purpose of limitation. Learned
Counsel for respondent further contended that for filing application under
Section 11 of the Act of 1996, there is no limitation period prescribed and
therefore, residuary clause under Article 137 is applicable. Thus, even as per
Article 137 of the Limitation Act, 1963, the limitation is of three years. In the
present case case, the breaking point arrived in the year 2014 and even if the
arbitration was to be invoked by the defendant, the same was supposed to be
invoked by the year 2017, therefore, the defendant cannot permitted to wait
for eternity for raising the request for arbitration because the plaint nowhere
indicates that the dispute involved is pertaining to or arising of MoU
Therefore, the Trial Court has rightly passed the impugned order in declining
10
the prayer of defendant for reference to Arbitration and the same cannot be
said to be faulted.
(19) To buttress the contentions, learned Counsel for plaintiff has relied on
the Delhi High Court decision in the matter of Ssipl Lifestyle Private
Limited vs. Vama Apparels (India) Private Limited and Others (decided on
19th of February 2020 in CS(COMM) 735 of 2018), decision of Hon’ble
Apex Court in the matters of Bharat Sanchar Nigam Ltd. And Another vs.
M/s. Nortel Networks Pvt. Ltd (2021) 5 SCC 738, Geo Miller and Company
Pvt. Ltd vs. Chairman, Rajasthan Vidyut Utpadan Nigam Limited (2020)
14 SCC 643, M/s. B and T AG vs. Ministry of Defence, 2023 Live-law (SC)
466 & Gujarat Composite Limited vs. A Infrastructure Limited and
Others,2023 Live Law(SC) 384. Hence, prayed for dismissal of both
Arbitration Appeal as well as civil revision.
(20) Heard learned Counsel for the parties at length and perused the
impugned orders as well as documents available on record.
(21) So far as the order impugned dated 01-02-2024 passed by Trial Court
rejecting the application of defendant under Order 7 Rule 11 read with
Section 151 of CPC against which, civil revision is under challenge at the
hand of defendant is concerned, relevant provisions of Order 7 Rule 11 of
CPC read as under:-
“11. Rejection of plaint-The plaint shall be rejected in the following cases-
(a) where it does not disclose a cause of action;
(b) where the relief claimed is undervalued, and the plaintiff, on being required by
the Court to correct the valuation within a time to be fixed by the Court, fails to do
so;
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(c) where the relief claimed is properly valued, but the plaint is written upon paper
insufficiently stamped, and the plaintiff, on being required by the Court to supply
the requisite stamp-paper within a time to be fixed by the Court, fails to do so;
(d) where the suit appears from the statement in the plaint to be barred by any law;
(e) where it is not filed in duplicate;
(f) where the plaintiff fails to comply with the provisions of rule 9;
Provided that the time fixed by the Court for the correction of the valuation or
supplying of the requisite stamp- paper shall not be extended unless the Court, for
reasons to be recorded, is satisfied that the plaintiff was prevented by any cause of
an exceptional nature for correcting the valuation or supplying the requisite stamp
paper, as the case may be, within the time fixed by the Court and that refusal to
extend such time would cause grave injustice to the plaintiff.”
(22) In the matter of Saleem Bhai and Ors. Vs. State of Maharashtra &
Others reported in 2003 (1) SCC 557 Civil Appeal No.8518/2002 decided
on 17.12.2002, the Hon’ble Apex Court has held as under:-
“Deciding application under Order 7 Rule 11, averment in the plaint can be seen
not the plea taken in the written statement.”
(23) On bare reading of provisions of order 7 Rule 11 of CPC as well as
the law down by the Hon’ble Apex Court in the case of Saleem Bhai (supra),
it appears that while considering application under Order 7 Rule 11 of CPC,
only plaint averments have to be examined. Plaintiff has filed plaint on 21-
01-2022. On receipt of notice, defendant put his appearance on 17 th of
February, 2022. On 09-05-2022, the defendant submitted application under
Order 11 Rule 12 & 14 read with Section 151 of CPC, so also on 10 th of
January, 2024 filed application under Order 7 Rule 11 read with Section 151
of CPC for the first time the plea of existence of the MoU and arbitration
clause. Reply was submitted on behalf of plaintiff on 04-01-2024. Plaint
appears to be maintainable on the basis of pleadings of plaintiff. Therefore,
application under Order 7 Rule 11 read with Section 151 of CPC fled by
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defendant on the basis of Agreement (MoU) was dismissed by Trial Court
vide impugned order dated 01-02-2024 on the ground that the said
Agreement (MoU) is a matter of evidence and the plaint is not barred by law.
Thus, it appears that Trial Court has not committed any error or illegality in
rejecting such application.
(24) So far as the order impugned dated 7 th of March, 2024 passed by
Trial Court rejecting the application of defendant under Section 8 of the Act
of 1996 read with Section 151 of CPC against which, the instant Arbitration
Appeal is under challenge at the hand of defendant is concerned, Section 8
of the Act of 1996 as it stood earlier and as amended by the Amendment Act
of 2016 with retrospective effect from 23rd of October, 2015 are set out
herein-below:-
Section 8 under the 1996 Act is as follows:
“8. Power to refer parties to arbitration where there is an arbitration
agreement.–
(1) A judicial authority before which an action is brought in a matter which is
the subject of an arbitration agreement shall, if a party so applies not later than
when submitting his first statement on the substance of the dispute, refer the
parties to arbitration. (2) The application referred to in sub-section (1) shall not
be entertained unless it is accompanied by the original arbitration agreement or
a duly certified copy thereof.
(3) Notwithstanding that an application has been made under sub-section (1)
and that the issue is pending before the judicial authority, an arbitration may be
commenced or continued and an arbitral award made.”
Section 8 under the substituted amendment Act 3 of 2016 w.e.f 23rd
October, 2015 is as follows:
“8. Power to refer parties to arbitration where there is an arbitration agreement-
[(1) A judicial authority, before which an action is brought in a matter which is
the subject of an arbitration agreement shall, if a party to the arbitration
agreement or any person claiming through or under him, so applies not later
13than the date of submitting his first statement on the substance of the dispute,
then notwithstanding any judgment, decree or order of the Supreme Court or
any Court, refer the parties to arbitration unless it finds that prima facie no
valid arbitration agreement exists] (2) The application referred to in sub section
(1) shall not be entertained unless it is accompanied by the original arbitration
agreement or a duly certified copy thereof:
[Provided that where the original arbitration agreement or a certified copy
thereof is not available with the party applying for reference to arbitration
under sub-section (1), and the said agreement or certified copy is retained by
the other party to that agreement, then, the party so applying shall file such
application along with a copy of the arbitration agreement and a petition
praying the Court to call upon the other party to produce the original arbitration
agreement or its duly certified copy before that Court.] …”
(emphasis underlined)
(25) As regards, amicable, mutual & permanent settlement which is arrived
at between the parties relating to disputed property in question vide
agreement (MoU) dated 28th of June, 2012, relevant Clauses read as under:-
”9. It is further agreed that the above agreement shall be carried out
within the next 30 days.
10. During this period the parties shall put on hold all inter se
litigations (both civil and criminal) that the parties have initiated against each
other.
11. Once the above mentioned transactions are completed the parties
shall immediately withdraw all inter-se litigations (both civil and criminal)
that the parties have initiated against each other and parties shall have no right
to reinstate any further litigation on the same issues.
12. The successful execution of the payment and transfer of
immovable properties mentioned above shall be the full and final settlement
of all disputes inter se between the parties.
xxxx xxxx
14. In the event of any dispute (s) arising out of this MOU, Shri Girish
Agarwal, s/o. Shri Ramesh Chandra Agrawal or his nominee shall be sole
Arbitrator and his/ her decision shall be final and binding on both the parties.”(26) On perusal of the impugned order dated 7 th of March, 2024 as well as
documents available on record, it appears that defendant is the real brother of
plaintiff. The Agreement (MoU) was executed between the parties on 28 th of
June, 2012 with regard to the disputed property and as per Clause 9 of said
14Agreement (MoU), it has been mentioned that within a period of thirty days,
the same was to be performed on the basis of execution of Agreement (MoU)
and if any kind of dispute arises between the parties, then Shri Girish
Agrawal will be appointed as an Arbitrator after placing the matter before
him and decision of sole Arbitrator will be considered final and binding on
the parties. The said Agreement (MoU) is alleged to be executed on 28 th of
June, 2012 and within a period of 30 days, the family property should have
been divided on the basis of execution of said agreement (MoU), but the
entire family property was never divided between the parties on the basis of
Agreement (MoU). On perusal of documents as well as aforesaid Agreement
(MoU), it was found that either of parties has not taken any step for
performance of Agreement (MoU) within the stipulated period of thirty days
after execution.
(27) It is not in dispute that plaintiff is the registered owner of disputed
property and he has only filed a plaint for getting vacant possession and
mesne profit in respect of disputed property. According to Agreement (MoU),
limitation is essential part and the defendant has never taken any steps for
performance of Agreement (MoU). The application under Section 8 of the
Act of 1996 was filed by defendant beyond period of 90 days from the date
of service, which is the period of limitation for filing the WS, therefore,
defendant has already waived off right to move an application under Section
8 of the Act of 1996 because said application was filed after much delay i.e.
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almost two years. So, in the considered opinion of this Court, the trial Court
has not committed any error in rejecting the application of defendant under
Section 8 of the Act of 1966 read with Section 151 of CPC declining the
prayer of defendant for reference to Arbitration. The decisions relied on
behalf of defendant are of no assistance in the facts of the present case.
(28) In view of foregoing discussions, this Court does not find any illegality
or impropriety in passing impugned orders. The Arbitration Appeal preferred
by defendant is hereby dismissed. As a consequence thereof, civil revision
preferred by defendant is also dismissed. The impugned orders dated 7th of
March, 2024 and dated 1st February, 2024 passed by 15 th District Judge,
Gwalior in Civil Suit No.92-A of 2022 are hereby affirmed.
Let a copy of this order be placed in connected Civil Revision.
(ANAND PATHAK) (HIRDESH)
JUDGE JUDGE
MKB
MAHEN
Digitally signed by MAHENDRA BARIK
DN: c=IN, o=HIGH COURT OF
MADHYA PRADESH BENCH GWALIOR,
ou=HIGH COURT OF MADHYA
PRADESH BENCH GWALIOR,
DRA
2.5.4.20=8c6d4d6122d7ee987e457a3
bec5922cacbc050c998981397a35d97
58a2b55074, postalCode=474001,
st=Madhya Pradesh,
serialNumber=AB90F893988F10D718
BARIK
DA01F8065D87F25DDC9B6C8C3FF0E
5E280DD36D476F6BA,
cn=MAHENDRA BARIK
Date: 2025.01.15 16:08:20 +05'30'
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