Jammu & Kashmir High Court
S. Charanjeet Singh vs Ut Of J&K on 13 March, 2025
Author: Rajnesh Oswal
Bench: Rajnesh Oswal
HIGH COURT OF JAMMU & KASHMIR AND LADAKH
AT JAMMU
Reserved on: 04.03.2025
Pronounced on: 13.03.2025
RFA No. 52/2023
CM No. 7861/2023, 654/2024
CAV No. 1940/2023
1. S. Charanjeet Singh, .....Appellant(s)/Petitioner(s)
Age 56 Years Prop. M/s Singh
Traders S/O Late S. Hari Singh
R/O Plot No. 234, Shopping
Centre, Bakshi Nagar, Jammu
Through: Mr. Vikram Sharma, Sr. Advocate with
Mr. Sachin Dev Singh, Advocate.
vs
1. UT of J&K ..... Respondent(s)
Th. Director Horticulture (P&M)
Department of Horticulture Planning
and Marketing Jammu.
2. Director Horticulture (P&M),
Department of Horticulture Planning &
Marketing, Fruit & Vegetable Market,
Narwal, Jammu.
3. Deputy Director Horticulture
(P&M),
Department of Horticulture Planning &
Marketing, Fruit & Vegetable Market,
Narwal, Jammu.
4. Market Administrative Committee,
Fruit & Vegetable Market, Narwal,
Jammu Th. Its Member Secretary
Narwal, Jammu
Through: Ms. Priyanka Bhat, Advocate vice
Mr. Suneel Malhotra, GA.
Mr. Rahul Pant, Sr. Advocate with
Mr. Anirudh Sharma, Advocate.
Coram: HON'BLE MR. JUSTICE RAJNESH OSWAL, JUDGE
JUDGMENT
2 RFA No. 52/2023
1. This appeal is directed against the order/judgment dated 30.10.2023
passed by the court of learned Principal District Judge, Jammu (for short
the „trial court‟) whereby the learned trial court has held the suit preferred
by the appellant as not maintainable, with liberty to the parties to approach
the nominated arbitrator at the earliest enabling him to settle the dispute
inter se parties.
2. The brief facts necessary for disposal of the instant appeal are that a suit
came to be filed by the petitioner for declaration to the effect that the
contract/agreement dated 30.09.2021 executed between the parties,
pursuant to e-NIT No. 39 of 2021-22 dated 03.09.2021 and e-NIT No. 40
of 2021-22 dated 03.09.2021, has frustrated and become incapable of
performance, on account of deliberate inaction on part of the respondents
to close numerous illegally run eat points/canteens/reharis/dhabas, etc.
around and in vicinity of the premises of the appellant with consequential
relief of mandatory injunction directing the respondents to refund an
amount of Rs. 7,48,650/- deposited by the appellant and to return two
FDR of Rs. 40,000/- bearing No. 532825 and 532826 dated 16.09.2021
deposited by the appellant alongwith interest, with further relief of
compensation of Rs. 10.00 Lacs for frustrating the contract of the
appellant and thus damaging goodwill of the appellant in the market and
public and further relief of permanent prohibitory injunction restraining
the respondents from enforcing the terms of the contract upon the
appellant in any manner whatsoever.
3. The respondents after causing appearance, filed their written statement on
20.02.2022 and on 27.07.2023, issue in respect of maintainability of the
3 RFA No. 52/2023
suit was framed by the learned trial court as to “Whether in view of the
Arbitration Clause, the suit is barred, hence not maintainable before the
court?”
4. After hearing the parties, the learned trial court vide order/judgment dated
30.10.2023, decided the suit against the appellant and held the suit not
maintainable.
5. The appellant has impugned the judgment/order dated 30.10.2023 on the
ground that once the respondents had filed the detailed written
statement/defence in respect of the suit filed by the appellant, they shall be
deemed to have waived off their right to seek the settlement of dispute
through arbitration, as such, the learned trial court could not have asked
the parties to approach the arbitrator by referring to the arbitration clause.
It is also urged that Arbitration and Conciliation Act, 1996 (for short the
„Act of 1996‟), mandates for filing of application under Section 8 of the
Act to seek reference of the dispute to arbitrator before filing the detailed
written statement. Having not done so, the respondents cannot raise the
issue of arbitration clause in the agreement to defeat the suit of the
appellant.
6. Mr. Vikram Sharma, learned senior counsel for the appellant has argued
that in absence of any application under Section 8 of the Act of 1996, the
learned trial court could not have referred the parties to arbitration and
further in terms of the clause 18 of the agreement, the arbitrator has been
nominated, who is the official of the respondents, which is not permissible
under law. Mr. Vikram Sharma has relied upon the judgments of Hon‟ble
the Supreme Court of India passed in cases titled „Rashtriya Ispat Nigam
4 RFA No. 52/2023Limited and another vs. M/s Verma Transport Company’, 2006 AIR
SC 2800 and „Booz Allen and Hamilton Inc. Vs. SBI Home Finance
Ltd. and others‘, 2011 AIR SC 2507. He has further placed reliance
upon judgment passed by this Court in case titled as Brij Mohan
Sawhney vs. Sanjeev Kumar Gupta decided on 25.08.2023 to
substantiate his contention.
7. Per contra, Mr. Rahul Pant, learned Senior Counsel for the respondents
has argued that the specific plea in the written statement was taken in
respect of the arbitration clause and as such, mandate of Section 8 of the
Act 1996 was complied with by the respondents and the learned trial court
has rightly come to the conclusion that the suit is not maintainable and
referred the parties to arbitration. He has further submitted that the
respondents concede to the contention of the appellant that the matter
could not have been referred to the nominated arbitrator who was the
official of the respondents. Mr. Rahul Pant has relied upon the judgments
passed by the Delhi High Court in cases titled as „Sharad P. Jagtiani vs.
Edelweiss Securities Limited’,2014 Legal Eagle (DEL) 391 and
„Madhu Sudan Sharma and others vs. Omaxe Ltd’,2023:DHC:8044.
8. Heard learned counsel for the parties and perused the record.
9. For the sake of brevity and reference, Section 8 of the Arbitration and
Conciliation Act, 1996 is reproduced hereunder:
8. Power to refer parties to arbitration where there is an
arbitration agreement:-
1[(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 than the
date of submitting his first statement on the substance of the
dispute, then, notwithstanding any judgment, decree or
5 RFA No. 52/2023order 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.
11
[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.
(3) Notwithstanding that an application has been made
under sub-section (1) and that the issue is pending before
the judicial authority, an arbitrator may be commenced or
continued and an arbitral award made.”
10. In terms of Section 8 of the Act of 1996, a judicial authority before which
an action is brought in a matter, which is the subject of an arbitration
agreement shall refer the parties to arbitration, if a party to the arbitration
agreement or any person claiming through or under him, so applies not
later than 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. Sub-section (2) of
Section 8 of the Act of 1996 provides that 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.
11. So far as the present case is concerned, the appellant himself has annexed
the agreement dated 30.09.2021 executed between the Market
Administrative Committee (MAC) Fruit and Vegetable Market Narwal
Jammu and M/s Singh Traders, th. its Prop. Charanjeet Singh R/o Plot No.
6 RFA No. 52/2023
234 Shopping Centre Bakshi Nagar, Jammu i.e. the appellant herein. This
is also admitted fact that no formal application was made before the
learned trial court accompanied with the arbitration agreement. The
conjoint reading of the Sub-sections 1 & 2 of Section 8 of the Act of 1996
would reveal that the purpose of filing an application is to place on record
the original arbitration agreement or a duly certified copy thereof, so as to
bring to the notice of judicial authority the factum of existence of
arbitration agreement. The only embargo contained in Section 8(1) of the
Act is that an application for referring the dispute to arbitrator cannot be
filed by party or anyone claiming through him, after the submission of his
first statement on the substance of the dispute, meaning thereby either
prior to or along with the submission of his first statement on the
substance of the dispute, the party can bring to the notice of the court,
clause in respect of arbitration and thereafter it becomes obligatory on part
of the judicial authority to refer the parties to arbitration, unless the party
waives off its right voluntarily.
12. In this context it would be appropriate to take note of the judgment passed
by the Hon‟ble Supreme Court of India in case titled as „P. Anand
Gajapathi Raju and others vs P.V.G Raju (Dead) and others‘ (2000) 4
SCC 539, wherein the Hon‟ble Supreme Court of India has held as under:
“In the matter before us, the arbitration agreement covers all the
disputes between the parties in the proceedings before us and
even more than that. As already noted, the arbitration agreement
satisfies the requirements of Section 7 of the new Act. The
language of Section 8 is peremptory. It is, therefore,
obligatory for the Court to refer the parties to arbitration in
terms of their arbitration agreement. Nothing remains to be
decided in the original action or the appeal arising
therefrom. There is no question of stay of the proceedings till
the arbitration proceedings conclude and the award becomes
7 RFA No. 52/2023final in terms of the provisions of the new Act. Al the rights,
obligations and remedies of the parties would now be governed
by the new Act including the right to challenge the award. The
court to which the party shall have recourse to challenge the
award would be the court as defined in clause (e) of Section 2 of
the new Act and not the court to which an application under
Section 8 of the new Act is made. An application before a court
under Section 8 merely brings to the court’s notice that the
subject matter of the action before it is the subject-matter of an
arbitration agreement. This would not be such an application as
contemplated under Section 42 of the Act as the court trying the
action may or may not have had jurisdiction to try the suit to
start with or be the competent court within the meaning of
Section 2(e) of the new Act.”
(emphasis added)
13. A reference to the judgment of the Hon‟ble Apex court in case titled as
„Rashtriya Ispat Nigam Ltd. and another vs M/s Verma Transport
Company’, 2006 AIR SC 2800 would also be relevant, wherein at paras
19, 20 and 21 following has been held:
“19. In the instant case, the existence of a valid agreement
stands admitted. There cannot also be any dispute that the matter
relating to termination of the contract would be a dispute arising
out of a contract and, thus, the arbitration agreement contained
in clause 44 of the contract would be squarely attracted. Once
the conditions precedent contained in the said proceedings
are satisfied, the judicial authority is statutorily mandated to
refer the matter to arbitration. What is necessary to be looked
into therefore, inter alia, would be as to whether the subject-
matter of the dispute is covered by the arbitration agreement or
not.
20. Section 34 of the repealed 1940 Act employs the expression
‘steps in the proceedings’. Only in terms of Section 21 of the
1940 Act, the dispute could be referred to arbitration provided
parties thereto agreed. Under the 1940 Act, the suit was not
barred. The Court would not automatically refer the dispute to
an arbitral tribunal. In the event, it having arrived at satisfaction
that there is sufficient reason that the dispute should not be
referred and no step in relation thereto was taken by the
applicant, it could stay the suit.
21. Section 8 of the 1996 Act contemplates some departure from
Section 34 of the 1940 Act. Whereas Section 34 of the 1940 Act
contemplated stay of the suit; Section 8 of the 1996 Act
mandates a reference. Exercise of discretion by the judicial
authority, which was the hallmark of Section 34 of the 1940
Act, has been taken away under the 1996 Act. The direction
to make reference is not only mandatory, but the arbitration
proceedings to be commenced or continued and conclusion
thereof by an arbitral award remain unhampered by such
8 RFA No. 52/2023pendency. [See O.P. Malhotra’s ‘The Law and Practice of
Arbitration and Conciliation’, 2nd Edition, pp. 346-347]”
(emphasis added)
14. There is no quarrel between the parties in respect of dispute being
arbitrable in nature, however, it is the contention of the appellant that once
the written statement was filed by the respondents and had submitted
themselves to the jurisdiction of the court, order impugned could not have
been passed. The argument though appears to be attractive but bereft of
any legal force, as a preliminary objection in respect of maintainability of
suit was raised by the respondents in their written statement in reference to
the arbitration clause existing in the agreement and the lack of jurisdiction
on part of the learned trial court to proceed ahead with the suit. The
respondents brought to the notice of the learned trial court the existence of
arbitration clause in the agreement through the medium of written
statement and at the same time submitted their first statement on the
substance of the dispute, therefore, it cannot be said that the respondents
had submitted to the jurisdiction of the learned trial court to proceed ahead
with the suit and waived off their right to get the matter adjudicated
through arbitration.
15. In the judgment passed by this Court in case titled as „Brij Mohan
Sawhney vs. Sanjeev Kumar Gupta‟, it was held by this Court that the
respondent had demonstrated his intention of defeating the suit of the
appellant by placing reliance upon the arbitration clause as contained in
the partnership deed but never submitted to the jurisdiction of the Court,
thereby waiving his right to seek reference to arbitration.
9 RFA No. 52/2023
16. In this context, it would be appropriate to take note of the judgment of the
High Court of Delhi in case titled ‘Sharad P. Jagtiani v. Edelweiss
Securities Ltd.‘, 2014 SCC OnLine Del 4015, wherein at paras 14 to 17
following has been held:
“14.We simply need to highlight the phrase not later than when
submitting his first statement on the substance of the dispute in
sub-section (1) of Section 8. The requirement is to bring to the
notice of the Court at a point not later than when submitting the
first statement on the substance of the dispute that there exists an
arbitration clause between the parties and that the subject matter
of the action brought before the Court by way of the suit falls
within the ambit of the arbitration clause.
15.Section 8 does not specify the manner in which the party
has to submit its first statement on the substance of the
dispute, and normally with respect to a suit, the first
statement on the substance of the dispute by the defendant
would be the written statement. Thus, if in the written
statement filed it is brought to the notice of the Court that
there exists an arbitration agreement between the parties
which embraces the subject matter of the suit there would
complete compliance with the mandate of the law und the
Court would be obliged to refer the parties to arbitration if
the plea in the written statement is made good.
16. On the facts of the instant case, it may be true that in the
written statement filed a specific prayer has not been made to
refer the parties to arbitration, but we have highlighted
hereinabove that in the written statement filed a preliminary
objection has been taken that the suit is barred in view of the
arbitration agreement, The written statement filed is with
strings attached by challenging the maintainability of the
suit in view of the arbitration clause and therefore in such
circumstance the said objection taken by Edelweiss
contained in the written statement could be treated as an
application under Section 8 of the Arbitration and
Conciliation Act, 1996.
17. It is trite that it is the substance of a matter contained in a
document which matters and not the form thereof.”
(emphasis added)
17. In view of the above, this Court is of the considered view that once a plea
of existence of arbitration clause is taken in the written statement and the
defendant persists with the same and objects to the jurisdiction of the trial
10 RFA No. 52/2023
court to proceed ahead with the suit, then the judicial authority is left with
no discretion but to refer the parties to arbitration.
18. In view of above, this Court does not find any reason to take a view other
than that of the learned trial court, however, this Court finds that the
learned trial court ought not to have granted liberty to the parties to
approach the nominated arbitrator, who was the official of the
respondents. Mr. Rahul Pant learned senior counsel for the respondents
has conceded that independent arbitrator is required to be appointed.
19. Accordingly, the instant appeal is disposed of by modifying the order
passed by the learned trial court to the extent that the suit is disposed of by
referring the parties to the arbitration. Decree sheet be prepared
accordingly.
20. Disposed of.
(RAJNESH OSWAL)
JUDGE
Jammu
13.03.2025
Sahil Padha
Whether the order is speaking: Yes
Whether the order is reportable: Yes
Sahil Padha
2025.03.13 14:07
I attest to the accuracy and
integrity of this document