Appeal against dismissal of applications for arbitration reference and dismissal of suit on jurisdictional grounds. Appeal dismissed as appellant not party to arbitration agreement and no claim was made through or under a party.
Application under Section 8 of the Arbitration and Conciliation Act, 1996 and Order VII Rule 10 CPC dismissed.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
HIGH COURT OF JUDICATURE FOR RAJASTHAN AT
JODHPUR
D.B. Civil Misc. Appeal No. 1738/2020
Ravindra Kumar Bordia S/o Shri Dalchand Bordia, Aged About 61 Years, R/o D-45, Shastri Nagar, Bhilwara (Raj.)
----Appellant
Versus
----Respondents
For Appellant(s) : Mr. Suresh Charan.
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HON'BLE MR. JUSTICE VIJAY BISHNOI HON'BLE MR. JUSTICE ARUN BHANSALI
Judgment
12/11/2021
This appeal under Section 13 of the Commercial Courts Act, 2015 (‘the Act, 2015’) and Section 37 of the Arbitration and Conciliation Act, 1996 (‘the Act, 1996’) has been filed against the order dated 27/2/2020 passed by the Commercial Court, Ajmer, whereby, the applications filed by the appellant under Order VII Rule 10 & 11 CPC and Section 8 of the Act, 1996 have been dismissed.
The respondent no.1 filed a suit for accounts etc. against respondent nos. 2 to 8 and the appellant, who was impleaded as defendant no. 7. The appellant, after ex parte proceedings initiated against him were set aside, filed application under Order VII Rule 10 & 11 CPC inter alia with the submissions that as the Memorandum of Understanding dated 16/11/2010 contains arbitration clause, the civil court does not have the jurisdiction to hear the matter and that as deficient court fee has been paid, the suit was not maintainable/was liable to be dismissed.
During the pendency of the said application, another application under Section 8 of the Act, 1996 was filed requiring the commercial court to direct the plaintiff to produce the original Memorandum of Understanding dated 16/11/2010 and thereafter dispose of the application.
The plaintiff filed reply and contested the applications inter alia alleging that the applications have been filed only with a view to delay the proceedings and that the applications were not maintainable.
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The commercial court after hearing the parties came to the conclusion that as the appellant – defendant no. 7 was not a party to the Memorandum of Understanding, he was not entitled to seek reference of the dispute to arbitration. The court further came to the conclusion that no other party to the agreement has raised such an objection and, therefore, the application was liable to be dismissed. Regarding the issue raised pertaining to valuation of the suit, the court came to the conclusion that the said aspect shall be decided after framing of the issues and consequently dismissed the applications.
Learned counsel for the appellant made submissions that the commercial court was not justified in dismissing the applications inasmuch as there was a reference in the Memorandum of Understanding that the property in dispute was purchased through the appellant and as such he was impleaded as party-defendant to the suit.
Submissions were also made that as the provisions of Section 8 of the Act, 1996 entitles any person claiming through or under a party to the arbitration agreement to maintain the application, the rejection of the application was not justified.
Further submissions were made that the plea raised regarding valuation of the suit should have been adverted to by the commercial court and deferring the said aspect till disposal of the suit was not justified.
Submissions were also made that before deciding the applications, the court should have insisted for production of original Memorandum of Understanding for which the appellant had made application and as the order in this regard was not passed, the dismissal of applications is not justified.
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We have considered the submissions made by learned counsel for the appellant and have perused the material available on record including the copy of plaint produced by the appellant under the directions of the Court.
A perusal of the applications filed by the appellant as well as the averments contained in the plaint, no where suggests that either the plaintiff and/or the appellant have in any manner indicated that though the appellant herein is not a party to the arbitration agreement, he was claiming through or under any party to the agreement.
On the other hand, submissions made indicate that the suit has been filed against the appellant apparently in his independent individual capacity. As submitted by the learned counsel for the appellant himself during the course of arguments that the subject matter of the Memorandum of Understanding was purchased through the appellant, which necessarily suggests that his impleadment was independent of parties to the Memorandum of Understanding.
A perusal of the provisions of Section 8 of the Act, 1996 clearly reveals that the application can be filed by a party to the arbitration agreement or any person claiming through or under him. As admittedly, the appellant does not answer any such description in the present case, the commercial court was justified in rejecting the applications.
So far as the commercial court not ordering for production of original Memorandum of Understanding is concerned, the said aspect could have been agitated by the plaintiff to contest the application filed by the appellant. The application filed by the appellant having been decided by the commercial court without
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such objection, the appellant apparently cannot raise such an objection regarding passing of the order without there being original Memorandum of Understanding on record.
The plea sought to be raised by the appellant regarding rejection of application pertaining to valuation of the suit though may not strictly fall within the parameters of Section 13 of the Act, 2015, however, the determination made by the commercial court regarding deciding the issue after framing of the issues also cannot be faulted.
In view of the above discussion, there is no substance in the appeal and the same is, therefore, dismissed.
(ARUN BHANSALI),J
(VIJAY BISHNOI),J
2-baweja/-
3 issues framed by the court
Whether an impleaded defendant not party to the arbitration agreement is entitled to invoke Section 8 of the Arbitration and Conciliation Act, 1996.
Whether the Commercial Court was justified in dismissing the arbitration reference application without examining the original Memorandum of Understanding.
Whether deferring the decision on valuation of the suit until framing of issues was legally sustainable.
3 provisions across 3 enactments
Ravindra Kumar Bordia
Devkishan Acharaya
Shri Sainath Dham Developers Pvt. Ltd.
Vijay M. Gadhwi
Ashok Shyam Savlani
Paresh Kishore
VIJAY BISHNOI
ARUN BHANSALI
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
