jpc 1 wp10886-11.sxw IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION CIVIL WRIT PETITION NO. 10886 OF 2011 Prabhavati Devi Bolanath Yadav and others ... Petitioners Versus Kersi Jamshed Randeria ... Respondent Mr. V. A. Thorat, Senior Counsel a/w Ms. Aarti P. Bhide for the petitioners Mr. D. Madon, Senior Counsel a/w Mr. Kapil Moye, Mr. L.A. Robeens, Mr. S. S. Suryawanshi and Mr. Pratik Shah for the respondent CORAM: R. M. SAVANT, J. DATED : 20th December, 2011 P. C. 1. The above petition filed under Article 227 of the Constitution of India takes exception to the order dated 13th October, 2011 passed by the learned Judge of the City Civil Court, Greater Mumbai by which order the Chamber Summons filed by the defendant no.1 i.e. the Respondent herein being No. 866 of 2010 came to be allowed and the dispute in the suit filed by the plaintiff being Short Cause Suit No. 2752 of 2009 came to be referred to arbitration. 2. The petitioners herein are the original plaintiffs who have filed the said suit for declaration that the defendant no.1 has no right to enter upon or remaining upon or carrying on any construction on the jpc 2 wp10886-11.sxw suit property bearing CTS nos. 1774, 1775, 1776-B and 1777 of the village Kirol and for injunction restraining the defendant no.1 from carrying on any construction or use of any FSI or TDR. It appears that the dispute involved in the suit has arisen out of the partnership deed dated 30th of October, 2007. The facts preceding the said deed of partnership dated 30th October 2007 have been mentioned which are not germane for the purposes of the present petition. 3. It is the case of the plaintiffs/petitioners that after execution of the agreement, the defendant no.1 was trying to grab the suit property for himself and oust the plaintiffs of all the benefits, efforts, investment, infrastructure and other work done by the plaintiffs. It is the case of the plaintiffs that they had got the slum scheme sanctioned and they have incurred professional fees and other charges and costs for obtaining LOI IOD and CC from the Competent Authorities and have spent considerable amount for the same. In view of the fact that defendant no.1 was acting prejudicially to the interest of the partnership firm the plaintiffs, by letter dated 27th May, 2009 dissolved the partnership firm as the defendant no.1 willfully breached the partnership deed. It is the further case of the plaintiffs that in spite of intimation to defendant no.2, not to issue the LOI that LOI came to be issued in favour of defendant no.1 and on the said basis the defendant jpc 3 wp10886-11.sxw No.1 is unlawfully going ahead with the development of the suit property. The suit was therefore filed for the reliefs as mentioned herein above. 4. The plaintiffs filed a Notice of Motion No. 2183 of 2009 for injuncting the defendants from entering into or remaining upon or carrying any construction or use of any FSI or TDR upon the suit property. The defendant No.1 filed his affidavit in reply to the said Motion and has, apart from dealing with the reliefs sought in the said Motion, contended that suit itself was not maintainable as it was barred under section 42 of the Maharashtra Slum Areas (Improvement Clearance & Redevelopment) Act, 1971 and also not maintainable in view of the arbitration clause No. 16 in the said partnership deed dated 30th October, 2007. It appears that in view of the objection raised by defendant no.1, a preliminary issue as regards valuation of the property and jurisdiction of the Court were framed on 9th February, 2010. By order dated 22nd February, 2010, the said preliminary issue was decided and it was held that in view of Section 42 of the Slum Act, the City Civil Court has no jurisdiction to entertain and try the suit. The said order resulted in two proceedings i.e. Appeal from Order no. 348 of 2010 filed by the plaintiffs and Civil Revision Application 268 of 2010 filed by the defendant no.1. The said Appeal from Order and the Civil Revision jpc 4 wp10886-11.sxw Application were decided by a learned Single Judge of this Court (R.C. Chavan, J.) by a common order dated 27th July,2011 whereby it was held that the Civil Court has jurisdiction to try the suit and consequently, the order dated 22nd February, 2010 was set aside. 5. In so far as the objection as regards maintainability of the suit on the ground of their being an arbitration clause is concerned, since at the relevant time no application was made to refer the dispute to arbitration, the learned Single Judge observed that said prayer was premature. It was further observed that if an application under section 8 of the Arbitration and Conciliation Act 1996 is made it will be decided on its own merits and therefore the challenge to the maintainability of the suit on the ground of mere existence of arbitration clause in the partnership deed is premature. 6. After this Court disposed of the said proceedings, the defendant no.1 filed Chamber Summons No. 866 of 2010 invoking Section 8 of the Arbitration & Conciliation Act, 1996 for referring the dispute to arbitration in terms of clause 16 of the partnership deed 30th October 2007. The said application has been allowed by the impugned order dated 13th October, 2011. A reading of the impugned order discloses that the trial Court has taken into consideration the law laid down by jpc 5 wp10886-11.sxw the Apex Court as regards the issue as to whether the objection regarding maintainability of the suit was taken at the first instance. The trial Court, by applying the law laid down by the Apex Court in the judgments in the case of Booz Allen and Hamilton Inc. Vs. SBI Home Finance and others reported in (2011) 5 SCC 532 and Sukanya Holdings Pvt. Ltd. Vs. Javesh H. Pandey and another reported in (2003) 5 SCC 531 in the facts of the present case observed that the defendants, by taking an objection to the jurisdiction of the Court in the reply to the Notice of Motion filed for interim injunction cannot be said to have submitted to the jurisdiction of the Court. The Trial Court, on the basis that since there is arbitration clause, observed that it is obligatory on the part of the judicial authority before whom an action is brought in the matter which is the subject matter of the arbitration clause, if the parties so apply, refer the parties to arbitration. 7. It is sought to be contended by the learned Senior counsel Mr. Thorat appearing for the petitioners, referring to the findings recorded in the order dated 27th July, 2011 passed by the learned Single Judge, disposing of the Appeal from Order and Civil Revision Application, that the said findings would operate as res judicata, in so far as the issue of referring the parties to arbitration is concerned. The learned senior jpc 6 wp10886-11.sxw counsel sought to rely upon the said findings to buttress his submission that it is an admitted fact that the defendant no.1 has not submitted any application for the parties being referred to arbitration. It is the submission of learned senior counsel that the trial Court, in deciding the said Chamber Summons No. 866 of 2010 has ignored the said findings and has proceeded to consider the said chamber summons independently. 8. Per contra it is submitted by Shri Madon the learned senior counsel appearing for the defendant No.1 i.e. Respondent herein that the findings recorded by the learned Single Judge (R.C.Chavan, J.) would have to be restricted to the issue that was before the learned Single Judge in the said proceedings. The learned counsel would contend that the issue which was before the learned Single Judge was as to whether the Court could suo moto refer the parties to arbitration. The learned counsel would contend that in so far as the said aspect is concerned the learned Single Judge has confirmed the findings of the City Civil Court wherein the City Civil Court has observed that the parties could not be suo moto referred to arbitration. The learned senior counsel would contend that in so far as the present case is concerned, the three prerequisites that are mentioned in the judgment in Sukanya Holdings (supra) have been complied with by the respondent/defendant no.1 jpc 7 wp10886-11.sxw and therefore the impugned order need not be interfered with in the writ jurisdiction of this Court under Article 227 of the Constitution of India. 9. Having heard the learned senior counsel appearing for the parties at some length and having perused the impugned order in my view here is no merit in the above petition. In so far as the submission of the learned senior counsel for the petitioners that the findings recorded by the learned Single Judge (R.C. Chavan, J) would operate as res judicata qua the application u/s 8 of the Arbitration & Conciliation is concerned, in my view the said submission is mis-founded. The issue before the learned Single Judge as rightly contended by the learned senior counsel appearing for respondent was as to whether the parties could be suo moto referred to arbitration. It is in the said context, that the findings have been recorded in the said order. The issue as to whether the parties could be referred to arbitration in the light of arbitration clause 16 of the partnership deed could never have been before the learned Single Judge as no application under Section 8 of the Arbitration & Conciliation Act till then was filed by the defendant. It is therefore observed in the concluding part of the said judgment that if an application under Section 8 is filed, the same would be considered in accordance with law. In my view therefore, the findings if any recorded by the learned Single Judge in the judgment jpc 8 wp10886-11.sxw and order dated 27th July, 2010 would have no consequence in of far as the application filed by the respondent/defendant No.1 under section 8 is concerned. 10. In so far as the issue as to whether the prerequisites for the parties for being referred to arbitration are satisfied or not, a useful reference could be made to the judgment of the Apex Court in Sukanya Holdings (supra). In Para 12 of the said judgment, the prerequisites before the parties could be referred to arbitration are mentioned. The said prerequisites can be conveniently culled out from the judgment and reproduced hereunder: 1. the parties to the arbitration agreement have not filed any such application for referring the dispute to the arbitrator; 2. in a pending suit, such application is not filed before submitting first statement on the substance of the dispute; 3. such application is not accompanied by the original arbitration agreement or duly certified copy thereof. Relying upon the said judgment and the three prerequisites mentioned in Para 12, the learned senior counsel appearing for the petitioners would contend that none of the three prerequisites have been satisfied by the defendant no.1 and therefore reference to arbitration by the trial Court was erroneous. The leaned counsel for the petitioners laid much store on the second prerequisite, inasmuch as it is jpc 9 wp10886-11.sxw the contention of the learned counsel that the said application under section 8 of the Arbitration & Conciliation Act has to be filed before submitting the first statement on the substance of the dispute. 11. The learned senior counsel for the petitioners would contend that the application being filed much after the filing of the affidavit in reply to the Motion and after a period of almost a year since filing of the suit cannot be said to be an application which has been filed at the first instance. The said issue would be addressed a bit later in this order. Suffice it to say that in so far as the prerequisite- 1 is concerned, the said requirement has been met, inasmuch as in terms of Clause 16 of the partnership deed, there is an arbitration clause and that in terms of the said agreement, an application under section 8 has been filed by the defendant No.1. In terms of prerequisite-3 an application under section 8 has been filed along with the certified copy of the partnership deed. The said fact has not been seriously disputed by the learned senior counsel for the petitioners. 12. Now coming to the aspect as to whether the application has been filed before submitting the first statement to the substance of the dispute, in the said context, useful reference can be made to the judgment of the Apex Court Booz Allen & Hamilton Inc. (Supra). jpc 10 wp10886-11.sxw The issue before the Apex Court was whether the appellant in the said case has submitted his first statement on the substance of the dispute before filing of an application under section 8 of the Arbitration & Conciliation Act. In the said case, an objection was taken to the maintainability of the application under Section 8 on the ground that an affidavit in reply had been filed by the appellant opposing the interim relief sought by the plaintiff in the said suit in question. It has been held by the Apex Court in para 17 of the judgment as under: “17. Not only filing of the written statement in a suit, but filing of any statement, application, affidavit filed by a Defendant prior to the filing of the written statement will be construed as ‘submission of a statement on the substance of dispute’, if by filing such statement/application/ affidavit, the Defendant shows his intention to submit himself to the jurisdiction of the court and waive his right to seek reference to arbitration. But filing of a reply by a Defendant, to an application for temporary injunction/attachment before judgment/appointment of Receiver, cannot be considered as submission of a statement on the substance of the dispute, as that is done to avoid an interim order being made against him. It has been held by the Apex Court that filing of a reply by a defendant to an application for temporary injunction/attachment before judgment/appointment of the Court Receiver cannot be considered as the submission of the first statement on the substance of the jpc 11 wp10886-11.sxw dispute as the same is done to avoid the interim order being made against him. The Apex Court has further gone to hold that even in the absence of a disclaimer, filing a detailed abjection to an application for interim relief cannot be considered to be submission of the first statement on the substance of dispute resulting in submitting oneself to the jurisdiction of the Court. 13. In the light of what has been held by the Apex Court in Booz Allen and Hamilton Inc. ( supra), that the facts of the present case would have to be seen. In the present case, as mentioned hereinabove, the defendant No.1 has filed his affidavit in reply to the Notice of Motion seeking interim injunction filed by the plaintiffs. Significantly in the same reply, an objection has been taken to the jurisdiction on two fold grounds firstly, the bar of section 42 under the Slum Act, 1971 and secondly on the ground that the suit is not maintainable in view of the arbitration clause in the partnership deed. Hence, the defendant No.1 , in terms of the law laid down by the Apex Court in Booz Allen & Hamilton Inc. (Supra), cannot be said to have submitted to the jurisdiction of the Court, and merely filing a reply to the application for interim injunction would not tantamount to submitting the first statement on the substance of the dispute. In my view therefore, all the three prerequisites as mentioned in Sukanya jpc 12 wp10886-11.sxw Holdings (Surpa) have been satisfied in the instant case. 14. A reading of the impugned order discloses that the trial Court has considered the law laid down by the Apex Court and after applying it to the facts of the present case and also considering the mandate of section 8 of the Arbitration & Conciliation Act, has allowed the said Chamber Summons No. 866 of 2010, thereby referring the parties to arbitration. 15. In my view, no exception could be taken to the order passed by the trial Court. There is no irregularity or illegality committed by the trial Court in passing the impugned order. In that view of the matter, no case for interdiction in the writ jurisdiction of this Court under Article 227 of the Constitution of India is made out. The Writ Petition is accordingly dismissed with no order as to costs. (R. M. SAVANT, J.)