Case: Greaves Cotton Limited Vs. United Machinery And Appliances

Section 8 (1), provision has been made to the effect that the party intending to go in for arbitration must do so in his "first statement on the substance of the dispute" and not later than that. In other words, only if in the first statement on the substance of the dispute he does not make such prayer that he is debarred from making that prayer later. Section 8(1) of the New Act is, thus, an Improvement upon the provisions of Section 34 of the old Act......."8. In Rashtriya Ispat Nigam Ltd. and another v. Verma Transport Co., 2006(4) R.C.R.(Civil) 478 : (2006) 7 SCC 275 interpreting the expression "first statement on the substance of the dispute", this Court has held as under: -"36. The expression "first statement on the substance of the dispute" contained in Section 8(1) of the 1996 Act must be contradistinguished with the expression "written statement". It employs submission of the party to the jurisdiction of the judicial authority. What is, therefore, needed is a finding on the part of the judicial authority that the party has waived its right to invoke the arbitration clause. If an application is filed before actually filing the first statement on the substance of the dispute, in our opinion, the party cannot be said to have waived its right or acquiesced itself to the jurisdiction of the court. What is, therefore, material is as to whether the petitioner has filed his first statement on the substance of the dispute or not, if not, his application under Section 8 of the 1996 Act, may not be held wholly unmaintainable....."9. This Court in Rashtriya Ispat Nigam Ltd. (supra) further held as under: -"42. Waiver of a right on the part of a defendant to the lis must be gathered from the fact situation obtained in each case. In the instant case, the court had already passed an ad interim ex parte injunction. The appellants were bound to respond to the notice issued by the Court. While doing so, they raised a specific plea of bar of the suit in view of the existence of an arbitration agreement. Having regard to the provisions of the Act, they had, thus, shown their unequivocal intention to question the maintainability of the suit on the aforementioned ground."10. In Booz Allen and Hamilton Inc. v. SBI Homes Finance Limited and others, 2011(5) R.C.R.(Civil) 168 : (2011) 5 SCC 532 while dealing with the question, this Court, in paragraph 19 of the judgment, has laid down the law on the similar issue as under: -"19. Where a suit is filed by one of the parties to an arbitration agreement against the other parties to the arbitration agreement, and if the defendants file an application under Section 8 stating that the parties should be referred to arbitration, the court (judicial authority) will have to decide:(i) whether there is an arbitration agreement among the parties;(ii) whether all the parties to the suit are parties to the arbitration agreement;(iii) whether the disputes which are the subject-matter of the suit fall within the scope of arbitration agreement;(iv) whether the defendant had applied under Section 8 of the Act before submitting his first statement on the substance of the dispute; and(v) whether the reliefs sought in the suit are those that can be adjudicated and granted in an arbitration."11. This Court in Booz Allen and Hamilton Inc. (supra), has further observed in paragraph 25 as under: -"25. Not only filing of the written statement in a suit, but filing of any statement, application, affidavit by a defendant prior to the filing of the written statement will be construed as "submission of a statement on the substance of the dispute", if by filing such statement/application/affidavit, the defendant shows his intention to submit himself to the jurisdiction of the court and waives 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."12. In view of the law laid down by this Court, as above, we find it difficult to agree with the High Court that in the present case merely moving an application seeking further time of eight weeks to file the written statement would amount to making first statement on the substance of the dispute. In our opinion, filing of an application without reply to the allegations of the plaint does not constitute first statement on the substance of the dispute. It does not appear from the language of sub-section (1) of Section 8 of the 1996 Act that the Legislature intended to include such a step like moving simple application of seeking extension of time to file written statement as first statement on the substance of the dispute. Therefore, in the facts and circumstances of the present case, as already narrated above, we are unable to hold that the appellant, by moving an application for extension of time of eight weeks to file written statement, has waived right to object to the jurisdiction of judicial authority.13. From the order impugned, it also reflects that before disposing of application under Section 8 of the 1996 Act the High Court has not looked into questions as to whether there is an agreement between the parties; whether disputes which are subject-matter of the suit fall within the scope of arbitration; and whether the reliefs sought in the suit are those that can be adjudicated and granted in arbitration. In view of the above, we think it just and proper to request the High Court to decide the application afresh in the light of law laid down by this Court in para 19 of the judgment in Booz Allen and Hamilton Inc. v. SBI Homes Finance Limited and others (supra) except the point, which has already been answered in the present case by us.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]12. In view of the law laid down by this Court, as above, we find it difficult to agree with the High Court that in the present case merely moving an application seeking further time of eight weeks to file the written statement would amount to making first statement on the substance of the dispute. In our opinion, filing of an application without reply to the allegations of the plaint does not constitute first statement on the substance of the dispute. It does not appear from the language of sub-section (1) of Section 8 of the 1996 Act that the Legislature intended to include such a step like moving simple application of seeking extension of time to file written statement as first statement on the substance of the dispute. Therefore, in the facts and circumstances of the present case, as already narrated above, we are unable to hold that the appellant, by moving an application for extension of time of eight weeks to file written statement, has waived right to object to the jurisdiction of judicial authority.13. From the order impugned, it also reflects that before disposing of application under Section 8 of the 1996 Act the High Court has not looked into questions as to whether there is an agreement between the parties; whether disputes which are subject-matter of the suit fall within the scope of arbitration; and whether the reliefs sought in the suit are those that can be adjudicated and granted in arbitration. In view of the above, we think it just and proper to request the High Court to decide the application afresh in the light of law laid down by this Court in para 19 of the judgment in Booz Allen and Hamilton Inc. v. SBI Homes Finance Limited and others (supra) except the point, which has already been answered in the present case by us.