Party Failing To File Written Submission Within Time Frame, Forfeits Right To File Sec. 8 Petition Under A&C Act: Delhi High Court

Brief Facts:

Surender Singh Sethi (“Respondent”) initiated a civil suit against Ranjana Bhasin (“Appellant”) in April 2022 before the Commercial Court surrounding around accounts reconciliation, debt recovery, and interest claims. Summons for the suit were issued to the Appellant in May 2022 but was refused by the Appellant, leading to deemed service. The Appellant engaged a legal representation and filed a memo of appearance before the Commercial Court in June 2022. However, the Commercial Court closed the window for Petitioner to file written submissions, proceeding ex-parte against her.

Subsequently, the Appellant filed an application under Section 8(1) of the Arbitration and Conciliation Act, 1996 (“Arbitration Act) praying that the parties be referred to arbitration. The Commerical Court rejected the application. Feeling aggrieved, the Appellant filed an appeal before the Delhi High Court (“High Court”) challenging the decision of the Commercial Court.

The Appellant argued that although she refused the service of summons, she didn't have access to the plaint and related documents. Consequently, the time limit for submitting written submissions and an application under Section 8 of the Arbitration Act should commence from a point of meaningful service.

Observations by the Commission:

The High Court rejected the contention raised by the Appellant and noted that the Appellant refused the summons and therefore, it was deemed as served. Further, it held that the Appellant's application under Section 8 of the Arbitration Act was lodged more than three months subsequent to the provision of the plaint and accompanying documents.

The High Court referred to its decision in SPML Infra Ltd Vs. M/s Trisquare Switchgears Pvt Ltd and held that if a party neglects to submit an application under Section 8(1) within the timeframe allotted for filing the initial statement addressing the substance of the dispute, which typically includes a written statement in the context of a lawsuit, that party would relinquish its entitlement to apply under Section 8(1) the Arbitration Act.

While acknowledging that the pre-2015 version of Section 8 lacked a specific deadline for filing such an application, the High Court in that case emphasized that the overall structure and provisions of the Act suggest that applications under Section 8 should be made promptly. It noted that seeking recourse to arbitration after the legal proceedings have progressed beyond the initial stage would no longer be permissible.

Therefore, the High Court found no deficiency in the decision reached of Commercial Court in rejecting the Appellant's application under Section 8(1) of the Arbitration Act.

Case Title: Ranjana Bhasin vs Surender Singh Sethi & Ors.

Citation: 2024 LiveLaw (Del) 159

Case Number: FAO (COMM) 12/2024 & CM APPL. 3706/2024, CM APPL. 3707/2024 and CM APPL. 3708/2024

Advocate for the Appellant: Mr. Raghavendra Mohan Bajaj, Adv. with Mrs. Renu Handa Bajaj and Mr. Kanav Agarwal

Advocate for the Respondent: N.A.

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