Judgment:
J.P. Singh, J.
1. Admitted. Heard.
This petition under Section 115 of the Code of Civil Procedure is directed against the orders dated 9.12.2002 and 14.1.2003. Vide order dated 9.12.2002 the learned Trial Court Civil Judge deferred the order on the application under Section 8 of the Arbitration and Conciliation Act, 1996 and directed the petitioners (defendants in the Trial Court) to file written statement and raise preliminary objection regarding the arbitration clause. The matter was adjourned to 14.1.2003 as the last opportunity for filing written statement. On 14.1.2003 at 1.20 p.m. due to non-filing of written statement the defense was struck off and the matter was fixed for ex parte evidence of the plaintiffs.
2. I have heard Mr. Sanjay Bajaj, learned Counsel for the petitioners and Mr. J.P.S. Sirohi, learned Counsel for the respondents and have gone through the impugned orders.
3. Briefly the facts are that the respondents herein (plaintiffs in the Trial Court hereinafter referred to as 'plaintiffs') had filed a suit for declaration and injunction on the ground that they had booked a house in joint ownership, with the defendant No. 1 in the building which was to come up at Ghaziabad, U.P. Construction did not start. The plaintiffs had paid one installment of Rs. 1,10,250/-. Meanwhile the defendants changed the number of the house to be sold. The said change was not acceptable to the plaintiffs and thereforee the plaintiffs wanted the dispute to be decided by an agreed arbitrator. But since the particulars were not being given by the defendants and there was delay in starting the construction on the part of the defendants, the plaintiffs filed a suit for declaration and injunction against the defendants.
4. It is the case of the petitioner-defendants that they straightaway filed an application under Section 8 of the Arbitration and Conciliation Act, 1996 and mentioned therein that there was an arbitration agreement and the matter should be referred to the agreed arbitrator. Reply to the said application was filed by the plaintiffs and the matter was fixed for arguments on the application under Section 8 of the Arbitration and Conciliation Act, 1996. The arguments were heard on 4.9.2002 and the matter was posted for order on 3.10.2002. The case was again fixed for 9.12.2002 but on the said date the impugned order directing filing of written statement was passed and the matter was adjourned to 14.1.2003, when the defendants came to know that instead of deciding company's application under Section 8 of the Arbitration Act, the order for filing written statement was passed. The petitioner-defendants contend that due to an accident of defendant's car defendant No. 2 reached the Court late on 14.1.2003 by which time the impugned order striking out the defense had been passed.
5. Learned Counsel for the petitioner-defendants has submitted that on the very face of it the order is against law and has read out Section 8 of the Arbitration and Conciliation Act, 1996 which is as follows:
8. Power to refer parties to arbitration where there is an arbitration agreement.
(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 so applies not later than when submitting his first statement on the substance of the dispute, refer the parties to arbitration.
(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.
(3) Notwithstanding that an application has been made under Sub-section (1) and that the issue is pending before the judicial authority, an arbitration may be commenced or continued and an arbitral award made.
6. As against this learned Counsel for the respondent-plaintiffs has submitted that the petitioner-defendants were indulging in cheating with the plaintiffs and the order was rightly passed in the facts and circumstances of the case.
7. Considering all the facts and circumstances of the case I am of the view that when admitted there was a dispute between the parties and at the first instance the defendants moved an application under Section 8 of the Arbitration and Conciliation Act, the Trial Court should have proceeded to hear the application rather than deferring the order and directing the defendants to file written statement and raise preliminary objections. That route, in my view, would be against the spirit of Section 8 of the Arbitration and Conciliation Act, 1996. I am, thereforee, of the opinion that the orders passed by the learned Civil Judge cannot be sustained because the Trial Court has failed to exercise its jurisdiction to decide the application under Section 8 of the Arbitration and Conciliation Act, 1996 and has thus acted with material irregularity also in the exercise of its jurisdiction.
8. I, thereforee, set aside both the orders and direct the learned Civil Judge to decide the application under Section 8 of the Arbitration and Conciliation Act, 1996 in accordance with law.
9. The parties are directed to appear before the learned Civil Judge on 18th December, 2006.
10. Nothing said herein will tantamount to expression of opinion on the merits of the case.