GREAVES COTTON LIMITEDversusUNITED MACHINERY AND APPLIANCES.

                           (2016] 12 S.C.R. 193


                    GREAVES COTTON LIMITED                                     A
                                     v.
             UNITED MACHINERY AND APPLIANCES.
                    (Civi!Appeal No. 12066of2016)
                          DECEMBER 14, 2016                                    B
      [J. CHELAMESWAR AND PRAFULLA C. PANT, JJ.]
         Arbitration and Conciliation Act, 1996 - s.5 rlw s.8 - Re-
  spondent filed a civil suit seeking decree towards loss and damage
  suffered by it on account of alleged breach of contract on the part
                                                                               c
  of the appellant - High Court issued summons - In respoilse,
  appellant filed application seeking extension of time to file written
. statement and invoked arbitration clause by sending a letter to the
  respondent - Respondent objected to invocation of arbitration on
  ground of pendency of civil suit in High Court - Thereafter,
  appellant filed application u/s. 5 rlw s.8 to get dispute referred to        D
  arbitral tribunal - High Court rejected the application on th,e_ ground
  that appellant by filing an application for extension of time to file
  written statement 'submitted first statement on the substance of the
  dispute' and waived its right to seek arbitration - On appeal, held:
  Merely moving an application seeking further time to file written
                                                                               E
  statement without replying to the allegations of the plaint would not
  amount to making first statement on the substance of the dispute -
  Also, it does not appear from the language of s.8(1) of the 1996 Act
  that legislature intended to include a step like filing simple application
  of seeking extension of time to file written statement as first
  statement on the substance of the dispute - Therefore, appellant             F
  did not waive right to object to the jurisdiction ofjudicial authority.
        Allowing the appeal, the Court
        HELD: 1. It is 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                G
 to making first statement on the substance of the dispute. Further,
 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 Arbitration and Conciliation Act, 1996 that the Legislature          H
                                    193
194            SUPREME COURT REPORTS                       r2o 161 12 s.c.R.



A     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, it cannot be held
      that the appellant, by moving an application for extension of time
      of eight weeks to file written statement, has waived right to object
B
      to the jurisdiction of judicial authority. [Para 12) · [199-D-F)
             2. The impugned order 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
c     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. Therefore, the High Court is requested
      to decide the application afresh in the light of law laid down by
      Supreme Court in para 19 of the judgment in Booz Allen mu/
D     Hamilton Inc. v. SB/ Homes Finance Limited mu/ others except
      the point, which has already been answered in the present case.
      [Paras 13, 14] [199-G-H; 200-A, BJ
            Rashtriya !spat Nigam Ltd. and another v. Verma
            Transport Co. (2006) 7 SCC 275 : 2006 (4) Suppl.
 E          SCR 332; Boaz Allen and Hamilton Inc. v. SB! Homes
            Finance Limited and others (2011) 5 SCC 532 : 2011
            (7) SCR 310 - relied on.
            Manna Lal Kedia and ors. v. State of Bihar and ors.
            AIR 2000 Pat 91; - referred to.
 F                             Case Law Reference
            AIR 2000 Pat 91                  referred to       .l?ara 7
            2006 (4) Suppl. SCR 332          relied on         Paras
             2011 (7) SCR 310                relied on         Para 10
 G         CIVILAPPELLATL JURISDICTION: Civil Appeal No. 12066
      of2016.
            From the Judgment and Order dated 16.09.2015 of the High Court
      ofCalcut~a in GA No. 2998 of2015 with CS No. 2 of2015.

            B. Adinarayan Roy, Sr. Adv., Deepak Khurana, Umesh Kumar
H     Khaitan, Ad vs. for the Appellant.
 GREAVES COTTON LIMITED v. UNITED MACHINERY AND                                195
                  APPLIANCES

      Guru Krishna Kumar, Sr. Adv., Ms. Sanjana Saddy, Mohan Raj,              A
Ritesh Agrawal, Advs. for the Respondent.
      The Judgment of the Court was delivered by
      PRAFULLA C. PANT, J. I. Leave granted.
       2. This appeal is directed against order dated 16.09.2015, passed       B.
by the High Court of Judicature at Calcutta in GA No. 2998 of2015 (in
CS No. 2 of 2015), whereby said Court has rejected the application
moved under Section 5 read with Section 8 of the Arbitration and
Conciliation Act, 1996, to get the dispute refeiTed to arbitral tribunal.
       3. Brief facts of the case are that appellant Greaves Cotton are        c
manufacturers of, inter alia, diesel engines. Respondent United
Machinery and Appliances are manufacturers of diesel generator sets.
An agreement containing arbitration clause was executed between them
for supply of diesel engines by the appellant to the respondent for using
the same in the diesel gensets. Arbitration clause contained in Article
10.1 of agreement dated 02.07.2007 (copy Annexure P-1) reads as under:         D
      "l 0.1 Any dispute or difference whatsoever arising between
      the parties out of or relating to the construction, meaning,
      scope, operation or effect of this Agreement or the validity
      or the breach thereof shall be referred to a Sole Arbitrator
      to be appointed by Greaves. The decision of the Arbitrator                E
      shall be final and binding upon the parties. The venue of
      arbitration shall be Mumbai. The arbitration proceedings
      shall, in all other aspects, be governed by the provisions of
      the Arbitration and Conciliation Act, 1996 or any
      subsequent statutory enactment in place thereof."
                                                                                F
        The plaintiff-respondent filed civil suit (CS No. 2of2015) seeking
decree for an amount of Rs.4,92, 76,854/- towards the loss and damages
suffered by it on account of alleged breach of contract on the part of
defendant-appellant. The High Court, in its original side, issued summons
in the suit on 06.01.2015 to the appellant. On the other hand, the appellant
                                                                                G
sent communication to the respondent claiming that it was the respondent
who has to pay outstanding dues of Rs.1,04,53, 103/- to the appellant.
The appellant, in response to the summons, on 07.07.2015 moved an
application (copy Annexure P-6) before the High Court seeking extension
oftime for eight weeks to file written statement and invoked the arbitration
clause contained in the agreement dated 02.07.2007 by sending a letter          H
196             SUPREME COURT REPORTS                            f20161 12 S.C.R.



A     dated 08.07.2015 (copy Annexure P-7) to the respondent, in response to
      which, vide communication dated 13.07.2015 (copy Annexure P-7), it
      denied the claim of the appellant, and objected to invocation ofarbitration
      clause on the ground of pendency of civil suit before the High Court.
      Thereafter, the appellant moved Application GA No. 2998of2015 (copy
      Annexure P-10) under Section 5 read with Section 8 of the Arbitration
8
      and Conciliation Act, 1996 (for short "the 1996 Act"), in the suit seeking
      reference of the disputes between the parties forming the subject-matter
      of the suit, for arbitration, which is rejected by the High Court on the
      ground that the appellant has, by moving application for extension of
      time to file written statement, waived its right to seek arbitration. Hence,
c     this appeal through special leave.
             4. We have heard learned counsel for the parties.
             5. Before further discussion, it is just and proper to refer to relevant
      provisions of law applicable to the case. Section 5 of the 1996 Act
      provides that notwithstanding anything contained in any other law for
D     the time being in force, in matters governed by Part I, no judicial authority
      shall intervene except where so provided in the said Part of the Act.
      Sub-section (I) of Section 8 of the 1996 Act, as it existed prior to
      23.10.2015, provided that a judicial authority before which an action is
      brought in a matter which is the subject of an arbitration shall, if a party
 E    so applies not later than when submitting his first statement on the
      substance of the dispute, refer the pai1ies to arbitration.
             6. The issue before us for consideration is whether filing of an
      application for extension of time to file written statement before a judicial
      authority constitutes - 'submitting first statement on the substance of
 F    the dispute' or not.
             7. For appreciating the intention of the Legislature, it is necessary
      for us to examine the change in law brought about by the 1996 Act. In
      Manna Lal Kedia and ors. v. State of Bifwr and ors. 1, comparing the
      provisions contained in Section 34 of the Arbitration Act, 1940 and Section
 G    8 of the 1996 Act, High Court of Patna has opined as follows: -
             "I 0. In terms of the Section 34 of the old Act a party was
             required to apply for reference of the dispute to the arbitrator
             before filing written statement or taking any other step in
             the proceeding. The words "or taking any other step" were

H      'AIR 2000 Pat 91
GREAVES COTTON LIMITED v. UNITED MACHINERY AND                             197
        APPLIANCES [PRAFULLA C. PANT, J.]

      interpreted to include even application for adjournment, for         A
      filing written statement. This obviously created anomalies,
      not only frustrating the objects of arbitration but also resulting
      in injustice in many cases. In order to bring about change
      in this regard in the New Act in Section 8 (I), provision has
      been made to the effect that the pai1y intending to go in for
                                                                            B
      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            c
      the old Act ......."
      8. In Raslitriy{{ /spat Nig{{m Ltd. and another v. Verma
Transport Co. 1 , interpreting the expression "first statement on the
substance of the dispute", this Cout1 has held as under: -
       "36. The expression "first statement on the substance of            D
       the dispute" contained in Section 8( I) 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.     E
       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        F
       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 Raslitriya /spat Nig{{m Ltd. (supra) further
held as under: -
                                                                            G
      "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
' (2006) 1 sec 21s                                                          H
198            SUPREME COURT REPORTS                          r2016112 S.C.R.



A           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."
B
            10. In Booz Allen and Hamilton Inc. v. SB/ Homes Fill(lnce
      Limited mu/ others3 , while dealing with the question, this Court, in
      paragraph 19 of the judgment, has laid down the law on the similar issue
      as under: -

c           "19. Where a suit is filed by one of the parties to an arbi-
            tration agreement against the other parties to the
            arbitration agreement, and "if the defendants file an
            application under Section 8 stating that the parties shou Id
            be referred to arbitration, the court Uudicial authority) will
            have to decide:
D           (i) whether there is an arbitration agreement among the
            parties;
            (ii) whether all the parties to the suit are pa11ies to the
            arbitration agreement;
            (iii) whether the disputes which are the subject-matter of
E           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
F           be adjudicated and granted in an arbitration."
             11. This Court in Booz Allen mu/ H(lmi/1011 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
G           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

H     '(2011) s sec 532
 GREAVES COTTON LIMITED v. UNITED MACHINERY AND                                  199
         APPLIANCES [PRAFULLA C. PANT, J.]

      reference to arbitration. But filing of a reply by a                       A
      defendant, to an application for temporary injunction/
      attachment before judgment/ appointment of Receiver,
      cannot be considered as submission ofa statement on the
      substance of the dispute, as that is done to avoid an interim
      order being made against him."
                                                                                 B
        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 sub-
stance of the dispute. In our opinion, filing of an application without
reply to the allegations of the plaint does not constitute first statement on    c
the substance of the dispute. It does not appear from the language of
sub-section (I) 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            D
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 ofjudicial authority..
       13. From the order impugned, it also reflects that before disposing        E
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        F
application afresh in the light oflaw laid down by this Court in para 19 of
the judgment in BoozA/le11 mu/ Hamilto11 J11c. v. SB/ Homes Fitumce
Limited and others (supra) except the point, which has already been
answered in the present case by us.
       14. Accordingly the appeal is allowed. The impugned order, passed          G
by the High Court is set aside. The High Court is requested to decide
the application (GA No. 2998 of2015 in CS No. 2 of2015) in the light of
observation, as above. No order as to costs.


Ankit Gyan                                                     Appeal allowed.    H