# Agtec Industries Pvt. Ltd., Greater Noida v. M/s Nikon Systems Pvt. Ltd., New Delhi

- **Citation:** (2021) 11 ILRA 1
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2021-09-16
- **Bench:** Suneet Kumar
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/agtec-industries-pvt-ltd-greater-noida-v-m-s-nikon-systems-pvt-ltd-new-delhi-46441
- **Pages:** 5

## Headnote

A. Civil Law - Arbitration and Conciliation
Act, 1996-Section 37-suit was instituted
for eviction and arrears of rent-appellant
filed an application under Order VII Rule
11 of the C.P.C.-during the pendency of
the trial proceedings, appellant filed an
application under section 8 for settlement
through mediation-Section 8 of Arbitration
Act does not oust the jurisdiction of the
civil court in landlord-tenant dispute, but
leaves it to the party to the agreement to
make a choice between the court or
arbitration, not later than the date of
submitting his first statement on the
substance of the dispute-the rejection of
the application filed by the appellant
under Order VII Rule 11 have no bearing
on the maintainability of an application
under section 8 of the Arbitration Act-It is
not the case of the appellant that the
settlement Agreement was obtained by
fraud,
misrepresentation
or
coercion.
(Para 1 to 16)

The appeal is dismissed. (E-6)

List of Cases cited:

## Text

11 All. Agtec Industries Pvt. Ltd., Greater Noida Vs. M/s Nikon Systems Pvt. Ltd., New Delhi
1
(2021)11ILR A1
APPELLATE JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 16.09.2021

BEFORE

THE HON'BLE SUNEET KUMAR, J.

Appeal U/S 37 of Arbitration and Conciliation Act 1996
No. 38 of 2021

Agtec Industries Pvt. Ltd., Greater Noida
 ...Appellant
Versus
M/s Nikon Systems Pvt. Ltd., New Delhi
 ...Respondent

Counsel for the Appellant:
Sri Gaurav Tripathi, Sri Syed Imran Ibrahim

Counsel for the Respondent:
Sri Syed Fahim Ahmed, Sri H.N. Singh

A. Civil Law - Arbitration and Conciliation
Act, 1996-Section 37-suit was instituted
for eviction and arrears of rent-appellant
filed an application under Order VII Rule
11 of the C.P.C.-during the pendency of
the trial proceedings, appellant filed an
application under section 8 for settlement
through mediation-Section 8 of Arbitration
Act does not oust the jurisdiction of the
civil court in landlord-tenant dispute, but
leaves it to the party to the agreement to
make a choice between the court or
arbitration, not later than the date of
submitting his first statement on the
substance of the dispute-the rejection of
the application filed by the appellant
under Order VII Rule 11 have no bearing
on the maintainability of an application
under section 8 of the Arbitration Act-It is
not the case of the appellant that the
settlement Agreement was obtained by
fraud,
misrepresentation
or
coercion.
(Para 1 to 16)

The appeal is dismissed. (E-6)

List of Cases cited:

1. Himangi Enterprises Vs Kamaljeet Singh Ahliwalia
(2017) AIR SC 5137

2. Vidya Drolia & ors. Vs Durga Trading Corporation
(2020) 0 Supreme (SC) 727: 2021 2 SCC 1

3. Rashtriya Ispat Nigam Ltd. & anr. Vs Verma
Transport Company(2006) 7 SCC 275

4. Ardy International (P) Ltd. Vs Inspiration Clothes &
U & anr.(2006) 1 SCC 417

(Delivered by Hon'ble Suneet Kumar, J.)

1. Heard Shri Gaurav Tripathi, along with
Shri Syed Imran Ibrahim, learned counsel for the
appellant and Shri H.N. Singh, learned Senior
Counsel assisted by Shri Syed Fahim Ahmed,
learned counsel for the opposite party.

2. The present appeal has been filed
against the order dated 14 January 2021, passed
by the learned Additional District Judge, Court
No. 5, Gautam Budh Nagar, Noida, Uttar
Pradesh in SCC Suit No. 09 of 2019 (M/s Nikon
Systems Private Ltd. vs. Agtec Industries Private
Ltd.). By the impugned order, the learned Court
has rejected the application filed by the
appellant/defendant under Section 8 of the
Arbitration
and
Conciliation
Act,
19961,
declining to refer the parties to arbitration in
terms of the registered rent agreement.

3. The facts giving rise in the present
appeal, briefly stated, is that the opposite party,
herein, is the landlord of the demised premises
bearing No. 38-B, Udyog Vihar, Ecotech-II,
Greater Noida, District Gautam Budh Nagar.
The property was rented to the appellant for
business
and
commercial
purpose
for
manufacturing sheet metal and engineering
goods. The parties reduced the terms of the
agreement vide rent agreement dated 7 August
2018. Clause 13.5 of the rent agreement
stipulated that in the event of a dispute arising
between the parties, the matter would be referred
2 INDIAN LAW REPORTS ALLAHABAD SERIES
for arbitration to a panel of arbitrators. Clause
13.5 is extracted:

"Clause 13.5 - Arbitration

In the event of any dispute or
difference arising out of or relating to or with
reference to or in connection with Sub-Lease
Deed, including the termination of the SubLease Deed, the same shall be referred for
arbitration to a panel of arbitrators, one to be
appointed jointly by the two arbitrators so
nominated, whose decision shall be final and
binding on both the parties. The arbitrators so
appointed shall give a reasoned award. The
venue of the arbitration shall be at New Delhi
and the arbitration proceedings shall be in
accordance with the Indian Arbitration and
Conciliation
Act,
1996.
The
arbitration
proceedings shall be conducted in English
language."

4. It appears that a dispute arose between
the parties with regard to payment of rent.
Aggrieved, the opposite party instituted a suit
before the Provincial Small Cause Court seeking
eviction and arrears of rent. The appellant upon
receiving the summons filed an application
under Order VII Rule 11 of the Code of Civil
Procedure, 19732, contending that in view of the
arbitration clause, the court lacks jurisdiction,
accordingly, prayed that the plaint be rejected
and the parties be relegated for arbitration as per
terms of the rent agreement. The application
came to be rejected vide order dated 16
September 2019. Learned trial court while
dismissing the application under Order VII Rule
11, placed reliance on the decision rendered by
the Supreme Court in Himangi Enterprises vs.
Kamaljeet
Singh
Ahliwalia3.
Aggrieved,
appellant approached this Court by filing a
petition under Article 227 of the Constitution of
India, being Writ Petition No. 7446 of 2019
(M/s Agtec Industries Private Ltd. vs. Nikon
Systems Pvt. Ltd.) The petition came to be
dismissed by this Court on 17.10.2019,
upholding the order of the trial court.

5. The appellant chose not to assail the
order, consequently, the judgement and order
passed by this Court affirming the trial court
order attained finality between the parties.
Thereafter, appellant within thirty days from
dismissal of the petition under Article 227,
appeared and filed written statement on 5
November 2020, along with objection to an
application filed by the opposite party/plaintiff
under Order VIII Rule 10 for rejecting the
defence of the appellant. Thereafter, appellant
filed an application before the court below for
referring the matter to mediation under Section
89 of the C.P.C. The parties agreed to mediation,
accordingly, parties were referred to the
Mediation Centre. The mediation between the
parties succeeded. The Settlement Agreement
was duly signed by the the parties and filed
before the court. This fact is noted by the trial
court in its order dated 23 December 2020. As
per Settlement Agreement dated 10 December
2020, the appellant (second party to the
agreement) agreed that the outstanding arrears of
rent till November 2020 stands at Rs.
1,68,53,522/-. In compliance of the terms of the
Settlement Agreement, appellant paid upfront an
amount at Rs. 20,00,000/- towards part payment
of arrears of rent from April 2020 till November
2020, at the signing of the Settlement
Agreement, and vacated the demised premises.

6. It is alleged that to scuttle the Settlement
Agreement and not to pay the agreed amount
stipulated therein, an application under Section 8
of the Arbitration Act was filed by the appellant
on 23 December 2020, raising an objection that
in view of the law mandated by the Supreme
Court in Vidya Drolia and others Vs. Durga
Trading Corporation4, the rent agreement
between the parties ought to be referred to
arbitration in terms of the rent agreement. The
11 All. Agtec Industries Pvt. Ltd., Greater Noida Vs. M/s Nikon Systems Pvt. Ltd., New Delhi
3
trial court by the impugned order has rejected
the application. The order is under challenge.

7. Learned Counsel for the appellant
submits that Section-8 application filed under
the Arbitration Act was maintainable. It was
filed before submitting to the jurisdiction of the
trial court. It is urged that the written statement,
though, filed earlier was not taken on record by
the trial court. In other words, it is submitted that
appellant had not submitted to the jurisdiction of
the court or on the substance of the dispute.
Learned counsel for the appellant has placed
reliance on the Allahabad Amendment of OrderVIII Rule-11, to submit that in the event the
defendant does not file defence within 30 days
from the date of appearance, his defence would
be struck off. Learned counsel, in support of his
submission, placed reliance on the decisions
rendered by the Supreme Court in Rashtriya
Ispat Nigam Ltd. and another v. Verma
Transport Company5 and Ardy International
(P) Ltd. v. Inspiration Clothes & U and
another6. It is sought to be urged the expression
'first statement on the substance of the dispute'
contained in Section 8(1) of the Arbitration Act
must be contra-distinguished with the expression
'written statement'. If an application is filed
before actually filing the first statement on the
substance of the dispute, the party cannot be said
to have waived his right or acquiesced himself to
the jurisdiction of the court.

8. Per contra, learned counsel for the
respondent submits that appellant appeared and
filed written statement within thirty days after
the dismissal of his application under Order VII
Rule 11 of C.P.C.. The appellant by raising
objection/defence on the substance (merit) of the
case submitted to the jurisdiction of the trial
court. Admittedly, appellant thereafter got the
matter settled through mediation. It is, thereafter,
appellant submitted an application under Section
8 of the Arbitration Act which was not
maintainable in view of the rejection of
application under Order VII Rule 11 of C.P.C..
The trial court had to decree the suit in terms of
the Settlement Agreement. The appeal lacks
merit and is liable to be dismissed in limine.

9. In the facts of the instant case, the
decisions relied upon by the learned counsel for
the appellant is distinguishable. The objections
were filed to the interim injunction application
wherein the court was of the view that objection
to an application for interim injunction would
not tantamount to the defendant having waived
his right or acquiesced itself to the jurisdiction
of the court.

10. In the facts of the case at hand, the suit
was instituted for eviction and arrears of rent,
there was no occasion of passing any interim
injunction. The suit had to be decided finally on
merit. On receiving summons, the appellant
appeared and filed an application under Order
VII Rule 11 of the C.P.C. questioning the
jurisdiction of the court in view of the arbitration
agreement. The application under Order VII
Rule 11 of the C.P.C. would not tantamount to
acquiescence to the jurisdiction of the court. The
application came to be rejected in view of the
law applicable on the date of passing of the
order. The order was carried in a petition under
Article 227 of the Constitution, which came to
be rejected, consequently, the order attained
finality. Thereafter, the appellant appeared and
filed written statement on the substance (merit)
of the dispute, thus, submitting to the
jurisdiction of the court. In other words,
appellant waived his right under the rent
agreement and acquiesced to the jurisdiction of
the court. During pendency of the trial
proceedings, appellant filed an application on 18
February
2020,
for
settlement
through
mediation, accordingly, parties were referred to
the Mediation Centre. Parties participated in the
mediation proceeding and entered into a
settlement outside the court vide Settlement
Agreement dated 23 December 2020. The
4 INDIAN LAW REPORTS ALLAHABAD SERIES
appellant, acted upon the settlement by making
upfront payment towards rent and also vacated
the premises. It is, thereafter, to thwart the
Settlement Agreement, an application was filed
under Section 8 for referring the dispute as per
the rent agreement. In my opinion, parties have
settled the dispute outside the court, the trial
court was required to decree the suit in terms of
the Settlement Agreement under Order XXIII
Rule 3 of the C.P.C. The application under
Section 8 at that stage to refer the matter to
arbitration would not satisfy the condition
stipulated under Section 8 of the Arbitration Act,
i.e., appellant waived his right by acquiescence
to the jurisdiction of the court by filing written
statement― first statement on the substance of
the dispute. Section 89 and Section 8 stand on
different footing.

11. The ratio expressed in Himangi (supra)
that
landlord
disputes
governed
by
the
provisions of Transfer of Property Act, 1882, are
not arbitrable as this would be contrary to public
policy. The ratio laid down came to be overruled
in Vidya Drolia (supra) (decided on 14.12.2020).
Relevant portion of para 49 is extracted:

"In view of the aforesaid, we overrule
the ratio laid down in Himangni Enterprises and
hold that landlord-tenant disputes are arbitrable
as the Transfer of Property Act does not forbid
or foreclose arbitration. However, landlordtenant disputes covered and governed by rent
control legislation would not be arbitrable when
specific court or forum has been given exclusive
jurisdiction to apply and decide special rights
and obligations. Such rights and obligations can
only be adjudicated and enforced by the
specified
court/forum,
and
not
through
arbitration."

12. Admittedly, the written statement was
filed by the appellant on 5 November 2020
before the law declared in Vidya Drolia;
Section 8 application was filed on 23 December
2020. As per Section 9 of C.P.C., civil court has
jurisdiction to try all suits of civil nature unless
barred explicitly or by implication. Section 8 of
Arbitration Act does not oust the jurisdiction of
the civil court in landlord-tenant dispute, but
leaves it to the party to the agreement to make a
choice between the court or arbitration, not later
than the date of submitting his first statement on
the substance of the dispute, notwithstanding
any judgment, decree or order of any court.

13. In the backdrop of the legislative
mandate the argument of the learned counsel for
the appellant that the written statement was not
taken on record by the court in view of the
pending application under Order VIII Rule 10
filed by the opposite party, lacks merit. No such
condition requiring an order of the court can be
read or inferred in Section 8 of the Arbitration
Act. Moment the defendant files his first
statement
(written
statement)
raising
objections/defence on the substance (merit) of
the dispute the embargo under Section 8
immediately operates. The order passed by the
court on the application of the respondent under
Order VIII Rule 10 is of no consequence. The
rejection of the application filed by the appellant
under Order VII Rule 11 would have no bearing
on the maintainability of an application under
Section 8 of the Arbitration Act in view of the
language explicitly providing "notwithstanding
any judgment, decree or order of the Supreme
Court or any court", but with a caveat that the
objection has to be raised not later than the date
of submitting the first statement on substance of
the dispute. In the facts of the case in hand, on 5
November 2020, the appellant filed his written
statement, the application under Section 8 of the
Arbitration Act filed, thereafter, was of no
consequence. Further, the court would have to
prima facie satisfy itself that there is a live
dispute, inter se, parties. In view of the
settlement reached between the parties arising
from the rent agreement, the dispute, if any, no
longer existed between the parties to be referred
11 All. M/S Akash Engineers & Builders Vs. U.P. Awas/Vikas Parishad & Ors.
5
to arbitration. The Arbitration Act facilitates
settlement of dispute through arbitration with
minimal interference of the court, provided there
is a dispute. It is not the case of the appellant
that the Settlement Agreement was obtained by
fraud, misrepresentation or coercion.

14. Learned counsel for the appellant failed
to point out any illegality, infirmity or
jurisdictional error in the impugned order.

15. It is clarified that no other ground was
pressed.

16. The appeal is, accordingly, dismissed
at the admission stage.

17. No Cost.
----------
(2021)11ILR A5
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: LUCKNOW 10.11.2021

BEFORE

THE HON'BLE RAJAN ROY, J.

ARBITRATION APPLICATION No. 38 of 2021

M/S Akash Engineers & Builders
 ...Applicants
Versus
U.P. Awas/Vikas Parishad & Ors.
 ...Opposite Parties

Counsel for the Applicants:
Pritish Kumar, Shantanu Gupta

Counsel for the Opposite Parties:
Ratnesh Chandra

A. Arbitration and Conciliation Act, 1996 -
Section 11 - challenge to-appointment of
arbitrator-the Housing Commissioner being
ineligible to himself act as Arbitrator in the
matter is also ineligible to appoint any
Arbitrator to resolve the dispute-agreement
relating to appointment of Arbitrator becomes
void
in
view
of
section
12(5)
of
the
Amendment Act-by virtue of section 12(5), if
any person who falls under any of the
categories specified in the Seventh Schedule
shall be ineligible to be appointed as the
arbitrator-the managing director becomes
ineligible by operation of law and also
becomes ineligible to nominate-the principle
here applies "Qui facit per alium facit per se"-
that which cannot be done directly may not be
done indirectly by engaging another outside
the prohibited area.(Para 1 to 22) (E-6)

List of Cases cited:

1. Perkins Eastman Architects DPC Vs. HSCC (India)
Ltd.(2020) AIR SC 59.

2. TRF Ltd. Vs Energo Engineering Projects Ltd.(2017)
AIR SC 3889

3. Roop Chand Vs. St. of Punj. (1963) AIR SC 1503

4. State Bank of India & anr. Vs. S.B.I. Employees
(1987) 4 SCC 370

5. Agnigundata Venikata Ranga Rao Vs. Indukuru
Ramachandra Reddy & ors. (2017) 7 SCC 694

(Delivered by Hon'ble Rajan Roy, J.)

1. Heard.

2. This is an application under section 11
of the Arbitration and Conciliation Act 1996
(hereinafter
referred
as
'Act
1996')
for
appointment of an Arbitrator.

3. Learned counsel for the applicant has
invited attention of the court to the Arbitration
Clause contained in Clause 32-C of the
Agreement, a copy of which is annexed as
Annexure-2 to the application.

4. The fact of the matter is that prior to
filing
of
this
application
the
Housing
Commissioner has appointed a retired District
Judge as Arbitrator to resolve the dispute.