The Delhi High Court has observed that a litigant can take different stands at different times but it cannot take contradictory and inconsistent shifting stands in the same case.
Dismissing a petition, which challenged a trial court order of June 2, 2023, the Bench of Justice V. Kameswar Rao and Justice Anoop Kumar Mendiratta noted that a party cannot be permitted to approbate and reprobate on the same facts, at the same time.
It said in the present matter, it was initially the case of the plaintiff that there was an arbitration clause, as per the terms and conditions of the Excise Invoices, and accordingly a legal notice dated January 2, 2021 was served by the plaintiff on the defendant no. 4, in a similar dispute between the parties.
But, the defendant no. 1 has denied the existence of the said Arbitration Clause, vide reply dated 09.01.2021.
But now, after filing of the present suit, the defendant has taken a U-Turn and again raised the objection that there exists an Arbitration Clause, as per the terms and conditions of the Excise Invoices, and therefore, the plaintiff should have resorted to Arbitration.
The Bench observed that if the Courts permitted the litigants to, for the purposes of litigation take a different stand from what they have been taking while complying with various laws, the Courts would be aiding and abetting such litigants to violate the laws, particularly fiscal laws and would be permitting the litigants to change their face from time to time to their advantage and to the detriment of public exchequer and the public at large.
The same cannot be permitted, it added and dismissed the plea as non-maintainable.
Appearing for the appellant, Advocates Samrat Nigam and Stuti Gupta contended that the District Judge has taken a hyper technical view in deciding the application under Section 8 of the Act of 1996, and has failed to appreciate that
(i) there is a valid arbitration agreement between the parties;
(ii) action should be brought before a judicial authority and that action should be the subject matter of the arbitration
(iii) either of the parties or any person related to the dispute can invoke the arbitration clause or agreement before the date of submitting their first statement on the substance of the dispute before the judicial authority
(iv) the application of the party to refer the case to arbitration should be filed with the original arbitration agreement or its duly certified copy.
They stated that the respondent invoked the arbitration clause by issuing notice under Section 21 of the Act of 1996, which was initially denied by the appellant under wrong advice.
There was a valid arbitration clause in the tax invoices and the District Judge has not given any finding on the existence of an arbitration agreement. The District Judge further failed to appreciate the conditions under Section 7(4) of the Act of 1996.
Under Section 8, the party merely needs to insinuate the Court about the arbitration clause before the filing of the first statement. Section 8 is mandatory in nature and if all the conditions thereof are satisfied, the judicial authority is obliged to refer the parties to Arbitration, they added.
They said the appellant denied the existence of Arbitration Agreement on receiving the notice invoking Arbitration.
The respondent therefore instituted a civil suit in Commercial Court. The Appellant thereafter filed an Application under Section 8 of the Arbitration & Conciliation Act, 1996 stating that the suit has to be dismissed as there is an Arbitration Clause and did not file the written statement within 120 days.
The Trial Court dismissed the application under Section 8 holding that a party (Appellant in the present case) cannot be permitted to approbate and reprobate on the same facts, at the same time and cannot be permitted to take inconstant and contradictory stands.
The appellant challenged the order of dismissal of Section 8 Application before the High Court. The High Court allowed the petition and held that the plea of approbate – reprobate on part of the Appellant was not the ground to decline reference of the parties to Arbitration.
The doctrine of approbate-reprobate invoked by the counsel for the respondents was a facet of the law of estoppel, it was also a law well settled that there cannot be an estoppel against a law. The law with regard to Section 8 of the Act of 1996 mandated reference of the parties to arbitration with minimal judicial interference.
Appearing for the respondent, Advocate Udit Maniktala contended that the respondent No.1 had sent a notice invoking arbitration on January 02, 2021 stating that there exists an arbitration agreement between the parties and that any dispute arising from the invoice should be referred to arbitration.
But the appellant/defendant No.1 denied the existence of any arbitration agreement between the parties vide reply letter dated January 09, 2021. He also stated that the appellant has approached the learned District Judge with the application under Section 8 of the Act of 1996 as a dilatory tactic.
The appellant did not submit his first statement on the substance of dispute with regard to admissibility of the arbitration clause before the Shahdara District Legal Service Authority, despite appearing before it. As such, the appellant once again failed to point out the existence of the arbitration clause while exhausting the remedy of pre-institution mediation under Section 12A of the Commercial Courts Act, 2015.
Thereafter, the appellant was served summons on January 19, 2023 and on the dates of hearing (January 23, 2023 and February 27, 2023), the counsel for the appellant had sought time to file Written Statement and had not raised the objection with regard to the existence of arbitration agreement.
Under Section 8 (1) of the Act of 1996, the appellant ought to have shown the arbitration agreement before submitting his first statement on the substance of dispute, only then would a judicial authority refer the parties to arbitration. The appellant failed to demonstrate the admissibility of the arbitration clause as he had not pointed out the existence of an arbitration agreement during his first statement on the substance of the dispute, he added.
(Case title: ANR International Pvt Ltd vs Mahavir Singhal & Ors)
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