1 2026:CGHC:16060-DB AFR HIGH COURT OF CHHATTISGARH AT BILASPUR First Appeal No. 421 of 2018 1 - M/s Rose Construction, Through Its Proprietor - Sardar Mohammad S/o Shri Mohammad Ismile, Aged About 69 Years, R/o Devendra Nagar, Near Nehru Nagar, Beside C S E B Office, Ameri Road Bilaspur Tahsil And District Bilaspur Chhattisgarh., District : Bilaspur, Chhattisgarh ... Appellant/Plaintiff versus 1 - The Manager M/s Jayaswal Neco Industries Limited, Village - Vankheta, Tahsil And District Tamnar, District Raigarh Chhattisgarh., District : Raigarh, Chhattisgarh ... Respondent/Defendant For Appellant : Mr. Sudeep Verma, Advocate For Respondent : Mr. Ashish Surana, Advocate (through video conferencing) DB- Hon'ble Shri Justice Sanjay K. Agrawal Hon’ble Shri Justice Sachin Singh Rajput Judgment On Board 08.04.2026 2 Sanjay K. Agrawal, J. 1. Invoking jurisdiction of this Court under Section 96 of the CPC, the appellant/plaintiff has preferred this appeal against the impugned judgment and decree dated 09/08/2017 (Annexure A/1) passed by learned 4th Additional District Judge, Raipur in Civil Suit No. 17-A/2013 whereby the application filed by the respondent/defendant under Order 7 Rule 11 of CPC read with Section 8 of the Arbitration and Conciliation Act, 1996 (hereinafter, “the Act of 1996) has been allowed and consequently, the suit filed by the appellant/plaintiff has been rejected. 2. The aforesaid challenge has been made on the following factual backdrop :- 2.1. Appellant/plaintiff filed a suit for recovery of Rs. 11,00,000/- along with 18% interest from 14/05/2009 stating inter alia that the appellant/plaintiff is a construction company and they were given work order for construction of underground tunnel on 15/03/2008 and the total cost of work was Rs. 24,00,000/-. Even after completion of entire work, payment of Rs. 11,00,000/- is still outstanding and it is not being paid by the respondent/defendant despite several demands being made by the appellant/plaintiff, hence, the civil suit had to be filed vide Annexure A/2. 2.2. Respondent/defendant filed its written statement (Annexure A/3) and opposed the suit filed by the appellant/plaintiff on merits 3 and further filed an application under Order 7 Rule 11 of CPC read with Section 8 of the Act of 1996 on 18/07/2016 (Annexure A/4) submitting in substance that the suit filed by the appellant/plaintiff is not maintainable for the reason that as per clause 15 of the work agreement executed between the parties, there is provision for settlement of dispute through arbitration in accordance with the provisions contained under the Act of 1996, as such, the plaint filed by the appellant/plaintiff deserves to be rejected. 2.3. Appellant/plaintiff filed reply (Annexure A/5) and opposed the application filed by the respondent/defendant under Order 7 Rule 11 of CPC read with Section 8 of the Act of 1996 stating that though there is an arbitration clause in the agreement executed between the parties, but there is no provision in the agreement to establish that the dispute cannot be dispose of by the Civil Court, as such, the Civil Court has the jurisdiction to entertain the suit and therefore, the application filed by the respondent/defendant is liable to be rejected. 2.4. 2.4. Learned trial Court, vide its impugned judgment and decree dated 09/08/2017 (Annexure A/1), rejected the plaint filed by the appellant/plaintiff by allowing the application filed by the respondent/defendant under Order 7 Rule 11 of CPC read with Section 8 of the Act of 1996 holding that as per clause 15 of the agreement, the dispute has to be settled through arbitration. 4 Feeling aggrieved and dissatisfied by the impugned judgment and decree, this appeal has been preferred by the appellant/plaintiff. 3. Mr. Sudeep Verma, learned counsel for the appellant/plaintiff, would submit that the trial Court is absolutely unjustified in rejecting the plaint by granting the application filed by the respondent/defendant under Order 7 Rule 11 of CPC read with Section 8 of the Act of 1996. He would further submit that if Section 8(1) of the Act of 1996 has to be invoked, matter has to be referred to the Arbitrator after ascertaining that there exists a valid arbitration agreement between the parties, as such, the impugned judgment and decree passed by the trial Court dismissing the plaint of the appellant/plaintiff is liable to be set aside. 4. Mr. Ashish Surana, learned counsel for the respondent/defendant appearing through video conferencing, would support the impugned judgment and decree and submit that the instant is liable to be dismissed. 5. We have heard learned counsel for the parties, considered their rival submissions made herein-above and went through the records with utmost circumspection. 6. At this stage, it would be appropriate to notice the provision contained under Section 8(1) of the Act of 1996, which states as under :- 5 “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 to the arbitration agreement or any person claiming through or under him, so applies not later than the date of submitting his first statement on the substance of the dispute, then, notwithstanding any judgment, decree or order of the Supreme Court or any Court, refer the parties to arbitration unless it finds that prima facie no valid arbitration agreement exists.” 7. From a careful perusal of the aforesaid provision, it appears that for the application of Section 8, it is absolutely essential that there should be an agreement between the parties (see: Atul Singh v. Sunil Kumar Singh1). The expression ‘first statement on the substance of the dispute’ contained in sub-section (1) of Section 8 must be contra-distinguished 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 judicial authority that the party has waived his right to invoke the arbitration clause. 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 (see: Rashtriya Ispat Nigam Ltd. v. Verma Transport Company2). 8. Similarly, the language of Section 8 is peremptory in nature. Therefore, in cases where there is an arbitration clause in the 1 2008 (2) SCC 602 2 AIR 2006 SC 2800 6 agreement, it is obligatory for the Court to refer the parties to arbitration in terms of their arbitration agreement and nothing remains to be decided in the original action after such an application is made except to refer the dispute to an arbitrator {see: P. Anand Gajapathi Raju v. P.V.G. Raju (Dead)3}. 9. Reverting to the facts of the instant case in light of the provision contained under Section 8(1) of the Act of 1996 which has been considered by their Lordships of the Supreme Court in the aforesaid judgments (supra), undisputedly, there is an arbitration clause being clause 15 in the work order dated 15/03/2008 issued by the respondent/defendant in favour of the appellant/plaintiff, which states as under :- “15. Arbitration between parties : In case of any dispute, a sole arbitrator appointed by JNL; shall settle the same. Arbitration proceedings shall be conducted in accordance with the provision of the Arbitration and reconciliation Act 1996 or any statutory modification thereof. The Venue of arbitration shall be Raipur (C.G.) India.” 10. As such, there is no dispute with regard to valid arbitration agreement existing between the parties on the date of the filing of the suit i.e. 02/05/2011. However, though in its first statement (written statement) dated 15/03/2012, the respondent/defendant has taken a specific plea that the matter has to be adjudicated in arbitration proceeding as there is an arbitration clause in the shape of clause 15 present in the work agreement but later the 3 2000 (4) SCC 539 7 respondent/defendant filed an application under Order 7 Rule 11 of CPC read with Section 8 of the Act of 1996 on 18/07/2016 stating that the suit filed by the appellant/plaintiff is not maintainable in view of Clause 15 of the work order and the trial Court, ultimately, allowed the application filed by the respondent/defendant and thereby, rejected the plaint filed by the appellant/plaintiff. In our considered opinion, the trial Court has committed a grave legal error in rejecting the plaint filed by the appellant/plaintiff as though he has invoked Section 8(1) of the Act of 1996, but instead of straightway rejecting the plaint, the trial Court could have referred the parties to an Arbitrator. The power of Court under Section 8(1) of the Act of 1996 to refer parties for arbitration would and must necessarily include, imply and inhere in it the power and jurisdiction to appoint Arbitrator also. 11. In view of the aforesaid analysis, the impugned judgment and decree passed by the trial Court is partly set aside and matter is referred for arbitration. With the consent of the parties, in exercise of power conferred under Section 8(1) of the Act of 1996, we hereby appoint Hon’ble Shri Justice Deepak Tiwari (Retired), former Judge of this Court, as an Arbitrator to resolve the dispute between the parties in accordance with the provisions of the Act of 1996. Registry is directed to communicate this order to Hon’ble Shri Justice Deepak Tiwari, at his address - 22, Dharampura, IAS Colony, 8 Raipur (C.G.), to enter upon reference after complying with the provisions contained under Section 12(1) and (2) of the Act of 1996 and adjudicate the dispute expeditiously in accordance with the Act of 1996. 12. Accordingly, this first appeal is allowed to the extent indicated herein-above. No order as to cost(s). 13. A decree be drawn-up accordingly. Sd/- Sd/- (Sanjay K. Agrawal) (Sachin Singh Rajput) Judge Judge Harneet