The Delhi High Court has ruled that continuing to contest a legal suit does not automatically waive the right to arbitration when a Section 8 objection was raised in written submissions and arguments. In the case of Madhu Sudan Sharma v. Omaxe Ltd, the court held that if a party raises a specific objection based on Section 8 during the application for leave to defend the suit, and reiterates this objection in subsequent written statements and arguments, it cannot be deemed to have waived the right to arbitration.
The case involved an MOU executed in 2005 between the appellants and the respondent for the acquisition of land. The respondent filed a lawsuit seeking recovery under Order XXXVII of the CPC, and the appellants contested, citing issues like the existence of an arbitration agreement. Despite objections, the court decreed the suit in 2012. The appellants continued to assert the Section 8 objection throughout legal proceedings.
The court clarified that a Section 8 objection, when raised in the application for leave to defend the suit, cannot be considered belated. It stated that the first statement on the substance of the dispute is the written statement, and a Section 8 application can be made with or before filing the written submission. The court also emphasized that once an arbitration clause is extracted in written submissions, there is no need for a separate application under Section 8.
The court rejected the argument that subsequent actions by the appellants, such as contesting the suit, constituted a waiver of their right to invoke Section 8. It held that continuing to contest a suit, despite raising an objection to its maintainability due to an arbitration agreement, does not imply a waiver of the right to arbitration.
As a result, the court set aside the impugned order and directed the parties to initiate arbitral proceedings. The ruling reinforces the importance of recognizing Section 8 objections raised in written submissions and arguments, even when the party continues to contest the suit.