M/S HAPUR ROLLER FLOUR MILLS AND ANOTHERversusM/S SHRI VARDHMAN ROLLER FLOUR MILLS AND 2 OTHERS

                                                                      A.F.R.

         HIGH COURT OF JUDICATURE AT ALLAHABAD

           FIRST APPEAL FROM ORDER No. - 2226 of 2025

M/S Hapur Roller Flour Mills And Another
                                                             .....Appellant(s)
                                   Versus
M/S Shri Vardhman Roller Flour Mills And 2 Others
                                                           .....Respondent(s)

Counsel for Appellant(s)              :     Akanksha Gaur
Counsel for Respondent(s)             :     Anurag Sharma, Rahul Sahai

Court No. - 39
                     HON'BLE ABDUL SHAHID, J.

1. Heard learned counsel for the defendants/appellants and learned counsel
for the plaintiffs/respondent nos. 1 and 2.

2. The present appeal has been filed against the impugned judgement and
order dated 15.07.2025 passed by Additional District Judge, Ist, Hapur, in
Civil Appeal No. 24 of 2025 (M/S Vardhman Rollers Flour Mills Vs.
Rajendra Sharma and others).

3. Learned counsel for the appellants/defendants has submitted that, as per
Clause 19 of the Tenancy Agreement dated 07.03.2024, it has been clearly
stated and agreed between the appellants and the respondents that, in case of
any change in the partnership, such change shall be incorporated only after
obtaining prior approval of the appellants. She has further submitted that
Clause 25 of the Tenancy Agreement dated 07.03.2024 clearly stipulates
that, in the event of any dispute between the parties to the agreement, the
matter shall be referred to an arbitrator, who shall be appointed with the
consent of the parties, and the proceedings shall be governed in accordance
with the Arbitration and Conciliation Act, 1996.

4. Learned counsel for the appellants has further submitted that, by way of a
notarized partnership deed/agreement dated 21.10.2024, a new partner,
namely Shri Ashish Jain, S/o Shri Ashok Kumar Jain, has been inducted by
the respondents (first set), and Smt. Amita Jain, with whom the appellants
had entered into the tenancy agreement dated 07.03.2024, has retired from
the partnership firm of the respondents. The respondents failed to inform the
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appellants about the aforesaid development, inasmuch as such addition is in
clear violation of Clause 19 of the Tenancy Agreement dated 07.03.2024.

5. Therefore, in view of Clause 19 of the Tenancy Agreement, Respondent
No. 2, who has been inducted as a partner and has been granted power of
attorney pursuant to the deed dated 10.09.2024, does not have any locus to
file the instant original suit, since Respondent Nos. 2 and 3 did not inform
the appellants about the said change in the partnership or the appointment of
Respondent No. 2 as the power of attorney holder. She has relied upon
Section 8 of the Arbitration and Conciliation Act, 1996, which is quoted
hereinbelow:

     "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.
     (2) The application referred to in sub-section (1) shall not be entertained
     unless it is accompanied by the original arbitration agreement or a duly
     certified copy thereof:
     Provided that where the original arbitration agreement or a certified
     copy thereof is not available with the party applying for reference to
     arbitration under sub-section (1), and the said agreement or certified
     copy is retained by the other party to that agreement, then, the party so
     applying shall file such application along with a copy of the arbitration
     agreement and a petition praying the Court to call upon the other party to
     produce the original arbitration agreement or its duly certified copy
     before that Court.
     (3) Notwithstanding that an application has been made under sub-section
     (1) and that the issue is pending before the judicial authority, an
     arbitration may be commenced or continued and an arbitral award
     made."

6. Learned counsel for the appellants has further submitted that the first
statement on the substance of dispute does not include; (i) applications
relating interim application, (ii) jurisdictional objections or (iii) procedural
matters as relied upon by her on law laid down by the Hon'ble Supreme
Court in Rashtriya Ispat Nigam Limited and another Vs. Verma
Transport Co. (2006) Volume 7 SCC 275 wherein it is held that the first
statement needs the written statement and not every application or reply filed
prior thereto. She has further submitted that in view of Booz Allen and
Hamilton Inc. Vs. SBI Home Finance Ltd. and others (2011) Volume 5
SCC 532, the court clarified that if a defendant wants to seek reference to
the arbitration under Section 8 of the Arbitration and Conciliation Act, the
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                                 3

application must be filed before or at the time of filing the written statement.
She has further submitted that the partnership firm of the respondent is a u
nregistered firm and therefore in view of the Section 9 of the Indian
Partnership Act, 1932; (1) no suit to enforce a right arising from a contract
or conferred by this Act shall be instituted in any court by or on behalf of
any person suing as a partner in the firm against the firm or any person
alleged to be or to have been a partner in the firm unless the firm is
registered and the person suing is or has been shown in the register of firms
as a partner in the firm. No suit to enforce a right arising from a contract
shall be instituted in any court by or on behalf of a firm against any third
party unless the firm is registered and the person suing are or have been
shown in the register of firms as partners in the firm.

7. Learned counsel for the appellants has submitted that the judgment and
order passed by the learned Additional District Judge in Civil Appeal No. 24
of 2025 (M/s Sri Vardhman Roller Flour Mills and another v. Rajendra
Sharma and others), decided on 15.07.2025, is not in accordance with law
and is liable to be set aside, and that the appeal deserves to be allowed.

8. The said civil appeal has arisen from the proceedings of Original Suit No.
174 of 2024 (M/s Vardhman Roller Flour Mills and others v. Rajendra
Sharma and others). The learned appellate court has held that the
appellant/defendant filed his first statement on the substance of the dispute
in Application No. 15-C under Order XXXIX Rule 4 CPC, seeking
modification of the ex parte injunction order. Hence, the application under
Order XXXIX Rule 4 CPC, which was submitted on 07.10.2024 before the
learned trial court, constituted his first statement on the substance of the
dispute.

9. Thereafter, the application under Section 8 of the Arbitration and
Conciliation Act, 1996 could not have been presented. The learned appellate
court has further held that the appellant/defendant filed the application under
Section 8 of the Act, 1996 on 23.10.2025. It has also been noted that the
learned trial court, contrary to the settled principles of law, not only
entertained the said application but also allowed it and dismissed the suit in
violation of the provisions of law. Accordingly, the said order was set aside,
and Original Suit No. 174 of 2024 was restored to its original number vide
judgment and order dated 15.07.2025. Hence, the present appeal has been
filed.

10. Original Suit No. 174 of 2024 was filed before the Civil Judge (Senior
Division)-II, Hapur by M/s Vardhman Roller Flour Mills as plaintiff no. 1
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                                4

and Ashok Kumar Jain as plaintiff no. 2 against defendant no. 1, Rajendra
Sharma; defendant no. 2, Balvir Sharma; and defendant no. 3, M/s Hapur
Roller Flour Mills, seeking the relief of permanent injunction to the effect
that the plaintiffs shall not be evicted from the premises in question and that
the defendants shall not interfere with their functioning except in accordance
with due process of law.

11. The tenancy agreement relied upon by learned counsel for the
appellants/defendants, dated 07.05.2024, was executed between Rajendra
Sharma (defendant no. 1) and M/s Shree Vardhman Roller Flour Mills
(plaintiff no. 1) through its partner, Amit Jain. The said tenancy agreement is
for a period commencing from 01.03.2024 to 28.02.2033.

12. Learned counsel for the appellants has relied upon Clause 25 of the said
tenancy agreement, which is a registered document, stipulating that in the
event of any dispute arising between the parties, an arbitrator shall be
appointed with the consent of both parties, and the award passed by the
arbitrator shall be binding upon them. The entire process shall be conducted
in accordance with the Arbitration and Conciliation Act, 1996.

13. Learned counsel for the appellants has also filed a supplementary
affidavit stating that the respondents have vacated the disputed premises;
however, they are not permitting the appellants to enter the premises under
the garb of the interim order dated 17.09.2024 passed by the learned Civil
Judge-II, Hapur, allegedly with a view to extract money from the appellants.

14. It is further submitted by learned counsel for the appellants that the
respondents have failed to pay the electricity dues to the electricity
department, due to which the electricity connection was disconnected. Upon
becoming aware of these facts, the appellants deposited the entire
outstanding dues on behalf of the respondents in order to prevent
disconnection of the electricity supply.

15. Learned counsel for the respondents has filed objections and submitted
that, on 07.03.2024, a registered tenancy agreement was executed between
Rajendra Sharma, partner of M/s Hapur Roller Flour Mills (defendant-
appellant/owner of the property), and M/s Shri Vardhman Roller Flour Mills
through its partner, Smt. Amita Jain (tenant). The aforesaid tenancy
agreement was registered, and the tenancy was valid for a period of nine
years, w.e.f. 01.03.2024 to 28.02.2033, at a monthly rent of Rs. 1,00,000/-
plus GST. A total sum of Rs. 19,00,000/- (Rs. 14,00,000/- and Rs. 5,00,000/-
as security) was paid to the defendants/appellants, and the rent was to be
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increased by 15% after three years. After execution of the agreement, the
plaintiffs took possession of the flour mill and carried out maintenance and
repairs of the plant and machinery. In order to maintain the quality and
standard of their products, the plaintiffs spent Rs. 27,00,000/-, which was to
be adjusted towards rent payable to the defendants/owners. The rent was
accordingly paid till July, 2024.

16. It is further submitted that, on 14–15 August, 2024, defendant no. 1
restrained the plaintiffs and attempted to forcibly evict them and their
workers in order to stop their manufacturing business. Again, on 20.08.2024,
the defendant created pressure and attempted to evict the plaintiffs from the
flour mill. On 25.08.2024, the defendants and their agents allegedly used
criminal force to restrain the plaintiffs from continuing their manufacturing
activities and attempted to evict them forcibly. These facts giving rise to the
cause of action have been set out in paragraph 9 of the civil suit filed on
17.09.2024.

17. In the meantime, a letter dated 08.08.2024 was issued to the
defendants/appellants by the State Bank of India, Hapur Main Branch,
regarding renewal of the credit facility and setting out various
compliances/directions for sanction of a credit facility to the tune of Rs. 10
crores for the purchase of plant and machinery. The bank directed defendant
no. 2 (Rajendra Sharma) to cancel the registered lease agreement bearing
Serial No. 3175 dated 07.03.2024, executed by M/s Hapur Roller Flour Mills
in favour of Shri Vardhman Roller Flour Mill.

18. The State Bank of India further stated that the renewal of the credit
facility had been due since 30.03.2024 and that nearly five months had
elapsed; as per RBI guidelines, the account would be classified as a non-
performing asset (NPA) on 26.09.2024. The property/flour mill in dispute
had already been mortgaged/hypothecated to the bank against the credit
facility availed, and the defendants were directed to furnish a non-
encumbrance certificate by cancelling the lease deed.

19. Thus, the property forming the subject matter of the tenancy agreement
dated 07.03.2024 had been mortgaged against the credit facility availed by
the defendants, and the bank had directed them to cancel the said agreement.
This fact has been stated in paragraph 12 of the civil suit.

20. The defendant/appellant has committed fraud by executing the tenancy
agreement and concealing the material fact that the property was mortgaged
against the credit facility availed by the defendant. The defendant/appellant
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has also used criminal force to restrain and evict the plaintiff from his
peaceful possession. Accordingly, the plaintiff has rightly filed the civil suit
before the competent court.

21. He has further submitted that the well recognized examples of non-
arbitral disputes are: (i) disputes relating to rights and liabilities which give
rise to or arise out of criminal offences; (ii) matrimonial disputes relating to
divorce, judicial separation, restitution of conjugal rights, child custody; (iii)
guardianship matters; (iv) insolvency and winding up matters; (v)
testamentary matters (grant of probate, letters of administration and
succession certificate); and (vi) eviction or tenancy matters governed by
special statutes where the tenant enjoys statutory protection against eviction
and only the specified courts are conferred jurisdiction to grant eviction or
decide the disputes. The present appeal lacks merit and is liable to be
dismissed.

22. Learned counsel for the appellants/defendants has relied on paragraph 14
of Krishan Radhu v. Emaar MGF Construction Pvt. Ltd., decided by
the High Court of Delhi at New Delhi in CS (OS) No. 3281/2014, IA No.
7709/2015 (under Section 8 of the Arbitration and Conciliation Act),
and OA No. 210/2015, dated 21.12.2016 that there is no dispute as to the
meaning of the words "first statement on the substance of the dispute" used
in Section 8 (1) of the Act, either before or after amendment. In the context
of civil suit, such expression obviously would mean the "written statement"
required to be filed in terms of the provision contained in Order 8 Rule 1 of
the Code of Civil Procedure, 1908 (CPC). But, for the purposes of
proceedings before other judicial authorities or forums where the Code of
Civil Procedure may not strictly apply, it would mean and include the
response (or reply) filed by the party against whom action is brought to
explain his defences. In Rashtriya Ispat Nigam (supra), the Supreme Court
observed that this expression must be contra-distinguished with the
expression 'written statement'. It implies submission of the party to the
jurisdiction of the judicial authority and, therefore, what is 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 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.

23. Learned counsel for the plaintiffs/respondent nos. 1 and 2 has submitted
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that the appellants/defendants put in appearance on 04.10.2024 and has
relied upon the supplementary affidavit filed by the appellants/defendants.
Thereafter, the appellants/defendants consistently participated in the
proceedings of the original suit on 07.10.2024, 08.10.2024, 10.10.2024,
11.10.2024, 18.10.2024, 24.10.2024, 29.10.2024, 07.11.2024, 14.11.2024,
26.11.2024, and 28.11.2024. The appellants/defendants filed an application
under Order XXXIX Rule 4 CPC for modification of the ex parte injunction
and also filed an application under Section 8(1) of the Act on 23.01.2025.

24. Learned counsel for respondent nos. 1 and 2 has submitted that the
appellants/defendants first put in appearance on 04.10.2024; therefore, the
period of limitation for filing the written statement expired on 04.01.2025.
However, the appellants/defendants did not file the written statement within
the stipulated period and instead filed the application under Section 8(1) of
the Act on 23.01.2025.

25. Learned counsel for respondent nos. 1 and 2 has relied upon the law laid
down by the High Court of Delhi at New Delhi in SSIPL Lifestyle Private
Limited v. Vama Apparels (India) Private Limited and another,
2020:DHC:1211, wherein paragraph 22 it is held as follows:...

     "22. Thus, as per the above decision, in view of the amended language in
     Section 8, the limitation for filing of the written statement under CPC for
     non-commercial suits and under the Commercial Courts Act for
     commercial suits would be applicable for filing of an application under
     Section 8. In view thereof, the Court concluded that the maximum period
     would be 90 days for ordinary civil suits and 120 days for commercial
     suits."

26. It is admitted that the appellants/defendants first put in appearance before
the learned trial court in the original suit on 04.10.2024. Thereafter, the
appellants/defendants filed an application under Order XXXIX Rule 4 CPC
for modification of the interim injunction and also filed applications under
other provisions of law, thereby consistently participating in the proceedings
of the original civil suit. However, within the stipulated period of 90 days,
the appellants/defendants did not file a written statement before the learned
trial court.

27. The appellants/defendants have taken the plea that they had not yet filed
their first statement on the substance of the dispute, and that the aforesaid
applications cannot be be considered as such, as only the written statement is
to be treated as the first statement on the substance of the dispute. The
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                                    appellants/defendants have, however, consistently participated in the matter
                                    and filed various applications, including an application under Order XXXIX
                                    Rule 4 CPC. Despite the expiry of the stipulated period of 90 days for filing
                                    the written statement, the appellants/defendants did not file any application
                                    under Section 8 of the Arbitration and Conciliation Act, 1996.

                                    28. The submission of the appellants/defendants that the period of 90 days is
                                    directory and not mandatory cannot be accepted in the present case. Such
                                    relaxation may be considered where the defendants have failed to submit the
                                    written statement within the stipulated period despite due diligence.
                                    However, in the present case, the appellants/defendants consistently
                                    participated in the proceedings and filed applications under various
                                    provisions of law, yet neither submitted a written statement within 90 days
                                    nor filed an application under Section 8 of the Act within the said period.

                                    29. The appellants/defendants have also failed to satisfy the Court that they
                                    complied with the provisions of Section 8(2) of the Act. It is an admitted
                                    position that the application under Section 8(1) of the Act was filed on
                                    23.01.2025, which is clearly beyond the stipulated period of 90 days. The
                                    appellants/defendants cannot be permitted to invoke the process of law at
                                    their convenience and without due diligence.

                                    30. In view of the facts and circumstances of the case, and the nature of the
                                    dispute between the parties in Original Suit No. 963 of 2025, this Court is of
                                    the view that there is neither any illegality nor irregularity in the impugned
                                    order dated 15.07.2025 passed by the Additional District Judge-I, Hapur, in
                                    Civil Appeal No. 24 of 2025 (M/s Vardhman Rollers Flour Mills v. Rajendra
                                    Sharma and others), arising out of Original Suit No. 174 of 2024.

                                    31. Accordingly, the appeal is liable to be dismissed and is hereby
                                    dismissed.

                                    April 29, 2026
                                    K.K. Maurya
                                                                                              (Abdul Shahid,J.)




Digitally signed by :-
KAMLESH KUMAR MAURYA
High Court of Judicature at Allahabad