The Delhi High Court, comprising Justices Shalinder Kaur and Navin Chawla, has ruled that once the right to file a written statement is closed, a party cannot seek reference to arbitration under Section 8 of the Arbitration and Conciliation Act, 1996.
This judgment was delivered in the case R. Santosh v. One97 Communications Ltd. [RFA(COMM) 130/2025], where the Court dismissed a Regular First Appeal challenging a trial court's decree ordering the appellant to refund ₹5,00,000, along with 8% interest and litigation costs.
The Respondent, a service provider offering telecom-based solutions including ticketing services, entered into a Ticketing Agreement and an Addendum Agreement with the Appellant, owner of Sharada Talkies. As part of the agreement, the Respondent advanced ₹5,00,000 as an interest-free refundable security deposit.
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However, after the Appellant's theatre ceased operations in April 2022, the Respondent terminated the agreements and sought a refund of the deposit. When no repayment was made, a recovery suit was filed.
Despite being served with summons, the Appellant failed to file a written statement within time, resulting in the closure of that right on 13.10.2023. The Appellant also did not cross-examine the Respondent's witness. After the Respondent led unchallenged evidence through PW-1, including the Ticketing Agreement, Addendum, statement of accounts, and termination notice, the trial court decreed the suit on 25.11.2024.
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Later, the Appellant filed an application under Order VII Rule 11 CPC and raised a plea for arbitration under Section 8 of the Arbitration Act. The trial court dismissed the application, noting that it was filed after the evidence stage and was essentially a tactic to recover the lost opportunity to defend.
The High Court agreed, observing:
“The Appellant’s failure to contest the evidence led by the Respondent and present a valid defence, leads to the conclusion that the Respondent’s claims are substantiated.”
The Court rejected the argument that the amount was not received by the Appellant personally but credited to the account of ‘Mysore Talkies’. The Court held that the Appellant signed the agreements and failed to prove any connection between himself and the alleged third party.
The bench referred to Hitachi Payments Services (P) Ltd. v. Shreyans Jain and R.K. Roja v. U.S. Rayudu, emphasizing that once the right to file a written statement is closed, the arbitration application is not maintainable.
“Liberty to file an application under Order VII Rule 11 CPC cannot be made as a ruse for retrieving the lost opportunity to file the written statement.”
Finding no merit in the appeal, the High Court upheld the trial court’s decree and dismissed the appeal.
Case Title: R. SANTOSH versus ONE97 COMMUNICATIONS LTD
Case Number: RFA(COMM) 130/2025
For Appellant: Ms. R. Gayathri Manasa, Adv.
