BGR Energy Systems Ltd. v. TUV SUD South Asia Pvt. Ltd.

What happened

TUV SUD South Asia Private Limited, which provides certification, testing, auditing, inspection and training services, said that BGR Energy Systems Limited, an engineering, procurement and construction company, owed it ₹37,45,109 for invoices raised for independent technical evaluation services under a Techno-Commercial Proposal of 17 June 2019, and filed Commercial Original Suit No. 125 of 2026 in the Principal Commercial Court, Egmore, Chennai. Summons were served on 2 April 2026, but BGR did not file a written statement within 30 days or within the extended period of 120 days, and the Commercial Court set it ex parte on 16 June 2026. The plaintiff filed its proof affidavit on 10 July 2026, and on 13 August 2026 BGR applied under Order IX Rule 7 of the Code of Civil Procedure to set the ex parte order aside (I.A. No. 1 of 2026). By an order of 3 September 2026 the Commercial Court allowed that application on payment of costs of ₹7,000, but recorded that BGR's right to file a written statement had been forfeited and permitted it only to take part in the cross-examination of the plaintiff's witnesses. BGR then applied under section 8 of the Arbitration and Conciliation Act, 1996 (I.A. No. 2 of 2026), relying on clause 15 of the Standard Terms and Conditions incorporated in the proposal, which provides for arbitration. The Commercial Court dismissed the application on 3 September 2026, relying on SCG Contracts India Pvt. Ltd. v. K.S. Chamankar Infrastructure Pvt. Ltd., and BGR appealed under section 37(1)(a) of the Act read with section 13(1) of the Commercial Courts Act, 2015. BGR argued that the Code of Civil Procedure regulates only the filing of the written statement and sets no limit for a section 8 application, that section 8(1) requires the application to be made not later than the first statement on the substance of the dispute but does not take away the right to seek a reference once the right to file a written statement is forfeited, that SCG Contracts concerns the written statement and not section 8, that the Commercial Court should have examined the agreement, and that under Booz Allen and Hamilton Inc. v. SBI Home Finance Ltd. the mere passage of time does not amount to submission to the jurisdiction of the civil court.

Questions before the court

• Can a defendant in a commercial suit whose right to file a written statement has been forfeited still apply under section 8 of the Arbitration and Conciliation Act, 1996 for a reference to arbitration?

Why the court ruled this way

The Court noted that the Commercial Courts Act, 2015 brought in strict timelines to speed up commercial disputes, including the amendments to Order V Rule 1, Order VIII Rule 1 and Order VIII Rule 10 of the Code of Civil Procedure under which the written statement must be filed within 30 days, extendable for recorded reasons and on costs but not beyond 120 days from service of summons, after which the right is forfeited and the court shall not take it on record (paragraphs 10–13). Section 8(1) requires the application to be made not later than when the party submits its first statement on the substance of the dispute, which in a suit means the written statement, so a reference can be sought up to the filing of the written statement and not beyond, and a party whose right has been forfeited by statute cannot use a reference as a procedural device to circumvent the mandatory time limit (paragraphs 14–16). It relied on the Delhi High Court Division Bench in SPML Infra Ltd. v. Trisquare Switchgears Pvt. Ltd., which held that once the right to file a statement of defence is closed the right to apply under section 8 is closed too, and on decisions of the Calcutta, Delhi, Karnataka and Bombay High Courts to the same effect (paragraphs 17–23). Since the Commercial Courts Act makes the timelines mandatory and states the consequence of default, a defendant that did not use its opportunity to file the written statement could not now ask for a reference, and permission to cross-examine the plaintiff's witnesses did not allow it to use section 8 to get round the time limit (paragraph 24).

Controlling point

A defendant in a commercial suit who has lost the right to file a written statement by not filing it within 120 days of service of summons cannot apply under section 8 of the Arbitration and Conciliation Act, 1996 for a reference to arbitration, and being allowed to cross-examine the plaintiff's witnesses does not revive that right.

Order and next steps

The Court dismissed the arbitration appeal and confirmed the Commercial Court's order, made no order as to costs and closed the connected miscellaneous petition.

Practical implications

A defendant in a commercial suit that wants the dispute arbitrated should apply under section 8 before the time for filing the written statement runs out, and an arbitration clause will not save an application made after the 120-day period.

Limits of this ruling

• The Court dealt with a suit governed by the Commercial Courts Act, 2015 and its timelines for the written statement, and did not decide whether the agreement contained a valid arbitration clause or the merits of the ₹37,45,109 claim. The judgment gives 2 April 2026 as the date of service of summons and 16 June 2026 as the date of the ex parte order and does not state the day on which the 120 days ended; this note repeats the dates as given.