[Arbitration Act] Section 8 Application Must Be Filed Before Or Simultaneously With Written Statement: Calcutta High Court

The Calcutta High Court Bench of Justice Sabyasachi Bhattacharyya and Justice Subhendu Samanta held that when no application for reference to arbitration under Section 8 of the Arbitration Act is made by either party, the civil court may very well entertain the suit and proceed with the adjudication of the same on merits in accordance with law. Also, the court held that the Trial Judge committed a patent error of law on both counts: first, the suit could not have been dismissed under Section 8. And secondly, the Section 8 application, having not been filed before or even simultaneously with the written statement of the defendant, could not have been entertained at all by the trial Judge. Brief Facts: The appellant has challenged the impugned judgment and decree passed by the Trial Judge, wherein it allowed an application filed by the respondent under Section 8 of the Arbitration & Conciliation Act, 1996 to refer the dispute to arbitration. The appellant argues that even Section 8 does not contemplate a dismissal of the suit, but merely speaks about reference to arbitration. Also, the respondent did not file the application under Section 8 either simultaneously with or prior to the filling of the written statement, which was the first statement on the merits of the defence within the contemplation of Section 8. Hence, in any event, the application under Section 8 filed after the filing of the written statement in the Trial Court ought to have been dismissed by the Trial Judge. However, the respondent referred a judgment of the Delhi High Court in Madhu Sudan Sharma & Ors. Vs. Omaxe Ltd. (2023), wherein the court held that even if an application under Section 8 of the Act was not filed but a proper objection as to jurisdiction of the Civil Court on the ground of existence of an arbitration clause was taken in the written statement, the matter ought to be referred to arbitration. Observation of the court: The court observed that a bare perusal of Section 8 of the Act clearly shows that a judicial authority can only refer the matter to arbitration in view of the existence of an arbitration agreement/clause, if the party seeking such reference applies for such reference not later than the date of submitting his first written statement on the substance of the dispute. Moving further, the court held that it cannot rely on the judgment of the Delhi High Court in Madhu Sudan Sharma & Ors. Vs. Omaxe Ltd. (2023). And the court relied on the judgment in Sukanya Holdings (P) Ltd. Vs. Jayesh H. Pandya (2003), wherein the Supreme Court held that an application under Section 8 of the Act has to be filed before the filing of the first statement on the substance of the dispute. Additionally, the court affirmed that when no application for reference to arbitration under Section 8 of the 1996 Act is made by either party, the civil court may very well entertain the suit and proceed with the adjudication of the same on merits in accordance with law. Also, the court held that Trial Judge committed a patent error of law on both counts: first, the suit could not have been dismissed under Section 8. And secondly, the Section 8 application, having not been filed before or even simultaneously with the written statement of the defendant, could not have been entertained at all by the trial Judge. Consequently, the court allowed the appeal and dismissed the Section 8 application filed by the respondent. Case Title: Smt. Gitarani Maity -vs- 1A. Mrs. Krishna Chakraborty and others Case Number: FAT No. 308 of 2023 Counsel for the Appellant: Mr. Sourav Kumar Mukherjee, Mr. Kaushik Chowdhury, Ms. Sahana Pal. Counsel for the Respondents: Mr. Rajdeep Bhattacharya, Ms. Adrija Bhattacharya. Date of Judgment: 09.01.2025 Click Here To Read/Download The Order

[Arbitration Act] Section 8 Application Must Be Filed Before Or Simultaneously With Written Statement: Calcutta High Court

Soumya Chakrabarti

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