Section 

8: Power to refer parties to arbitration where there is an arbitration agreement

• Section 5 : Extent of judicial intervention — Notwithstanding

anything contained in any other law for the time being in force, in
matters governed by this Part, no judicial authority shall intervene
except where so provided in this Part.”
• Section 8 of the Arbitration and Conciliation Act, 1996 is
peremptory in nature.
• a judicial authority shall, on the basis of the arbitration
agreement between the parties, direct the parties to go for
arbitration.
• # P. Anand Gajapathi Raju & Ors. v. P.V.G. Raju, AIR 2000 SC
1) there is an arbitration agreement.
2) a party to the agreement brings an action in the Court against
the other party
 Section 8: Power to refer parties to arbitration where there is
an arbitration agreement
3) subject matter of the action is the same as the subject matter
of the arbitration agreement
4) the other party moves the Court for referring the parties to
arbitration before it submits his first statement on the
substance of the dispute.
• section 8 of the act differs from Article 8 of model law
• Article 8 enabled a court to decline to refer parties to
arbitration if it is found that the arbitration agreement is null
and void, inoperative or incapable of being performed.
• legislature has intentionally endowed less power on judicial
courts with respect to section 8 applications to make sure
the arbitration process is facilitated and unnecessary
intervention by courts be avoided.
 Section 8: Power to refer parties to arbitration where there is
an arbitration agreement
• Section 8 uses the expansive expression “judicial authority”
rather than “court”
• Wider than court, includes those authorities upon which the
judicial power of the state is conferred.
• “first statement on the substance of the dispute”
• The expression 'first statement on the substance of the
dispute' contained in Section 8(1) of the 1996 Act must be
contra-distinguished with the expression 'written statement'.
It employs submission of the party to the jurisdiction of the
judicial authority. What is, therefore, is needed is a finding on
the part of the judicial authority that the party has waived his
right to invoke the arbitration clause.
[Rashtriya Ispat Nigam Limited v M/S Verma Transport
Company 2006 (3) ArbLR 210 SC]
 Section 8: Power to refer parties to arbitration where there is
an arbitration agreement
• After 2015 amendment, not only the parties to an arbitration
agreement but any person claiming through or under the
party to arbitration can seek reference of the dispute to
arbitration.
• possibility of non-signatories being referred to arbitration in
arbitrations seated in India.
# Swiss Timing Ltd v. Commonwealth Games 2010 Organising
Committee (2014) 6 SCC 677
• The main contention of the defendant was that since a
complaint case has been filed against petitioner for
corruption, hence the reference of dispute to arbitration is
not tenable.
• To support this contention, the respondent placed reliance
on N. Radhakrishnan V. Maestro Engineers (2010) 1 SCC 72
 Section 8: Power to refer parties to arbitration where there is
an arbitration agreement
• In the said case, even after finding that the subject matter of
the suit was within the ambit of arbitration, the court refused
to refer the dispute to arbitration by holding that once the
contract is held to be void ab initio, the arbitration clause dies
then and there.
• the court held that, the law laid down in the Radhakrishnan
runs counter to the ratio laid down in Hindustan Petroleum
Corpn Ltd v. Pinkcity Midway Petroleums (2003) 6 SCC 503
• where the court observed that in an agreement the parties
before the civil court, there is a clause for arbitration, it is
mandatory for the civil court to refer the dispute to arbitrator.
• The court gave two reasons on the basis of which it
invalidated Radhakrishnan’s judgment i.e.
• (a) the judgment in Hindustan Petroleum though referred,
was not distinguished nor followed and
 Section 8: Power to refer parties to arbitration where there is
an arbitration agreement
• (b) provisions mentioned under section 16 of arbitration act
were also not brought before the court.
• The arbitration act emphasizes that an arbitration clause
which forms part of a contract shall be treated as an
agreement independent of the other terms of the contract.
• there is no inherent risk of prejudice to any party in
permitting arbitration to proceed simultaneously with
criminal proceedings since findings recorded by arbitral
tribunal are not binding in criminal proceedings.
• in an eventuality where ultimately the award is rendered by
arbitral tribunal, and criminal proceedings result in conviction
rendering the contract void, such conviction can be placed on
record to resist the enforcement of the award.
 Section 8: Power to refer parties to arbitration where there is
an arbitration agreement
# A. Ayyasamy V. A. Paramasivam, (2016) 10 SCC 386
• clarified that allegations of fraud are arbitrable as long as it is in
relation to simple fraud.
• Where court finds very serious allegation of fraud that makes a
virtual case of criminal offence
• Where allegations of fraud are so complicated that it becomes
essential that such complex issues can be decided only by civil
court on appreciation of voluminous evidence
• Where serious allegations of forgery/fabrication of documents
• Where fraud is alleged against arbitration provision itself
• Where fraud alleged permeates the entire contract, including
agreement to arbitrate where fraud goes to the validity of
contract itself or contract that contains arbitration clause or
validity of arbitration clause itself.
 Section 8: Power to refer parties to arbitration where there is
an arbitration agreement
#Magic Eye Developers Pvt. Ltd. (“Plaintiff”) v. Green Edge Infra
Pvt. Ltd. & Ors. (“Defendants”) Delhi HC 2020
• whether non-signatories to an arbitration agreement are
amenable to arbitration under Section 8 A&C Act, by applying the
group of companies doctrine.
• The Plaintiff contended that in addition to recovery of the loan,
the Plaintiff had also claimed damages for which there was no
arbitration agreement between the parties.
• The Plaintiff relied on the decision in Sukanya Holdings Pvt. Ltd.
vs. Jayesh H. Pandya
• The Court rejected the argument and held that the claim for
damages was based on the failure of Defendant No.1 to perform
its contractual obligations.
• the two reliefs were not required to be bifurcated and could be
decided by arbitration.
 Section 8: Power to refer parties to arbitration where there is
an arbitration agreement
• The Plaintiff claimed that since Defendant Nos. 2 and 3 who
were not signatory to the various agreements, the disputes
could not be referred to arbitration.
• The Court referred to the case of Chloro Controls India (P) Ltd.
Vs. Severn Trent Water Purification Inc.
• a non-signatory or third party could be subjected to arbitration
without their prior consent in exceptional cases.
• direct relationship to the party signatory to the arbitration
agreement, direct commonality of the subject matter and the
agreement between the parties being a composite transaction.
• arbitration agreement concluded in proper form between two
or more parties may also bind other parties by operation of the
group of companies doctrine, or by operation of law such as
agency, assignment, agency or succession.
• The Court accordingly referred all parties to arbitration.
 Section 8: Power to refer parties to arbitration where there is
an arbitration agreement
8 (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.