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CS Professional · Arbitration, Mediation and Conciliation · Arbitration under Investors' Grievances Redressal Mechanism of Stock Exchanges

Sundaram Capital sues its client Pooja Rao in a civil court over a disputed trade. The contract has an arbitration clause. Pooja files her written statement contesting the claim on merits, and only afterwards applies under section 8 to refer the matter to arbitration. What is the position?

The application is late. Section 8(1) requires a party to apply for reference to arbitration not later than the date of submitting the first statement on the substance of the dispute. Having contested on merits first, Pooja lost the right to seek reference.

  1. AThe application is in time, since it can be made at any stage of the suit
  2. BThe application is in time if made before the final judgment
  3. CThe application is late, because it must be made not later than the date of submitting the first statement on the substance of the disputeCorrect
  4. DThe application is valid only if the court itself first suggests arbitration

Explanation

Section 8(1) requires the application not later than the date of submitting the first statement on the substance of the dispute. Pooja filed her statement on merits first, so she has missed the deadline. Hence the options allowing later stages are wrong.

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