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CS Professional · Arbitration, Mediation and Conciliation · Arbitration: Introduction, Agreements and its Institutions

Zenith Textiles Ltd, Surat, sues Bharat Dyes Pvt Ltd in a civil court on a supply dispute. Their contract contains an arbitration clause. Bharat Dyes files its written statement contesting the claim on merits and only afterwards applies to the court to refer the parties to arbitration. Under the Arbitration and Conciliation Act, 1996, what is the position of this application?

The application is not in time. Under Section 8(1), a party seeking reference to arbitration must apply not later than the date of submitting its first statement on the substance of the dispute. Contesting the claim on merits in a written statement first makes the later application belated.

  1. AIt is in time, because the application may be made at any stage before the court's final judgment
  2. BIt is not in time, because the application must be made not later than the date of submitting the first statement on the substance of the disputeCorrect
  3. CIt is in time, because only the plaintiff may object to the court's jurisdiction at the final hearing
  4. DIt is not in time, because a reference to arbitration can be sought only before the suit is filed

Explanation

Section 8(1) requires the application for reference to arbitration to be made not later than the date of submitting the first statement on the substance of the dispute. Bharat Dyes filed a written statement on the merits first, so the application is late. The option allowing any stage before judgment ignores this cut-off.

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