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Anshuman Yadav*
I. INTRODUCTION
In its judgment dated 9th January, 2025, a division bench of the Calcutta High Court, in Smt. Gitarani Maity v. Mrs. Krishna Chakraborty and others, addressed the interplay between Section 8 of the Arbitration and Conciliation Act, 1996 (‘the Arbitration Act’) and the adjudication of Civil Suits. The division bench was hearing an appeal from a suit for specific performance of a contract, wherein the Civil Court had allowed the defendant-respondent’s application under Section 8 of the Arbitration Act for reference to arbitration and dismissed the plaintiff-appellant’s suit. The Calcutta High Court overturned this decision, rejecting the application under Section 8 on the grounds of belated filing and remanded the matter to the Civil Court for consideration on merits. In reaching this conclusion, the Calcutta High Court reiterated that an application seeking reference to arbitration under Section 8 of the Arbitration Act has to be filed prior to or with the filing of the first statement on the substance of the dispute, which is normally the written statement by the defendant, and held that: (a) the referral Court does not lose its subject-matter jurisdiction after a reference to arbitration is made under Section 8; (b) the referral Court cannot dismiss the suit when an application under Section 8 is accepted; (c) an objection in the written statement as to the jurisdiction of the Court due to an arbitration clause cannot be treated as an application under Section 8.
This post is divided into four sections, and it examines the aforementioned propositions, arguing that they are retrograde and untenable in law. To this end, it engages with the Court’s reasoning as well as the broader legal questions at stake. Section I introduces the key issues raised by the judgment. Section II critiques the Calcutta High Court’s jurisdictional findings, opposing the expansion of subject-matter jurisdiction beyond the referral stage. Section III unpacks the two-fold reasoning supplied by the Court in support of its judgment. The first sub-section locates the power of dismissal under Section 8, while the second sub-section advocates for a purposive reading of Section 8, which aligns with the legislative intent and the overarching purpose of the Arbitration Act. Part IV concludes this post by summarizing the key arguments and emphasising on the need for jurisprudential coherence.
II. JURISDICTIONAL BOUNDARIES
Section 8 of the Arbitration Act mirrors Article 8 of the UNCITRAL Model Law on International Commercial Arbitration (‘Model Law’) with some changes. Section 8 of the Arbitration Act mandates that a court shall refer the parties to a suit to arbitration if the subject matter of the suit is covered by an arbitration agreement and a party applies for such reference not later than submitting their first statement on the substance of the dispute. For the purpose of reference under Section 8, the referral Court only takes a prima facie view as to the existence of a valid arbitration agreement covering the dispute. After a reference to arbitration is made, the parties are precluded from approaching the Court, unless provided for in the Arbitration Act. The Calcutta High Court, while appraising the judgment of the Civil Court to dismiss the suit and accept an application made under Section 8 for reference, allowed the appeal against this judgment. In support of its decision, the Calcutta High Court supplied a two-fold reasoning: first, that Section 8 does not contemplate dismissal of suits in entirety; and second, that the application under Section 8 in the instant case was filed after the permissible period. Noting the enabling nature of Section 8, the Calcutta High Court went on to hold that Section 8 does not operate as a bar on the pre-reference jurisdiction of the Court. It also held that reference to arbitration under Section 8 does not oust the jurisdiction of the referral Court and the referral Court retains seisin over the subject matter of the dispute. Before engaging with the aforementioned reasoning in detail, it is important to first address the jurisdictional findings made by the Calcutta High Court, particularly the latter, which, it is argued, runs counter to the jurisprudence surrounding the Arbitration Act.
It is trite law that the Civil Courts’ jurisdiction to try suits of civil nature is excluded only when their cognizance is expressly or impliedly barred under some law. Agreements prohibiting parties to a contract from enforcing their rights by usual legal proceedings are also void under Section 28 of the Indian Contract Act, 1872. However, Exception 1 to Section 28 expressly saves arbitration agreements from the provision’s purview and Section 7 of the Arbitration Act allows parties to submit disputes arising between them to arbitration. Arbitration is a binding dispute resolution process by a private tribunal and thus, by choosing arbitration, the parties forfeit their right to litigate before the Civil Courts. An arbitration agreement, consistent with its consensual and contractual character, imposes positive and negative obligations upon the parties: an affirmative commitment to refer disputes to arbitration and a negative restraint from pursuing reliefs before other forums. However, Section 8 accommodates situations where both the parties may mutually waive their obligations under the arbitration agreement inter se. In this light, the Calcutta High Court is correct insofar as it states that Section 8 per se does not operate as a bar on the jurisdiction of the Civil Courts, as there is no prohibition on the presentation of a plaint before a competent Court. However, once an application under Section 8 is accepted, highlighting the presence of a valid arbitration agreement and intent to arbitrate, the referral Court’s jurisdiction over the action as originally brought ceases in favour of the arbitral tribunal, meaning thereby that the jurisdiction of the referral Court to adjudicate upon the lis stands completely ousted by the operation of Section 28 of the ICA read conjointly with Section 7 of the Arbitration Act and Section 9 of the Code of Civil Procedure, 1908 (‘CPC’). The peremptory character of Section 8 limits the role of the referral Court to determining whether its jurisdiction has been ousted under the Arbitration Act, rather than assessing whether it retains jurisdiction under the CPC. The rationale behind this is encapsulated in the maxim pacta sunt servanda, which duty binds the parties to abide by the terms of the arbitration agreement, including both positive and negative obligations. In such circumstances, as emphasised by the Supreme Court, a refusal to make reference to arbitration despite compliance with Section 8, causes irreparable harm to the applicant and constitutes a failure of justice. This harm manifests in far-reaching ways. Procedurally, it compels applicants to forgo procedural flexibility of arbitration and litigate before a forum whose jurisdiction stands ousted by law. Substantively, it denies them the core advantages of arbitration, including confidentiality, party autonomy, and adjudication by an expert tribunal. More broadly, it fosters legal uncertainty, as it deters commercial entities from choosing India as a preferred jurisdiction for arbitration due to fear of unpredictable litigation risks or excessive judicial involvement. Thus, while the Calcutta High Court’s findings partially aligns with the consensual nature of arbitration, it erroneously enlarges the scope of the referral Court’s jurisdiction beyond the referral stage , causing an overlap with the arbitral tribunal.
This concurrent subject jurisdiction, post-reference, invites undue interventions by the Courts, undermining the precepts of the Arbitration Act, which was introduced, inter alia, to minimise the role of Courts in arbitral proceedings. It militates against the scheme of the Arbitration Act, which envisions that once a party is referred to arbitration, the case goes outside the stream of Courts. Following the reference, the rights, obligations and remedies of the parties come to be governed by the Arbitration Act, which is a self-contained code. The application of the CPC over arbitral proceedings is circumscribed in two ways: first, the principle of generalis specialibus non derogant dictates that the CPC yields to the Arbitration Act in the case of inconsistency; and second, Section 5 of the Arbitration Act, framed in non obstante language, limits the supervisory jurisdiction of Judicial Authorities. Therefore, intervention by the Courts in arbitral proceedings, even as a supervisory authority, is significantly fettered by the text of the Arbitration Act.
Notably, the Arbitration Act contemplates instances where a referral Court, within whose jurisdiction the subject-matter of the suit is situated, may be different from the Courts with supervisory jurisdiction. Section 15 of the CPC requires all suits to be instituted in the Court of the lowest grade, while Section 2(1)(e) of the Arbitration Act exhaustively defines ‘Court’ to mean, for non-international arbitrations, the principal Civil Court of original jurisdiction and includes the High Court with ordinary original jurisdiction, but excludes lower Civil Courts of inferior grades. For international arbitrations, it includes the High Court with original or appellate jurisdiction over the subject-matter and again, excludes lower Civil Courts of inferior grades. This distinction assumes practical salience because once an arbitration commences, the lis may be adjudicated and disposed of without any recourse to the referral Court in view of Section 42 of the Arbitration Act.
Section 42, as an overriding provision, confers exclusive jurisdiction over the arbitral proceedings and any application arising therefrom or from the arbitration agreement itself to the Courts delineated under Section 2(1)(e) of the Arbitration Act. Section 42, apart from its overriding text, expressly bars the presentation of any of the aforementioned applications “in no other Court” as an added safeguard to prevent undue or unexpected interventions in arbitral proceedings. Thus, it is submitted that the Calcutta High Court’s finding of concurrent jurisdiction is inconsistent with the Arbitration Act’s statutory mandate.
III. A GULF OF DIFFERENCE
Section 8 of the Arbitration Act mandates that an application must be filed before or at the time of the first statement on the substance of the dispute, which is generally the Written Statement by the defendant. A failure to file the application within the stipulated period constitutes an acquiescence to the jurisdiction of the Civil Court, indicating an abandonment or supersession of the terms of the arbitration agreement. In the instant case, the application was filed after the submission of the Written Statement, thereby implying that the Defendant-Respondent waived their right to arbitrate. Against this, the Division Bench dismissed their argument that an objection to the Court's jurisdiction, raised in the Written Statement because of the arbitration clause, should be construed as an application under Section 8. Moreover, the Calcutta High Court expressed disagreement with the Delhi High Court, which had previously upheld a similar argument. The Calcutta High Court’s rejection is grounded in what it characterises as a “gulf of difference” between an objection raised in a request for referral under Section 8 and an objection presented in a Written Statement – the former only requests referral to arbitration, with no authority for the referral Court to dismiss the suit post-referral, while the latter seeks to establish the Court’s lack of jurisdiction and requests the suit’s dismissal.
The Calcutta High Court’s characterization stems from the first prong of its reasoning—namely, the referral Court’s power of dismissal or more appropriately, the lack thereof. According to the Calcutta High Court, an application under Section 8 is made for the limited purpose of reference to arbitration and it cannot be placed at par with a prayer for dismissal for the want of jurisdiction. As a corollary, an objection in the Written Statement cannot be construed as an application under Section 8 as the referral Court lacks the power to dismiss the suit. This characterization, therefore, invites scrutiny on two fronts: first, whether referral Courts possess the power to dismiss suits under Section 8, and if yes, then whether an objection in a Written Statement can qualify as an application under Section 8 of the Arbitration Act.
A. The Question Of Dismissal
The Supreme Court has consistently held that when a Court determines that none of the reliefs sought in the plaint can be granted under the law, the suit must be dismissed at the threshold for want of jurisdiction. This position was reinforced in P. Anand Gajapathi Raju v. P.V.G. Raju, where it was observed that once a referral Court complies with the mandate of Section 8 of the Arbitration Act, there is no point in staying the proceedings until the arbitration concludes. This is because once a reference is made, the reliefs lie exclusively before the arbitral tribunal and the Court as delineated under Section 2(1)(e). Hence, the referral Court lacks the jurisdiction to adjudicate on the matter and staying the suit serves little purpose, except inflating the Court’s docket. Even when the Court under Section 2(1)(e) and the referral Court are the same, the reliefs granted are in accordance with the exercise of power under the Arbitration Act rather than its jurisdiction under the CPC.
At this juncture, it would be pertinent to refer to the predecessor of the present Arbitration Act, the Arbitration Act, 1940 (‘Old Act’). Under Section 34 of the Old Act, the analogous provision to Section 8, a party could apply to a Judicial Authority to stay proceedings concerning disputes covered by an arbitration agreement. A comparison of Section 34 of the Old Act and Section 8 of the Arbitration Act discloses two key differences: first, the Old Act gave the referral Courts the discretionary power to stay or continue the proceedings when an application under Section 34 was made, whereas the Arbitration Act replaces this discretion with a legislative command to compulsorily refer the matter to arbitration. Second, the Old Act, employing plain and unambiguous language, permitted the referral Court to only stay the proceedings. Similar provisions, such as Section 9 of the UK Arbitration Act, 1996, and Section 6 of the Singapore Arbitration Act, 2001, also limit the referral Court’s role to only staying the proceedings when a reference is made. In contrast, Section 8 of the Arbitration Act, is silent and deliberately omits any mention of a 'stay,' indicating a departure from the earlier framework and a shift in the legislative intent to granting greater autonomy to the referral Courts regarding decisions on stay or dismissal. Section 5 of the Arbitration Act, aimed at minimising Court intervention, guides the referral Courts in the exercise of their power under Section 8. Thus, once an application under Section 8 is accepted, the referral Court may, in accordance with Order 7 of the CPC, dismiss the suit, considering that there is no absolute right to file a civil suit. The Calcutta High Court’s conclusion rests on a flawed assertion of concurrent jurisdiction and a rigid reading of the prayer as well as Section 8 itself. It erred in its approach in that it mandates a blanket ban on dismissal of suits when none has been provided by the Legislature.
B. From Objection to Application
Once the power of dismissal is read into Section 8, the characterisation founded on the purported difference between the nature of reliefs in a reference to arbitration and a jurisdictional objection based on an arbitration clause in a Written Statement is eroded. In this context, the second prong of the Calcutta High Court’s reasoning warrants reconsideration, as recognising an objection in a Written Statement as an application under Section 8 could address the issue of belated filing. The demand of a separate application under Section 8 reflects a formalistic approach that disregards the provision’s purpose. Section 8, as a narrowly crafted exception to the principle of judicial non-intervention, aims to ensure that valid arbitration agreements are upheld and a party is prevented from unilaterally abrogating their obligations. While Article 8 of the Model Law precludes reference when the agreement is found to be null, void, or inoperative, or incapable of being performed, Section 8 of the Arbitration Act does not impose such a duty on the referral Court. Instead, it commands referral to arbitration to be made only on being satisfied that a prima facie valid arbitration agreement, notwithstanding any judgment, decree, or order of the Supreme Court or any other Court. To oppose such a reference, the opposing party bears the burden of summarily demonstrating a strong prima facie case of the non-existence of a valid arbitration agreement because the Courts adopts the mantra of ‘when in doubt, do refer.’ The broader objective is to reduce the judicial docket by redirecting arbitrable disputes, thereby upholding party autonomy in the process.
Section 8 does not prescribe the content of an application made thereunder, nor does the Arbitration Act define the term ‘application.’ In the absence of a strict definition or format, the term ‘application’ in Sections 8(2) and 8(3) should be interpreted purposively in conjunction with the term ‘applies’ in Section 8(1), which should be given an expansive meaning. Previously, while dealing with Section 30 of the Old Act, which pertained to setting aside of an award, the Supreme Court has held that in the absence of a prescribed form, an objection raised in a written statement is sufficient to be construed as an application for setting aside. Despite the absence of a specific prayer for setting aside the award, the Supreme Court discerned the objection’s intent and substance to amount to a challenge against the award. More recently, several High Courts—including the Delhi, Telangana, and Kerala High Courts—have taken the view that an objection as to jurisdiction due to the presence of an arbitration agreement is sufficient to satisfy the procedural requirements of an application under Section 8 without a separate application. Opting out of the formalist tradition, these Courts have attempted to excavate the purpose behind Section 8 instead. Section 8 functions to inform the Court of the existence of a valid arbitration agreement covering the subject matter, and a preliminary objection raised in a written statement similarly alerts the Court’s about the same. Even in the absence of a specific prayer for reference, the reliance on the arbitration clause signifies the party’s intent to resolve the dispute through the arbitration, to the exclusion of the referral Courts. If such a party refuses to cooperate after the reference, the aggrieved party is not left without a remedy because it can approach the Court delineated in Section 2(1)(e) for the appointment of an arbitrator under Section 11 of the Arbitration Act. An insistence on a separate application beyond the Written Statement when it notifies an arbitration agreement, represents a rigid and hyper technical procedural approach which leads to duplication of pleadings. It is well settled that the Court must exercise its jurisdiction to give effect to the arbitration agreement and not to permit the parties to avoid their bargain of arbitration. Thus, inaction or refusal to refer the dispute despite the knowledge of the arbitration agreement defeats the substantive rights of the parties, violating the principles of party autonomy and inhibiting access to justice. The Calcutta High Court’s interpretation seeking a separate application risks frustrating the Arbitration Act’s intent by elevating form over substance. A purposive reading of Section 8, on the other hand, ensures that the right to arbitrate is preserved and prevents procedural technicalities from hindering the enforcement of valid arbitration agreements.
IV. CONCLUSION
Arbitration has emerged as the preferred mode of dispute resolution due to its ability to balance procedural flexibility with prompt adjudication. However, judicial scepticism toward arbitration has long existed. As early as the seventeenth century, the English courts viewed arbitration with distrustful scepticism, driven by the notion that all disputes should remain under the jurisdiction of State law and Court. This notion gradually evolved, culminating in the adoption of the Model Law, which serves as a seminal legislation toward an arbitration-friendly legal framework. By extending the jurisdiction of the Courts beyond the referral stage, the Calcutta High Court inadvertently revives the notion of judicial parochialism, undermining arbitral autonomy. When a party seeks reference to arbitration, the Court should give effect to the intention of the parties on the basis of a prima facie arbitration agreement, rather than attempt to invalidate it on procedural technicalities. It is imperative that the Courts do not impinge into arbitral proceedings, and instead, facilitate arbitration through a purposive reading of Section 8—one that includes both the power to dismiss suits and the power to make a meaningful reference. A conspectus of the judgments of the various High Courts across India reveals a rift between the formalistic and purposive tradition, with the former favoring procedural formality and the latter emphasising substantive intent. The Expert Committee on Arbitration Law, formed in 2023 to assess the working of the Arbitration Act, recommends a directory timeline of 60 days for adjudicating applications under section 8. However, the question of what qualifies as an “application” under Section 8 remains at crossroads. Going forward, the future trajectory of efficacious reference may well depend on the path that is taken.
*Anshuman Yadav is a fourth-year B.A. LL.B. student at University School of Law and Legal Studies, New Delhi.
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