While Filing Application U/S 8 Of Arbitration Act, Applicant Is Not Required To Dispute Contents Of Plaint: Allahabad High Court

The Allahabad High Court Bench of Chief Justice Arun Bhansali and Justice Vikas Budhwar has held that there is no requirement for the applicant to dispute the contents of the plaint, while filling in an application under Section 8. The very fact that an application has been filed necessarily means that the applicant wants to refer the dispute to arbitration.

Additionally, the court held that the scope of judicial review and jurisdiction of the Court under Section 8 and 11 of the Act is identical, but extremely limited and restricted with little interference from court.

Brief Facts:

The appellant has challenged the order passed by the Commercial Court, Jhansi under Section 8 of the Arbitration and Conciliation Act, 1996. The dispute arose from the working of a retail outlet (“RO”) in the name of M/s Kamadgiri Filling Station at Khoh, District Chitrakoot operated by the late Sri Balendu Kumar Singh. After the death of Balendu Kumar Singh, various family disputes emerged between the legal heirs, that stopped the operation of the RO. Moreover, the Indian Oil Corporation Limited claimed its outstanding for the fuel supplied before the RO ceased to operate.

The appellant filed an application under Section 8 of the act to refer the dispute to arbitration since there was an arbitration clause mentioned in the agreement. The Commercial Court dismissed the application by stating that the application has been filed to delay the proceedings, and the applicant is not a signatory to the dealership agreement dated 01.04.2016. Therefore, the applicant has no locus-standi to file application under Section 8 of the Act. So, the matter cannot be referred to arbitration. The Commercial Court concluded by stating that there was no arbitrable dispute as the claim made by the plaintiff has not been disputed by the defendants and consequently, dismissed the application. Aggrieved by the decision of the Commercial Court, the appellant filed an application under Section 8 in the High Court.

The appellant argued that the decision of the Commercial Court is contrary to the settled legal position, wherein in an application filed under Section 8 of the Act, the Court is bound to refer the parties to arbitration. However, the respondent supported the impugned order.

Observation of the court:

The court observed that under Section 8, if a party to the arbitration agreement applies not later than the date of submitting his first statement on the substance of the dispute, a judicial authority is required to refer the parties to arbitration. The only restriction is that no prima facie valid arbitration agreement exists.

The court held that there is no requirement for the applicant to dispute the contents of the plaint, while filling in an application under Section 8. The very fact that an application has been filed necessarily means that the applicant wants to refer the dispute to arbitration. Additionally, the court held that the reason indicated by the Commercial Court regarding the appellant not disputing his liability in the application cannot be sustained.

Further, the court held that the scope of judicial review and jurisdiction of the Court under Section 8 and 11 of the Act is identical, but extremely limited and restricted with little interference from court during this stage.

Finally, the court allowed the appeal and referred the parties to arbitration in terms of Clause 61 of the agreement.

Case Title: Atul Pratap Singh v. Indian Oil Corporation Limited and 3 Others

Case Number: 2024:AHC:167917-DB

Counsel for the Petitioner: Tarun Agrawal, Yash Padia.

Counsel for the Respondent: Chandan Sharma, Devi Shanker Shukla.

Date of Judgment: 22.10.2024

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