‘First Statement on the Substance of the Dispute’: Section 8 of the Arbitration &

Conciliation Act, 1996

Provision of Law (As amended by the Arbitration & Conciliation (Amendment) Act,
2015):
“Section 8 of the Arbitration & Conciliation Act, 1996 (hereinafter referred to as the A&C
Act): Power to refer parties to arbitration where there is an arbitration agreement:
(1) A judicial authority, before which an action is brought in a matter which is the
subject of an arbitration agreement shall, if a party to the arbitration agreement or
any person claiming through or under him, so applies not later than the date of
submitting his first statement on the substance of the dispute, then, notwithstanding
any judgment, decree or order of the Supreme Court or any Court, refer the parties to
arbitration unless it finds that prima facie no valid arbitration agreement exists.
(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.”
Pre-Amendment- Section 8 (1) of the A&C Act:
The erstwhile Section 8 (1) of the A&C Act (prior to the enactment of the Arbitration &
Conciliation (Amendment) Act, 2015) stated thus:
“A judicial authority before which an action is brought in a matter which is the subject of an
arbitration agreement shall, if a party so applies not later than when submitting his first
statement on the substance of the dispute, refer the parties to arbitration.”

Author: Shivam Goel, LL.M. (NUJS)

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While interpreting the erstwhile Section 8 (1) of the A&C Act, the Hon’ble High Court of
Delhi in the matter of: Sharad P. Jagtiani V/s Edelweiss Securities Ltd., FAO (OS)
188/2014, Date of Decision: 07.08.2014, Coram: Pradeep Nandrajog & Mukta Gupta, JJ.
observed as follows:
1. Section 8 of the A&C Act does not specify the manner in which the party has to
submit its first statement on the substance of the dispute, and normally with respect to
a suit, the first statement on the substance of the dispute by the defendant would be
the written statement. Thus, if in the written statement filed it is brought to the notice
of the Court that there exists an arbitration agreement between the parties which
embraces the subject matter of the suit there would be complete compliance with the
mandate of the law and the Court would be obliged to refer the parties to arbitration if
the plea in the written statement is made good.
2. In Section 8 (1) of the A&C Act the phrase used is “not later than when submitting
his first statement on the substance of the dispute”, thus, the requirement is to bring to
the notice of the Court at a point not later than when submitting the first statement on
the substance of the dispute that there exists an arbitration clause between the parties
and that the subject matter of the action brought before the Court by way of the suit
falls within the ambit of the arbitration clause.
3. In Para 16 and Para 17 it was held that:
“… 16. On the facts of the instant case, it may be true that in the written statement
filed a specific prayer has not been made to refer the parties to arbitration, but we
have highlighted hereinabove that in the written statement filed a preliminary
objection has been taken that the suit is barred in view of the arbitration agreement.
The written statement filed is with strings attached by challenging the maintainability
of the suit in view of the arbitration clause and therefore in such circumstance the
said objection taken by Edelweiss contained in the written statement could be treated
as an application under Section 8 of the Arbitration and Conciliation Act, 1996.
17. It is trite that it is the substance of a matter contained in a document which
matters and not the form thereof…” (emphasis supplied)
4. It is incorrect in law to state that, “unless an application is filed under Section 8 of the
A&C Act, mere raising a plea in the written statement that there exists an arbitration

Author: Shivam Goel, LL.M. (NUJS)

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 agreement between the parties which embraces the subject matter of the dispute
raised in the suit, would be useless”.
Post-Amendment- Section 8 (1) of the A&C Act:
In the matter of: Parasramka Holdings (P) Ltd. V/s Ambience (P) Ltd. & Anr., High Court
of Delhi, CS (OS) 125/ 2017 (I.A. 12076/2017), Date of Decision: 15.01.2018, Coram:
Manmohan, J., it was held that:
1. “…not later than when submitting…” V/s “…not later than the date of
submitting…”:
In the matter of: Krishan Radhu V/s Emaar MGF Construction (P) Ltd., 2017 (1)
AD (Delhi) 781, it was observed that by virtue of the amendment (the Arbitration &
Conciliation (Amendment) Act, 2015), the words “not later than when submitting”
have been substituted by “not later than the date of submitting”, thus, under the
amended law the defendant is required to invoke the arbitration clause and apply to
the Court for reference thereunder by moving an application but is not required to file
his written statement or any answer to set out his statement on the substance of the
dispute. Rather, the submission of the written statement or reply indicating the first
statement on the substance of the dispute may be construed as waiver of the right to
seek reference to arbitration, or even as submission to or acquiescence of the
jurisdiction of the Court where the action has been brought by the plaintiff. The
amended provision of Section 8 (1) of the A&C Act, however, sets out a limit to the
period within which application invoking the arbitration agreement must be presented.
It is this limitation period which is indicated by the words “not later than the date of
submitting”.
2. The expression “… so applies not later than the date of submitting his first statement
on the substance of the dispute…”, means the outer limit for filing the written
statement in a particular case.
3. A written statement under the Commercial Courts, Commercial Division and
Commercial Appellate Division of High Courts Act, 2015 has to be filed within a
period of 120 days and the Court is powerless to extend the time beyond 120 days.
4. An arbitration agreement is a contract by which the parties agree to settle certain
disputes by way of arbitration rather than by proceeding in Court. It is akin to an

Author: Shivam Goel, LL.M. (NUJS)

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 exclusive jurisdiction clause and contains a negative obligation not to commence
substantive proceedings in any other forum.
5. Where the Court action is commenced in breach of an arbitration agreement the other
party may apply to stay the Court action, unless it is content to forego its right to have
the dispute referred to arbitration and choose instead to defend the action before the
Court. However, the other party must apply without delay to the Court for a stay of
the proceedings brought in breach of the agreement to arbitrate.
6. Under Section 8 of the A&C Act, the power to stay proceedings is mandatory, unless
the Court is satisfied that the arbitration agreement is null and void, inoperative, or
incapable of being performed.
7. If the defendant files an application under Order VII, Rule 11 of the Code of Civil
Procedure, 1908, before actually filing the first statement on the substance of the
dispute, the defendant cannot be said to have waived his right under Section 8 of the
A&C Act or have acquiesced himself to the jurisdiction of the Court.
8. The party invoking the arbitration clause does not have to file a formal application
seeking a specific prayer for reference of the dispute to arbitration as long as it raises
an objection in the written statement that the suit is not maintainable in view of the
arbitration clause in the agreement.
9. The decision in the matter of Sharad P. Jagtiani (Supra) holds the field, thus, it is not
incumbent upon the defendant to specifically pray in the written statement that in
view of Section 8 of the A&C Act, the Court has no jurisdiction to entertain the suit,
that is to say that a mere objection (preliminary or otherwise) is sufficient to oust the
jurisdiction of the Court in view of Section 8 of the A&C Act.

Excursus:
1. Section 8 of the A&C Act requires a party to arbitration, to only intimate to the Court
that the action before the Court is the subject matter of arbitration agreement. The
duty, to ‘refer’ the parties to arbitration, is thereafter of the judicial authority and
merely because such an obligation has been imposed on the judicial authority, it does
not mean that the party ‘invoking’ the arbitration has to seek ‘reference to arbitration’.
As long as a party to the proceeding before a judicial authority ‘invokes’ arbitration,
not later than when submitting his first statement on the substance of the dispute, that

Author: Shivam Goel, LL.M. (NUJS)

advocate.shivamgoel@gmail.com
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 is enough to bring the bar of Section 8 of the A&C Act into play and the judicial
authority/court ceases to have jurisdiction.
2. Section 8 of the A&C Act merely requires a party to the action before a judicial
authority, to bring to the notice of the judicial authority that the action brought before
the judicial authority is the subject of an arbitration agreement. As long as the same is
done in the written statement, mere absence of a prayer or use of the words seeking
reference to arbitration cannot come in the way of the obligation of the judicial
authority to refer the parties to arbitration.
3. That prior to amendment of Section 8 (1) of the A&C Act with retrospective effect
from 23rd October, 2015, even an objection in the written statement without a specific
prayer for referring the dispute to arbitration was treated as an application under
Section 8 (1) of the A&C Act.
4. In a commercial suit if an application under Section 8 of the A&C Act (as amended)
is filed within 120 days of rejection of the application under Order VII, Rule 11 of the
Code of Civil Procedure, 1908, then, the Court has to entertain the application filed
under Section 8 of the A&C Act (as amended) because it has been filed prior to the
date of expiry of the time period for filing of the written statement.
5. It is trite that where a dispute is referable to arbitration the parties cannot be
compelled to take recourse to the remedy in civil court. [Ravi Prakash Goel V/s
Chandra Prakash Goel, AIR 2007 SC 1517]
6. As per the amended Section 8 (1) of the A&C Act, 1996, the defendant is required to
invoke the arbitration clause and apply to the Court for a reference thereunder by
moving an application but is not required to file his written statement or any answer to
set out his statement on the substance of the dispute, rather, the submission of the
written statement/ reply indicating his ‘first statement on the substance of the dispute’
may be construed as waiver of the right to seek reference to arbitration, or even as
submission to or acquiescence of the jurisdiction of the Court where the action has
been brought by the plaintiff. The amended provision of Section 8 (1), however, sets
out a limit to the period within which such application invoking the arbitration
agreement must be presented. It is this limitation period which is indicated by the
words “not later than the date of submitting”. [Krishan Radhu (Supra)]

Author: Shivam Goel, LL.M. (NUJS)

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 7. It is clear from the language of Order VIII, Rule 1 of the Code of Civil Procedure,
1908 that a defendant when called upon to respond to the claim brought by a civil suit
and upon being served with summons is required, by the law, to submit his reply or
response in the form of “written statement” within the period of 30 days. For purposes
of arbitration law, it is this period which is the period within which “first statement on
the substance of the dispute” under the amended law is expected to be submitted. Of
course, the period of 30 days is extendable, for just and sufficient reasons to be
recorded in writing, naturally upon the prayer to that effect made by the defendant.
But the extension of the period cannot be beyond the maximum period of 90 days in
ordinary civil suits. It may be added that by virtue of the amendment incorporated by
the Commercial Courts, Commercial Division and Commercial Appellate Division of
High Courts Act, 2015, the maximum period for cases involving “commercial
dispute” would be 120 days of the date of service of the summons. [Krishan Radhu
(Supra)]
8. Not only filing of the written statement in a suit, but filing of any statement,
application, affidavit by a defendant prior to the filing of the written statement will be
construed as ‘submission of a statement on the substance of the dispute’, if by filing
such statement/application/affidavit, the defendant shows his intention to submit
himself to the jurisdiction of the court and waives his right to seek reference to
arbitration. But filing of a reply by a defendant, to an application for temporary
injunction/ attachment before judgment/ appointment of receiver, cannot be
considered as submission of a statement on the substance of the dispute, as that is
done to avoid an interim order being made against him. [Booz Allen & Hamilton Inc.
V/s SBI Home Finance Ltd & Ors, (2011) 5 SCC 532]
9. Whether ‘leave to defend’ filed in a summary suit under Order XXXVII of the Code
of Civil Procedure, 1908, can be considered as ‘first statement on the substance of
dispute’ having regard to Section 8 of the A&C Act?
i. The High Court of Delhi, in the matter of: Anis Ahmad V/s Hongkong &
Shanghai Banking Corporation, (2005) 83 DRJ 122, has held that, the first
submission of the defendant on the substance of the dispute takes place in a
suit under Order XXXVII of the Code of Civil Procedure, 1908, when
application for leave to defend is filed.

Author: Shivam Goel, LL.M. (NUJS)

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 ii. The High Court of Madras, in the matter of: G. Rajarajan V/s AIG Consumer
Financial Services (India) Ltd, 2012 SCC Online Mad 2717, has held that,
when a person seeks permission under Order XXXVII, Rule 3 (5), of the Code
of Civil Procedure, 1908 to defend the suit, it is not necessarily to be
construed as his first statement on the substance of the dispute.
iii. The High Court of Bombay, in the matter of: M/s. D.C. Textile Mills (P) Ltd.
V/s Keval Kishan Arora, SJ No. 343 of 2008 in SS No. 2066 of 2008 (Date of
Decision: 30.06.2009), has held that, the reply of the defendant to the
summons for judgment would be his ‘first statement on the substance of the
dispute’ as contemplated under Section 8 of the A&C Act.
iv. The High Court of Bombay, in the matter of: Stellar Industries V/s
International Combustion (India) Ltd., W.P. No. 3251 of 2008 in SS No.
2066 of 2008 (Date of Decision: 30.06.2009), has held that, application for
leave to defend cannot be called ‘first statement on the substance of the
dispute’ of the defendant.
v. The High Court of Bombay, in the matter of: Drive India Enterprise
Solutions Ltd. V/s Haier Telecom (India) Pvt. Ltd., SJ No. 51 of 2017 in
Commercial Suit No. 243 of 2017 (Date of Decision: 06/12.03.2018), has held
that:
a. The expression ‘first statement on the substance of the dispute’ refers to
the submission of the party to the jurisdiction of the judicial authority by
offering to defend the suit and thereby, waiving his right to invoke the
arbitration clause. If the affidavit opposing the summons for judgment and
seeking leave to defend objects to the jurisdiction of the Court to hear the
suit and indicates that the defendant does not want the Civil Court to
adjudicate upon his rights or liabilities, but wants the domestic forum to
decide that, then mere filing of a reply to the summons for judgment does
not amount to making a ‘first statement on the substance of the dispute’,
even if such affidavit contains various other defenses. In every other case,
the affidavit can well be said to be the ‘first statement on the substance of
the dispute’ within the meaning of Section 8 of the A&C Act. In such
other case, what the defendant essentially wants is to have the matter heard

Author: Shivam Goel, LL.M. (NUJS)

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 by the Civil Court and to that end, after indicating the bona fides and
probability or plausibility of his defence, seeks leave of the Court, so that
he may resist the plaintiff’s claim before it. No application can be moved
under Section 8 of the A&C Act after filing of the affidavit seeking leave
to defend.
b. Whether affidavit of the defendant in reply to the summons for judgment
amounts to ‘first statement on the substance of the dispute’?
The affidavit of the defendant in reply to the summons for judgment
amounts to ‘first statement on the substance of the dispute’ if the affidavit
in reply takes all objections on merits of the case, and does not object to
the jurisdiction of the Court on the ground of existence of the arbitration
agreement. It is thus a ‘first statement on the substance of the dispute’
within the meaning of Section 8 of the A&C Act.

Author: Shivam Goel, LL.M. (NUJS)

advocate.shivamgoel@gmail.com
info@lexunified.com

Electronic copy available at: https://ssrn.com/abstract=3371393