Ruling in Sharad P Jagtiani v Edelweiss Securities Limited, Delhi High Court held that section 8 of the Arbitration and Conciliation Act, 1996, merely requires a party to an action before a judicial authority to bring to the notice of the authority that the action being brought before it is the subject of an arbitration agreement.
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Ruling on whether a plea in the written statement suffices to refer parties to arbitration, the court took the view that legislative intent required it to interpret section 8 widely and not in “a constricted and pedantic fashion”. As such, the court said that “it is the substance of the plea and not the nomenclature which matters”.
Jagtiani had filed suit for recovery of ₹4,671,768 (US$77,600) from Edelweiss Securities. Objecting to the suit, Edelweiss argued that the court lacked jurisdiction to entertain it as the parties had agreed to refer any claims or disputes that arose between them to arbitration. Edelweiss submitted a list of documents along with its written statement which included a copy of an agreement between the parties that contained an arbitration clause.
Jagtiani unsuccessfully argued that the dispute was non-arbitrable as the dispute related to rights and liabilities that give rise to or arise out of a criminal offence, on the ground that he had filed a complaint with the police with respect to the same transaction.
Jagtiani also argued that the matter could not be referred to an arbitral tribunal because the parties to the arbitration agreement had not filed an application under section 8 of the act to refer the dispute to the arbitrator.
Rejecting both arguments Delhi High Court said “it is the court which owes a duty to refer the parties to arbitration upon the arbitration being invoked”.
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The dispute digest is compiled by Bhasin & Co, Advocates, a corporate law firm based in New Delhi. The authors can be contacted at lbhasin@bhasinco.in or lbhasin@gmail.com. Readers should not act on the basis of this information without seeking professional legal advice.
