K PRAKASH Vs. SRIRAM TRANSPORT FINANCE CO LTD

JUDGEMENT

(1.) What is the procedure to be adopted by a Court when a petition is filed by one of the parties to the suit under S.8 of Arbitration & Conciliation Act, 1996. Is the Court to refer the parties to arbitration mechanically by looking into the agreement produced or is it for the Court to consider and decide whether the agreement produced was executed by the parties. If it is found that the agreement was executed, is it for the Court to decide whether the agreement is vitiated by fraud or misrepresentation.

(2.) S.8 of Arbitration and Conciliation Act, 1996 (hereinafter referred to as the Act), deals with the power to refer parties to arbitration when there is an arbitration agreement. Under sub-section (1), a judicial authority before which an action is brought in a matter which is the subject of an arbitration agreement and if a party applies not later than before submitting his first statement on the substance of the dispute, judicial authority shall refer the parties to arbitration. Sub-section (2) provides that the application so filed shall not be entertained unless it is accompanied by the original arbitration agreement or a duly certified copy thereof. S.16 of the Act deals with the competence of Arbitral Tribunal to rule on its own jurisdiction. Under sub-section (1), the Arbitral Tribunal is competent to rule on its own jurisdiction including ruling on any objections with respect to the existence or validity of the arbitration agreement. For that purpose, an arbitration clause, which forms part of a contract shall be treated as an agreement independent of the terms of the contract and a decision by the Tribunal that the contract is null and void shall not entail ipso jure invalidity of the arbitration clause.

(3.) S.8 of the Act reads: