Civil court may refuse arbitration reference where the agreement is allegedly coerced and the suit claims exceed the clause.

Section 8 of the Arbitration and Conciliation Act may be declined in rare exceptional cases where the arbitration agreement itself appears non-existent, invalid, or procured by coercion, and where the pleaded disputes are not fully covered by the arbitration clause. Although arbitral jurisdiction is generally for the tribunal to examine, the civil court may still assess whether a valid arbitration agreement exists and whether the suit is covered by it. On the facts discussed, the memorandum of understanding and arbitration clause were alleged to have been obtained while the plaintiff was in custody and under threat, and the claims for declaration and damages extended beyond the clause. Reference to arbitration was therefore refused.

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Issues: Whether an application under Section 8 of the Arbitration and Conciliation Act, 1996 could be allowed when the arbitration agreement was alleged to have been obtained under pressure, coercion and undue influence, and when the plaint also included claims beyond the scope of the arbitration clause.

Analysis: The Court held that although Section 8 ordinarily mandates reference of disputes to arbitration and Section 16 permits the arbitral tribunal to rule on its jurisdiction, the Civil Court is not barred from examining whether the suit is ly covered by an arbitration agreement and whether the agreement exists or is valid in exceptional cases. It distinguished the administrative function under Section 11 from the judicial function under Section 8, and held that judicial discretion remains relevant under Section 8. On the facts, the Court found sufficient material to show that the memorandum of understanding and arbitration clause were allegedly obtained while the plaintiff was in custody and under threat, and that the claims for declaration and damages extended beyond the alleged arbitration agreement.

Conclusion: The application under Section 8 was not liable to be allowed, and the parties were not referred to arbitration.

Ratio Decidendi: Under Section 8, a Civil Court may decline reference to arbitration in rare and exceptional cases where the arbitration agreement itself appears to be non-existent, invalid, or procured by coercion, and where the disputes pleaded are not fully covered by the arbitration clause.

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