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Issues: (i) Whether a defendant satisfies Section 8 of the Arbitration and Conciliation Act, 1996 by raising the arbitration agreement in the written statement without filing a separate formal application. (ii) Whether arbitration under the National Stock Exchange Bye-Laws constitutes statutory arbitration and supports reference of the dispute to arbitration.
Issue (i): Whether a defendant satisfies Section 8 of the Arbitration and Conciliation Act, 1996 by raising the arbitration agreement in the written statement without filing a separate formal application.
Analysis: Section 8 requires the judicial authority to refer the parties to arbitration when, not later than the first statement on the substance of the dispute, the party brings to the court's notice that the dispute is covered by an arbitration agreement. The written statement is ordinarily the first statement on the substance of the dispute in a suit. The provision does not prescribe any rigid form for making the request, and the substance of the objection is material. Where the written statement specifically asserts that the suit is barred by the arbitration clause and challenges maintainability on that basis, the requirement of Section 8 stands satisfied.
Conclusion: The absence of a separate formal application did not defeat compliance with Section 8, and the plea in the written statement was sufficient.
Issue (ii): Whether arbitration under the National Stock Exchange Bye-Laws constitutes statutory arbitration and supports reference of the dispute to arbitration.
Analysis: The bye-laws framed under Section 9 of the Securities Contracts (Regulation) Act, 1956, with SEBI approval, provide for settlement of disputes by arbitration. Such arbitration operates as statutory arbitration and is covered by Section 2(4) of the Arbitration and Conciliation Act, 1996, subject to that Act to the extent not inconsistent with the bye-laws. The court also treated the contractual and statutory framework as supporting reference to arbitration, including the policy reflected in Section 89 of the Code of Civil Procedure, 1908.
Conclusion: The dispute was properly referable to statutory arbitration, and the order referring the parties to arbitration was upheld.
Final Conclusion: The appeal failed, the referral to arbitration was sustained, and the legal view requiring a separate Section 8 application despite a clear written-statement objection was rejected.
Ratio Decidendi: For purposes of Section 8 of the Arbitration and Conciliation Act, 1996, a defendant's written statement can constitute the requisite first statement on the substance of the dispute if it clearly invokes the arbitration agreement and objects to the suit on that basis; substance prevails over form.
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