First statement on the dispute can arise in a counter, defeating later reference to arbitration under Section 8.

An application under Section 8 of the Arbitration and Conciliation Act, 1996 must be filed before the party submits its first statement on the substance of the dispute. The Madras High Court noted that a first statement is not confined to a written statement and may be found in any pleading or defence that clearly addresses the merits. On the facts, the counter filed in the injunction proceedings contained a substantive defence to the suit claim, so the party had already submitted to the civil court's jurisdiction before seeking arbitration. The Section 8 application was therefore not maintainable, and refusal to refer the suit to arbitration was upheld.

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Issues: Whether the application under Section 8 of the Arbitration and Conciliation Act, 1996 was filed before the party submitted its first statement on the substance of the dispute, so as to require reference of the suit to arbitration.

Analysis: The existence of an arbitration agreement was not in dispute. The decisive question was whether the counter filed in the injunction proceedings, in which the petitioner denied the allegations and asserted that its acts were within its objects and memorandum, amounted to the first statement on the substance of the dispute. The Court held that a first statement need not necessarily be a written statement and may be found in any pleading or defence that clearly sets out the party's stand on the merits. On the facts, the counter in the interlocutory application contained a substantive defence on the very dispute raised in the suit, and the petitioner had thus already submitted to the civil court's jurisdiction before invoking Section 8.

Conclusion: The application under Section 8 was not maintainable, and the refusal to refer the parties to arbitration was correct.

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