Mandatory reference to arbitration under Section 8 limits Article 227 interference where the arbitration agreement is admitted.

Where an arbitration agreement is admitted, Section 8 requires the civil court to refer the parties to arbitration, and objections to arbitrability or the clause's applicability are ordinarily for the arbitral tribunal. Supervisory interference under Article 227 against an order allowing reference is exceptional and confined to cases of patent lack of jurisdiction; no statutory appeal lies from such an order. Accordingly, the commentary states that a challenge under Article 227 to an order referring the dispute to arbitration is generally not maintainable, and the prior application under Order 12 Rule 6 does not override the mandatory reference to arbitration.

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Issues: (i) Whether a petition under Article 227 of the Constitution of India was maintainable against an order allowing an application under Section 8 of the Arbitration and Conciliation Act, 1996; (ii) Whether interference with the order was warranted on merits when the arbitration agreement was admitted and the dispute raised issues to be decided in arbitration.

Issue (i): Whether a petition under Article 227 of the Constitution of India was maintainable against an order allowing an application under Section 8 of the Arbitration and Conciliation Act, 1996.

Analysis: The supervisory jurisdiction under Article 227 is to be exercised sparingly. An order refusing reference under Section 8 carries a statutory appeal, but an order allowing reference does not. In view of the statutory policy favouring arbitration and the need to avoid derailing the arbitral process, interference with such orders is confined to cases of patent lack of jurisdiction.

Conclusion: The petition under Article 227 was held to be not maintainable against the order allowing reference to arbitration.

Issue (ii): Whether interference with the order was warranted on merits when the arbitration agreement was admitted and the dispute raised issues to be decided in arbitration.

Analysis: Once the existence of an arbitration agreement is not denied, Section 8 operates mandatorily and the civil court is obliged to refer the parties to arbitration. Any objection regarding applicability of the arbitration clause, or the effect of alleged admissions and supporting documents, is for the arbitral tribunal to decide under the arbitral framework. The prior application under Order 12 Rule 6 did not displace the duty to refer the dispute to arbitration.

Conclusion: No ground for interference on merits was made out, and the reference to arbitration was upheld.

Final Conclusion: The order referring the dispute to arbitration was sustained, and the challenge to it failed.

Ratio Decidendi: Where the existence of an arbitration agreement is admitted, a civil court must refer the parties to arbitration under Section 8, and objections to arbitrability or the agreement's applicability are ordinarily for the arbitral tribunal; supervisory interference under Article 227 against such an order is to be exercised only exceptionally.

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