The Imperative of Documentary Compliance: An Analysis of Section 8(2) of the Arbitration and Conciliation Act, 1996

Introduction

The Arbitration and Conciliation Act, 1996 (hereinafter "the Act") was enacted in India to consolidate and amend the law relating to domestic arbitration, international commercial arbitration, and enforcement of foreign arbitral awards, as also to define the law relating to conciliation. A cornerstone of this legislative framework is Section 8, which empowers a judicial authority to refer parties to arbitration when an action is brought before it in a matter which is the subject of an arbitration agreement. This provision reflects the Act's pro-arbitration stance, aiming to minimize judicial intervention and uphold party autonomy. Within Section 8, sub-section (2) lays down a crucial procedural requirement for an application seeking such a reference. This article undertakes a scholarly analysis of Section 8(2) of the Act, primarily focusing on its interpretation and application by Indian courts based on the provided reference materials, particularly its pre-2015 amendment version.

The Statutory Mandate of Section 8(2) (Pre-2015 Amendment)

Prior to its amendment in 2015, Section 8(2) of the Arbitration and Conciliation Act, 1996, stipulated a clear documentary requirement. The text of this provision, as consistently cited in several judicial pronouncements, read as follows:

"(2) The application referred to in sub-section (1) shall not be entertained unless it is accompanied by the original arbitration agreement or a duly certified copy thereof."

This exact wording is found in the reference materials, including judgments such as Branch Manager, Magma Leasing And Finance Limited And Another v. Potluri Madhavilata And Another (Supreme Court Of India, 2009), Management Committee Of Montfort Senior Secondary School v. Vijay Kumar And Others (Supreme Court Of India, 2005), and Ananthesh Bhakta v. Nayana S. Bhakta (Supreme Court Of India, 2016). The plain language of the sub-section indicates that the submission of either the original arbitration agreement or its duly certified copy is a prerequisite for the judicial authority to entertain an application made under Section 8(1) for referring the parties to arbitration.

Judicial Emphasis on the Mandatory Nature of Section 8(2)

Indian courts have consistently interpreted the requirement under Section 8(2) (pre-2015 amendment) as mandatory, not merely directory. This interpretation underscores the importance of formally establishing the existence and terms of the arbitration agreement before the judicial authority.

In Sukanya Holdings (P) Ltd. v. Jayesh H. Pandya And Another (2003 SCC 5 531, Supreme Court Of India, 2003), the Supreme Court, while delineating the conditions for referral under Section 8, observed that "the matter is not required to be referred to the arbitral Tribunal, if... (3) such application is not accompanied by the original arbitration agreement or duly certified copy thereof." This observation highlights that the absence of the requisite documentation is a valid ground for the court to refuse the reference to arbitration.

The Delhi High Court, in Arti Jethani v. Daehsan Trading (India) Pvt Ltd & ... (Delhi High Court, 2010), explicitly listed the conditions for an application under Section 8, stating that one of the pre-requisite conditions is that "the application should be accompanied by the original arbitration agreement or its certified copy." The failure to meet this condition, among others, would result in the non-fulfillment of the requirements for a Section 8 reference.

Further reinforcing this stance, the Andhra Pradesh High Court in Asian Securities And Estates Limited Petitioner v. Ms. Nausheen Riyaz & Others S (Andhra Pradesh High Court, 2014) unequivocally held that "there was a clear non-compliance of sub-section (2) of Section 8 of 1996 Act which is a mandatory provision and the dispute could not have been referred to arbitration." The court further noted that the party "should have filed the original arbitration agreement or a duly certified copy thereof along with the petition... which he did not do. Therefore, no order for referring the dispute to arbitration could have been passed in the suit."

Consequences of Non-Compliance with Section 8(2)

The statutory language "shall not be entertained" implies a clear bar on the judicial authority from considering an application under Section 8(1) if the documentary requirement of Section 8(2) is not met. The consequence of non-compliance is, therefore, the dismissal or rejection of the application for reference to arbitration. This strict approach ensures that the judicial process of referral is initiated only upon the presentation of authentic proof of the arbitration agreement. As seen in Asian Securities (Andhra Pradesh High Court, 2014), the failure to file the agreement in the prescribed form was deemed fatal to the application.

This procedural rigour serves as a gatekeeping mechanism, preventing parties from making unsubstantiated claims of an arbitration agreement and compelling them to produce concrete evidence of the same at the very threshold of seeking judicial intervention for referral.

The Rationale Behind the Requirement

The insistence on the original or a duly certified copy of the arbitration agreement serves multiple purposes. Firstly, it provides the judicial authority with primary evidence of the agreement to arbitrate, allowing for a preliminary verification of its existence and prima facie validity. Secondly, it ensures that the scope of the arbitration agreement, which defines the jurisdiction of the arbitral tribunal, is clearly before the court. Thirdly, it mitigates the risk of disputes being erroneously referred to arbitration based on alleged or improperly evidenced agreements. This requirement, therefore, contributes to the orderly and efficient functioning of the referral process under Section 8.

Section 8(2) in the Context of the Wider Arbitration Framework

Section 8(2) is intrinsically linked to Section 8(1). The latter empowers the court to refer parties to arbitration, but this power is conditioned by the procedural fulfillment mandated by Section 8(2). While the judiciary has adopted a strong pro-arbitration stance, evident in cases like Sundaram Finance Limited And Another v. T. Thankam (2015 SCC 14 444, Supreme Court Of India, 2015) and Hindustan Petroleum Corpn. Ltd. v. Pinkcity Midway Petroleums (2003 SCC 6 503, Supreme Court Of India, 2003), which emphasize the peremptory nature of Section 8, this does not obviate the need for strict compliance with its procedural sub-components. Indeed, procedural integrity, including adherence to requirements like Section 8(2), is vital for maintaining the credibility and efficacy of the arbitration process itself.

It is also pertinent to distinguish Section 8(2) of the 1996 Act from Section 8(2) of the repealed Arbitration Act, 1940. Several provided reference materials, such as J.C Budhraja v. Chairman, Orissa Mining Corporation Ltd. And Another (2008 SCC 2 444, Supreme Court Of India, 2008) and Kamal Pushp Enterprises v. D.R Construction Co. (2000 SCC 6 659, Supreme Court Of India, 2000), refer to applications under Section 8(2) of the 1940 Act. That provision concerned the power of the court to appoint an arbitrator when parties failed to concur on an appointment, a subject matter distinct from the documentary requirement for a referral application under Section 8(2) of the 1996 Act.

The Impact of the Arbitration and Conciliation (Amendment) Act, 2015

The Arbitration and Conciliation (Amendment) Act, 2015, brought about significant changes to Section 8 of the Act. The reference material Emaar Mgf Land Limited (S) v. Aftab Singh (S) (Supreme Court Of India, 2018) notes that "Sections 8(1) and 8(2) after amendment by the 2015 Act are as follows:" and proceeds to quote the amended Section 8(1). However, the provided excerpt of this judgment does not furnish the text of the amended Section 8(2). Consequently, this analysis has primarily focused on the pre-2015 text of Section 8(2) and the jurisprudence interpreting it, as this is comprehensively covered by the other reference materials provided. The pre-2015 framework clearly established the mandatory nature of filing the original or certified copy of the arbitration agreement. Any nuances introduced by the 2015 amendment to Section 8(2) specifically are beyond the scope of analysis strictly based on the provided texts.

Conclusion

Section 8(2) of the Arbitration and Conciliation Act, 1996, in its pre-2015 iteration, laid down an unequivocal and mandatory procedural requirement: an application for referring parties to arbitration under Section 8(1) would not be entertained unless accompanied by the original arbitration agreement or a duly certified copy thereof. Judicial pronouncements, as evidenced by the reference materials, have consistently upheld this mandate, emphasizing its importance in ensuring that the court's power to refer disputes to arbitration is exercised on the basis of authenticated documentary evidence of the parties' agreement to arbitrate. This requirement, while procedural, plays a substantive role in safeguarding the integrity of the arbitration process by ensuring that referrals are grounded in clearly established contractual commitments. Parties seeking to invoke Section 8 must, therefore, meticulously comply with this documentary prerequisite to ensure their application is entertained by the judicial authority.