It has now been well settled by the catena of judicial precedents that a judicial authority is bound to refer the dispute to Arbitration once the existence of Arbitration clause is established. It has been settled by a 7 judges bench of Hon’ble Apex Court in the case of SBP & Co. vs Patel Engineering Ltd. & Anr. (2005) 8 SCC 618 that in case of existence of an arbitration clause, the Civil Court does not have the jurisdiction to entertain such a suit and is bound to refer the dispute to Arbitration. The Hon’ble Apex Court observed that “Where there is an arbitration agreement between the parties and one of the parties, ignoring it, files an action before a judicial authority and the other party raises the objection that there is an arbitration clause, the judicial authority has to consider that objection and if the objection is found sustainable to refer the parties to arbitration. The expression used in this section is "shall" and this Court in P. Anand Gajapathi Raju v. P.V.G. Raju and in Hindustan Petroleum Corpn. Ltd. v. Pinkcity Midway Petroleums has held that the judicial authority is bound to refer the matter to arbitration once the existence of a valid arbitration clause is established. Thus, the judicial authority is entitled to, has to and is bound to decide the jurisdictional issue raised before it, before making or declining to make a reference.

Objection of Existence of Arbitration Clause is valid under Order VII Rule 11 CPC, 1908 Application & Separate Application under Section 8 Arbitration Act is not required:

The object of Section 8 of Arbitration Act is to bring to the notice of the court about the existence of Arbitration Agreement between the parties. Hence, where the objection to the existence of the Arbitration clause has been taken by way of Order VII Rule 11 Application, it shall amount to sufficient compliance of Section 8 of Arbitration Act & no separate Application under Section 8 of Arbitration Act is required. Reliance is placed upon the case of “M/S Naolin Infrastructure Private Limited Versus M/S Kalpana Industries, Arbitration Application 162/2023 Order dated 02.02.2024”, Telangana High Court (Ref Para 9,10 &11) which has been upheld by Hon’ble Supreme Court in the case of “Special Leave to Appeal (C) No. 8087/2024 M/S Kalpana Industries Versus M/S Naolin Infrastructure Private Limited dated 19.11.2024”

Once a party raises an objection in the Written Statement to the Court’s Jurisdiction based on an Arbitration Clause, a separate Application under Section 8 Arbitration Act is not necessary:

Where the Party raises the preliminary objection of jurisdiction of this Hon’ble Court on the ground of existence of Arbitration Clause in its Written Statement, it shall constitute a sufficient compliance of mandate of Section 8 of Act and no separate Application is required under Section 8 of Arbitration Act, 1996. It has been well settled by the Division bench of Hon’ble Delhi High Court in the case of Sharad P. Jagtiani vs M/s Edelweiss Securities Ltd. FAO (OS) 188/2014, that if in the written statement filed it is brought to the notice of the Court that there exists an arbitration agreement between the parties there would be sufficient compliance with the mandate of the law and the Court is bound to refer the matter to Arbitration. The Hon’ble Division bench observed that “Section 8 does not specify the manner in which the party has to submit its first statement on the substance of the dispute, and normally with respect to a suit, the first statement on the substance of the dispute by the defendant would be the written statement. Thus, if in the written statement filed it is brought to the notice of the Court that there exists an arbitration agreement between the parties which embraces the subject matter of the suit there would be complete compliance with the mandate of the law and the Court would be obliged to refer the parties to arbitration if the plea in the written statement is made good”.

It is pertinent to note that the judgment of Ld. Single Judge in Din Dayal Agrawal Huf versus Capriso Finance Ltd. 2025 SCC OnLine Del 4576 wherein the Hon’ble Delhi High Court held that for reference of dispute for Arbitration, Separate Application under Section 8 of Arbitration & Conciliation Act, 1996 is mandatory, stands on entirely different footing and distinguishable from the facts of the case “Sharad P. Jagtiani vs M/s Edelweiss Securities Ltd. FAO (OS) 188/2014 as in Din Dayal Agarwal (Supra), the Defendant has not filed Written Statement and only filed Order VII Rule 11 Application. However, the cases where the Written Statement being the first statement on the substance of the dispute at the very outset raises the preliminary objection of existence of Arbitration Clause, no separate Application under Section 8 Arbitration & Conciliation Act, 1996 is required to refer the matter to Arbitration.

Arbitration Agreement need not necessarily be signed:

It is well settled that merely because the arbitration clause is not separately signed by the parties, the existence and validity of the arbitration agreement cannot be disputed. Under Section 7(4) of the Arbitration and Conciliation Act, 1996, an arbitration agreement is required to be in writing; however, signature of the parties is not a mandatory requirement for constituting a valid arbitration agreement.

It is pertinent to note that the reliance placed upon the judgment Hon’ble Supreme Court in Caravel Shipping Services Pvt. Ltd. v. Premier Sea Foods Exim Pvt. Ltd. (2019) 11 SCC 461, wherein the Hon’ble Court held that an arbitration agreement need not be signed separately if the written documents and conduct of the parties clearly establish acceptance of the arbitration clause.