“Judicial Authority” under Section 8 of the Arbitration and Conciliation Act, 1996

Section 8 of the Arbitration and Conciliation Act, 1996 (“Act”) makes it mandatory for a “judicial authority” to refer the parties to arbitration given certain conditions are satisfied.[1] However, Act does not define as to what a “judicial authority” can be. Hence, confusion is inevitable as regard the authorities which can come under the ambit of this term.

Under Section 8, power is conferred not on an administrative authority, but on a judicial authority; and hence, such an authority has to act judicially while considering Section 8 of the Act.[2]If a body is acting judicially, then need of compliance with certain judicial principles becomes necessary, for eg., compliance with the principle of natural justice. It is in this light that one has to see the scope of the term “judicial authority”.

Term “Judicial Authority” would certainly include the court as defined in Section 2(e) of the Act. However, it would also include other courts and may even include a special tribunal like the Consumer Forum.[3]Inclusion of such term, and not the court per se, can also be attributed to the fact that least intervention should be done in matters related to arbitration.[4]

Supreme Court of India (“Supreme Court”), while deciding the case of Management Committee, Montfort Senior Secondary School v. Vijay Kumar, considered the scope of the term “judicial authority”.[5] In this case, court referred to an English judgment:

“In R. v. London County Council [(1931) 2 KB 215 : 100 LJKB 760 : 144 LT 464 (CA)] judicial authority was defined as under:

“It is not necessary that it should be a court in the sense in which this Court is a court; it is enough if it is exercising, after hearing evidence, judicial functions in the sense that it has to decide on evidence between a proposal and an opposition and it is not necessary to be strictly a court.”

It can be said that, as long as an authority is competent to exercise “judicial functions”, it can very well come under the ambit of Section 8. The interpretation of this term becomes important when one is concerned with “first statement on the substance of the dispute”. In other words, the important question is as to before which authority, or “judicial authority”, can a person waive his right by not challenging the action because of the presence of arbitration clause. There can be a situation where a defendant submits such a statement before an authority which is not judicial in nature. In such case, it would be hard to say that Section 8 of the Act would be applicable.

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[1]See  Shin-Etsu Chemical Co. Ltd. v. Aksh Optifibre Ltd., (2005) 7 SCC 234; Kalpana Kothari v. Sudha Yadav, (2002) 1 SCC 203; Rashtriya Ispat Nigam Ltd. v. Verma Transport Co., (2006) 7 SCC 275

[2] SBP & Co. v. Patel Engg. Ltd., (2005) 8 SCC 618

[3] Id; See also Fair Air Engineers Pvt. Ltd v. N.K. Modi (“the District Forum, State Commission and National Commission are judicial authorities, for the purpose of Section 34 of the Arbitration Act”)

[4] Bharat Aluminium Co. v. Kaiser Aluminium Technical Services Inc., (2012) 9 SCC 552, ¶ 125

[5] Management Committee, Montfort Senior Secondary School v. Vijay Kumar, (2005) 7 SCC 472