Civil suit application does not preclude arbitration

The Supreme Court recently considered whether a high court was right in rejecting the application under section 5 read with section 8 of the Arbitration and Conciliation Act, 1996, to have the dispute referred to an arbitral tribunal. Allowing an appeal against the high court decision, the Supreme Court held that an application for an extension of time to file a written statement in a civil suit did not constitute a waiver of the right to object to the jurisdiction of judicial authority.

In Greaves Cotton Ltd v United Machinery & Appliances, United filed a civil suit before the high court on account of alleged breach of contract by Greaves. After receiving notice from the court, Greaves applied for an eight-week extension of time to file a written statement and also invoked the arbitration clause contained in the contract. Greaves then applied under section 5 read with section 8 of the 1996 act, seeking to have the disputes forming the subject-matter of the suit referred for arbitration.

The high court held that by applying for an extension of time to file its written statement, Greaves had waived its right to seek arbitration. An appeal against this order was filed before the Supreme Court.