Time Runs Out for Arbitration: Bombay High Court Dismisses SBI's Application Under Amended Section 8.


07 April 2025 Arbitration Law >> Business & Commercial Law   |   Civil Suits >> Civil & Consumer Law  

The Bombay High Court recently dismissed an interim application filed by the State Bank of India (Defendant) seeking to refer the ongoing suit to arbitration under Section 8 of the Arbitration and Conciliation Act, 1996. The Court in the matter of State Bank of India, M/s. Surya Pharmaceuticals Ltd Through Harvinder Kaur Jatana, Liquidator v/s State Bank of India., held that the application was time-barred as it was filed beyond the stipulated period for submitting the first statement on the substance of the dispute, which, following the amended Section 8 and precedents from the Delhi and Karnataka High Courts, is linked to the timeline for filing the written statement.

The Defendant-State Bank of India argued, citing the arbitration clause in their agreement with the Plaintiff, that the matter should be referred to arbitration as per Section 8 of the Act.


 

 

However, the Plaintiff's counsel argued that the application was filed after the deadline prescribed under Section 8(1) of the Act. She drew the Court's attention to interpretations by the Karnataka High Court in Shri Thangavelu. R. Vs. Shri Santosh J. Joseph and Anr. and the Delhi High Court in SSIPL Lifestyle Private Limited Vs. Vama Apparels (India) Private Limited and Anr., which held that "the date of submitting his first statement on the substance of the dispute" under Section 8(1) corresponds to the date of filing the written statement. Since the Defendant had failed to file the application within this timeframe, the Plaintiff contended it should be rejected.

The Defendant's counsel acknowledged filing a separate application to set aside the "no written statement" order, but admitted this was done after filing the Section 8 application. Nevertheless, he urged the Court to consider the arbitration clause and refer the parties to arbitration.

The Court, after considering the arguments and perusing the cited judgments, concurred with the interpretations of Section 8(1) by the Delhi and Karnataka High Courts. It emphasized that the 2016 amendment to Section 8, changing the language from "not later than when submitting" to "not later than the date of submitting" the first statement, explicitly links the deadline for a Section 8 application to the timeline for filing the written statement under the Code of Civil Procedure for non-commercial suits and the Commercial Courts Act for commercial suits. This sets a maximum period of 90 days for non-commercial suits and 120 days for commercial suits.

In this specific case, the suit, being a commercial one, had a limitation period of 120 days for filing the written statement, which expired on February 24, 2017. The Defendant's application for referring the matter to arbitration was filed much later. The Court also noted the Defendant's admission that the application to set aside the "no written statement" order was also filed beyond this 120-day period.

Citing the Supreme Court's decision in Booz Allen & Hamilton Inc. Vs. SBI Home Finance Ltd and Others, the Court concluded that the significant delay in filing the Section 8 application implied a waiver of the arbitration clause. Consequently, the Court dismissed the Defendant's application for referring the matter to arbitration as time-barred, granting the Applicant liberty to pursue other appropriate applications related to the remaining prayers.


COMMERCIAL COURTS ACT, 2015  

Arbitration and Conciliation Act, 1996