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    Question

    Under Section 8(1) of the Arbitration and Conciliation

    Act, 1996, when must a judicial authority refer parties to arbitration? 
    A Only if both parties request referral in writing before the first hearing Correct Answer Incorrect Answer
    B When a valid arbitration agreement exists and the dispute falls within its scope, upon application of a party made not later than when the first statement on the substance of the dispute is filed Correct Answer Incorrect Answer
    C Only after the court has heard preliminary arguments on the merits Correct Answer Incorrect Answer
    D When the court itself discovers an arbitration agreement, even without party request Correct Answer Incorrect Answer
    E Never, as courts have complete discretion to ignore arbitration agreements Correct Answer Incorrect Answer

    Solution

    Section 8(1) provides: "A judicial authority, when seized of an action in a matter which is the subject of an arbitration agreement, shall, at the request of one of the parties or any person claiming through or under him, refer the parties to arbitration unless it finds that prima facie no valid arbitration agreement exists." Critically, the application must be made "not later than when the first statement on the substance of the dispute is filed." The 2015 Amendment further reinforced that referral is mandatory and must occur "notwithstanding any judgment, decree or order" of higher courts. The condition "prima facie no valid agreement" provides a minimal threshold—the court need not exhaustively validate the agreement, only confirm apparent existence.

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