AIBE III 2012 Question 5 Answer

AIBE III 2012 Question 5

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Question 5 of 100 AIBE III 2012 Set Common

A enters into a contract to sell his house to his son B at a nominal price of Rupees Five lakhs, and B agrees to pay Rupees Ten thousand every month to A's daughter, C, for her lifetime. The contract contains an arbitration clause that in the event of any dispute between the parties with respect to the terms of the contract or its implementation, they will refer the matter to arbitration. Later, B stops paying C. C wishes to commence an arbitration proceeding, but B does not agree to arbitration. C files a suit seeking the Court's direction that arbitration proceedings be commenced. In light of these facts, which of the following statements is most accurate?

A There was no 'separate' arbitration agreement between A and B, and therefore C's suit will be dismissed.
B There was no arbitration agreement between B and C, and therefore C's suit will be dismissed. Official answer
C B's agreement to pay Rupees Ten thousand every month to C was an ancillary matter and not the subject matter of the contract, and therefore C's suit will be dismissed.
D Since arbitration is a voluntary method of alternate dispute resolution and B did not agree to arbitration, no arbitration proceedings can be ordered by the Court.
E B's failure to pay is clearly a dispute regarding implementation of the contract, which is the subject matter of the arbitration agreement, and therefore the Court is obliged to refer the matter to arbitration.