Summary
While appointing an arbitral tribunal under Section 11 of the Arbitration and Conciliation Act, 1996, the High Court excluded certain claims as non-arbitrable 'excepted matters' under the contract. The Court held that Section 11(6A), which remains in force because its omission by the 2019 Amendment Act has not been notified, confines the referral court to examining the existence of an arbitration agreement; having found one, the High Court could not bisect the claims into arbitrable and non-arbitrable parts, and pleas of non-arbitrability are for the arbitral tribunal.
Issues
- Whether a court exercising power under Section 11 of the Arbitration and Conciliation Act, 1996 must confine itself to examining the existence of an arbitration agreement.
- If so, whether the referral court may nonetheless hold that some claims are non-arbitrable or fall within excepted matters while making the reference.
Provisions considered
- Section 11(6A), Arbitration and Conciliation Act, 1996Inserted by Act 3 of 2016 with effect from 23.10.2015; requires the Supreme Court or High Court, notwithstanding any judgment, decree or order, to confine itself to examining the existence of an arbitration agreement. Its omission by Act 33 of 2019 has not been notified, so it remains on the statute book and governed the High Court's jurisdiction. (¶¶ 7, 8, 12)
- Section 11 (appointment of arbitrators), Arbitration and Conciliation Act, 1996The High Court, while appointing the tribunal under Section 11, excluded claims in paragraphs 48(ii), (iii) and (iv) of the claim petition as excepted matters under clauses 50 and 50.2 of the agreement; that exclusion was held beyond the referral court's remit. (¶¶ 2, 6, 12, 13)
Held
- Sub-section (6A) of Section 11, inserted by the 2015 Amendment, requires the Supreme Court or the High Court, notwithstanding any judgment, decree or order of any court, to confine its consideration to the existence of an arbitration agreement; although Act 33 of 2019 omitted the sub-section, that omission has not been notified and the sub-section remains in force. (¶¶ 7, 8)
- The statement of objects and reasons of the 2015 Amendment (the court shall examine the existence of a prima facie arbitration agreement 'and not other issues'), as read by the seven-Judge Bench in In Re: Interplay and the three-Judge Bench in SBI General Insurance v. Krish Spinning, limits the enquiry at the appointment stage to the prima facie existence of the arbitration agreement and nothing else; the observations in Vidya Drolia and NTPC v. SPML Infra that the referral court may weed out ex facie non-arbitrable disputes no longer apply, and the two-Judge decision in Emaar India v. Tarun Aggarwal Projects cannot be relied on against these later larger-Bench rulings. (¶¶ 9, 10, 11, 12)
- Having found an arbitration agreement for settlement of disputes between the parties, the High Court erred in bisecting the appellant's claim into arbitrable and non-arbitrable parts; the correct course was to leave it open to the party to raise non-arbitrability of particular claims before the arbitral tribunal, which could consider and decide it. (¶¶ 12, 13)
Result
Appeal allowed; order of the High Court set aside to the extent it excluded the claims in paragraph 48(ii), (iii) and (iv) of the claim petition; parties at liberty to plead non-arbitrability of particular claims before the arbitral tribunal, which shall decide the plea unaffected by the High Court's observations; no order as to costs.