Summary
The Court set aside an arbitral reference because the High Court had left the disputed existence and validity of the arbitration agreement to the tribunal. Applying section 11(6A), the judgment required the referral court to decide that threshold issue conclusively, distinguishing it from limited review of non-arbitrability. The petitions were remanded for fresh decision within three months; whether the four agreements were interconnected and supplied an arbitration agreement remained open.
Issues
- Whether the referral court could leave a contested arbitration agreement’s existence and validity to the arbitral tribunal.
- Whether the High Court had actually decided that threshold issue by describing four agreements as interconnected.
- Whether the Supreme Court should decide the interconnection and agreement questions on merits.
Provisions considered
- Section 11(6) and (6A), Arbitration and Conciliation Act, 1996Under the post-2015 provision applied in this judgment, the referral court was required to determine disputed existence and validity of the arbitration agreement, including the parties and privity, rather than simply refer that issue to the tribunal. The statutory text of subsection (6A) confined the court to examining the agreement’s existence. (¶¶ 5, 5.1, 5.2, 5.3, 6, 8)
Held
- The judgment distinguished two inquiries at the referral stage: existence and validity of the arbitration agreement, including parties and privity, and non-arbitrability of the dispute. It held that the first, going to the root of the reference, had to be decided conclusively by the referral court under section 11(6A); the second permitted limited prima facie scrutiny to exclude plainly non-arbitrable matters. (¶¶ 5, 5.1, 5.2, 5.3)
- The High Court’s statement that the agreements were interconnected did not constitute the required determination when read with its express refusal to pronounce finally and its decision to leave the issue to the tribunal. Complexity of the linked transactions did not justify omitting the threshold decision required by this judgment. (¶¶ 2.1, 2.2, 4.1, 6)
- The Supreme Court declined to decide whether SHA-1, SHA-2 and MOU-1 were interconnected with MOU-2 or established a valid arbitration agreement for the disputes. Those questions were reserved for the High Court on remand; setting aside the reference was not a finding that no agreement existed. (¶¶ 7, 8)
- The impugned common order referring the disputes to arbitration was quashed. The High Court was directed to decide the arbitration petitions afresh, including the threshold agreement question, within three months of receiving this order. Appeals were allowed to that extent, without costs. (¶ 8)
Result
Appeals allowed to the stated extent; arbitral-reference order set aside and petitions remitted to the High Court for fresh decision within three months of receipt. Agreement and interconnection merits left open. No order as to costs.