Section 11 Petition Under Arbitration and Conciliation Act, 1996 — Jurisdiction Limited to Examining Existence of Arbitration Agreement — Scope of Review Under Section 11(6A) — Privity of Parties a Matter for Arbitral Tribunal

The Court appointed Smt. Justice R.P. Sondurbaldota (Retd.) as the sole arbitrator, holding that issues regarding the privity of contract and substantive rights of the parties fall within the domain of the arbitral tribunal under Section 16 of the Act.

The Court’s jurisdiction under Section 11 is confined to examining the existence of a valid arbitration agreement, as per Section 11(6A) of the Act (Para 7). Matters related to the privity of parties and substantive rights are within the exclusive jurisdiction of the arbitral tribunal under Section 16 of the Act (Para 8). Costs of Rs. 25,000 were imposed on Respondent No. 2 due to the prolonged and contentious nature of the proceedings (Para 11).

Acts and Sections Discussed:

1. Arbitration and Conciliation Act, 1996 — Section 11 — Appointment of Arbitrator

2. Arbitration and Conciliation Act, 1996 — Section 16 — Competence of Arbitral Tribunal to Rule on Its Jurisdiction

Subjects:

Arbitration Agreement — Section 11 Petition — Privity of Parties — Partnership Dispute — Appointment of Arbitrator — Arbitral Tribunal Jurisdiction — Section 16 Application — Costs Imposed

Nature of the Litigation: The case arose from a Section 11 petition filed under the Arbitration and Conciliation Act, 1996, seeking the appointment of a sole arbitrator due to the failure of the previously appointed presiding arbitrator to continue in the matter.

Who Asked the Court and for What Remedy: The Petitioner, Darshan Mahendra Nibjya, sought the appointment of a substitute presiding arbitrator following the resignation of the previous arbitrator amid allegations made by Respondent No. 2.

Reason for Filing the Case: The resignation of the originally appointed presiding arbitrator created a vacancy, necessitating the appointment of a new arbitrator for the continuation of arbitration proceedings.

What Has Already Been Decided: The appointment of the original presiding arbitrator had been upheld by the Supreme Court, which dismissed challenges raised by Respondent No. 1. The resignation of this arbitrator required the current petition for a substitute appointment.

Issues:

1. Whether the Court under Section 11 of the Act can decide on the privity of parties to the arbitration agreement.

2. Whether the existence of a valid arbitration agreement between the Petitioner and Respondent No. 2 should be considered by the Court.

Submissions/Arguments:

a) Petitioner argued that the Court’s jurisdiction under Section 11 is limited to determining the existence of a valid arbitration agreement. b) Respondent No. 2 contended that there was no privity of contract between the Petitioner and Respondent No. 2 under the arbitration agreement. c) Respondent No. 2 relied on the judgment in Magic Eye Developers Pvt. Ltd. vs. Green Edge Infrastructure Pvt. Ltd., arguing for a deeper inquiry into the agreement’s applicability.