Case Note & Summary
The appellant, Mahindra Defence Systems Limited, filed an appeal under Section 37 of the Arbitration and Conciliation Act, 1996, challenging the order of the learned Single Judge refusing to appoint an arbitrator under Section 11 of the Act. The appellant had entered into a contract with the respondent, Ranjana Industries, for supply of goods. A dispute arose regarding payment, and the appellant invoked the arbitration clause. The respondent opposed the appointment, contending that no dispute existed as the claim was time-barred. The learned Single Judge dismissed the application, holding that the dispute was not arbitrable. The appellant appealed. The Division Bench of the Bombay High Court allowed the appeal, setting aside the order of the Single Judge. The Court held that the existence of an arbitration agreement is a jurisdictional fact and once it is prima facie satisfied, the court must appoint an arbitrator. The Court found that the arbitration agreement existed and the dispute was covered by it. The Court further held that at the stage of Section 11, the court is only required to examine the existence of an arbitration agreement and whether the dispute is arbitrable, and should not conduct a mini-trial or examine the merits of the dispute. The Court appointed a sole arbitrator to adjudicate the dispute.
Headnote
A) Arbitration Law - Appointment of Arbitrator - Section 11 of the Arbitration and Conciliation Act, 1996 - Existence of Arbitration Agreement - The appellant sought appointment of an arbitrator under Section 11 of the Act. The respondent opposed on the ground that no dispute existed. The Court held that the existence of an arbitration agreement is a jurisdictional fact and once it is prima facie satisfied, the court must appoint an arbitrator. The Court found that the arbitration agreement existed and the dispute was covered by it. (Paras 1-10) B) Arbitration Law - Prima Facie Test - Section 11 of the Arbitration and Conciliation Act, 1996 - The Court held that at the stage of Section 11, the court is only required to examine the existence of an arbitration agreement and whether the dispute is arbitrable. The court should not conduct a mini-trial or examine the merits of the dispute. (Paras 5-8)
Issue of Consideration
Whether the learned Single Judge erred in refusing to appoint an arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996, despite the existence of an arbitration agreement and a dispute arising thereunder.
Final Decision
Appeal allowed. Order of the learned Single Judge set aside. A sole arbitrator appointed to adjudicate the dispute between the parties.
Law Points
- Appointment of arbitrator under Section 11 of Arbitration and Conciliation Act
- 1996
- Existence of arbitration agreement
- Dispute referable to arbitration
- Prima facie test for appointment
