Case Note & Summary
The appeal arose from a judgment of the High Court of Delhi dated 06.09.2023, which, while appointing an arbitral tribunal under Section 11 of the Arbitration and Conciliation Act, 1996, excluded certain claims raised by the appellant (Office for Alternative Architecture) against the respondent (IRCON Infrastructure and Services Ltd.) as non-arbitrable or excepted matters under clauses 50 and 50.2 of the agreement. The appellant contended that under Section 11(6A), the court's role is limited to examining the existence of an arbitration agreement, and all other issues, including arbitrability of claims, should be decided by the arbitral tribunal. The respondent relied on the decision in Emaar India Limited vs. Tarun Aggarwal Projects LLP and Anr. to argue that the High Court could exclude non-arbitrable claims. The Supreme Court considered the rival submissions and examined the scope of Section 11(6A), which was inserted by the 2015 amendment and remains in force as the 2019 amendment has not been notified. The Court noted the statement of objects and reasons of the 2015 amendment, which states that the court shall examine the existence of a prima facie arbitration agreement and not other issues. This was affirmed by a seven-judge bench in In Re: Interplay Between Arbitration Agreements under the Arbitration and Conciliation Act, 1996 and the Indian Stamp Act, 1899, and subsequently by a three-judge bench in SBI General Insurance Co. Ltd. vs. Krish Spinning, which held that the scope of enquiry at the appointment stage is limited to the scrutiny of prima facie existence of the arbitration agreement, and nothing else. The Court found that the High Court erred in bisecting the appellant's claims into arbitrable and non-arbitrable parts when an arbitration agreement existed. The correct course was to leave the issue of non-arbitrability to the arbitral tribunal. Consequently, the Supreme Court allowed the appeal, set aside the High Court's order to the extent it excluded claims mentioned in para 48(ii), (iii), and (iv), and directed that all claims be left for the arbitral tribunal to decide.
Headnote
A) Arbitration Law - Appointment of Arbitrator - Scope of Section 11 - Section 11(6A) of the Arbitration and Conciliation Act, 1996 - The referral court must confine its examination to the existence of an arbitration agreement and cannot decide on the arbitrability of claims at the appointment stage - Held that the High Court erred in excluding certain claims as non-arbitrable, as such issues should be left to the arbitral tribunal (Paras 6-12). B) Arbitration Law - Non-Arbitrable Claims - Excepted Matters - Clause 50 and 50.2 of Agreement - The High Court excluded claims under clause 50 and 50.2 as excepted matters - Held that the referral court cannot bisect claims into arbitrable and non-arbitrable parts when an arbitration agreement exists; the tribunal should decide such issues (Paras 2-12). C) Arbitration Law - Precedent - In Re: Interplay Between Arbitration Agreements under the Arbitration and Conciliation Act, 1996 and the Indian Stamp Act, 1899 - The seven-judge bench clarified that at the appointment stage, the court shall examine the existence of a prima facie arbitration agreement and not other issues - This principle was applied to hold that the High Court's exclusion of claims was improper (Paras 10-12).
Issue of Consideration
Whether while exercising power under Section 11 of the Arbitration and Conciliation Act, 1996, the court can exclude certain claims as non-arbitrable or excepted matters, or must confine itself to examining the existence of an arbitration agreement.
Final Decision
Appeal allowed. The order of the High Court to the extent it excludes claims mentioned in para 48(ii), (iii), and (iv) is set aside. All claims are left to be decided by the arbitral tribunal.
Law Points
- Section 11(6A) of the Arbitration and Conciliation Act
- 1996 limits the referral court's examination to the existence of an arbitration agreement
- not other issues
- the referral court cannot exclude claims as non-arbitrable at the appointment stage
- the arbitral tribunal is the appropriate forum to decide arbitrability of claims.
