Case Note & Summary
The Supreme Court dismissed a civil appeal arising from a Special Leave Petition against a High Court decision refusing to appoint an arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996. The appellant, M/s Mayavti Trading Pvt. Ltd., sought appointment of an arbitrator, but the High Court declined. The Supreme Court, after hearing senior advocates for both sides, declined to interfere under Article 136 of the Constitution, finding no reason to disturb the impugned order. However, the Court took the opportunity to clarify the legal position regarding Section 11(6A) of the Act, which was inserted by the 2015 Amendment and later omitted by the 2019 Amendment (though not yet in force). The Court noted that prior to the 2015 Amendment, courts could examine preliminary issues such as accord and satisfaction at the stage of appointment of arbitrator, as held in SBP & Co. v. Patel Engineering Ltd. and ONGC Mangalore Petrochemicals Ltd. v. ANS Constructions Ltd. The 2015 Amendment introduced Section 11(6A), which confined the court's examination to the existence of an arbitration agreement. The 2019 Amendment omits this sub-section, based on the recommendation of the High Level Committee on Institutionalization of Arbitration, to promote institutional arbitration where courts are not required to determine the existence of an arbitration agreement. The Court observed that the omission is not yet in force and does not revive the pre-2015 position. The appeal was dismissed without interfering with the impugned decision.
Headnote
A) Arbitration Law - Appointment of Arbitrator - Section 11(6A) of Arbitration and Conciliation Act, 1996 - Scope of Court's Examination - The court held that under Section 11(6A), introduced by the 2015 Amendment, the court's role is confined to examining the existence of an arbitration agreement, and not other preliminary issues like accord and satisfaction. However, prior to this amendment, courts could examine such issues. The 2019 Amendment omits Section 11(6A) but is not yet in force, and the omission is aimed at promoting institutional arbitration where courts are not required to determine existence of arbitration agreement. (Paras 5-9) B) Arbitration Law - Accord and Satisfaction - Pre-2015 Position - Prior to insertion of Section 11(6A), courts could examine whether there was accord and satisfaction at the stage of Section 11(6) application, as held in SBP & Co. v. Patel Engineering Ltd. and ONGC Mangalore Petrochemicals Ltd. v. ANS Constructions Ltd. (Paras 7-8) C) Arbitration Law - 2019 Amendment - Omission of Section 11(6A) - The omission is based on the High Level Committee Report recommending institutional appointment of arbitrators without court involvement in determining existence of arbitration agreement. The omission is not yet in force. (Paras 6-7)
Issue of Consideration
Whether the Supreme Court should interfere under Article 136 with the impugned decision refusing to appoint an arbitrator, and the scope of Section 11(6A) of the Arbitration and Conciliation Act, 1996.
Final Decision
The Supreme Court dismissed the appeal, declining to interfere with the impugned decision of 12.03.2019 under Article 136 of the Constitution of India.
Law Points
- Section 11(6A) of Arbitration and Conciliation Act
- 1996
- confining court to examination of existence of arbitration agreement
- Omission of Section 11(6A) by 2019 Amendment Act not yet in force
- Accord and satisfaction as a ground to refuse appointment of arbitrator under Section 11(6) prior to 2015 amendment
- Institutional arbitration recommended by High Level Committee
