Case Note & Summary
The dispute arose from an agreement dated 21.12.2010 between M/s. Uttarakhand Purv Sainik Kalyan Nigam Limited (Petitioner-Contractor) and Northern Coal Field Limited (Respondent-Company) for security services. The agreement contained an arbitration clause. Disputes arose regarding payment and deduction of security amounts. The Petitioner issued a legal notice on 29.05.2013 demanding Rs. 1,43,69,309/-, followed by a notice of arbitration on 09.03.2016 and a further notice on 30.05.2016 proposing an arbitrator. The Respondent did not respond. The Petitioner filed an application under Section 11 of the Arbitration and Conciliation Act, 1996 on 20.09.2016 before the High Court for appointment of an arbitrator. The High Court dismissed the application holding that the claims were barred by limitation. The Supreme Court allowed the appeal, holding that under Section 11(6A), inserted by the 2015 Amendment Act, the court's jurisdiction is confined to examining the existence of an arbitration agreement. Issues of limitation and other preliminary objections are to be decided by the arbitral tribunal under Section 16, which embodies the Kompetenz-Kompetenz principle. The Court set aside the High Court's order and appointed a sole arbitrator to adjudicate the disputes.
Headnote
A) Arbitration Law - Appointment of Arbitrator - Section 11(6A) of the Arbitration and Conciliation Act, 1996 - Scope of Examination - The court, while considering an application under Section 11, must confine itself to examining the existence of an arbitration agreement and cannot decide issues of limitation or other preliminary objections. The 2015 Amendment Act legislatively overruled earlier judgments like Patel Engineering and Boghara Polyfab which allowed wider scrutiny. (Paras 9.3-9.8) B) Arbitration Law - Kompetenz-Kompetenz - Section 16 of the Arbitration and Conciliation Act, 1996 - Jurisdiction of Arbitral Tribunal - The arbitral tribunal has competence to rule on its own jurisdiction, including limitation and other threshold issues, subject to the exception where the arbitration agreement is impeached as procured by fraud or deception. (Paras 9.8-9.9) C) Limitation Act - Bar of Limitation - Not Applicable at Section 11 Stage - The question whether a claim is barred by limitation is a matter for the arbitrator to decide under Section 16, and cannot be a ground for refusing appointment of an arbitrator under Section 11. (Paras 9.4-9.8)
Issue of Consideration
Whether the High Court was justified in rejecting an application under Section 11 of the Arbitration and Conciliation Act, 1996 for reference to arbitration on the ground that the claims were barred by limitation.
Final Decision
The Supreme Court allowed the Special Leave Petition, set aside the High Court's order, and appointed a sole arbitrator to adjudicate the disputes between the parties. The Court held that under Section 11(6A), the court's jurisdiction is confined to examining the existence of an arbitration agreement, and issues of limitation are to be decided by the arbitral tribunal under Section 16.
Law Points
- Section 11(6A) of the Arbitration and Conciliation Act
- 1996 confines court's examination to existence of arbitration agreement
- leaving limitation and other issues to arbitrator under Section 16
- Kompetenz-Kompetenz principle
- 2015 Amendment Act overrules Patel Engineering and Boghara Polyfab
