Case Note & Summary
The dispute arose from an agreement dated 21.12.2010 between the Petitioner, a contractor, and the Respondent, a company, for providing security services. The agreement included an arbitration clause. Disputes regarding payment and deductions led the Petitioner to issue a legal notice on 29.05.2013, demanding payment of Rs. 1,43,69,309. Following a lack of response from the Respondent, the Petitioner issued a Notice of Arbitration on 09.03.2016 and subsequently proposed an arbitrator on 30.05.2016. The Petitioner filed an application under Section 11 on 20.09.2016 for the appointment of a sole arbitrator. The High Court dismissed the application, ruling that the claims were barred by limitation. The Petitioner appealed to the Supreme Court, which examined the implications of the 2015 Amendment Act on the arbitration process. The Court noted that under Section 21 of the Act, arbitral proceedings commence upon the request for arbitration being received. The Court highlighted that the 2015 Amendment Act shifted the appointment power to the High Court and restricted the examination to the existence of the arbitration agreement. The Supreme Court concluded that the issue of limitation is a jurisdictional matter to be decided by the arbitrator, not the High Court. The Court set aside the High Court's order and appointed a retired judge as the sole arbitrator, directing that the arbitration proceedings commence at Singrauli, Madhya Pradesh. The parties were instructed to share arbitration costs equally and appear before the arbitrator on 02.12.2019.
Headnote
A) Arbitration Law - Limitation in Arbitration - Jurisdictional Issue - Arbitration and Conciliation Act, 1996, Section 11, Section 16 - The Supreme Court held that the issue of limitation is a jurisdictional issue that must be decided by the arbitral tribunal, not the High Court at the pre-reference stage. The Court emphasized that once the existence of the arbitration agreement is not disputed, all issues, including jurisdictional objections, are to be decided by the arbitrator (Paras 10-10).
Issue of Consideration
Whether the High Court was justified in rejecting the application for reference to arbitration on the ground of limitation.
Final Decision
The Supreme Court set aside the High Court's order and directed that the issue of limitation be decided by the arbitral tribunal. The Court appointed Mr. Justice (Retd.) A. M. Sapre as the Sole Arbitrator and directed the parties to appear before him on 02.12.2019.
Law Points
- Arbitration agreement
- Limitation period
- Kompetenz-Kompetenz principle
- Judicial intervention
- Section 11
- Section 16
- 2015 Amendment Act
