The Delhi High Court has reiterated that the scope of scrutiny under Section 11 of the Arbitration and Conciliation Act, 1996, is “extremely limited” and confined only to a prima facie examination of the existence of an arbitration agreement
Justice Harish Vaidyanathan Shankar appointed a sole arbitrator while rejecting preliminary objections raised by the respondents. The Court clarified that “all rights and contentions of the parties in relation to the claims/counter claims are kept open, to be decided by the learned Arbitrator on their merits, in accordance with law.”
The case arose from a loan agreement dated 2 March 2015 containing an arbitration clause. After earlier proceedings culminated in the arbitral award being set aside on the ground of unilateral appointment, the Division Bench had left it open to the petitioner to take steps “for appointment of an arbitrator in accordance with law.”
A subsequent Section 11 petition was disposed of with liberty to first invoke arbitration under Section 21. In the present proceedings, the respondents objected on the ground that the invocation notice was barred by limitation and there had been no valid invocation under Section 21 read with Section 11(4).
Rejecting the objections at the threshold, the Court held that “in proceedings under Section 11 of the Act, the scope of examination being extremely limited, the Court is only required to appoint an Arbitrator for the purpose of adjudication of the disputes between the parties”
Referring to SBI General Insurance Co. Ltd. v. Krish Spinning, (2024) 12 SCC 1, the Court reiterated that “the scope of enquiry at the stage of appointment of arbitrator is limited to the scrutiny of prima facie existence of the arbitration agreement, and nothing else.”
The Supreme Court in SBI General emphasised that the Court’s role under Section 11 is “facilitative and procedural” and contentious issues are reserved for the Arbitral Tribunal. Accordingly, in this matter, questions such as limitations were left open for the tribunal to decide.
Appearances
Petitioner- Mr. Harshal Kumar, Advocate.
Respondent- Ms. Nidhi Mohan Parashar, Mr. Vikrant Kumar and Mr. Amar Bajpayee, Advocates.
