The Supreme Court has upheld an order of the Telangana High Court constituting an arbitral tribunal in a dispute arising out of an EPC contract awarded by Andhra Pradesh Power Generation Corporation Limited (APGENCO), holding that questions relating to the capacity of an individual consortium member to invoke arbitration must be decided by the arbitral tribunal and not at the referral stage.
The dispute arose from a tender floated by APGENCO for works at the Rayalaseema Thermal Power Plant, which was awarded to a consortium comprising Tecpro Systems Ltd., VA Tech Wabag Ltd., and Gammon India Ltd., with Tecpro designated as the lead member. After disputes arose during execution, Tecpro invoked the arbitration clause contained in the General Conditions of Contract and sought appointment of an arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996. APGENCO objected, contending that arbitration could be invoked only by the consortium as a collective entity and not by an individual member.
Rejecting the challenge, a Bench of Justice Pamidighantam Sri Narasimha and Justice Atul S. Chandurkar held that the scope of judicial scrutiny at the Section 11 stage is limited to a prima facie examination of the existence of an arbitration agreement, as mandated by Section 11(6A) of the Act. The Court reiterated that issues relating to capacity, authority, maintainability, or arbitrability fall within the jurisdiction of the arbitral tribunal under Section 16.
The Court observed that whether an individual consortium member qualifies as a “party” to the arbitration agreement depends on the terms of the principal contract and the consortium agreement, and such issues require a detailed examination of contractual provisions and evidence. It held that conducting such an enquiry at the referral stage would amount to an impermissible “mini trial”, contrary to the settled principles of minimal judicial intervention and kompetenzkompetenz.
Affirming the High Court’s approach, the Supreme Court ruled that once a prima facie arbitration agreement is found to exist, the referral court is justified in constituting the arbitral tribunal, leaving all preliminary objections open to be adjudicated by the tribunal itself.
Appearances
Petitioner- Mr. Guru Krishnakumar, Sr. Adv. (arguing counsel) Mr. Venkita Subramoniam T.r, AOR Mr. Neeraj Kumar, Adv. Mr. Meenakshi Jha, Adv. Mr. N. Venkataraman, A.S.G.(arguing counsel) Ms. Prerna Singh, Adv. Mr. Guntur Pramod Kumar, AOR
Respondents- Mr. Anirudh Krishnan, Adv.(arguing counsel) Mr. K. Shiva, Adv. Mr. Anuraag Rajagopalan, Adv. Mr. Pranay Prakash, Adv. Mr. Varun Venkatesan, Adv. Mr. Sasank Iyer, Adv. Mr. Balaji Srinivasan, AOR M/S. Dharmaprabhas Law Associates, AOR Mr. Guntur Pramod Kumar, AOR
