The Delhi High Court has recently ruled that the Court's role in appointing an arbitrator under §11 of the Arbitration Act 1996 is confined to determining the existence of an arbitration agreement. Any other issue, including limitation, must be decided by the arbitrator.
Background
The dispute arose from a contract between KR Anand and the New Delhi Municipal Council following a notice inviting tenders dated 13 August 2009. After NDMC accepted Anand's bid, the parties executed an agreement on 4 December 2009, and this included an arbitration clause. Despite a demand notice to NDMC in May 2013 for amounts due, payment was not made, and arbitration was invoked in August 2024, 10 years later.
NDMC opposed the invocation of arbitration on the grounds that the claims were time-barred. Anand applied to the Delhi High Court under §11 of the Act seeking the appointment of an arbitrator.
Issue
The primary issue before the Delhi High Court was whether Anand's claims were barred by limitation and whether such objections could be decided by the Court at the stage of appointing and arbitrator.
Decision
The Court said that under §11(6) of the Act, the scope of its inquiry is limited to determining the existence of an arbitration agreement. The Court referred to the Supreme Court decision in SBI General Insurance Co Ltd v Krish Spinning1 which precludes the Court from considering issues such as limitation or jurisdiction, leaving these to be decided by the arbitrator.
The Court also said that that objections concerning limitation and jurisdiction could be raised by the NDMC in the arbitration and were to be considered by the arbitrator before adjudicating the merits of the claims.
Conclusion
This decision reinforces the current position under §11 of the Act, which strictly limits judicial intervention in the arbitral process, including on questions of limitation and jurisdiction. The position has evolved from Vidya Drolia v Durga Trading Corporation2, which allowed the referral court's intervention in only exceptional cases, such as time-barred claims. Recent judgments, including SBI General Insurance Co Ltd v Krish Spinning3, and Aslam Ismail Khan Deshmukh v Asap Fluids Pvt Ltd4, have narrowed the referral court's intervention even further, confining the review to verifying the existence of the arbitration agreement.
Footnotes
1 2024 SCC OnLine SC 1754
2 (2021) 2 SCC 1
3 2024 SCC Online SC 1754
4 (2024) 5 SCC 313
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