Supreme Court: In a civil appeal against Delhi High Court’s decision, whereby, while appointing an Arbitral Tribunal in exercise of power under Section 11 of the Arbitration and Conciliation Act, 1996 (the Act), the High Court excluded certain claims holding them to be non-arbitrable, the Division Bench of PS Narasimha and Manoj Misra*, JJ. allowed the appeals and set aside the order of the High Court to the extent it excluded the part of claims of the impugned order. The parties were given the liberty to take the plea of non-arbitrability of certain claims before the arbitral tribunal, which shall decide the same without being prejudiced by any observations made in the order of the High Court.
The appellant’s case was that while exercising power under Section 11 of the Act, the Court has to only examine whether the arbitration agreement exists or not and if it exists, an Arbitrator is to be appointed who, thereafter, would decide whether the claims fall within the excepted category or not. The respondent’s submission was that the High Court is empowered to exclude non-arbitrable claims in light of Emaar India Limited v. Tarun Aggarwal Projects LLP, (2023) 13 SCC 661.
Issue
Whether while exercising power under Section 11 of the Act, the Court has to confine its consideration as to the existence of an arbitration agreement between the parties. If so, whether it would be permissible, while exercising jurisdiction under Section 11, to hold that some of the claims raised are non-arbitrable.
Decision
The Court pointed out that Sub-section (6A) of Section 11, which was inserted by Act 3 of 2016, with effect from 23-10-2015 made it clear that while considering an application under sub-section (4) or sub-section (5) or sub-section (6), the Supreme Court or the High Court, shall, notwithstanding any judgment, decree or order of any Court, confine to the examination of the existence of an arbitration agreement.
The Court also considered that the 2019 Amendment omitted sub-section (6A) but since the amending Act has not been notified thus far, sub-section (6A) of Section 11 of the 1996 Act remains intact.
Further, the Court added that the significance of the use of the expression “not other issues” in the statement of objects and reasons of the 2015 amendment was discussed by a seven-Judge bench in Interplay Between Arbitration Agreements under Arbitration, 1996 & Stamp Act, 1899, In re, (2024) 6 SCC 1 , and said that it indicates that the Supreme Court or High Court at the stage of the appointment of an Arbitrator shall ‘examine the existence of prima facie arbitration agreement and not other issues’. Further, therein, it was added that the other issues not only pertained to the validity of the arbitration agreement but also include any other issues which are a consequence of unnecessary judicial interference in the arbitration proceedings.
The Court also relied on SBI General Insurance Co. Ltd. v. Krish Spinning, 2024 SCC OnLine SC 1754 , wherein, it was 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. Hence, considering the abovementioned larger Bench decisions, the Court dismissed respondent’s submission.
Thus, the Court viewed that the High Court erred in bisecting the claim of the appellant into two parts, one arbitrable and the other non- arbitrable, when it found arbitration agreement to be there for settlement of disputes between the parties. The Court stated that the correct course for the High Court was to leave it open to the party to raise the issue of non-arbitrability of certain claims before the arbitral tribunal, which, if raised, could be considered and decided by it.
[Office for Alternative Architecture v. Ircon Infrastructure and Services Ltd., 2025 SCC OnLine SC 1098, decided on: 13-05-2025]
*Judgment Authored by: Justice Manoj Misra
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