Punjab and Haryana High Court: In a petition filed by Karan Paul (‘petitioner’), an Indian businessman, under Section 11(5) of the Arbitration and Conciliation Act, 1996 (‘Arbitration Act’) seeking appointment of appointment of a Sole Arbitrator as per Articles of Association (‘AOA’) of the K.P.H. Dream Cricket Pvt. Ltd. (‘the Company’) that owns the Indian Premier League (‘IPL’) franchise Punjab Kings, a Single Judge Bench of Jasgurpreet Singh Puri*, J., held that it was settled law that under Section 11 of the Arbitration Act, the question as to whether the dispute was arbitrable or not was not to be looked into at the reference stage.
The Court nominated Justice Harinder Singh Sidhu, a former Judge of the High Court as the Sole Arbitrator, to adjudicate the dispute between the parties.
Background
The petitioner and the respondents were shareholders and Directors of the Company. A dispute arose between the parties that there was a resolution passed by the Company, wherein it was decided that the Chairman of the Company would be appointed on rotational basis and in consonance with Clause 67 of the AOA of the Company, the petitioner invoked the same by issuing a notice under Section 21 of the Arbitration Act by describing the claims.
The said specific clause provided that whenever any difference or dispute would arise between the Company and any of the members or their heirs, executors, administrators, nominees or assignees or between the members inter-se or their respective heirs, executors, administrators, nominees or assigns inter-se touching the true intent, construction or incident or consequences of these Articles or touching anything done, executed emitted or suffered in pursuance thereof or to any affairs of the Company, every such disputes or differences should be referred to the sole arbitration of the Chairman.
A detailed reply was given to the aforementioned notice by the respondents wherein they stated that the dispute raised was not arbitrable and could not be referred to arbitration. It was alleged that since the mechanism provided in Clause 67 of the AOA failed, the High Court was approached.
The petitioner had earlier filed an application under Section 9 of the Arbitration Act seeking interim relief, which was declined, and when an appeal was filed, the Commercial Appellate Division of the High Court disposed of the same. It was observed by the Division Bench of the High Court that nothing would prejudice the rights and contention of the parties in appropriate proceedings where the issue, as to whether the dispute was arbitrable or not, would be decided.
Analysis and Decision
Considering respondent’s argument that the petitioner had already filed an application under Section 9 of the Arbitration Act, which was declined, the Court held that the Arbitrator would be the appropriate competent authority to adjudicate upon the dispute as to whether the issue was arbitrable or not. Therefore, the appointment of the Arbitrator will be in consonance with the aforesaid observation of the High Court.
Further considering Respondent 2’s objection that Respondent 4 had filed a civil suit and the same was rejected on an application filed under Order VII Rule 11 of the Civil Procedure Code 1908 (‘CPC’), the Court held that it would also have no bearing upon the present petition under Section 11 of the Arbitration Act because that civil suit was not filed by the present petitioner.
Considering the Respondent 3’s argument that at the most it was a case of oppression and mismanagement and a petition under the Companies Act 2013 could have been filed, the Court held that the same was not sustainable as the fact that oppression and mismanagement could not be looked into by the Court as it pertained to arbitrability of the dispute and at the given stage only existence of arbitration clause was to be taken into account.
Considering another objection raised by Respondents 2 and 3 that the dispute was not arbitrable, the Court held that the same was not sustainable as it was settled law that under Section 11 of the Arbitration Act at the reference stage was not to look into as to whether the dispute was arbitrable or not. Further, the Court stated that it was also settled that the High Court would not hold a mini trial because all the issues could be raised and should be adjudicated in accordance with law by the Arbitrator.
Thus, the Court held that all the pre-requisite conditions for invocation of Section 11 of the Arbitration Act remained satisfied, and therefore, the present petition was allowed. The Court nominated Justice Harinder Singh Sidhu, a former Judge of the High Court as the Sole Arbitrator, to adjudicate the dispute between the parties, subject to compliance with statutory provisions including Section 12 of the Arbitration Act. The Court directed the Arbitrator to complete the proceedings as per the time limit prescribed under Section 29-A of the Arbitration Act.
[Karan Paul v. K. P. H. Dream Cricket Pvt. Ltd., ARB no. 327 of 2025 (O&M), decided on 23-12-2025]
Advocates who appeared in this case :
For the Petitioner: Puneet Bali, Senior Advocate, Kunal Vajani, Advocate, Vipul Joshi, Advocate, Shubhang Tandon, Advocate, Ishan Puri, Advocate and Favi Singla, Advocate
For the Respondent: Deepak Sabharwal, Advocate, Amit Jhanji, Senior Advocate, Shrey Goel, Advocate, Ankur Sehgal, Advocate, Shubham Mahajan, Advocate, Anand Chhibbar, Senior Advocate, Amitabh Tewari, Advocate, Sangram S. Saron, Advocate and M. B. Rajwade, Advocate