SC: Court deciding S.11 Arbitration Act Application can leave plea of Non-Arbitrability of Dispute open for Tribunal (Read Judgment)

The Supreme Court recently took up three civil appeals filed against similar orders passed by a Single Judge of the Bombay High Court on the petitions under Section 11 of the Arbitration and Conciliation Act, 1996 for appointment of arbitrator.

All three cases revolved around similar facts. The arbitration clause was invoked by one of the parties and the other parties to the contract did not respond. Thereafter, a petition under Section 11 of the Arbitration Act was filed. The Bombay High Court allowed the petition and appointed a sole Arbitrator. Appellant’s advocate appeared before the arbitrator and raised objection regarding competence of arbitral tribunal u/s. 16 of A&C Act. The objection was overruled by the arbitrator. Appellant has filed petition against this order under Section 34 of the A&C Act before the Bombay High Court.

The appellant contended before the Supreme Court that he was not given a notice of the date fixed in the petition under Section 11, he could not urge before the Single Judge that the claim of the respondent no.1 was barred by limitation and that there was no arbitration clause. He further submitted that the appellant caused appearance before the Arbitrator without prejudice to his rights and contentions.

The Supreme Court held that in such cases, the issue of non­-arbitrability is left open to be decided by the Arbitral Tribunal. On perusal of the impugned order, the bench found that the issues of non-arbitrability and the claim being time barred have neither been concluded by the Single Judge of the Bombay High Court. In fact, the learned Single Judge had observed that the contentions of the parties have been kept open. The petitions filed by the appellant under Section 34 of the Arbitration Act, are pending before the High Court in which the appellant can raise all permissible contentions.

The bench concluded that no case for interference is made out. Therefore, the appeals were dismissed, while leaving open the contentions raised by the appellant in pending petitions under Section 34 of the Arbitration Act before the High Court of Bombay.

Case Title: Mohammed Masroor Shaikh v. Bharat Bhushan Gupta & Ors.
Bench: Justice Indira Banerjee, Justice Abhay S. Oka
Date: February 2, 2022

Read the Judgement: