Birendra Kumar Gupta @ Virendra Kumar ... vs Sudhir Prasad
2025 Latest Caselaw 7841 Jhar

Jharkhand High Court

Birendra Kumar Gupta @ Virendra Kumar ... vs Sudhir Prasad on 18 December, 2025

                                  Neutral Citation No. 2025:JHHC:38070




 IN THE HIGH COURT OF JHARKHAND AT RANCHI
            Arbitration Application No. 47 of 2025
Birendra Kumar Gupta @ Virendra Kumar Gupta, aged about 66 years,
Son of Dindayal Ram, Resident of Co-operative Colony, B.S. City,
P.O. & P.S. - B.S. City, Dist. - Bokaro, Jharkhand-827001.
                                                         ...  Applicant
                          Versus
Sudhir Prasad, Son of Late Sagar Prasad, Resident of Krishna
Apartment, Flat No. 201, Puran Bihar, Argora, P.O. & P.S.- Argora,
Dist.- Ranchi, presently residing at Sagarkunj, H. No. 157, Harmu
Housing Colony, P.O.- Harmu, P.S. - Argora, Dist.- Ranchi.
                                                     ...     Respondent
                          ---------

CORAM: HON'BLE THE CHIEF JUSTICE

---------

For the Applicant: Mr. Shresth Gautam, Advocate Mr. Sanjay Kumar, Advocate For the Respondent: Mr. Himanshu Kumar Mehta, Advocate Mrs. Manjushri Patra, Advocate Mr. Vidhan Kumar Singh, Advocate

---------

04/Dated: 18.12.2025

1. The applicant has filed the instant application for appointment of

independent Sole Arbitrator under Section 11(6) of the Arbitration and

Conciliation Act, 1996 as per Clause 18 of the Deed of Partnership

dated 25.11.2010.

2. It is the case of the applicant that he entered into a partnership

agreement with the respondent on 25.11.2010 in respect of builder,

promoter and developer for construction of flats on the land purchased

in the name of the wife of the respondent amounting to Rs.51.00 Lakh

and it was agreed that initial capital of partnership would be Rs.66.00

Lakh, out of which first partner shall pay Rs.44.00 Lakh, while the

remaining amount of Rs.22.00 Lakh would be paid by the second

Neutral Citation No. 2025:JHHC:38070

partner. It was also agreed that the entire profit would be shared as 2/3rd

share to first party and 1/3rd share of net profit to the respondent.

3. According to the applicant, soon after execution of the Deed, the

respondent requested him for payment of Rs.25 Lakh which was paid

by the applicant vide three separate bank drafts amounting to Rs.10.00

Lakh, Rs.12.00 Lakh and Rs.3.00 Lakh respectively, but the respondent

though received the said amounts, but he never served or provided the

calculation with respect to profit of their partnership nor he provided

any information regarding the investment made by the applicant. The

respondent thereafter on 30.12.2015 provided self cheque of Rs.10.00

Lakh in capacity of Director, Ankitech Buildcon Pvt. Ltd. to the

applicant, but the aforesaid cheque was dishonoured due to insufficient

fund and the respondent has till date not paid Rs.18.50 Lakh to him.

4. The applicant thereafter lodged a criminal case against the

respondent in the year 2017, but the same was quashed by this Court.

Thereafter, the applicant sent a notice on 09.08.2024 under Section 21

of the Act for appointment of Arbitrator, but since the same has not

been appointed, hence this petition.

5. The respondent has filed his reply wherein preliminary objection

regarding maintainability of this application has been questioned on the

ground of its being stale claim and being time-barred and it is also

averred that even though the applicant has taken recourse by filing this

application on the basis of partnership deed, however, the right to apply

for appointment of Arbitrator arose in favour of the petitioner in 2017

Neutral Citation No. 2025:JHHC:38070

itself, but the notice has been given to the respondent for appointment

of Arbitrator only on 09.08.2024.

6. It is further averred that it is the respondent who in terms of para

3 of the partnership deed is entitled to recover a sum of Rs.22.00 Lakh

from the applicant.

7. The applicant has approached this Court after 14 years of the

agreement and after 07 years of the date through which the right to

apply accrued in his favour in 2017.

8. As regards the averment with regard to payment of Rs.22.00

Lakh, it has been stated that the applicant made the payment of only

Rs.10.00 Lakh and Rs.3.00 Lakh respectively, whereas, the 3rd draft of

Rs.12.00 Lakh as mentioned was not given effect to in its true term and

spirit.

9. Lastly it is averred that the applicant has already taken one

alternative remedy by which he has received Rs.13.00 Lakh from the

respondent which he has paid because of the fact that the partnership

deed has not been given effect to by giving the amount as agreed in the

partnership deed.

10. I have heard the learned counsel for the parties and gone through

the materials on records.

11. Section 11 of the 1996 Act is provided to give effect to the

mutual intention of the parties to settle the dispute by arbitration in

situations where the parties fail to appoint an Arbitrator(s).

Neutral Citation No. 2025:JHHC:38070

12. The parameters of judicial view laid down in Section 8 differ

from those prescribed for Section 11 of the Act. The view taken by

Hon'ble Supreme Court earlier in its decision in SBP & Co. v. Patel

Engineering Ltd and Another, (2005) 8 SCC 618, and affirmed in

Vidya Drolia and Others v. Durga Trading Corporation, (2021) 2

SCC 1, that Sections 8 and 11, respectively, of the 1996 Act are

complimentary in nature, was legislatively overruled by introduction of

Section 11(6A) in 2015, which reads as under:

"(6A) The Supreme Court or, as the case may be, the High Court,

while considering any application under sub-section (4) or sub-

section (5) or sub-section (6), shall, notwithstanding any judgment,

decree or order of any Court, confine to the examination of the

existence of an arbitration agreement."

13. By now it is well settled that scope of examination under Section

11(6A) is confined to the existence of an arbitration agreement on the

basis of Section 7 of the Act. The examination of validity of arbitration

agreement is also limited to the requirement of formal validity such as

the requirement that the agreement be in writing.

14. The law declared by Hon'ble Supreme Court interpreting Section

11 of the Arbitration Act is that indeed no matter how tempting it may

be to examine and pronounce upon what may be canvassed as being

self-evident facets, Parliament has consciously legislated to disable the

Court from delving into facets outside the "examination" of the

existence of an arbitration agreement. The Court must have the

Neutral Citation No. 2025:JHHC:38070

discipline to follow this requirement and leave such facets for

examination by the Arbitral Tribunal.

15. In the case of Interplay Between Arbitration Agreements

under Arbitration and Conciliation Act, 1996 and Stamp Act, 1899,

In Re (2024) 6 SCC 1, a Seven-Judge Bench of the Hon'ble Supreme

Court distinguished "examination" and "adjudication" and held that

while dealing with Section 11 application, the Court should not venture

outside the examination of the existence of the arbitration agreement.

16. Thereafter, in multiple judgments, the Hon'ble Supreme Court

has declared emphatically that while dealing with Section 11, the

Courts should only examine existence of arbitration agreement and

nothing else.

17. No doubt, there appears to be some confusion created regarding

this issue in Arif Azim Company Limited v. Aptech Limited, (2024)

5 SCC 313. However, this issue was subsequently clarified by Three-

Judge Bench judgment in SBI General Insurance Company Limited

v. Krish Spinning, (2024) 12 SCC 1.

18. All the aforesaid judgments in turn were thereafter considered by

another Three-Judge Bench Judgment of Hon'ble Supreme Court in

Aslam Ismail Khan Deshmukh v. ASAP Fluids Private Limited and

Another, (2025) 1 SCC 502, wherein the Hon'ble Court observed as

under:-

"IV. Analysis

Neutral Citation No. 2025:JHHC:38070

33. Having heard the learned counsel appearing for the parties

and having gone through the materials on record, the short question

that falls for our consideration is whether we should decline to make a

reference under Section 11(6) of the 1996 Act, by examining whether

the substantive claims of the petitioner are ex facie and hopelessly

time-barred?

34. A three-Judge Bench of this Court in Vidya Drolia v. Durga

Trading Corpn. [Vidya Drolia v. Durga Trading Corpn., (2021) 2

SCC 1 : (2021) 1 SCC (Civ) 549] while dealing with the scope of

powers of the referral Court under Sections 8 and 11, respectively,

endorsed the prima facie test and opined that courts at the referral

stage can interfere only in rare cases where it is manifest that the

claims are ex facie time-barred and dead, or there is no subsisting

dispute. Such a restricted and limited review was considered necessary

to check and protect parties from being forced to arbitrate when the

matter is demonstrably "non-arbitrable" and to cut off the deadwood.

35. The relevant observations in Vidya Drolia [Vidya

Drolia v. Durga Trading Corpn., (2021) 2 SCC 1 : (2021) 1 SCC (Civ)

549] are reproduced hereinbelow : (Vidya Drolia case [Vidya

Drolia v. Durga Trading Corpn., (2021) 2 SCC 1 : (2021) 1 SCC (Civ)

549] , SCC pp. 119 & 121, paras 148 & 154)

"148. Section 43(1) of the Arbitration Act states that the

Limitation Act, 1963 shall apply to arbitrations as it applies to

court proceedings. Sub-section (2) states that for the purposes of

the Arbitration Act and the Limitation Act, arbitration shall be

deemed to have commenced on the date referred to in Section

21. Limitation law is procedural and normally disputes, being

factual, would be for the arbitrator to decide guided by the facts

Neutral Citation No. 2025:JHHC:38070

found and the law applicable. The court at the referral stage can

interfere only when it is manifest that the claims are ex facie

time-barred and dead, or there is no subsisting dispute. All other

cases should be referred to the Arbitral Tribunal for decision on

merits. Similar would be the position in case of disputed "no-

claim certificate" or defence on the plea of novation and

"accord and satisfaction". As observed in Premium Nafta

Products Ltd. [Fili Shipping Co. Ltd. v. Premium Nafta Products

Ltd., 2007 UKHL 40 : 2007 Bus LR 1719 (HL)] , it is not to be

expected that commercial men while entering transactions inter

se would knowingly create a system which would require that the

court should first decide whether the contract should be rectified

or avoided or rescinded, as the case may be, and then if the

contract is held to be valid, it would require the arbitrator to

resolve the issues that have arisen.

* * *

154. ... 154.4. Rarely as a demurrer the court may

interfere at Section 8 or 11 stage when it is manifestly and ex

facie certain that the arbitration agreement is non-existent,

invalid or the disputes are non-arbitrable, though the nature and

facet of non-arbitrability would, to some extent, determine the

level and nature of judicial scrutiny. The restricted and limited

review is to check and protect parties from being forced to

arbitrate when the matter is demonstrably "non-arbitrable" and

to cut off the deadwood. The court by default would refer the

matter when contentions relating to non-arbitrability are plainly

arguable; when consideration in summary proceedings would be

insufficient and inconclusive; when facts are contested; when the

Neutral Citation No. 2025:JHHC:38070

party opposing arbitration adopts delaying tactics or impairs

conduct of arbitration proceedings. This is not the stage for the

court to enter into a mini trial or elaborate review so as to usurp

the jurisdiction of the Arbitral Tribunal but to affirm and uphold

integrity and efficacy of arbitration as an alternative dispute

resolution mechanism."

(emphasis supplied)

36. In BSNL v. Nortel Networks India (P) Ltd. [BSNL v. Nortel

Networks India (P) Ltd., (2021) 5 SCC 738 : (2021) 3 SCC (Civ) 352]

, the notice invoking arbitration was issued 5½ years after the cause of

action arose i.e. rejection of the claims of Nortel by BSNL and the

claim was therefore held to be ex facie time-barred. This Court

clarified that the period of limitation for filing a petition seeking

appointment of an arbitrator(s) cannot be confused or conflated with

the period of limitation applicable to substantive claims made in the

underlying commercial contract.

37. By placing reliance on Vidya Drolia [Vidya Drolia v. Durga

Trading Corpn., (2021) 2 SCC 1 : (2021) 1 SCC (Civ) 549] it was held

that, a referral Court exercising its jurisdiction under Section 11 may

decline to make the reference in a very limited category of cases,

where there is not even a vestige of doubt that the claim is ex facie

time-barred. The relevant observations in BSNL v. Nortel Networks

India [BSNL v. Nortel Networks India (P) Ltd., (2021) 5 SCC 738 :

(2021) 3 SCC (Civ) 352] are reproduced hereinbelow : (Nortel

Networks case [BSNL v. Nortel Networks India (P) Ltd., (2021) 5 SCC

738 : (2021) 3 SCC (Civ) 352] , SCC pp. 763 & 766, paras 44 & 47-

49)

Neutral Citation No. 2025:JHHC:38070

"44. The issue of limitation which concerns the

"admissibility" of the claim, must be decided by the Arbitral

Tribunal either as a preliminary issue, or at the final stage after

evidence is led by the parties.

* * *

47. It is only in the very limited category of cases, where

there is not even a vestige of doubt that the claim is ex facie time-

barred, or that the dispute is non-arbitrable, that the court may

decline to make the reference. However, if there is even the

slightest doubt, the rule is to refer the disputes to arbitration,

otherwise it would encroach upon what is essentially a matter to

be determined by the tribunal.

48. Applying the law to the facts of the present case, it is

clear that this is a case where the claims are ex facie time-barred

by over 5½ years, since Nortel did not take any action

whatsoever after the rejection of its claim by BSNL on 4-8-2014.

The notice of arbitration was invoked on 29-4-2020. There is not

even an averment either in the notice of arbitration, or the

petition filed under Section 11, or before this Court, of any

intervening facts which may have occurred, which would extend

the period of limitation falling within Sections 5 to 20 of the

Limitation Act. Unless, there is a pleaded case specifically

adverting to the applicable section, and how it extends the

limitation from the date on which the cause of action originally

arose, there can be no basis to save the time of limitation.

49. The present case is a case of deadwood/no subsisting

dispute since the cause of action arose on 4-8-2014, when the

claims made by Nortel were rejected by BSNL. The respondent

Neutral Citation No. 2025:JHHC:38070

has not stated any event which would extend the period of

limitation, which commenced as per Article 55 of the Schedule of

the Limitation Act (which provides the limitation for cases

pertaining to breach of contract) immediately after the rejection

of the final bill by making deductions."

(emphasis supplied)

38. This very Bench in Arif Azim Co. Ltd. v. Aptech Ltd. [Arif Azim Co.

Ltd. v. Aptech Ltd., (2024) 5 SCC 313 : (2024) 3 SCC (Civ) 358] was

concerned with the following two issues while deciding an application

for the appointment of an arbitrator under Section 11(6) of the 1996

Act, -- first, whether the Limitation Act, 1963 is applicable to an

application for appointment of arbitrator under Section 11(6) of the

1996 Act?; and second, whether the court may decline to make a

reference under Section 11 of the 1996 Act, where the claims are ex

facie and hopelessly time-barred.

39. On the first issue in Arif Azim [Arif Azim Co. Ltd. v. Aptech

Ltd., (2024) 5 SCC 313 : (2024) 3 SCC (Civ) 358] , it was observed

that Section 11(6) of the 1996 Act, would be covered by Article 137 of

the Limitation Act, 1963 which prescribes a limitation period of 3

years from the date when the right to apply accrues. The limitation

period for filing an application seeking appointment of an arbitrator

was held to commence only after a valid notice invoking arbitration

had been issued by one of the parties to the other party and there had

been either a failure or refusal on the part of the other party to comply

with the requirements of the said notice.

40. On the second issue in Arif Azim [Arif Azim Co.

Ltd. v. Aptech Ltd., (2024) 5 SCC 313 : (2024) 3 SCC (Civ) 358] ,

which is identical to the issue raised in the present petitions, it was

Neutral Citation No. 2025:JHHC:38070

observed that, although, limitation is an admissibility issue, yet it is the

duty of the courts to prima facie examine and reject non-arbitrable or

dead claims, so as to protect the other party from being drawn into a

time-consuming and costly arbitration process. The findings on both

the issues were summarised as thus : (SCC p. 357, para 92)

"92. Thus, from an exhaustive analysis of the position of

law on the issues, we are of the view that while considering the

issue of limitation in relation to a petition under Section 11(6) of

the 1996 Act, the Courts should satisfy themselves on two aspects

by employing a two-pronged test -- first, whether the petition

under Section 11(6) of the 1996 Act is barred by limitation; and

secondly, whether the claims sought to be arbitrated are ex facie

dead claims and are thus barred by limitation on the date of

commencement of arbitration proceedings. If either of these

issues are answered against the party seeking referral of disputes

to arbitration, the Court may refuse to appoint an Arbitral

Tribunal."

(emphasis supplied)

41. However, subsequently, very pertinent observations were

made by a seven-Judge Bench of this Court in Interplay between

Arbitration Agreements under A&C Act, 1996 & Stamp Act, 1899, In

re [Interplay between Arbitration Agreements under A&C Act, 1996 &

Stamp Act, 1899, In re, (2024) 6 SCC 1 : 2023 INSC 1066] regarding

the scope of judicial interference at the Section 11 stage with a view to

give complete meaning to the legislative intention behind the insertion

of Section 11(6-A) of the 1996 Act. This Court referred to the

Statement of Objects and Reasons of the 2015 Amendment Act and

opined that the same indicated that the referral Courts shall "examine

Neutral Citation No. 2025:JHHC:38070

the existence of a prima facie arbitration agreement and not other

issues" at the stage of appointment of an arbitrator. These "other

issues" would include the examination of any other issue which has

the consequence of unnecessary judicial interference in the arbitral

proceedings. The relevant observations are reproduced hereinbelow :

(SCC pp. 103-104, paras 219-20)

"219. The Statement of Objects and Reasons of the 2015

Amendment Act are as follows:

'6. (iii) an application for appointment of an arbitrator

shall be disposed of by the High Court or Supreme Court,

as the case may be, as expeditiously as possible and an

endeavour should be made to dispose of the matter within

a period of sixty days.

(iv) to provide that while considering any application for

appointment of arbitrator, the High Court or the Supreme

Court shall examine the existence of a prima facie

arbitration agreement and not other issues.'

220. The above extract indicates that the Supreme Court or High

Court at the stage of the appointment of an arbitrator shall

"examine the existence of a prima facie arbitration agreement

and [Ed. : The words between two asterisks have been

emphasised in original as well.] not other issues [Ed. : The

words between two asterisks have been emphasised in original as

well.] ". These other issues not only pertain 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. Accordingly, the "other issues" also

include examination and impounding of an unstamped

Neutral Citation No. 2025:JHHC:38070

instrument by the referral Court at the Section 8 or Section 11

stage."

(emphasis supplied)

42. In light of the aforesaid observations, the ratio of Arif

Azim [Arif Azim Co. Ltd. v. Aptech Ltd., (2024) 5 SCC 313 : (2024) 3

SCC (Civ) 358] was reconsidered by this very Bench in SBI General

Insurance Co. Ltd. v. Krish Spg. [SBI General Insurance Co.

Ltd. v. Krish Spg., (2024) 12 SCC 1 : 2024 SCC OnLine SC 1754] The

position of law was clarified as thus : (Krish Spg. case [SBI General

Insurance Co. Ltd. v. Krish Spg., (2024) 12 SCC 1 : 2024 SCC OnLine

SC 1754] , SCC paras 131-32 & 135-37)

"131. On the first issue, it was observed by us that the Limitation

Act, 1963 is applicable to the applications filed under Section

11(6) of the 1996 Act. Further, we also held that it is the duty of

the referral Court to examine that the application under Section

11(6) of the 1996 Act is not barred by period of limitation as

prescribed under Article 137 of the Limitation Act, 1963 i.e. 3

years from the date when the right to apply accrues in favour of

the applicant. To determine as to when the right to apply would

accrue, we had observed in para 57 of the said decision that :

(Arif Azim case [Arif Azim Co. Ltd. v. Aptech Ltd., (2024) 5 SCC

313 : (2024) 3 SCC (Civ) 358] , SCC p. 340)

'57. ... the limitation period for filing a petition under

Section 11(6) of the 1996 Act can only commence once a

valid notice invoking arbitration has been sent by the

applicant to the other party, and there has been a failure

or refusal on part of that other party in complying with

the requirements mentioned in such notice.'

Neutral Citation No. 2025:JHHC:38070

132. Insofar as the first issue is concerned, we are of the opinion

that the observations made by us in Arif Azim [Arif Azim Co.

Ltd. v. Aptech Ltd., (2024) 5 SCC 313 : (2024) 3 SCC (Civ) 358]

do not require any clarification and should be construed as

explained therein.

* * *

135. Insofar as our observations on the second issue are

concerned, we clarify that the same were made in light of the

observations made by this Court in many of its previous

decisions, more particularly in Vidya Drolia [Vidya

Drolia v. Durga Trading Corpn., (2021) 2 SCC 1 : (2021) 1 SCC

(Civ) 549] and NTPC v. SPML Infra Ltd. [NTPC v. SPML Infra

Ltd., (2023) 9 SCC 385 : (2023) 4 SCC (Civ) 342] . However, in

the case at hand, as is evident from the discussion in the

preceding parts of this judgment, we have had the benefit of

reconsidering certain aspects of the two decisions referred to

above in the light of the pertinent observations made by a seven-

Judge Bench of this Court in Interplay between Arbitration

Agreements under A&C Act, 1996 & Stamp Act, 1899, In

re [Interplay between Arbitration Agreements under A&C Act,

1996 & Stamp Act, 1899, In re, (2024) 6 SCC 1 : 2023 INSC

1066] .

136. Thus, we clarify that while determining the issue of

limitation in exercise of the powers under Section 11(6) of the

1996 Act, the referral Court should limit its enquiry to examining

whether Section 11(6) application has been filed within the

period of limitation of three years or not. The date of

commencement of limitation period for this purpose shall have to

Neutral Citation No. 2025:JHHC:38070

be construed as per the decision in Arif Azim [Arif Azim Co.

Ltd. v. Aptech Ltd., (2024) 5 SCC 313 : (2024) 3 SCC (Civ) 358]

. As a natural corollary, it is further clarified that the referral

Courts, at the stage of deciding an application for appointment

of arbitrator, must not conduct an intricate evidentiary enquiry

into the question whether the claims raised by the applicant are

time-barred and should leave that question for determination by

the arbitrator. Such an approach gives true meaning to the

legislative intention underlying Section 11(6-A) of the Act, and

also to the view taken in Interplay between Arbitration

Agreements under A&C Act, 1996 & Stamp Act, 1899, In

re [Interplay between Arbitration Agreements under A&C Act,

1996 & Stamp Act, 1899, In re, (2024) 6 SCC 1 : 2023 INSC

1066] .

137. The observations made by us in Arif Azim [Arif Azim Co.

Ltd. v. Aptech Ltd., (2024) 5 SCC 313 : (2024) 3 SCC (Civ) 358]

are accordingly clarified. We need not mention that the effect of

the aforesaid clarification is only to streamline the position of

law, so as to bring it in conformity with the evolving principles of

modern-day arbitration, and further to avoid the possibility of

any conflict between the two decisions that may arise in future.

These clarifications shall not be construed as affecting the

verdict given by us in the facts of Arif Azim [Arif Azim Co.

Ltd. v. Aptech Ltd., (2024) 5 SCC 313 : (2024) 3 SCC (Civ) 358]

, which shall be given full effect to notwithstanding the

observations made herein."

(emphasis supplied)

Neutral Citation No. 2025:JHHC:38070

43. Therefore, while determining the issue of limitation in the

exercise of powers under Section 11(6) of the 1996 Act, the referral

Court must only conduct a limited enquiry for the purpose of

examining whether the Section 11(6) application has been filed within

the limitation period of three years or not. At this stage, it would not

be proper for the referral Court to indulge in an intricate evidentiary

enquiry into the question of whether the claims raised by the petitioner

are time-barred. Such a determination must be left to the decision of

the arbitrator.

44. After all, in a scenario where the referral Court is able to

discern the frivolity in the litigation on the basis of bare minimum

pleadings, it would be incorrect to assume or doubt that the Arbitral

Tribunal would not be able to arrive at the same inference, especially

when they are equipped with the power to undertake an extensive

examination of the pleadings and evidence adduced before them.

45. As observed by us in Krish Spg. [SBI General Insurance Co.

Ltd. v. Krish Spg., (2024) 12 SCC 1 : 2024 SCC OnLine SC 1754] , the

power of the referral Court under Section 11 must essentially be seen

in light of the fact that the parties do not have the right of appeal

against any order passed by the referral Court under Section 11, be it

for either appointing or refusing to appoint an arbitrator. Therefore, if

the referral Court delves into the domain of the Arbitral Tribunal at

the Section 11 stage and rejects the application of the claimant, we run

a serious risk of leaving the claimant remediless for the adjudication

of their claims.

50. As evident from the aforesaid discussion and especially in

light of the observations made in Krish Spg. [SBI General Insurance

Co. Ltd. v. Krish Spg., (2024) 12 SCC 1 : 2024 SCC OnLine SC 1754]

Neutral Citation No. 2025:JHHC:38070

, this Court cannot conduct an intricate evidentiary enquiry into the

question of when the cause of action can be said to have arisen

between the parties and whether the claim raised by the petitioner is

time-barred. This has to be strictly left for the determination by the

Arbitral Tribunal. All other submissions made by the parties regarding

the entitlement of the petitioner to 4,00,000 and 2,00,010 equity shares

in Respondent 1 company are concerned with the merits of the dispute

which squarely falls within the domain of the Arbitral Tribunal.

51. It is now well-settled law that, at the stage of Section 11

application, the referral Courts need only to examine whether the

arbitration agreement exists -- nothing more, nothing less. This

approach upholds the intention of the parties, at the time of entering

into the agreement, to refer all disputes arising between themselves to

arbitration. However, some parties might take undue advantage of

such a limited scope of judicial interference of the referral Courts and

force other parties to the agreement into participating in a time-

consuming and costly arbitration process. This is especially possible

in instances, including but not limited to, where the claimant

canvasses either ex facie time-barred claims or claims which have

been discharged through "accord and satisfaction", or cases where

the impleadment of a non-signatory to the arbitration agreement is

sought, etc.

52. In order to balance such a limited scope of judicial

interference with the interests of the parties who might be constrained

to participate in the arbitration proceedings, the Arbitral Tribunal

may direct that the costs of the arbitration shall be borne by the party

which the Tribunal ultimately finds to have abused the process of law

Neutral Citation No. 2025:JHHC:38070

and caused unnecessary harassment to the other party to the

arbitration.

V. Conclusion

53. The existence of the arbitration agreement as contained in

Clause 13.10 of the shareholders' agreement is not disputed by either

of the parties. The submissions as regards the claim of the petitioner

being ex facie time-barred may be adjudicated upon by the Arbitral

Tribunal as a preliminary issue.

19. More recently, in Managing Director Bihar State Food and

Civil Supply Corporation Limited and Another v. Sanjay Kumar,

2025 SCC OnLine SC 1604, the Hon'ble Supreme Court has pithily

declared the law thus:-

"27. The curtains have fallen. Courts exercising jurisdictions

under Section 11(6) and Section 8 must follow the mandate of

sub-section (6A), as interpreted and mandated by the decisions of

this and their scrutiny must be "confined(d) to the examination of

the existence of the arbitration agreement".

20. What would be the scope of enquiry of the referral court in an

application filed for appointment of an Arbitrator was subject-matter of

a recent decision of the Hon'ble Supreme Court in the case of M/s.

Andhra Pradesh Power Generaion Corporation Limited

(APGENCO) v. M/s. TECPRO Systems Limited & Others, 2025

SCC OnLine SC 2851, wherein it was observed that beyond the prima

facie enquiry, the referral court should refrain from undertaking a

detailed on basis of evidence to arrive at a finding of fact in the nature

Neutral Citation No. 2025:JHHC:38070

of a 'proof'. It shall be apt to reproduce the necessary observations as

contained in paragraphs 17 to 19 which read as under:-

"17. Beyond the prima facie enquiry, it should be the discipline of the

referral court to refrain from undertaking a detailed enquiry on basis

of evidence to arrive at a finding of fact in the nature of a 'proof'. The

scope of such an enquiry, by virtue of Section 11(6-A) is very well

articulated in the decision of this Court in Interplay Between

Arbitration Agreements under Arbitration and Conciliation Act,

1996 and Stamp Act, 1899, In Re wherein this Court observed:

"165. The legislature confined the scope of reference under

Section 11(6-A) to the examination of the existence of an

arbitration agreement. The use of the term "examination" in

itself connotes that the scope of the power is limited to a prima

facie determination. Since the Arbitration Act is a self-contained

code, the requirement of "existence" of an arbitration agreement

draws effect from Section 7 of the Arbitration Act. In Duro

Felguera [Duro Felguera, S.A. v. Gangavaram Port Ltd., (2017)

9 SCC 729 : (2017) 4 SCC (Civ) 764], this Court held that the

Referral Courts only need to consider one aspect to determine

the existence of an arbitration agreement -- whether the

underlying contract contains an arbitration agreement which

provides for arbitration pertaining to the disputes which have

arisen between the parties to the agreement. Therefore, the scope

of examination under Section 11(6-A) should be confined to the

existence of an arbitration agreement on the basis of Section 7.

Similarly, the validity of an arbitration agreement, in view of

Section 7, should be restricted to the requirement of formal

validity such as the requirement that the agreement be in writing.

Neutral Citation No. 2025:JHHC:38070

This interpretation also gives true effect to the doctrine of

competence-competence by leaving the issue of substantive

existence and validity of an arbitration agreement to be decided

by Arbitral Tribunal under Section 16. We accordingly clarify

the position of law laid down in Vidya Drolia [Vidya

Drolia v. Durga Trading Corpn., (2021) 2 SCC 1 : (2021) 1 SCC

(Civ) 549] in the context of Section 8 and Section 11 of the

Arbitration Act.

166. The burden of proving the existence of arbitration

agreement generally lies on the party seeking to rely on such

agreement. In jurisdictions such as India, which accept the

doctrine of competence-competence, only prima facie proof of

the existence of an arbitration agreement must be adduced

before the Referral Court. The Referral Court is not the

appropriate forum to conduct a mini-trial by allowing the parties

to adduce the evidence in regard to the existence or validity of an

arbitration agreement. The determination of the existence and

validity of an arbitration agreement on the basis of evidence

ought to be left to the Arbitral Tribunal. This position of law can

also be gauged from the plain language of the statute.

167. Section 11(6-A) uses the expression "examination of the

existence of an arbitration agreement". The purport of using the

word "examination" connotes that the legislature intends that

the Referral Court has to inspect or scrutinise the dealings

between the parties for the existence of an arbitration agreement.

Moreover, the expression "examination" does not connote or

imply a laborious or contested inquiry. [P. Ramanatha Aiyar,

The Law Lexicon (2nd Edn., 1997) 666.] On the other hand,

Neutral Citation No. 2025:JHHC:38070

Section 16 provides that the Arbitral Tribunal can "rule" on its

jurisdiction, including the existence and validity of an arbitration

agreement. A "ruling" connotes adjudication of disputes after

admitting evidence from the parties. Therefore, it is evident that

the Referral Court is only required to examine the existence of

arbitration agreements, whereas the Arbitral Tribunal ought to

rule on its jurisdiction, including the issues pertaining to the

existence and validity of an arbitration agreement. A similar

view was adopted by this Court in Shin-Etsu Chemical Co.

Ltd. v. Aksh Optifibre Ltd. (2005) 7 SCC 234."

18. Following this Court's mandate in the above decision, this Court

in Managing Director Bihar State Food and Civil Supply Corporation

Limited v. Sanjay Kumar, 2025 SCC OnLine SC 1604, explaining the

contemporary legal position of the referral court emphasised that:

"27. The curtains have fallen. Courts exercising jurisdictions

under Section 11(6) and Section 8 must follow the mandate of

sub-section (6A), as interpreted and mandated by the decisions

of this Court and their scrutiny must be "confine(d) to the

examination of the existence of the arbitration agreement"."

19. Once the High Court was satisfied that an arbitration

agreement prima facie existed, an aspect neither seriously disputed

nor refutable at this stage, its decision to constitute the AT cannot be

faulted. In the earlier part of our judgment, we have reproduced the

detailed arguments of the appellants and respondents on the issue of

maintainability only to draw a distinction between a prima

facie consideration of such contentions for the purpose of Section 11

on the one hand and for a detailed examination by the AT. While we

hold that there is certainly a prima facie case for referring the dispute

Neutral Citation No. 2025:JHHC:38070

to arbitration under Section 11, a detailed scrutiny on the basis of

evidence must be left to AT. Whether first respondent has validly

invoked arbitration individually, whether the Consortium continues to

exist, whether consent of other Consortium partners was necessary,

and whether claims are maintainable after commencement of

liquidation, are all matters which may legitimately be raised,

contested and determined before the AT under Section 16.

Entertaining these questions here would amount to conducting a mini

trial at the Section 11 stage, contrary to the settled principles of

minimal judicial intervention and kompetenz-kompetenz."

21. Thus, what can be taken to be settled by now is that there are two

kinds of limitation which may be coming to play in a petition under

Section 11(6) of the 1996 Act :-

(a) where the petition under Section 11(6) may be barred by

limitation having been filed beyond the period of three years

from the date when the right to apply accrues in favour of the

applicant; and,

(b) where the claim sought to be referred to arbitration may be ex

facie time barred and be a dead claim.

22. The decision with respect to time-barred claim in the latter

category is to be left to the Arbitrator. However, the objection falling

under the former category has to be examined by the referral court.

23. Judged in light of the aforesaid exposition of law, it would be

noticed that the applicant has served a notice under Section 21 of the

Arbitration and Conciliation Act, 1996 upon the respondent dated

Neutral Citation No. 2025:JHHC:38070

09.08.2024 and thereafter has been requesting the respondent to appoint

Arbitrator in connection with the agreement dated 25.11.2010, but the

respondent failed to appoint the same and the applicant has thereafter

filed the instant petition promptly on 10.01.2025 i.e. within the

stipulated time.

24. Since the existence of the arbitration agreement as contained in

Clause 18 of the agreement dated 25.11.2010 is not disputed by either

of the parties. Accordingly, Mr. Biren Poddar, learned Senior Advocate

of this Court, having his Chambers at Poddar & Associates, 101,

Commerce Tower, Main Road, Ranchi-834001, is hereby appointed as

the Sole Arbitrator to adjudicate the dispute between the parties.

25. The submission as regards the claim of the petitioner being ex

facie time-barred would be adjudicated by the learned Arbitrator as a

preliminary issue and in case the learned Arbitrator finds the present

claim of the petitioner to be time-barred, it may direct that the cost of

the arbitrator pertaining to his claim will be borne solely by the

petitioner herein which shall be open to the respondent herein to file the

counter-claim, which, too, shall be adjudicated by the learned Arbitrator

in accordance with law.

26. It is made clear all the other right and contentions of the parties

are left open for adjudication.

27. Learned Arbitrator would be free to lay down the fees and other

expenses towards conduct of the arbitration proceedings, however,

Neutral Citation No. 2025:JHHC:38070

while doing so he shall take into account the ceiling prescribed under

Schedule IV of the Act of 1996 as amended.

28. Learned Arbitrator would endeavor to conclude the proceedings

expeditiously by taking into regard the mandate of the Legislature

under Section 29-A of the Act of 1996.

29. Accordingly, this application is allowed.

30. The Registry is directed to intimate the Arbitrator so appointed

with a request to take up the arbitration proceedings and shall also

provide photocopies of the entire pleadings along with copies of the

entire order-sheets to the learned Arbitrator.

31. Urgent Certified Copies as per Rules.

32. Pending Interlocutory Application (s), if any, shall stand disposed

of.

(Tarlok Singh Chauhan, C.J.) December 18, 2025 N.A.F.R. Manoj/Cp.2 Uploaded on 22.12.2025