[Cites 30, Cited by 0]
Jharkhand High Court
M/S Modi Project Limited vs The Union Of India on 22 December, 2025
Neutral Citation No. 2025:JHHC:38555
IN THE HIGH COURT OF JHARKHAND AT RANCHI
Arbitration Application No. 23 of 2025
M/s Modi Project Limited, having its corporate Office at 248, Kanke
Road, opposite Lake Avenue, Ranchi 834008 through its Authorized
Signatory, namely Pradip Modi, aged about 68 years, son of Late
Sitaram Modi, presently resident of 803, Panchwati Apartments,
Bariatu Road, Ranchi-834009, P.O. & P.S. Bariatu, Dist. Ranchi.
... Petitioner
Versus
1. The Union of India
2. The General Manager, Eastern Railway, having its office at 17,
Netaji Subhas Road, Fairlie Place, P.O. & P.S. Netaji Subhas Road,
Kolkata 700001.
3. The Chief Administrative Officer (Construction), Eastern Railway,
having its office at 14, Strand Road, P.O. & P.S. Strand Road, NKG
Building, Kolkata 700001.
4. The Chief Engineer (Construction)-II, Eastern Railway, having its
office at 14, Strand Road, NKG Building, P.O. & P.S. Strand Road,
Kolkata 700001.
5. The Deputy Chief Engineer (Construction)-III, Eastern Railway,
Near DRM Office, Asansol, P.O. & P.S. - Asansol, Dist. - Asansol,
West Bengal.
... Respondents
---------
CORAM: HON'BLE THE CHIEF JUSTICE
---------
For the Petitioner: Mr. Shresth Gautam, Advocate
Mr. Rahul Anand, Advocate
For the Respondents: Mr. Prashant Pallav, A.S.G.I.
Mr. Abhijeet Kumar singh, C.G.C.
Mr. Parth Jalan, A.C. to A.S.G.I.
---------
Reserved on: 18.12.2025 Pronounced on: 22/12/2025
1) Even though the arbitration clause in the agreement has not been
denied, however the respondents have averred that a claim which is
apparently time-barred and is rather a dead claim cannot be referred to
Neutral Citation No. 2025:JHHC:38555
the Arbitrator and hence this petition seeking appointment of an
Arbitrator be dismissed.
2) The facts are not in dispute.
3) The Notice Inviting Tender was issued by the respondents
inviting tenders in sealed cover for the work of "Earthwork, blanketing
& construction of Minor Bridge from Km 24.55 to 37.00 Km. including
Hansdiha Station Yard in connection with construction of New B G Rail
Line between Manderhill & Dumka, Phase-II" having approximate
value of Rs.13.87 crore.
4) The petitioner along with others participated in the tender process
and after successfully completing in the said tender, the petitioner was
awarded for the contract work vide letter dated 09.08.2007 for a total
cost of Rs.15,23,08,971.88, on the condition that the work shall have to
be executed as per the terms and conditions laid down in the tender
documents and such work shall have to be completed within 18 months
from the date of Letter of Award.
5) In compliance of the terms and conditions stipulated in the Letter
of Award dated 09.08.2007, the petitioner deposited performance
guarantee in the form of bank guarantee for a sum of Rs.76.16 Lakh
and thereafter, on acceptance of the terms and conditions stipulated in
the Letter of Award dated 09.08.2007, the petitioner entered into an
agreement dated 26.03.2008 and was directed to commence the work at
the site.
Neutral Citation No. 2025:JHHC:38555
6) The above agreement was to be guided by the General
Conditions of Contract, 2001 of Eastern Railway.
7) There arose a dispute between the parties wherein, according to
the respondents, the progress of the work was slow and non-satisfactory
from the very beginning resulting in failure of the petitioner to achieve
the milestones and on his request, he was granted extension of time for
completion of the work, but he failed to complete the work. Several
notices with requests to complete the work within the timeframe were
issued, but he failed to complete the work even within the extended
time.
8) On the other hand, it is the petitioner's case that there was no
delay on his part in execution of the work, rather it was the respondents
who did not offer an obstructions-free land for execution of the work
and even the electrical overhead wires and high voltage electrical lines
were not removed by the authorities concerned, due to which in such
areas and also adjoining areas could not be completed.
9) Likewise, the permission to use of blasting work was not given
by the Deputy Commissioner, Dumka and as a consequence whereof,
the petitioner was not able to do the blasting work. Petitioner also faced
the problem of Naxal activities, etc.
10) It is in such circumstances that the petitioner approached this
Court by filing a writ petition i.e. W.P. (C) No. 4541 of 2012, wherein
an ex parte interim order was passed in its favour. However, later on,
on 30.01.2025, the petitioner withdrew the writ petition with liberty to
Neutral Citation No. 2025:JHHC:38555
avail remedy of arbitration provided in the contract signed by the
parties, as is evident from the order dated 30.01.2025 which reads as
under:-
"1) Counsel for the petitioner seeks to withdraw the writ petition
with liberty to avail remedy of arbitration provided in the
contract signed by the parties.
2) Granting liberty, as sought, this writ petition is dismissed as
withdrawn.
3) Interlocutory application, if any, stands disposed of."
11) It is in this background that the petitioner has filed this
application under Section 11(6) of the Arbitration and Conciliation Act,
1996, for appointment of Arbitrator for adjudication of the
dispute/claim between the parties in connection with the agreement
dated 26.03.2008 since the respondents have not referred the
dispute/claim for arbitration by appointing an Arbitrator, even though,
request for the same has been made by the petitioner by notice dated
06.03.2025.
12) The respondents, as observed above, on the merit of the claim of
the petitioner, have raised the issue of non-completion of the work
within the stipulated period of 18 months and further the petitioner has
failed to complete the work even within the extended time, due to
which, after serving notice dated 24.07.2012, Work Order was
rescinded vide letter dated 27.07.2012. However, the existence of
arbitration clause 64(1)(i) of the agreement has not been denied, but it
is claimed that the petitioner did not raise any dispute/claim as per the
Neutral Citation No. 2025:JHHC:38555
agreement, and now after lapse of more than 13 years, the present
application as filed is not maintainable.
13) I have heard the learned counsel for the parties and gone through
the materials on records.
14) 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).
15) 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."
16) 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.
Neutral Citation No. 2025:JHHC:38555
17) 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
discipline to follow this requirement and leave such facets for
examination by the Arbitral Tribunal.
18) 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.
19) 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.
20) 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.
Neutral Citation No. 2025:JHHC:38555
21) 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
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)
Neutral Citation No. 2025:JHHC:38555
"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
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
Neutral Citation No. 2025:JHHC:38555
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
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
Neutral Citation No. 2025:JHHC:38555
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)
"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
Neutral Citation No. 2025:JHHC:38555
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
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
Neutral Citation No. 2025:JHHC:38555
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
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 &
Neutral Citation No. 2025:JHHC:38555
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
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
Neutral Citation No. 2025:JHHC:38555
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
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)
Neutral Citation No. 2025:JHHC:38555
'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.'
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] .
Neutral Citation No. 2025:JHHC:38555
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
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
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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)
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
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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]
, 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.
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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
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.
22) 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".
23) 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
Neutral Citation No. 2025:JHHC:38555
(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
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
Neutral Citation No. 2025:JHHC:38555
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.
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
Neutral Citation No. 2025:JHHC:38555
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,
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
Neutral Citation No. 2025:JHHC:38555
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
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."
24) 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.
Neutral Citation No. 2025:JHHC:38555
25) 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.
26) 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
Act upon the respondents on 06.03.2025 and thereafter are requesting
the respondents to refer all the issues/disputes/claims in connection
with agreement dated 26.03.2008 to the Independent Arbitrator/s in
terms of Section 12(5) of the Arbitration and Conciliation Act, 1996,
but the respondents failed to appoint the same and the petitioner has
thereafter filed the instant petition promptly on 23.06.2025 i.e. within
the stipulated time.
27) Since the existence of the arbitration agreement as contained in
Clause 64(1)(i) of the agreement dated 26.03.2008 is not disputed by
either of the parties. Accordingly, Hon'ble Mr. Justice Deepak Gupta,
Retired Judge of the Hon'ble Supreme Court, presently residing at D-
1/48, Second Floor, Vasant Vihar, New Delhi 110057, is hereby
appointed as the Sole Arbitrator to adjudicate the dispute between the
parties.
28) 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
Neutral Citation No. 2025:JHHC:38555
petitioner herein which shall be open to the respondents herein to file
the counter-claim, which, too, shall be adjudicated by the learned
Arbitrator in accordance with law.
29) It is made clear all the other right and contentions of the parties
are left open for adjudication.
30) Learned Arbitrator would be free to lay down the fees and other
expenses towards conduct of the arbitration proceedings, however,
while doing so he shall take into account the ceiling prescribed under
Schedule IV of the Act of 1996 as amended.
31) 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.
32) Accordingly, this application is allowed.
33) 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.
34) Urgent Certified Copies as per Rules.
35) Pending Interlocutory Application (s), if any, shall stand disposed
of.
(Tarlok Singh Chauhan, C.J.)
nd
December 22 , 2025
N.A.F.R.
Manoj/Cp.2
Uploaded on 22.12.2025
