M/S. Anand Granites Exports Private vs Mr. Prabhudayal Agrawal .... Opposite ...
2025 Latest Caselaw 6476 Ori

Orissa High Court

M/S. Anand Granites Exports Private vs Mr. Prabhudayal Agrawal .... Opposite ... on 26 August, 2025

       IN THE HIGH COURT OF ORISSA AT CUTTACK
                    ARBP No.01 of 2025


M/s. Anand Granites Exports Private            ....              Petitioner
Limited.

                                -Versus-

Mr. Prabhudayal Agrawal                        ....        Opposite Party



Advocates appeared in this case:

For Petitioner:          Mr. Gautam Misra, Senior Advocate
                         Mr. J.R. Deo, Advocate

For Opposite Party       : Mr. Vaibhav Shukla, Advocate

CORAM:

                  THE HON'BLE THE CHIEF JUSTICE

                           JUDGMENT

26th August, 2025

HARISH TANDON, CJ.

1. An application under Section 11 of the Arbitration and

Conciliation Act, 1996 (in short, „the Act‟) filed by the petitioner is

resisted by the opposite party primarily on the premise that the dispute

raised in the notice invoking arbitration clause contained in the raising

contact dated 18th March, 2010 is beyond the purview of the arbitration

agreement/arbitration clause contained therein.

2. Undeniably, the opposite party was granted mining lease for an

area covering 262.27 acres of land situated in Tantra (Khata No.35),

Rangua (Khata No.31) and Bandhal (Khata Nos.30 and 39) under Bonai

Sub-Division of Sundargarh district in the State of Odisha on the basis

of a mining lease deed dated 25th January, 2002. Previous to entering

into the said raising contract dated 18th March, 2010, a similar contract

was entered into between the opposite party and one M/s. Gayatri

Mining Pvt. Limited on 14th August, 2009 but that could not materialize

and subsequently, the opposite party cancelled the said previous

contract and approached the petitioner to operate and run the said mine

on the terms and conditions embodied in the raising contract dated 18 th

March, 2010. Indubitably, the said raising contract dated 18th March,

2010 contains an arbitration agreement/clause in the event any disputes

arise between the parties thereto in relation to or touching upon any of

the terms and conditions embodied therein. Simultaneously, a tripartite

agreement of the even date was also executed between the parties

hereto and the said M/s. Gayatri Mining Private Limited for discharge

of several statutory dues including the dues of the said M/s. Gayatri

Mining Private Limited to the tune of Rs.14.00 crores. The validity of

the said raising contract dated 18th March, 2010 was agreed till the

ultimate end of the mining lease which includes renewal and/or revival

period or till the complete exhaustion of the detected mineral deposited

in the schedule land, whichever is earlier.

3. In order to facilitate the smooth and continuous extraction of the

minerals from the said mining lease which is commonly known as

Tantra Bauxite Mines, a power of attorney was also executed in favour

of an employee of the petitioner on 10th May, 2010 wherein clause 36

thereof provides that the same is irrevocable and cannot be revoked at

the sweet will of the opposite party. Apropos the same, several

affidavits were also executed and affirmed by the opposite party so that

the period of mining lease can be renewed and/or extended to be

transferred in favour of the petitioner and it appears from the documents

annexed and from the stand of the parties that considerable amount of

money was also paid both to the statutory authorities and also to a 3 rd

party in discharge of the obligation imposed upon the opposite party.

4. Amidst the aforesaid action and/or steps being taken, the

Government of Odisha adopted a policy to enhance the tenure of lease

to 50 years subject to fulfillment of the terms and conditions

incorporated therein and to avail such opportunity, the petitioner

engaged M/s. Earth and Environment Consultancy Services, a service

provider to process the application for renewal and/or extension of lease

and also to have clearances from various departments upon payment of

the statutory dues.

5. It is a specific stand of the petitioner that despite having complied

with all the statutory impositions including deposit of the statutory

amount, the opposite party was putting an obstacle and in fact, resiled

from the said raising contract and thus, the dispute arose between the

parties in relation thereto. The litigations were also ensued by the

opposite party by approaching the civil Court touching upon the

cancellation of the irrevocable power of attorney, which is pending.

6. Perceiving the dispute having arisen touching upon the respective

obligations of the parties to the proceeding, the arbitration

agreement/arbitration clause contained in the said agreement provides

for an amicable resolution which was, in fact, resorted to. The said

arbitration agreement/arbitration clause postulates that in the event the

amicable resolution to a dispute fails, the parties may invoke the

arbitration clause for determination of the said dispute by an arbitrator.

Interestingly, the notice invoking arbitration was issued on 04.02.2023

seeking concurrence on the appointment of the arbitrator; the same was

replied by the opposite party through an e-mail contending that he is

unable to recollect of having signed any such raising agreement and

called upon the petitioner to send the fully scanned copy of the said

raising agreement dated 18th March, 2010 for his knowledge. The said

e-mail reply was duly responded to by the petitioner on 10 th February,

2023 showing their concern on the content of the said e-mail and to

refresh the memory of the opposite party also forwarded the copy of the

agreement. The opposite party replied to such letter on 2nd March, 2023

taking a specific stand that the approach has already been made to

Court and the matter being subjudice, it is not possible for the opposite

party to concur on the arbitration. It was further indicated in the said

letter that the dispute does not come within the periphery of the

arbitration agreement.

7. Since the opposite party denied to agree on the arbitrators named

in the letter invoking the arbitration agreement/clause, the petitioner

was advised to move the High Court of Judicature at Madras as the part

of the cause of action has arisen within the territorial jurisdiction of the

said High Court, which was registered as ARB. O.P. (Com. Div.)

No.215/23 and O.A. No.364 of 2023. The opposite party took a stand

that the High Court at Madras had no territorial jurisdiction as the cause

of action pleaded in the said application had not arisen within the

territorial limits of the said High Court. The said High Court ultimately

held that entire cause of action has arisen either within the jurisdiction

of this High Court or the High Court at Andhra Pradesh and rejected the

said application filed by the petitioner on the ground of the jurisdiction

on 16th August, 2023. The said order is annexed to the application

wherefrom it revealed that an application under Section 9 of the said

Act was also taken out by the petitioner and both the applications were

decided by the said common order dated 16th August, 2023.

8. The present application is taken out by the petitioner as this

Court has the territorial jurisdiction in relation to a cause of action

arisen between the parties and the opposite party is resisting the said

application on the ground indicated in the opening paragraph of the

instant judgment.

9. Both the counsels appearing for the respective parties made their

oral submissions and also filed the written note of submission in

support of their respective stands and relied upon the several judgments

of the apex Court in support thereof.

10. Mr. Gautam Misra, learned Senior Advocate appearing for the

petitioner has strenuously argued that the disputes so raised is in

relation to a raising contract dated 18th March, 2010 and in view of

clause 12 of the said agreement, the same is required to be decided by

an arbitrator and, therefore, the Court may refer the parties to arbitration

for determination thereof. Mr. Misra would submit that Section 11(6-A)

of the Act restricts the scrutiny and/or determination to the existence of

an arbitration agreement and, therefore, whether the dispute is

sustainable or not cannot be decided at the stage of appointment of the

arbitrator. He fervently submits that the moment the Court finds the

prima facie existence of an arbitration agreement, application for

appointment of the receiver is required to be allowed. Placing reliance

upon the judgment of the apex Court in the case of Goqii Technologies

(P) Ltd. vs. Sokrati Technologies Pvt. Ltd. reported in (2025) 2 SCC

192, Mr. Misra further submits that the ancillary agreement or

connected agreements executed by the parties in furtherance of the

main agreement which contains an arbitration clause and if the dispute

has cropped up, it would be decided by invoking the arbitration clause

and placed reliance upon a judgment of the apex Court in the case of

Ameet Lalchand Shah and others Vs. Rishabh Enterprises reported in

(2018) 15 SCC 678. Mr. Misra, further submits that the arbitration

agreement/clause shall be regarded to have incorporated in the

subsequent agreement if the reference of the contract/agreement

containing the arbitration clause can be seen and placed reliance upon a

judgment of the apex Court in case of Inox Wind Limited vs.

Thermocables Limited reported in (2018) 2 SCC 519. Lastly, it is

submitted that the High Court in exercise of power under Section 11 of

the Act, restricts the determination and/or scrutiny only to the

arbitration agreement and not into the validity and/or frivolity of the

dispute as held in SBI General Insurance Company Limited vs. Krish

Spinning reported in 2024 SCC OnLine SC 1754.

11. On the other hand, the counsel for the opposite party submits that

the Court exercising powers under Section 11 of the Act should confine

its scrutiny within the four corners of an agreement containing an

arbitration clause and disputes arising therefrom and placed reliance

upon the judgment of the apex Court in the case of M/s. KSS KSSIIPL

Consortium vs. M/s. Gail (India) Limited reported in (2015) 4 SCC

210, it is vociferously submitted that the dispute raised in an application

invoking the arbitration clause is basically founded upon the

cancellation of the power of attorney executed in favour of the agent by

the opposite party, which is beyond the scope and purview of the

raising contract dated 18th March, 2010. The counsel for the opposite

party strenuously argues that the disputes raised by the petitioner is

untenable in view of the raising agreement dated 18th March, 2010 and

there is no fetter on the part of the Court to enter into the nature of the

dispute with the limited scrutiny whether it comes within the purview of

the arbitration agreement/clause and placed reliance upon a judgment of

the apex Court in the case of Duro Felguera S.A. vs. Gangavaram Port

Ltd. reported in (2017) 9 SCC 729. To sum up, it is contended that the

disputes raised by the petitioner is beyond the scope and purview of the

raising agreement dated 18th March, 2010 and, therefore, it is not

obligatory on the part of the High Court to appoint the arbitrator by

invoking the arbitration agreement/clause contained in the raising

contract dated 18th March, 2010.

12. On the conspectus of the facts and the submissions advanced by

the respective counsels, the first and foremost point emerged therefrom

relates to the scope and jurisdiction exercised by the High Court for

appointment of the arbitrator under Section 11(6) of the Act.

13. The arbitration agreement is defined under Section 7 of the Act to

mean an agreement by the parties to submit to arbitration all or certain

disputes which have arisen or which may arise between them in respect

of a legal relationship, whether contractual or not. It would be apposite

to quote the said provision, which reads thus:

"7. Arbitration agreement.-- (1) In this Part, "arbitration agreement" means an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not.

(2) An arbitration agreement may be in the form of an arbitration clause in a contract or in the form of a separate agreement.

(3) An arbitration agreement shall be in writing. (4) An arbitration agreement is in writing if it is contained in

(a) a document signed by the parties;

(b) an exchange of letters, telex, telegrams or other means of telecommunication 1[including communication through electronic means] which provide a record of the agreement; or

(c) an exchange of statements of claim and defence in which the existence of the agreement is alleged by one party and not denied by the other.

(5) The reference in a contract to a document containing an arbitration clause constitutes an arbitration agreement if the contract is in writing and the reference is such as to make that arbitration clause part of the contract."

14. On the meaningful reading of the provision as mentioned

hereinabove, the definition ascribed to arbitration agreement is of wide

import. Apart from a conventional way of execution of an agreement as

known in common parlance, such agreement can also be perceived in

the form of an arbitration clause in the contract. It further engulfed the

exchange of letters, telex, telegrams and other means of

telecommunication, recording the agreement and can also be construed

from the pleadings, if the existence of the arbitration agreement is not

denied by the other. The arbitration agreement can also be presumed or

be treated in existence by way of a reference in a contract to a

document containing an arbitration clause in specified eventualities.

15. Section 11 of the Act contains an exhaustive provision relating to

appointment of an arbitrator by the authority/Court mentioned therein.

Sub-section (6) of Section 11 postulates that in the event the procedure

for appointing an arbitrator is agreed upon by the parties and in the

event a party fails to act thereupon or to reach an agreement expected

from them or to perform any functions entrusted upon them, the

appointment, if any, can be made on an application by any party. The

cumulative effect of the provisions contained in Sections 7 and 11 of

the Act is that once the parties have entered into a contract which is

legally enforceable, agreeing upon the determination of the dispute that

has arisen or to be arisen to be decided by the private fora; in the event

such dispute crops up, if the party fails to appoint the arbitrator

mutually, no fetter can be seen on the part of the High Court to appoint

the arbitrator.

16. Of late, the question invariably comes before the Court for

determination is whether the High Court exercising jurisdiction under

Section 11 of the Act can enter into the existence of a dispute or a

dispute covered under the arbitration agreement even for recording the

prima facie finding which in this case appears to have been projected

by the opposite party. The reliance is placed upon the decision of the

apex Court in the case of KSS KSSIIPL Consortium (supra) wherein it

is held that the Court before appointing an arbitrator will have to decide

on the existence of an arbitrable dispute/enforceable claim of the parties

to the contract in the following:

"9. There can be no manner of doubt that before exercising the power under Section 11(6) of the Arbitration Act to make appointment of an arbitrator the Court will have to decide on the existence of an arbitrable dispute/enforceable claim by and between the parties to the contract. The existence of a claim and denial thereof giving rise to a dispute is required to be determined on the basis of what the parties had agreed upon as embodied in the terms of the contract and only for the purpose of a decision on the question of arbitrability and nothing beyond. It is from the aforesaid standpoint that the issues raised in the present proceedings will have to be considered."

17. In M/s. Gail (India) Limited (supra) a tender was floated for

pipeline laying and terminal works for Dabhol-Bangalore Pipeline

project and two companies, one of foreign origin and one of India

constituted a consortium to participate in the said tender and in the

event the work is awarded those have to be undertaken on the basis of

the terms and conditions mentioned therein. Since one of the

constituents of consortium failed to provide engineering inputs and

were indulged in frequent modifications with respect to drawing, extra

work and delays in providing free issue materials, the compensatory

claim in the form of extended stay compensation was made, which gave

rise to a dispute within one of the several agreements entered into by

and between the parties. In the backdrop of the above, the Court found

that if the dispute has arisen from a contract and claim of compensation

is made, it gives rise to arbitral dispute and proceeded to appoint the

arbitrator for resolution. While considering the nature of the claim, the

Court held that there is no fetter on the part of the Court exercising

power under Section 11(6) of the Act to decide the existence of an

arbitral dispute and/or enforceable claim, which would always be

tentative.

18. The larger Bench Coram of the Supreme Court in Cox and Kings

Limited vs. SAP India (P) Limited and another, reported in (2024) 4

SCC 1 was basically deciding a reference whether the doctrine of group

of companies, a modern theory which conventionally runs counter to

the notion of an arbitration law, has any manner of applicability in the

jurisprudence of the Indian arbitration though sees its origin a century

ago, but was embraced by some and dissented by others. The larger

Bench was posed with a challenge to figure out whether there can be

any reconciliation between the group of companies doctrine vis-a-vis,

the well settled legal principles of corporate law and the contract law.

Though the reference was limited as it appeared from the narration of

the facts discerned therefrom, yet the Court in pursuit of answering the

said reference also took into consideration, which in my opinion, was

inevitable and would set the standard of the determination at the referral

stage in the perspective of Sections 8 and 11 of the said Act.

19. The Constitution Bench of the Supreme Court in the case of SBP

and Co. v. Patel Engineering Limited reported in (2005) 8 SCC 618

held that it is imperative on the part of the Chief Justice or the

designated Judge not only to determine the jurisdiction to entertain the

request but shall also determine the existence of a valid arbitration

agreement existence of live claim etc. The larger Bench noticed the

amendment having brought in the year 2015 by introducing Section 11

(6-A) of the Act, wherein the High Court and/or Supreme Court while

exercising the powers under Sub-Sections 4, 5 or 6 shall confine to the

examination of the existence of an arbitration agreement

notwithstanding any judgment, decree or order of any Court. Though

the said amended section impliedly whittle down the proposition laid

down in the SBP and Co. (supra) where the existence of a dispute or a

live claim including the validity of the agreement was also conferred

upon the Court under Section 11 but the said section was subsequently

omitted in the year 2009 by the Parliament when Arbitration And

Conciliation (Amendment) Act, 2019 was passed, but the operation and

effect of the said amended act has not been notified as yet, as a

resultant affect the said amended provision still continued to hold the

field.

20. The larger Bench was conscious on the principle of competence-

competence as well known in the parlance of arbitration law emanating

from Section 16 of the said Act. The said section empowers the arbitral

tribunal to rule its own jurisdiction including the existence or validity of

the arbitration agreement and it does not create any fetter on the part of

arbitral tribunal to decide the same as a preliminary issue. The

enlightening observation of the larger Bench is quoted as under:

"163. Section 16 of the Arbitration Act enshrines the principle of competence-competence in Indian arbitration law. The provision empowers the Arbitral Tribunal to rule on its own jurisdiction, including any ruling on any objections with respect to the existence or validity of arbitration agreement. Section 16 is an inclusive provision which comprehends all preliminary issues touching upon the jurisdiction of the Arbitral Tribunal. [Uttarakhand Purv Sainik Kalyan Nigam Ltd. v. Northern Coal Field Ltd., (2020) 2 SCC 455 :

(2020) 1 SCC (Civ) 570] The doctrine of competence-competence is intended to minimise judicial intervention at the threshold stage. The issue of determining parties to an arbitration agreement goes to the very root of the jurisdictional competence of the Arbitral Tribunal."

21. Although the judgment of the larger Bench rendered in Cox and

Kings (supra) was not taken into consideration in a subsequent

judgment rendered in case of Goqii Technologies (P) Ltd. (supra), but

the observation as quoted above was restated and reapplied in the

following:

"19. The scope of inquiry under Section 11 of the 1996 Act is limited to ascertaining the prima facie existence of an arbitration agreement. In the present case, the High Court exceeded this limited scope by undertaking a detailed examination of the factual matrix. The High Court erroneously proceeded to assess the auditor's report in detail and dismissed [Goqii Technologies (P) Ltd. v. Sokrati Technologies (P) Ltd., 2024 SCC OnLine Bom 3530] the arbitration application. In our view, such an approach does not give effect to the legislative intent behind the 2015 Amendment to the 1996 Act which limited the judicial scrutiny at the stage of Section 11 solely to the prima facie determination of the existence of an arbitration agreement.

20. As observed in Krish Spg. [SBI General Insurance Co. Ltd. v. Krish Spg., (2024) 12 SCC 1 : 2024 SCC OnLine SC 1754 :

2024 INSC 532] , frivolity in litigation too is an aspect which the referral court should not decide at the stage of Section 11 as the arbitrator is equally, if not more, competent to adjudicate the same.

21. Before we conclude, we must clarify that the limited jurisdiction of the referral courts under Section 11 must not be misused by parties in order to force other parties to the arbitration agreement to participate in a time consuming and costly arbitration process. This is possible in instances, including but not limited to, where the claimant canvasses the adjudication of non-existent and mala fide claims through arbitration.

22. With a view to balance the limited scope of judicial interference of the referral courts 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.

Having said that, it is clarified that the aforesaid is not to be construed as a determination of the merits of the matter before us, which the Arbitral Tribunal will rightfully be equipped to determine.

E. Conclusion

23. The existence of the arbitration agreement in Clause 18.12 of the MSA has not been disputed by the respondent. The question whether there exists a valid dispute to be referred to arbitration can be addressed by the Arbitral Tribunal as a preliminary issue."

22. An argument was advanced dissenting one sentence or paragraph

from the later invoking the arbitration clause that the dispute revolves

around a non-signatory to an agreement which contains an arbitration

clause and in this prospective whether the doctrine of Group of

Companies can be applied. Several judgments were referred to but the

larger Bench in Cox and Kings (supra) in an unequivocal terms held

that such doctrine may have its application in the event non-signatory

have a positive, direct and substantial involvement in the negotiation,

performance or termination of a contract. It is further held that the

incidental involvement is insufficient to bind a non-signatory and such

doctrine does not extend to the non-signatory merely because they are

the members of the same Group of Companies.

23. On a factual matrix, we find a patent distinction in this regard for

a reason that none of the parties to the proceedings have included the

non-signatory of an agreement dated 18th March, 2010. The opposite

party construed the letter invoking the arbitration where it is asserted

that the said opposite party has created an obstacle in renewal and/or

extension of the lease despite an irrevocable power of attorney having

executed in favour of the employee of the company as the said dispute

is beyond the scope of the said agreement containing arbitration clause.

It would not be proper course for the High Court at the stage of Section

11 of the said Act to dissect the claim raising a dispute but must confine

its scrutiny on the existence of an arbitration clause. The moment the

Court found that there exists an arbitration clause between the parties

which is not denied, it must leave the question of arbitrability of the

dispute to the arbitral tribunal, who is competent to decide its own

jurisdiction.

24. Letter dated 4th February, 2023 invoking the arbitration clause

contains various allegations constituting a dispute between the parties

which includes the huge loss suffered by the companies because of the

conduct of the opposite party in clear violation of the terms and

conditions of the said raising contract dated 18th March, 2010.

Astonishingly, despite having received such letter the opposite party

while sending email categorically asserted that he does not recollect

having signed any such raising agreement and demanded such

agreement to be forwarded to him for his knowledge. Though the said

agreement was forwarded by the petitioner vide letter dated 10th

February, 2023 but the same was responded on 2nd March, 2023

claiming that the issues are not part of the subject agreement and there

is already a civil suit pending relating to the cancellation of the power

of attorney and, therefore, the matter being subjudice, there cannot be a

parallel trial by an arbitrator.

25. The conjoint reading of the correspondences exchanged between

the parties manifestly leads to an inescapable conclusion that the

opposite party has not denied the existence of an arbitration clause in a

raising agreement dated 18th March, 2010. In view of the law

pronounced in Goqii Technologies (P) Ltd. (supra) the moment the

High Court finds the existence of an arbitration agreement whether the

dispute raised by the petitioner is touching upon the contract or arising

therefrom or in relation thereto, can be decided by an arbitral tribunal

under the theory of competence-competence. Section 16 of the Act is

not squeezed to the extent that once the parties are referred to

arbitration, the question of arbitral dispute cannot be decided by the

arbitral tribunal. Section 16 is exposit that despite the parties having

referred to arbitral tribunal, the arbitral tribunal can decide its own

jurisdiction and as a preliminary issue may take a decision whether the

disputes are covered under the said arbitration agreement or not.

26. Section 11(6-A) of the Act though omitted by an amended Act of

2019 yet occupies the field of valid provision as the effect of the said

amended provision has not been notified by the Central Government. In

view of the restricted scrutiny in a latter provision introduced by way of

Section 11(6-A) of the Act once the Court finds the existence of the

arbitral agreement, it should not expand its horizon unless the said

amended Act is notified and the provision is taken up from the

legislative document. Thus, this Court does not find any justification

and/or force in the objection raised by the opposite party.

27. Mr. Justice B.P. Das, Former Judge of this Court is hereby

appointed as a sole Arbitrator, who shall decide the dispute between the

parties immediately upon communication of the instant judgment and

determine the dispute raised by the parties. The arbitration shall take

place under the aegis of the High Court of Orissa Arbitration Centre.

Remuneration of the Arbitrator shall be equally paid by the parties as

per the 4th Schedule appended to the said Act. The Arbitrator shall

make efforts to adhere the time limit set forth in Section 29A of the said

Act

28. The arbitration petition is disposed of accordingly. A copy of this

judgment be communicated to the learned Arbitrator forthwith.

( Harish Tandon ) Chief Justice

Location: High Court of Orissa, Cuttack.