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 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.
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 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 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.
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.
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)
“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 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 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 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 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 & 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 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)
‘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] .
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 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 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.
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 (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 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 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 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.
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 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.
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