An ancillary SPA arbitration clause cannot govern disputes under a principal agreement reserving court litigation.

The parties entered into a Collaboration Agreement dated 20 October 2021 for redevelopment of the respondent’s property.

It allocated the petitioner the First Floor and a share in the stilt parking/land in return for construction at its cost; Clause 27 provided for civil-court remedies in the event of default but contained no arbitration clause.

A Special Power of Attorney (SPA), executed on 9 November 2021 under the Collaboration Agreement, authorised the petitioner to undertake specified administrative acts and contained an arbitration clause at Clause 19.

After disputes arose over accounts and alleged outstanding dues, the petitioner invoked the SPA’s arbitration clause and sought appointment of a sole arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996.

The respondent opposed the petition, arguing that the disputes arose under the Collaboration Agreement, which prescribed court litigation, and that a subsequent MoU had superseded the earlier arrangements.

1. Whether the arbitration clause in the SPA governed the monetary and other disputes arising from the Collaboration Agreement.

2. Whether the Court could appoint an arbitrator under Section 11(6) when the principal Collaboration Agreement contained no arbitration clause and expressly provided for civil-court remedies.

Under Section 11(6A) of the Arbitration and Conciliation Act, 1996, the referral court’s inquiry is confined to the prima facie existence of an arbitration agreement relatable to the dispute; it should not conduct a mini-trial, and contested questions of scope are generally left to the arbitrator.

Section 7(5) permits incorporation of an arbitration clause from another document only where the reference in the written contract makes that clause part of the contract.

Relying on Duro Felguera, S.A. v. Gangavaram Port Ltd., Interplay Between Arbitration Agreements under Arbitration Act, 1996 & Stamp Act, 1899, In re, and SBI General Insurance Co. Ltd. v. Krish Spg., the Court applied the limited Section 11 inquiry.

It also relied on NCC Ltd. v. Indian Oil Corpn. Ltd. for the requirement that the dispute be relatable to the arbitration agreement, and on NBCC (India) Ltd. v. Zillion Infraprojects (P) Ltd. and M.R. Engineers & Contractors (P) Ltd. v. Som Datt Builders Ltd. for the requirement of specific intention to incorporate an arbitration clause from another document.

The Court found that the Collaboration Agreement created and regulated the parties’ substantive rights and obligations, including the petitioner’s entitlement to the First Floor and the consequences of default; it contained no arbitration clause and expressly contemplated civil-court remedies.

By contrast, the SPA was an ancillary agency instrument for limited administrative purposes, and its purpose had been exhausted after the First Floor was sold.

The claims for outstanding dues and damages arose from the Collaboration Agreement, not from any independent breach of the SPA.

The Court therefore declined to treat the documents as a single arbitrable arrangement or to import the SPA’s arbitration clause into the Collaboration Agreement, particularly absent a contractual reference incorporating that clause.

The Section 11(6) petition was dismissed, pending applications were disposed of, and no order as to costs was made.