Excepted-matter and limitation objections under Section 11 must be left to the arbitrator.

The applicant was awarded Contract No. 511687784746189 by West Central Railway under a Letter of Acceptance dated 25 August 2023 for mechanized cleaning of coaches at Coaching Depot, Jabalpur.

The contract was valued at ₹5,35,30,910.51 for 24 months, and the applicant furnished a performance guarantee of ₹53,53,100.

The applicant alleged that the scope of work was enhanced by approximately 33%, beyond the permissible 25% variation limit, resulting in additional financial liability and deductions from its bills.

By letter dated 27 June 2025, it objected to undertaking work beyond the permissible limit without a formal amendment and compensation.

The respondent thereafter issued a seven-day notice and terminated the contract on 7 July 2025.

The applicant disputed the termination, alleged retaliatory action, challenged the deductions, debarment and withholding of bank guarantees, and invoked Clause 8.2 of the GCC, 2018, seeking appointment of an arbitrator through representations dated 3 October 2025 and 17 February 2026.

The respondent rejected the request on 9 April 2026, contending that the disputes concerned “Excepted Matters” under Clause 8.1 of the GCC and were therefore not arbitrable.

The applicant consequently filed the present application under Section 11 of the Arbitration and Conciliation Act, 1996, for appointment of a sole arbitrator.

Whether a valid arbitration agreement existed between the parties and whether the disputes arising from the contract were referable to arbitration under Section 11 of the Arbitration and Conciliation Act, 1996?

Whether the respondent’s objection that termination and related disputes constituted “Excepted Matters” under Clause 8.1 of the GCC was required to be decided by the High Court at the referral stage?

Whether questions concerning limitation, jurisdiction, contractual variation, termination, deductions, debarment and withholding of securities should be left for determination by the Arbitral Tribunal?

The Court applied Section 11(6-A) of the Arbitration and Conciliation Act, 1996, under which the referral court is confined to examining the existence of an arbitration agreement.

Section 16 embodies the kompetenz-kompetenz principle, enabling the Arbitral Tribunal to rule on its own jurisdiction, including objections concerning the existence, scope or validity of the arbitration agreement and limitation.

Relying on Uttarakhand Purv Sainik Kalyan Nigam Ltd. v. Northern Coal Field Ltd., (2020) 2 SCC 455, the Court held that threshold issues, including jurisdiction and limitation, ordinarily fall within the Tribunal’s jurisdiction at the post-reference stage.

It also relied on Central Organisation for Railway Electrification v. ECI SPIC SMO MCML (JV), (2025) 4 SCC 641, and Aslam Ismail Khan Deshmukh v. ASAP Fluids (P) Ltd., (2025) 1 SCC 502, for the principle that the referral court must not conduct an intricate evidentiary inquiry into limitation or the merits of the claims.

The contractual arbitration mechanism under Clause 8.2 of the GCC, 2018, and the respondent’s reliance on the “Excepted Matters” exclusion under Clause 8.1 were also considered.

The existence of the arbitration clause in the contract was not disputed.

The applicant’s claims concerning enhanced work, deductions, termination, performance, debarment and retention of bank guarantees arose out of the contractual relationship and were therefore capable of being placed before the Arbitral Tribunal.

Although the respondent argued that the variation had been accepted, payments had been made, the applicant had committed fundamental breaches, and termination fell within the “Excepted Matters” clause, these contentions involved disputed questions of fact and contractual interpretation.

Applying Section 11(6-A) and Section 16, the Court held that it was not required to undertake a detailed examination of those objections at the referral stage.

The question whether particular disputes were excluded as “Excepted Matters,” as well as limitation and other jurisdictional objections, was left open for determination by the appointed arbitrator.

The Court appointed Shri Sujoy Paul, Retired Chief Justice of the Calcutta High Court, as the sole arbitrator to adjudicate the disputes.

The arbitration was directed to take place at Jabalpur; the arbitrator was to issue notices and fix the venue and dates, while the parties were directed to deposit fees and charges in accordance with the applicable M.P. Arbitration Centre Rules, 2019.

The issue of whether the disputes were “Excepted Matters,” along with limitation and all other rights and contentions, was expressly left open for adjudication by the Arbitral Tribunal.

The arbitration case was accordingly disposed of.