Delhi High Court

Referral Court’s Section 11 jurisdiction is confined to prima facie examination of arbitration agreement existence.

Satnam Enterprises Private Limited v. Uppal Chadha Hi-Tech Developers Pvt. Ltd. [ARB.P. 634/2024]

Delhi High CourtJUDGMENT: no citation2 MIN READSOURCE JUDGMENT
THE ORIGINAL LAWLENS SUMMARY
01

Facts

The Petitioner filed five petitions under Section 11(6) of the Arbitration and Conciliation Act, 1996, seeking the appointment of a sole arbitrator

Source reference: p. 2

The disputes arose from five similarly worded Development Agreements dated June 30, 2011, each containing an identical arbitration clause (Clause 20)

Source reference: p. 3

The Petitioner invoked arbitration via legal notices dated December 21, 2022

Source reference: p. 3

While the Respondent did not dispute the existence of the arbitration agreement, it contended that the claims were barred by the law of limitation

Source reference: p. 3

The Court previously directed the parties to seek a consensus on an arbitrator or explore settlement, but the parties informed the Court they were unable to reach an agreement

Source reference: p. 4
02

Issues

Whether the Court should appoint an arbitrator under Section 11(6) when the Respondent raises a plea of limitation

Source reference: p. 3-4

Whether the scope of judicial scrutiny under Section 11 is limited to the prima facie existence of the arbitration agreement

Source reference: p. 4-6
03

Law Applied

The Court applied Section 11(6) and 11(6-A) of the Arbitration and Conciliation Act, 1996

Source reference: p. 2, 5

It relied heavily on the three-judge bench decision in *SBI General Insurance Co. Ltd. v. Krish Spinning* (2024), which followed the seven-judge bench ruling in *Interplay Between Arbitration Agreements under Arbitration Act, 1996 & Stamp Act, 1899, In re*

Source reference: p. 4-5

These precedents establish that the referral court's jurisdiction is confined strictly to a *prima facie* examination of the existence of the arbitration agreement, leaving issues of "accord and satisfaction," limitation, and merits to the Arbitral Tribunal under the principle of competence-competence

Source reference: p. 6-8
04

Reasoning

The Court observed that while the Respondent raised objections regarding limitation, such issues fall within the domain of the Arbitral Tribunal, especially since the petitions were filed within three years of the notice invoking arbitration

Source reference: p. 4

Following the mandate in *Krish Spinning*, the Court held that judicial interference at the Section 11 stage must be minimal and facilitative

Source reference: p. 8

Since the existence of the arbitration agreement (Clause 20) was not in dispute and the parties failed to mutually appoint an arbitrator as per the contract, the Court’s role was limited to resolving the deadlock

Source reference: p. 4, 8

The Court declined to conduct a "laborious enquiry" into the merits or the plea of limitation, noting that the Arbitral Tribunal is better equipped to decide such mixed questions of law and fact after appreciating full evidence

Source reference: p. 6, 8
05

Holding

The Court allowed the petitions and appointed Hon’ble Mr. Justice B. R. Gavai, Former Chief Justice of India, as the Sole Arbitrator to adjudicate the disputes through a composite reference

The Court held that the issue of limitation is a matter for the Tribunal to decide

Source reference: p. 4

The arbitration will be conducted under the aegis of the Delhi International Arbitration Centre (DIAC) following its rules and fee schedule

Source reference: p. 8-9

All rights and contentions regarding the merits of the claims were left open for the arbitrator's determination

Source reference: p. 9
Delhi High Court

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Satnam Enterprises Private Limited v. Uppal Chadha Hi-Tech Developers Pvt. Ltd. [ARB.P. 634/2024]

Delhi High Court · no citation

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