SCOPE OF SECTION 11 ENQUIRY LIMITED TO ASCERTAINING EXISTENCE OF VALID ARBITRATION AGREEMENT DESPITE PLEA OF LIMITATION

The Petitioner and Respondent are partners in M/s Swiss Device (I) under a Partnership Deed dated 09.02.2007

Disputes arose regarding the settlement and rendition of accounts and alleged statutory violations

The Petitioner invoked the arbitration agreement via a legal notice dated 15.05.2023

The Respondent resisted the appointment of an arbitrator, contending that the firm was dissolved by the Petitioner’s conduct in 2014-15, the notice failed to mention a specific claim amount, and the claims were barred by limitation

Conversely, the Petitioner argued that the Respondent continued to represent himself as a partner before authorities, proving a subsisting dispute

1. Whether an independent Sole Arbitrator should be appointed under Section 11 of the Arbitration and Conciliation Act, 1996, despite objections regarding limitation and the dissolution of the partnership

2. Whether the scope of judicial examination at the Section 11 stage extends to deciding jurisdictional objections such as limitation

The Court applied Section 11 of the Arbitration and Conciliation Act, 1996, which governs the appointment of arbitrators

It relied on the Supreme Court’s decision in SBI General Insurance Co. Ltd. v. Krish Spinning (2024), which, alongside In re: Interplay Between Arbitration Agreements (2024) and Aslam Ismail Khan Deshmukh v. ASAP Fluids Private Limited (2025), clarified that the judicial scope under Section 11 is strictly limited to ascertaining the existence of a valid arbitration agreement

The principle of kompetenz-kompetenz is reinforced by Clause 12 of the Partnership Deed, which mandates arbitration for disputes arising out of the instrument

The Court observed that the existence of the arbitration agreement in Clause 12 of the Partnership Deed was not in dispute

Applying the limited-scope mandate established in SBI General Insurance, the Court determined that as long as the agreement exists, it is not required to adjudicate on the merits of the disputes or the "live" nature of the claims at the referral stage

Regarding the Respondent’s objections—specifically that the claims were barred by limitation and the firm had been dissolved—the Court reasoned that these are jurisdictional and merit-based issues

Following the agreement of both parties, the Court directed that these objections be determined by the Arbitral Tribunal as a preliminary issue rather than by the Court itself

The Court held that jurisdictional objections, including limitation and the status of the partnership, shall be decided by the Arbitrator as a preliminary issue before proceeding to the merits

The Arbitrator was directed to provide disclosures under Section 12 of the Act and fix fees in consultation with the parties

The petition was disposed of without any expression of opinion on the merits of the underlying claims