Section 11 courts must leave limitation of underlying claims to the arbitral tribunal.

The parties executed an agreement on 27 March 2013 under which the Petitioner provided super-speciality treatment and diagnostic services to ESI beneficiaries from 2013 to 2020.

The Petitioner alleged that some bills remained unpaid and invoked arbitration by notice dated 26 March 2024.

The Respondent denied that any bills were outstanding and objected that the claims were time-barred.

The arbitration agreement was not disputed; however, Clause 35 designated the Director (Medical), ESIC, to appoint the arbitrator.

The Petitioner applied under Section 11(5) and (6) of the Arbitration and Conciliation Act, 1996 for appointment of a sole arbitrator.

Whether the Respondent’s objections that the claims were time-barred or “deadwood” prevented appointment of an arbitrator under Section 11.

Whether the arbitrator could be appointed by the authority designated in Clause 35, or instead had to be appointed by the Court.

Section 11(6-A) of the Arbitration and Conciliation Act, 1996 limits the referral court’s inquiry principally to the prima facie existence of an arbitration agreement; contested or evidentiary questions about whether the underlying claims are time-barred are ordinarily for the arbitral tribunal under Section 16.

In SBI General Insurance Company Limited v. Krish Spinning, 2024 SCC OnLine SC 1754, the Supreme Court clarified that, when considering limitation, the referral court should determine whether the Section 11 application itself is within the three-year period under Article 137 of the Limitation Act, 1963, while leaving intricate inquiries into limitation of the claims to the tribunal.

An interested party cannot unilaterally appoint the arbitrator; the Court relied on Perkins Eastman Architects DPC v. HSCC (India) Limited, (2020) 20 SCC 760, and the other cited Supreme Court decisions on unilateral appointment.

The appointed arbitrator must provide disclosure under Section 12, and the fee is to be fixed under the Fourth Schedule, as agreed by the parties.

The Court found that the arbitration agreement’s existence was undisputed and therefore held that the Respondent’s objections to the alleged unpaid bills and the limitation of the claims did not prevent reference to arbitration.

Applying SBI General, the Court left the question whether the claims were time-barred or “deadwood” for the arbitrator, rather than undertaking an evidentiary inquiry at the referral stage.

The Court also declined to have the Director (Medical), ESIC appoint the arbitrator because that would be a unilateral appointment by a person interested in the dispute’s outcome.

It held that this part of Clause 35 was unenforceable, without affecting the parties’ substantive agreement to arbitrate, and appointed the arbitrator itself.

Ms. Sukriti Mago, Advocate, was appointed sole arbitrator; the Respondent may raise its limitation objections before the arbitrator and may bring a counterclaim.

The arbitrator is to provide disclosure under Section 12, and the fee is to be fixed under the Fourth Schedule as agreed.

The Court expressed no opinion on the merits and left the parties’ rights and contentions open.