Court While Deciding ‘Section 11’ Application Seeking Appointment Of Arbitrator Can Consider Whether Dispute Falls Within ‘Excepted Clause’

Case: Indian Oil Corporation Limited vs NCC Limited

Coram: Justices MR Shah and BV Nagarathna

Case No.: CA 341 OF 2022

Court Observation: “Parties to the contract are free to agree on applicability of (1) proper law of contract, (2) proper law of arbitration agreement and (3) proper law of the conduct of arbitration. Parties to the contract also may agree for matters excluded from the purview of arbitration”

“We do not agree with the conclusion arrived at by the High Court that after the insertion of Sub­ Section (6­A) in Section 11 of the Arbitration Act, scope of inquiry by the Court in Section 11 petition is confined only to ascertain as to whether or not a binding arbitration agreement exists qua the parties before it, which is relatable to the disputes at hand. We are of the opinion that though the Arbitral Tribunal may have jurisdiction and authority to decide the disputes including the question of jurisdiction and non­arbitrability, the same can also be considered by the Court at the stage of deciding Section 11 application if the facts are very clear and glaring and in view of the specific clauses in the agreement binding between the parties, whether the dispute is non­arbitrable and/or it falls within the excepted clause. Even at the stage of deciding Section 11 application, the Court may prima facie consider even the aspect with regard to ‘accord and satisfaction’ of the claims.”

“Parties to the contract are free to agree on applicability of (1) proper law of contract, (2) proper law of arbitration agreement and (3) proper law of the conduct of arbitration. Parties to the contract also may agree for matters excluded from the purview of arbitration. As observed by this Court in a catena of decisions, unless the effect of agreement results in performance of an unlawful act, an agreement, which is otherwise legal, cannot be held to be void and is binding between the parties.”

“In that view of the matter, the High Court has misread and misinterpreted the clauses 9.0.1.0 and 9.0.2.0 and has seriously erred in holding that where there is contestation or the decision rendered by the General Manager leaves scope for argument as to whether the claims alleged by the contractor can be categorized as Notified Claim is best left to the Arbitral Tribunal. The dispute whether the claim is a Notified Claim or not is specifically excluded from the scope, purview and ambit of the arbitration agreement. Therefore, once such a dispute falls within the ‘excepted matters’, any decision by the General Manager on the issue of Notified Claims cannot be the subject matter of arbitration proceeding”

Previous Posts

Denial Of Maintenance To Estranged Wife & Child Is Worst Offence From Humanitarian Perspective: Delhi High Court Imposes 20K Cost On Husband

Right Of Accused To Representation Integral Part Of Article 21, Trial Court Must Appoint Amicus In Absence Of Defence Counsel: Madras High Court

11 Yrs Of Frivolous Litigation: Bombay High Court Reprimands Petitioner In Person, Imposes 1 Lakh Cost

Employee Not Entitled To Seek Permanency Or Regularisation Of Service If Continued On Ad Hoc Basis For Decades: Delhi High Court

Coal Allocation Per Se Does Not Amount To “Proceeds Of Crime” Under PMLA: Delhi High Court

Section 37 NDPS Act – “Credible & Plausible” Grounds To Believe Accused Is Not Guilty Required To Grant Bail: Supreme Court

Single Member Benches Of NGT Cannot Be Constituted In View Of Proviso To Section 4(4)(c) NGT Act: Supreme Court

Contempt Action Can Be Taken Only In Respect Of Established Wilful Disobedience Of Court Order, Reiterates Supreme Court Download Judgement

Extramarital Affair No Ground To Conclude Woman Wouldn’t Be A Good Mother & Deny Her Child Custody: Punjab & Haryana High Court

Keywords

Appointment Of Arbitrator, Section 11: Appointment Of Arbitrator