The Supreme Court, in Office for Alternative Architecture vs. IRCON Infrastructure and Services Ltd., has held that a High Court, while exercising jurisdiction under Section 11 of the Arbitration and Conciliation Act, 1996, must confine itself to examining the existence of an arbitration agreement and should not exclude certain claims as non-arbitrable at that stage. The Bench comprising Justice Pamidighantam Sri Narasimha and Justice Manoj Misra delivered the judgment on May 13, 2025.
Background
The appeal arose out of a judgment of the Delhi High Court dated September 6, 2023, passed in an application under Section 11 of the Arbitration and Conciliation Act, 1996. While appointing an arbitral tribunal, the High Court had excluded claims mentioned in paragraphs 48(ii), (iii), and (iv) of the claim petition on the ground that they were “excepted matters” under clauses 50 and 50.2 of the contract.
Challenging this order, the appellant contended that the role of the Court under Section 11 is limited to examining the existence of an arbitration agreement. Once the existence is established, the arbitral tribunal alone should decide whether specific claims are arbitrable or fall within the excepted category.
Arguments
The appellant relied on sub-section (6A) of Section 11, inserted by the Arbitration and Conciliation (Amendment) Act, 2015, which mandates that courts must restrict their examination to the existence of an arbitration agreement. Although this sub-section was deleted by the 2019 Amendment Act, the Court noted that the omission had not yet been notified and thus continued to remain part of the statute.
On the other hand, the respondent cited the Supreme Court’s decision in Emaar India Limited vs. Tarun Aggarwal Projects LLP, arguing that the High Court had the authority to exclude non-arbitrable claims.
Court’s Analysis
The Supreme Court examined the legislative intent behind Section 11(6A) and reiterated the objective of minimizing judicial interference at the stage of appointing arbitrators. Citing the seven-Judge Bench judgment in In Re: Interplay Between Arbitration Agreements under the Arbitration and Conciliation Act, 1996 and the Indian Stamp Act, 1899 and the three-Judge Bench decision in SBI General Insurance Co. Ltd. vs. Krish Spinning, the Court emphasized:
“The scope of enquiry at the stage of appointment of Arbitrator is limited to the scrutiny of prima facie existence of the arbitration agreement, and nothing else.”
Accordingly, the Court held that reliance on the two-Judge Bench decision in Emaar was misplaced.
Decision
Allowing the appeal, the Supreme Court held:
“The High Court fell in error in bisecting the claim of the appellant into two parts, one arbitrable and the other not arbitrable, when it found arbitration agreement to be there for settlement of disputes between the parties. The correct course for the High Court was to leave it open to the party to raise the issue of non-arbitrability of certain claims before the arbitral tribunal, which, if raised, could be considered and decided by it.”
The Court set aside the High Court’s order insofar as it excluded claims mentioned in para 48(ii), (iii), and (iv) of the claim petition and granted liberty to the parties to raise the issue of non-arbitrability before the arbitral tribunal. No order as to costs was made.
