S. 11 of the Arbitration Act, 1996: Is the Law Finally Clear!

S. 11 of the Arbitration and Conciliation Act, 1996 (Hereinafter “the Act”) has given rise to a great deal of controversy. There is catena of decisions of the Supreme Court wherein the Apex Court has examined the nature and scope of the enquiry and the jurisdiction of the Chief Justice or his designate while dealing with petitions under Section 11 of the Act. In Alva Aluminium Ltd., Bangkok v. Gabriel India Limited (16.11.2010), the Supreme Court has once again reiterated the law on this subject. The Court in ALVA cited with approval the judgment of the Supreme Court in National Insurance Co. Ltd. v. Boghara Polyfab (P) Ltd. (2009(1) SCC 267) wherein the Apex Court had categorized the issue(s) that may arise for consideration before the Chief Justice or his designate in a petition under Section 11 of the Act. In Boghara Polyfab the Court had stated the following proposition of law:

“1. The issues (first category) which the Chief Justice/his designate will have to decide are:

(a) Whether the party making the application has approached the appropriate High Court.

(b) Whether there is an arbitration agreement and whether the party who has applied under Section 11 of the Act, is a party to such an agreement.

2. The issues (second category) which the Chief Justice/his designate may choose to decide (or leave them to the decision of the Arbitral Tribunal) are:

(a) Whether the claim is a dead (long-barred) claim or a live claim.

(b) Whether the parties have concluded the contract/transaction by recording satisfaction of their mutual rights and obligation or by receiving the final payment without objection.

3. The issues (third category) which the Chief Justice/his designate should leave exclusively to the Arbitral Tribunal are:

(a) Whether a claim made falls within the arbitration Clause (as for example, a matter which is reserved for final decision of a departmental authority and excepted or excluded from arbitration).

(b) Merits or any claim involved in the arbitration.”

The other decisions of the Supreme Court which have enunciated the law on this subject are mentioned hereunder:    

• A.P.Tourism Development Corporation v. Pampa Hotels Ltd., 2010 (5) SCC 425
• SBP. v. Patel Engineering Ltd., AIR 2006 SC 540
• Shivnath Rai v. Gaffar, AIR 2008 SC 1906