Arbitration Act| Debatable Questions Of Fact Cannot Be Decided In Proceedings U/ S 11(6): Allahabad High Court

“The rival contentions regarding arbitrability, in my view, cannot be decided in the instant proceedings. Its adjudication requires appreciation of evidence. The scope of judicial review in deciding issue of arbitrability is very limited,” held Acting Chief Justice Manoj Kumar Gupta.

The Court relied on Vidya Drolia and Others vs. Gujarat Informatics Limited wherein the Supreme Court had held that the scope of adjudication under Section 11(6) is very narrow.

“In the said judgment, it has been observed that while deciding issue of arbitrability, the Court under Section 11(6) has a very limited power, confined to cases where there is not even a vestige of doubt that the claim is non-arbitrable.”

Factual Background

Applicant filed an application under Section 11(6) of the Arbitration and Conciliation Act, 1996 for appointment of arbitrator in a dispute with the opposite party. An objection was raised by the opposite party that the dispute was not arbitrable as it fell within the purview of 'excepted matters' which were excluded from arbitration by Clause 63 of the General Conditions of Contract 2014, Indian Railways.

Opposite parties argued that since the contract was determined under Clause 61.1 of the General Conditions, it was an 'excepted matter', hence, not arbitrable. It was also argued that no claim was made before the General Manager as per the General Conditions and the applicant had straight away invoked the arbitration clause.

Counsel for the applicant argued that the determination was not made by the officer who issued the communication, hence it was not determined as per Clause 61.1 of the General Conditions. It was further argued that after the communication of determination, applicant was issued communications to the work of launching by the specified dates. Further, it was stated that claim was made before the Chief General Manager who rejected it vide separate communications.

High Court Verdict

The Court observed that the main dispute between the parties was whether the dispute between them is arbitral. The second question which arose for Court's consideration is whether the dispute between the parties would fall under 'excepted matter' as notice under Clause 61 was duly given or the said notice having been waived, the bar relating to non- arbitrability of certain matters under Clause 63 would not apply.

Observing the factual dispute between the parties, the Court observed that for resolving the dispute between the parties, it was necessary to appreciate evidence which cannot be done in the proceedings under Section 11(6) of the Act of 1996.

Considering the submissions made and the evidences placed before it, the Court held that the dispute was not “outrightly non-arbitrable.” The Court held that the questions of fact raised in the dispute need to be decided by an arbitrator.

Further, the Court held that once the opposite party believed that the dispute fell under 'excepted matters' and was non-arbitrable, it was sufficient for them to refer the dispute to an arbitrator.

Accordingly, the application for appointment of arbitrator was allowed.

Case Title: M/S Neelkanth Construction vs. Union Of India And 3 Others 2024 LiveLaw (AB) 68 [ARBITRATION AND CONCILI. APPL.U/S11(4) No. - 42 of 2023]

Case citation: 2024 LiveLaw (AB) 68

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