Personal Hearings Not Always Necessary For Arbitrator Appointment If Pleadings Are Complete: Bombay High Court

The Bombay High Court bench of Justice Somasekhar Sundaresan has held that while personal hearings for all parties can be beneficial in proceedings to enforce the appointment of an arbitrator under Section 11(6), it is not always necessary. The bench held that when an arbitration agreement is clearly established in the pleadings and the dispute is not evidently stale or time-barred, it is unnecessary to delay the consideration of an application under Section 11. It noted that if the pleadings are complete and all relevant issues are adequately documented, the application should be considered without requiring additional personal hearings. Brief Facts: The matter pertained to an Interim Application filed by Universal Builders (Original Respondent) seeking the review or recall of an order dated June 20, 2024 (Subject Order). This order appointed a Sole Arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996, to resolve disputes arising from a Work Contract Agreement. The application was submitted after arbitration proceedings had commenced before the appointed Arbitrator. The Original Respondent argued that its participation in the preliminary meeting was made without prejudice to its right to file and pursue the application. The application was listed on multiple dates. An affidavit in reply dated January 16, 2024, was filed by the Original Respondent. On June 20, 2024, the matter was reviewed in the absence of representation for the Original Respondent. The High Court, having reviewed the Arbitration Application and the Reply Affidavit, allowed Vascon Engineers Limited (Original Applicant) to submit a short note addressing objections raised by the Original Respondent. The High Court planned to decide whether to defer the matter for further hearing or proceed based on the existing record. A written note on submissions was filed on June 24, 2024 which lead to the passing of the Subject Order on June 25, 2024 that appointed the Arbitrator. The Interim Application filed by Original Respondent challenged the Subject Order seeking either its recall and setting aside or, alternatively, its review. The Original Respondent requested a stay of the arbitral proceedings pending the disposal of this application. The Original Applicant argued that the court lacked jurisdiction to review an order under Section 11 of the Arbitration Act. Conversely, the Original Respondent contended that the court has inherent power to recall the Subject Order and argued that the arbitration proceedings were barred by limitation and that its representation was inadequate. The Original Respondent argued that its lack of representation on the hearing date led to an adverse order that could have been avoided if it had been allowed to present oral arguments. It claimed this constitutes a denial of natural justice. The Original Respondent acknowledged that while its advocate's name was listed for the June 20, 2024, hearing, no email or SMS notification was received about the listing which contrasted with the notifications received by the Original Applicant's advocates. In opposition, the Original Applicant argued that a review of an order under Section 11 of the Arbitration Act is not permissible and that the Original Respondent failed to make a case for recalling the Subject Order. Observations by the High Court: The High Court noted that the Subject Order adequately addressed the arguments and submissions made by the parties and dealt with the objections raised by the Original Respondent. These objections included claims that the dispute was barred by limitation and that the Agreement was not properly stamped. The Order addressed these issues and left the substantive merits of the case for the Arbitral Tribunal to resolve. Given this, the High held that the objections to the Arbitral Tribunal's appointment laced merit. The request to recall the Subject Order was based on the argument that it imposes extensive and time-consuming arbitration proceedings on the Original Respondent. The High Court noted that the objections raised by the Original Respondent—primarily that the claims were barred by limitation and that the Agreement was inadequately stamped—are no longer tenable. The Supreme Court's judgment in the case of Interplay between Arbitration Agreements under the Arbitration and Conciliation Act, 1996 and the Indian Stamp Act, 1899 clarified that an arbitration agreement's validity is not necessarily affected by insufficient stamping. The Subject Order also explicitly left the issue of inadequate stamping for the Arbitral Tribunal to address. The High Court noted that the Curative Arbitration Judgment underscores that a Section 11 Court's role is limited to determining whether an arbitrator should be appointed, without conducting a full trial of facts. If a claim appears to be obviously time-barred from the material on...

Personal Hearings Not Always Necessary For Arbitrator Appointment If Pleadings Are Complete: Bombay High Court

Rajesh Kumar

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