Issue Of Arbitrability Should Be Left To Arbitrator Unless On The Face It Is Found That Dispute Is Non- Arbitrable: Supreme Court

The Supreme Court reiterated that while considering application under Section 11(6) of the Arbitration and Conciliation Act, the dispute with respect to the arbitrability should be left to the arbitrator, unless on the face it is found that the dispute is not arbitrable.

In this case, the Madras High Court dismissed an application to appoint an arbitrator on the ground that at the time when the application was filed there were already arbitral proceedings pending between the parties and the award was passed and (2) that the proceedings were pending before the NCLT on the allegation of mismanagement and oppression.

The Apex Court bench observed that the High Court ought to have allowed the application and left the issue on arbitrability of dispute between the parties to the arbitrator. Referring to Vidya Drolia and Ors. Vs. Durga Trading Corporation; (2021) 2 SCC 1, the bench of Justices MR Shah and Krishna Murari said:

As per the decision of this Court in the case of Vidya Drolia (supra) unless on the facet it is found that the dispute is not arbitrable and if it requires further/deeper consideration, the dispute with respect to the arbitrability should be left to the arbitrator. The decision of this Court in the case of Vidya Drolia (supra) is a three judges' bench subsequent decision in which the entire law on the scope and ambit of the Court at the stage of application under Section 11(6) of the Act, 1996 has been dealt with and considered by the Court"

The court added that the dispute with respect to the Share Subscription and Shareholders Agreement is altogether different from the allegations of mismanagement and oppression.

Allowing the appeal, the bench appointed Justice K. Ravichandrabaabu Former Judge, Madras High Court as the Arbitrator in this matter.

Case details

VGP Marine Kingdom Pvt Ltd vs Kay Ellen Arnold | 2022 LiveLaw (SC) 914 | CA 6679 OF 2022 | 4 November 2022 | Justices MR Shah and Krishna Murari 

Headnotes

Arbitration and Conciliation Act, 1996 ; Section 11(6) - Unless on the facet it is found that the dispute is not arbitrable and if it requires further/deeper consideration, the dispute with respect to the arbitrability should be left to the arbitrator. (Para 5.3)

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