S.11 Arbitration & Conciliation Act | Not Necessary To Go Into Merits Of Claim/ Counter-Claim For Appointment Of Arbitrator: Delhi High Court

The Delhi High Court has observed that in a petition under Section 11 of the Arbitration & Conciliation Act, 1996 for appointment of arbitrator, High Court is not to go into the merits of the claim or the counter-claim, if any, of the parties.

Justice Sanjeev Sachdeva observed that the High Court has to examine as to whether there is an arbitration agreement between the parties and there are any disputes unless ex-facie it is apparent from the record that the disputes are a mere deadwood.

The Court was dealing with a plea filed by Oyo Hotels and Homes Private Limited seeking reference of disputes to a Sole Arbitrator under a Lease Deed dated 23.10.2019.

The counsel appearing for Oyo submitted that the lease deed, particularly Clause 12.9 referred to an additional document being an Assets Purchase Agreement dated 23.10.2019 which had also been executed between the parties. It was submitted that both the documents contained a similar arbitration clauses and disputes had arisen and they were liable to be referred to a Sole Arbitrator.

On the other hand, counsel appearing for the respondent disputed the contentions and submitted that the lease deed itself stipulated that the property had been handed over on 'as is where is basis' and further that the respective obligations under the Assets Purchase Agreement had been duly performed and as such there was no dispute surviving that is referable to the arbitration.

"I am unable to accept the contentions of learned Senior Counsel for the respondent for the reason that the claim sought to be raised in the petition are over and above the Assets Purchase Agreement and also refer to certain obligations that were allegedly required to be performed by the respondent and have not been performed leading to the termination of the agreement on account of the alleged defaults of the respondent," the Court said.

The Court opined that there was no dispute that the lease deed as well as the Assets Purchase Agreement dated 23.10.2019 were executed by the parties.

Both the agreements contain an arbitration clauses requiring the disputes to be referred to arbitration, the Court noted further.

The Court said that the question as to whether the claim of the petitioner survives or has been duly satisfied is an issue that will be required to be adjudicated upon by the Arbitration Tribunal.

"In the present case, both the lease deed as well as the Assets Purchase Agreement contain similar arbitration clauses. Further, the lease deed specifically stipulates that parties have entered into an Assets Purchase Agreement which was attached as a Schedule-H to the lease deed," the Court said.

It was further observed that it was not a case where the petitioner by implication sought incorporation of an arbitration clause in an agreement which did not contain an arbitration clause.

Accordingly, allowing the plea, the Court referred the disputes between the parties to arbitration and appointed Justice Vikramajit Sen, former Judge of the Supreme Court of India as the Sole Arbitral Tribunal to adjudicate the claims and counter-claims, if any, of the parties.

Case Title: OYO HOTELS AND HOMES PVT. LTD. v. PARVEEN JUNEJA & ORS.

Citation: 2022 LiveLaw (Del) 389

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