Applications U/S 11 A&C Act Routinely Languish In Courts; First Step Of Getting Arbitral Tribunal Constituted Is Routinely Frustrated & Delayed: Bombay HC
The Bombay High Court remarked that the applications under Section 11 of the Arbitration and Conciliation Act, 1996 (A&C Act) routinely languish in the Courts with the ability to merely commence the first step of getting an Arbitral Tribunal constituted being routinely frustrated and delayed.
The Court remarked thus in an interim application seeking a review or a recall of an order by which the Sole Arbitrator was appointed under Section 11 of the A&C Act to adjudicate disputes and differences between the parties in connection with a Work Contract Agreement.
A Single Bench of Justice Somasekhar Sundaresan said, “Ordinarily, every Court is most reluctant to dispose of matters on an ex-parte basis. However, it is a matter of fact that applications under Section 11 of the Act routinely languish in the courts, with the ability to merely commence the first step of getting an arbitral tribunal constituted being routinely frustrated and delayed. It must be remembered that the very jurisdiction of Section 11(6) of the Act is attracted only after constitution of the arbitral tribunal as contracted, is elusive.”
The Bench added that it is routinely found that resort to arbitration is rendered ineffective, with the very first stage of having an Arbitral Tribunal constituted itself taking years and it is in this backdrop that, Courts should also have regard to the material on record and the pleadings of the parties to see if the absence of a party on a date the application is listed and called out, should be a ground to further postpone a decision on the very appointment of an arbitrator.
Advocate Prateek Pai represented the applicant while Advocate Aditya Mehta represented the respondent.
Brief Facts -
The interim application was filed after the commencement of the arbitration proceedings before the Sole Arbitrator and the respondents stated that its participation in the preliminary meeting was without prejudice to its right to file and pursue this application. The Arbitration Application was listed on various dates and an affidavit in reply was filed by the Original Respondent. Eventually. The matter was listed on June 20, 2024 on which date, none appeared on behalf of the Original Respondent. On that date, after perusing the record including the arbitration application and the Reply Affidavit, and hearing the counsel for the applicant, liberty was granted to the applicant to file a short note dealing with the objective that were raised by the respondent in the affidavit. It was ordered that upon a perusal of the submission, the Court would decide upon whether, to stand over the matter to a future date in order to hear the respondent, or to proceed with dealing with the arbitration application on the basis of the record.
Thereafter, a written note on submissions was filed upon a review of which the order appointing a Sole Arbitrator was passed on June 25 and was uploaded on the same date. After appreciation of the material brought on record, and the pleadings and submissions made by the parties, the Court was of the view that it would not be necessary to list the matter again for another date for deciding whether to refer the disputes to arbitration. In the interim application, the respondent assailed the said order seeking few reliefs. Pending the hearing and disposal of this interim application, the respondent sought a stay of the arbitral proceedings.
The High Court in view of the above facts observed, “Needless to reiterate, but out of abundant caution, it is clarified that nothing contained in this judgement is meant to be an expression of an opinion on the merits of the case. The Learned Sole Arbitrator, I am sure, will deal with all contentions of the parties, on merits and uninfluenced by any inference from the contents of this judgement”
The Court noted that the proceedings to enforce the right to have an arbitrator appointed under Section 11(6) too, would benefit from a personal hearing of all parties, but when the existence of an arbitration agreement and the arbitrability of the dispute disclosed in the pleadings of the parties, is writ large on the face of the record, and when there is no evidence that the dispute is inexorably and manifestly stale and barred by limitation, it would be unnecessary for an application under Section 11, where pleadings are complete and all facets of all contentions are available in writing, to not be considered and disposed of, if feasible to do so.
“Nothing further need be said, except to note that no prejudice or adversity is visited upon the party refusing to submit to contracted arbitration, when the material on record including the sworn affidavit of such party does not show that the dispute is manifestly stale and time-barred. All facets, including examining the argument on limitation, being left to the jurisdiction of the Arbitral Tribunal, is in itself a vital safeguard for the Section 11 Court to not further procrastinate disposal of the application”, it further noted.
The Court also emphasised that the duty of the Section 11 Court is to enable an expedited commencement to the dispute resolution, particularly in commercial disputes, when all it does is to simply hold the parties to the mutual promises made in the arbitration agreement, and merely nudges the proceedings to the next stage, handing over the entire matter to the arbitral tribunal.
Accordingly, the High Court disallowed the interim application.
Cause Title- Vascon Engineers Limited v. Universal Builders (Neutral Citation: 2024:BHC-OS:13029)
Appearance:
Applicant: Advocates Prateek Pai and Pratik Karande.
Respondent: Advocates Aditya Mehta, Anuj Jhaveri, and Mihir Modi.
