Referral Court While Considering Petition Seeking Appointment Of Arbitrator Need To Just Examine Existence Of Arbitration Agreement: SC

The Supreme Court reiterated that a Referral Court, while considering applications seeking appointment of arbitration, need to just examine the existence of an arbitration agreement.

The Court was hearing a Civil Appeal considering the question of whether the Public Premises Act, 1971 overrides the Arbitration and Conciliation Act, 1996.

The bench of Justice Pamidighantam Sri Narasimha and Justice Sandeep Mehta observed: "The remit of the referral court to consider an application under Section 11(6) is clear and unambiguous. We need to just examine the existence of an arbitration agreement."

The Appellant, a statutory body under the Warehousing Corporations Act, 1962, provided storage space to the Respondent, a company dealing in ceramic tiles, based on a lease agreement. During the lease, the Appellant revised storage charges multiple times, which led to disputes over payment and renewal terms. After the lease expired, the Appellant raised a demand and invoked the Public Premises (Eviction of Unauthorised Occupants) Act, as the respondent did not vacate the premises. Following the eviction, the Respondent sought arbitration to resolve issues regarding the lease's renewal and the legitimacy of the revised charges. The High Court held that the disputes were covered by the arbitration clause.

The Court observed that the right of renewal as well as the legality and propriety of the enhanced demand arose during the subsistence of the agreement. According to the Court, it will be on the interpretation, construction and the obligations arising out of the agreement that the respondent’s claim rests.

The Court said that the Public Premises Act neither bars nor overlaps with the scope and ambit of proceedings that were initiated under the Arbitration and Conciliation Act.

Accordingly, the Court rejected the Petition and imposed a cost of ₹50k on the Appellant for unnecessary litigation.