This case is a part of our Annual Arbitration Review 2019.
Citation: (2020) 2 SCC 455
Court: Supreme Court of India
Coram: Indu Malhotra & Ajay Rastogi, JJ.
Date: 27th November 2019
Keywords: Section 16, Section 11(6-A), Kompetenz-Kompetenz.
The parties entered into an agreement on 21st December 2010 under which the Petitioner (Contractor) was required to provide security to the Respondent company around the clock on a need basis as per agreed contractual rates.
Whether the High Court was justified in rejecting the application filed under Section 11 for reference to arbitration the ground that it was barred by limitation?
The rules applied in this case are Section 16 that envisages within its scope the principle of kompetenz-kompetenz and Section 11(6-A) that was added to the Arbitration and Conciliation Act, 1999 by way of the 2015 Amendment.
Analysis and Conclusion
The doctrine of kompetenz-kompetenz and states that the Arbitral Tribunal shall always be competent to rule on its own jurisdiction including the validity and existence of the arbitral agreement. The court then moves to look at the intent of the legislature behind enacting the Arbitration Act. It identifies the necessity of minimal judicial interference and party autonomy as the foremost reasons for the same. The court concludes by saying that the issue of limitation is a jurisdictional one that ought to be decided by the Arbitrator and not the High Court at the pre-reference stage.
Before the enactment of Section 11(6-A) the scope of power of the court extended to deciding the (i) validity of the arbitration agreement, (ii) whether person seeking the appointment of the arbitrator was a party to the arbitration agreement, (iii) whether the party making the application had approached the appropriate high court, (iv) whether the time barred claim was sought to be resurrected or (v) whether parties had resolved their dispute by deciding upon their rights and obligations and received final payment without objection. Since the enactment of Section 11(6-A) that is a non-obstante clause, these rights as identified in certain Supreme Court judgments were legislatively overruled.
It is necessary to be noted that Section 11(6-A) has been omitted by way of the 2019 Amendment.