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2019 (9) TMI 1548 - SC - Indian LawsInstitutionalization of arbitration in India - insertion of sub-section (6-A) to Section 11 of the Amendment Act 2015 - HELD THAT - The law prior to the 2015 Amendment that has been laid down by this Court which would have included going into whether accord and satisfaction has taken place has now been legislatively overruled. This being the position it is difficult to agree with the reasoning contained in the aforesaid judgment as Section 11(6A) is confined to the examination of the existence of an arbitration agreement and is to be understood in the narrow sense. Application disposed off.
Issues Involved:
1. Exercise of extraordinary jurisdiction under Article 136 of the Constitution of India. 2. Interpretation and application of Section 11(6A) of the Arbitration and Conciliation Act, 1996. 3. Omission of Section 11(6A) by the Amendment Act of 2019. 4. Judicial intervention in the appointment of arbitrators. 5. Examination of the existence of an arbitration agreement. Issue-wise Detailed Analysis: 1. Exercise of Extraordinary Jurisdiction under Article 136 of the Constitution of India: The Court decided not to interfere with the impugned decision dated 12.03.2019 and found it unnecessary to exercise its extraordinary jurisdiction under Article 136 of the Constitution of India. This decision was based on the specific facts of the case, indicating that the Court did not find sufficient grounds to overturn the lower court's decision. 2. Interpretation and Application of Section 11(6A) of the Arbitration and Conciliation Act, 1996: The Court discussed the interpretation of Section 11(6A), which was introduced by the Amendment Act of 2015. This section limited the Court's mandate to examining the existence of an arbitration agreement. The Court referred to the judgment in Duro Felguera, S.A. vs. Gangavaram Port Limited, which emphasized that preliminary disputes should be examined by the arbitrator and not by the Court within the limited scope of appointing an arbitrator under Section 11(6). 3. Omission of Section 11(6A) by the Amendment Act of 2019: The Court noted that Section 11(6A) was omitted by the Amendment Act of 2019, which has not yet been brought into force. The omission was recommended by a High-Level Committee led by Justice B. N. Srikrishna, which aimed to institutionalize arbitration in India and reduce court interference. The Committee recommended that the appointment of arbitrators should be done by designated arbitral institutions, thus eliminating the need for the Court to determine the existence of an arbitration agreement. 4. Judicial Intervention in the Appointment of Arbitrators: Prior to Section 11(6A), the Court had the authority to decide preliminary questions such as whether a claim was stale or whether there was accord and satisfaction. The Court referred to several judgments, including SBP & Co. vs. Patel Engineering Ltd. and Anr., and ONGC Mangalore Petrochemicals Limited vs. ANS Constructions Limited, which allowed judicial intervention in such matters. However, the introduction of Section 11(6A) restricted this intervention to only examining the existence of an arbitration agreement. 5. Examination of the Existence of an Arbitration Agreement: The Court emphasized that the introduction of Section 11(6A) confined the Court's role to examining the existence of an arbitration agreement, leaving other preliminary issues to be decided by the arbitrator. The Court referred to the 246th Law Commission Report and the judgment in Garware Wall Ropes Ltd. vs. Coastal Marine Constructions & Engineering Ltd., which supported this limited scope of judicial intervention. Conclusion: The Court overruled the judgment in United India Insurance Company Limited vs. Antique Art Exports Private Limited, stating that it did not lay down the correct law. The Court dismissed the appeal based on the reasoning that Section 11(6A) should be understood in the narrow sense as laid down in Duro Felguera, S.A. The Court granted the appellant's request for an extension of the status quo order for one week to allow for the adoption of other proceedings.
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