Court's Role Under Section 11(5) Or 11(6) Of Arbitration Act Limited To Verifying Arbitration Agreement And Timely Filing: Delhi High Court

The Delhi High Court bench of Justice C. Hari Shankar has held when a Court exercises jurisdiction under Section 11(5) or Section 11(6) of the Arbitration and Conciliation Act, 1996, it has to only ensure the existence of an arbitration agreement between the parties and to confirm that the petition under these sections has been filed within three years of the service of a Section 21 notice. Brief Facts: Raj Kumari Taneja (Petitioner) filed a petition under Section 11(5) of the Arbitration and Conciliation Act, 1996 before the High Court seeking the referral of disputes between the parties to arbitration. The dispute arose from a Partnership Deed concerning Respondent 2, a partnership firm in which the Petitioner and Rajinder Kumar (Respondent 1) are partners. The Partnership Deed included an arbitration clause (Clause 14) which specifies that any disputes between the partners should be resolved under the provisions of the Arbitration Act. Disputes arose between the Petitioner and the Respondents and there was no pre-arbitral protocol outlined in the arbitration clause. Consequently, the Petitioner sent a legal notice to the Respondents proposing that the disputes be referred to arbitration. In response, the Respondents communicated denying any liability towards the Petitioner. Given the lack of consensus on proceeding with arbitration despite the existence of the arbitration clause in the Partnership Deed, the Petitioner filed the present petition under Section 11(5) of the Arbitration Act to have the disputes referred to arbitration. Notice of the petition was issued on 22 August 2023 but there was no response from the Respondents. While these proceedings were pending, an application was filed by one Vinay Kumar under Order XXXII Rules 3 and 15 of the Code of Civil Procedure, 1908. Vinay Kumar sought to represent Respondent 1 as his next friend claiming that Respondent 1 was suffering from a psychological ailment that prevented him from prosecuting his own interests. The Petitioner opposed this application, leading the High court, by order to request a medical report from the doctor treating Respondent 1 at Lady Hardinge Medical College. The High Court also directed Vinay Kumar to submit an affidavit confirming that he had no conflict of interest or adverse interest against Respondent 1. Observations by the High Court: The High Court initially granted four weeks for the submission of a requisite report from the doctor and an affidavit from Vinay Kumar. However, despite the lapse of three months since that order, neither the report nor the affidavit was submitted to the High Court. Given this considerable delay, the High Court held against granting any further time for submission particularly because the matter pertained solely to the reference of disputes between the parties to arbitration. The High Court referred to Supreme Court in SBI General Insurance Co. Ltd. v. Krish Spinning where it was held that the court's role under Section 11(5) and Section 11(6) of the Arbitration Act is confined to ensuring the existence of an arbitration agreement between the parties and confirming that the petition was filed within three years of the service of the Section 21 notice. The High Court found that both these conditions were satisfied. Since the parties had not reached a consensus regarding the arbitration, the High Court deemed it necessary to intervene and appoint an arbitrator to adjudicate the disputes. Consequently, the High Court appointed Mr. Arvind Kumar Sharma, Senior Advocate, as the arbitrator to arbitrate the disputes between the parties. Case Title: Raj Kumari Taneja Vs Rajinder Kumar & Anr.Citation: 2024 LiveLaw (Del) 929 Case Number: ARB.P. 862/2023 Advocate for the Petitioner: Mr. Gurpreet Singh and Mr. Dhruv Kumar, Advs. Advocate for the Respondent: Ms. Sandhya Chawla and Mr. Ashwani Kumar, Advs. Date of Judgment: 21.08.2024 Click HereTo Read/Download Order or Judgment

Court's Role Under Section 11(5) Or 11(6) Of Arbitration Act Limited To Verifying Arbitration Agreement And Timely Filing: Delhi High Court

Rajesh Kumar

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