Objections On Capacity Of Party To Initiate Arbitration Must Be Addressed Before Tribunal, Not While Appointing Arbitrator: Delhi HC

The Delhi High Court bench of Justice Sachin Datta has held that the objections as regards the capacity of the party to initiate arbitration is an aspect which is necessarily required to be gone into the arbitration proceedings, however, the same could not preclude the constitution of an Arbitral Tribunal. The court held that a party may raise appropriate jurisdictional/preliminary objections before the Arbitral Tribunal as regards the maintainability of the arbitration and/or the arbitrability of the claim. Brief Facts: 'M/s Kanwar Singh Yadav, Caterers, Canteen and Kiosk Contractor', through its proprietor/authorized signatory (i.e. the Petitioner), entered into an agreement with the Respondent on 25.01.2021. Disputes arose. The Petitioner sent an invocation notice dated 11.06.2024 to the Respondent. The Respondent didn't respond to the notice. The petitioner filed the petition under Section 11(6) of the Arbitration and Conciliation Act, 1996, seeking the appointment of a Sole Arbitrator to adjudicate disputes between parties. Contentions of the Parties: Counsel for the Respondent raised an objection to the maintainability of the petition on the ground that the petitioner was not a party to the agreement. Counsel for the Petitioner contended that the Petitioner is the successor in interest of the entity that entered into the agreement with the Respondent. Observations: The court noted that the scope of proceedings was confined to ascertaining the existence of an arbitration agreement between the parties. In this regard, the court relied upon the decision of the Supreme Court in In Re: Interplay between Arbitration Agreement under the Arbitration and Conciliation Act, 1996 and the Indian Stamp Act, 1899. The court referred to SBI General Insurance Co. Ltd. v. Krish Spinning [2024 INSC 532], in which the Supreme Court held that at the stage of appointing an arbitrator, the role of the Court is limited to determining the prima facie existence of an arbitration agreement and “nothing else”. The court held that the objections raised by the Respondent as regards the capacity of the petitioner to initiate arbitration was an aspect which was necessarily required to be gone into the arbitration proceedings. However, the objections could not preclude constitution of an Arbitral Tribunal. The court held that it shall be open to the respondent to raise appropriate jurisdictional/preliminary objections before the Arbitral Tribunal as regards the maintainability of the arbitration and/or the arbitrability of the claim sought to be raised. The court appointed Mr. Ashish Dixit, Advocate as the Sole Arbitrator to adjudicate the disputes between the parties. Case Title: Kanwar Singh Yadav vs. Delhi Tourism and Transport Development Corporation LimitedCitation: 2024 LiveLaw (Del) 1247 Case Number: ARB.P. 1455/2024 For Petitioner: Mr. Kaushal Kapoor, Adv. For Respondent: Mr. Vaibhav Kalra, Ms. Anisha Upadhyay and Ms. Neha Bhatnagar, Advs. and Mr. Ramniwas, AG (Legal), DTTDC. Date of Decision: 07.11.2024 Click Here To Read/Download The Order

Objections On Capacity Of Party To Initiate Arbitration Must Be Addressed Before Tribunal, Not While Appointing Arbitrator: Delhi HC

Tazeen Ahmed

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