High Court Exercises Judicial Function Under S. 11 (6) of Arbitration Act; Principle Of Res Judicata Applicable To S. 11 Petition: Delhi High Court

The Delhi High Court has ruled that the High Court exercises a judicial function under Section 11 (6) of the Arbitration and Conciliation Act, 1996 (A&C Act), and thus while dealing with a petition filed under Section 11 for appointment of Arbitrator, the High Court can determine the issue of maintainability of a petition on any ground, including on territorial jurisdiction or res judicata. The Court noted that the Supreme Court’s decision in United India Insurance Company Limited vs. Antique Art Export Pvt Ltd (2019) has been overruled by a three Judge Bench of the Supreme Court in M/s. Mayavati Trading Pvt. Ltd. vs. Pradyuat Deb Burman (2019), where the Apex Court had ruled that the Court, in view of Section 11(6A), must confine itself to the examination of the existence of an arbitration agreement. However, the bench of Justice V. Kameswar Rao reckoned that the dispute between the parties with regard to appointment of Arbitrator had attained finality with the decision of the Supreme Court in Antique Art Export (2019), and in the review petition filed before it, where the Apex Court had ruled that the dispute was not arbitrable in view of the discharge voucher signed by the claimant. While dismissing the contention of the petitioner/claimant that the judgment in Antique Art Export (2019) is erroneous / without jurisdiction, and thus the same is not binding between the parties, the Court concluded that the Section 11 petition filed by it was not maintainable inter se between the parties, since the same was barred by the principle of res judicata. The petitioner, Antique Art Export Pvt Ltd, who is engaged in the business of manufacturing, selling and export of carpets and rugs, availed insurance policies from the respondent, United India Insurance Company Ltd. After a fire took place in the factory of the petitioner, the petitioner raised an insurance claim. Certain disputes arose between the parties under the Insurance Policy relating to the claim amount, and the same were referred to arbitration by the Delhi High Court in a petition filed by the petitioner under Section 11. Against this, the respondent filed a Special Leave Petition (SLP) before the Supreme Court. The Supreme Court in United India Insurance Company Limited vs. Antique Art Export Pvt Ltd (2019), allowed the insurance company’s appeal and set aside the High Court’s order where it had appointed a Sole Arbitrator. The Apex Court had concluded that no arbitrable dispute existed between the parties. Against the said judgment of the Supreme Court, the petitioner filed a Review Petition, which was dismissed by the Supreme Court. Thereafter, the petitioner, Antique Art Export, again approached the Delhi High Court by filing a petition under Section 11 (6) of the A&C Act, seeking appointment of an Arbitrator. The petitioner submitted that the Supreme Court in Antique Art Export (2019), while allowing the appeal of the respondent, had ruled that prima facie no dispute subsisted between the parties after the petitioner had signed a discharge voucher without any demur or protest. Thus, the claim under the policy was finally settled with accord and satisfaction, the Supreme Court had held. The petitioner, Antique Art Export, had contested the validity of the discharge voucher and had claimed that the same was signed by it under undue influence and coercion. The petitioner pleaded before the High Court that the judgment passed by the two Judge bench of the Supreme Court in Antique Art Export (2019), was thereafter overruled by a three Judge bench of the Supreme Court in M/s. Mayavati Trading Pvt. Ltd. vs. Pradyuat Deb Burman (2019). It added that the Apex Court in Mayavati Trading (2019), while overruling the said judgment, had held that, in view of Section 11(6A) of the A&C Act, as inserted by the Amendment Act of 2015, the Court, while dealing with an application under Section 11, must confine itself to the examination of the existence of an arbitration agreement. The Apex Court in Mayavati Trading (2019) had ruled that the Court in a Section 11 petition, cannot decide on the arbitrability of a dispute and cannot delve on the issue whether accord and satisfaction had taken place or not, since the issue of accord and satisfaction has been overruled legislatively. The petitioner, Antique Art Export, thus sought benefit of the law laid down in Mayavati Trading (2019) while seeking appointment of Arbitrator. It added that the issue whether full and final settlement had taken place or not, is a question that can be left to the Arbitrator. While holding that the principle of res judicata shall be applicable to a petition filed under Section 11, the High Court dismissed the contention of the petitioner that in view of the judgment of the Supreme Court in Mayavati Trading (2019), the judgment of the Apex Court in Antique Art Export (2019) is erroneous ...

High Court Exercises Judicial Function Under S. 11 (6) of Arbitration Act; Principle Of Res Judicata Applicable To S. 11 Petition: Delhi High Court

Parina Katyal

Tags