Whether dispute against non-parties to arbitration agreement can be referred to arbitration?

As per the Deed of Partnership dated 1.4.2010, the applicants and the non-applicant Nos. 1 and 2 agreed to refer any dispute amongst the partners with regard to interpretation of the said deed or any other matter connected with the business of partnership to the sole arbitrator. In this context, if the plaint is perused, it can be seen that it is the case of the plaintiffs that defendant Nos. 2 to 6 by acting inappropriately had deleted the names of the plaintiffs from the revenue record pertaining to the suit property and had thereafter with the aid of defendant No. 10, had sold the suit properties to defendant Nos. 7 to 9. The relief sought was cancellation of these sale deeds executed in favour of defendant Nos. 7 to 9 dated 16.3.2016. Defendants No. 7 to 10 are not partners of the partnership firm nor are they signatories to any agreement by which any dispute amongst them could be referred for arbitration. The relief sought with regard to the cancellation of sale deeds executed in favour of defendant Nos. 7 to 9 who were strangers to the Deed of Partnership was thus non-arbitrable.

9. For the purposes of applicability of Section 8 of the said Act, it is well-settled that such agreement containing the arbitration clause should be between parties to the dispute and that such agreement should relate to or be applicable to the dispute - Yogi Agrawal (supra). Similarly, the words "a matter" appearing in Section 8 of the said Act would mean the entire subject-matter of the suit which should be the subject of arbitration. The suit cannot be bifurcated into two parts so as to refer some part to the arbitrator for adjudication and the other part to be decided by the civil court" - Sukanya Holdings (P) Ltd. (supra).

10. In the light of aforesaid law, on considering the plaint as a whole along with clause 15 of the Deed of Partnership dated 1.4.2010, I do not find that the trial Court committed any error when it rejected the application moved by the defendant Nos. 1 to 6 under Section 8 of the said Act. Considering the reliefs sought in the plaint, the ratio of the decisions in the case of Hindustan Petroleum Corpn. Ltd. and Ravi Prakash Goel (supra) cannot be made applicable to the case in hand. Though in Agri Gold Exims Ltd. (supra), it has been held that the expression "any dispute" in Section 8 of the said Act are of wide amplitude, it cannot be construed in such a matter so as to cover a dispute even against non-parties to the arbitration agreement.
IN THE HIGH COURT OF BOMBAY (NAGPUR BENCH)

Civil Revision Application No. 99 of 2016

Decided On: 16.02.2017

Ramdeobaba Padmavati Developers & Builders and Ors. Vs.

 Ganesh Vitthaldas Chandak and Ors.

Hon'ble Judges/Coram:

A.S. Chandurkar, J.

Citation: 2017(5) MHLJ 357

Print Page

Whether court can appoint arbitrator if there is no counter to referability of dispute to arbitration?

 We have heard learned Counsel for the Petitioner. The averments made in the petition must, in the absence of any counter from the Respondent, be taken to be correct at least for the purposes of deciding whether the matter ought to be referred to an Arbitrator. This is especially so when the averments are supported by an affidavit filed by the Petitioner. In that view, therefore, we see no reason to decline the prayer for appointment of an Arbitrator made by the Petitioner. 

IN THE SUPREME COURT OF INDIA

Arbitration Petition No. 23 of 2015 (Under Section 11(6) of the Arbitration & Conciliation Act, 1996)

Decided On: 30.03.2016

 Purple India Holdings Ltd.
Vs.
 Drilling and Offshore Pte. Ltd.

Hon'ble Judges/Coram:T.S. Thakur, C.J.I., R. Banumathi and U.U. Lalit, JJ.

Citation:(2016) 7SCC583

Print Page

When court will not refer dispute to arbitration?

 So far this application of the defendant-Company for referring the dispute between the parties to an Arbitrator is concerned, Section 8 provided that if an action is brought before a .Judicial Authority and such action is subject, to an arbitration agreement, then on an application of a party before or at the time of filing the written statement, the Judicial Authority shall refer the parties to arbitration. Section 8 of the Arbitration Act reads :

8. Power to refer parties to arbitration where there is an arbitration agreement. (1) A judicial authority before which an action is brought in a matter which is the subject of an arbitration agreement shall, if a party so applies not later than when submitting his first statement on the substance of the dispute, refer the parties to arbitration.

(2) The application referred to in subsection (1) shall not be entertained unless it is accompanied by the original arbitration agreement or a duly certified copy thereof. Notwithstanding that an application has been made under sub section (1) and that the issue is pending before the judicial authority, arbitration may be commenced or continued and an arbitral award made.

11. A careful reading of the provision shows that before a. Court exercises its powers, it must be satisfied.

(a) there is an arbitration agreemeni;

(b) a party to the agreemeni has brought an action in the Court against the other party;

(c)such action is subject-matter of the arbitration agreement provided the party moves the Court for referring the parties for arbitration before it submits his first statement on the action brought by the other party.

12. The defendant-Company has neither filed the original arbitration agreement nor any duly certified copy thereof' in terms of Sub-section (2) of Section 8 of the Act. On this ground alone, the application of the defendant-Company is liable to be dismissed.

Himachal Pradesh High Court

Shobit Construction And Anr. Etc. vs T.K. International Ltd. on 7 March, 2005

Equivalent citations: AIR 2006 HP 4, 2006 (1) ARBLR 510 HP

Bench: K Sood

Print Page

What is distinction between live claim and dead claim in arbitration proceeding?

 We have considered the submissions of both the
parties and have perused the record, what is the nature
of jurisdiction of the Chief Justice while deciding an
application under Section 11 of the Act has elaborately
been considered by Seven Judge Bench of this court in
SBP & CO. versus Patel Engineering Ltd and another
(2005) 8 SCC 618. In para 47 of the judgment,
conclusions were recorded by the larger Bench.
Conclusion IV is relevant for the present case which is
quoted as below:
“47. We, therefore, sum up our conclusions
as follows:
(iv) The Chief Justice or the designated
Judge will have the right to decide the
preliminary aspects as indicated in the
earlier part of this judgment. These will be
his own jurisdiction to entertain the request,
the existence of a valid arbitration
agreement, the existence or otherwise of a
live claim, the existence of the condition for
the exercise of his power and on the
qualifications of the arbitrator or
arbitrators. The Chief Justice or the
designated Judge would be entitled to seek
the opinion of an institution in the matter of
nominating an arbitrator qualified in terms
of Section 11(8) of the Act if the need arises
but the order appointing the arbitrator
could only be that of the Chief Justice or the
designated Judge.”
17. The Chief Justice exercises the judicial power while
passing an order under Section 11 of the Act thus can
examine the question as to whether the claim which has
been raised before him survives and needs to be
adjudicated. It goes without saying that if Chief Justice
finds that claim is a dead claim, he can exercise
jurisdiction in rejecting the application.
18. A two Judge Bench of this court in Indian Oil
Corporation Limited vs. SPS Engineering Limited,
2011 (3) SCC 507, had occasion to consider what is a
‘live claim’ within the meaning of Section 11 of the Act.
Elaborating the jurisdiction of the Chief Justice, under
Section 11 of the Act following was laid down by this
court in para 14 of the judgment:
“14. …….The Chief Justice or his designate
may however choose to decide whether the
claim is a dead (long-barred) claim or
whether the parties have, by recording
satisfaction, exhausted all rights,
obligations and remedies under the contract,
so that neither the contract nor the
arbitration agreement survived. When it is
said that the Chief Justice or his designate
may choose to decide whether the claim is
a dead claim, it is implied that he will do so
only when the claim is evidently and
patently a long time-barred claim and there
is no need for any detailed consideration of
evidence. We may elucidate by an
illustration: if the contractor makes a claim
a decade or so after completion of the work
without referring to any acknowledgment of
a liability or other factors that kept the
claim alive in law, and the claim is patently
long time-barred, the Chief Justice
or his designate will examine whether the
claim is a dead claim (that is, a long
time-barred claim). On the other hand, if
the contractor makes a claim for payment,
beyond three years of completing of the
work but say within five years of
completion of work, and alleges that the
final bill was drawn up and payments
were made within three years before the
claim, the Court will not enter into a
disputed question whether the claim was
barred by limitation or not. The Court will
leave the matter to the decision of the
Tribunal. If the distinction between
apparent and obvious dead claims, and
claims involving disputed issues of
limitation is not kept in view, the Chief
Justice or his designate will end up
deciding the question of limitation in all
applications under Section 11 of the Act.”

REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPEALLATE JURISDICTION
CIVIL APPEAL NO. 7184 OF 2008
M/S. EMM ENN ASSOCIATES … APPELLANT(S)
VERSUS
COMMANDER WORKS ENGINEER … RESPONDENT(S)
& ORS
WITH
 CIVIL APPEAL NO. 7185 OF 2008
Citation:AIR 2016 SC 3079
ASHOK BHUSHAN, J.

Print Page

Whether Commercial Courts Ordinance 2015 can be construed as a special enactment concerning subject matter of arbitral disputes?

We have no hesitation in concluding that the Ordinance can by
no stretch of imagination be construed as a special enactment concerning the
subject matter of arbitral disputes. Rather the said Ordinance is a law giving
birth to a class of ordinary Courts of the land exclusively reserved for the
adjudication of commercial disputes of the specified value. The fact that
incidental reference to arbitral disputes has been made therein does not
clothe the said Ordinance with the status of a special law qua arbitration.
This would require sub-Section 1 and sub-Section 2 of Section 10 of the
Ordinance to be read down and the words ‘Commercial Appellate Division’
to be read as ‘Commercial Division’ concerning applications or petitions
against which an appeal lies under Section 37 of the Arbitration and
Conciliation Act, 1996.
IN THE HIGH COURT OF DELHI AT NEW DELHI
 Date of Decision : December 10, 2015
 OMP (I) (Comm.) 16/2015
ASCOT ESTATES PVT. LTD. 
versus
BON VIVANT LIFE STYLE PVT. LTD. .
CORAM:
HON'BLE MR. JUSTICE PRADEEP NANDRAJOG
HON'BLE MS. JUSTICE MUKTA GUPTA
Dated;DECEMBER 10, 2015

Print Page

Which disputes can be referred to arbitrator?

 The position emerging from above discussion may be summed up as follows:

(a) Section 11 of the Act requires the Chief Justice or his designate to either appoint the arbitrator/s or take necessary measures in accordance with the appointment procedure contained in the arbitration agreement. The Chief Justice or the designate is not required to draw up the list of disputes and refer them to arbitration. The appointment of Arbitral Tribunal is an implied reference in terms of the arbitration agreement.

(b) Where the arbitration agreement provides for referring all disputes between the parties (whether without any exceptions or subject to exceptions), the arbitrator will have jurisdiction to entertain any counter claim, even though it was not raised at a stage earlier to the stage of pleadings before the Arbitrator.

(c) Where however the arbitration agreement requires specific disputes to be referred to arbitration and provides that the arbitrator will have the jurisdiction to decide only the disputes so referred, the arbitrator's jurisdiction is controlled by the specific reference and he cannot travel 29

beyond the reference, nor entertain any additional claims or counter claims which are not part of the disputes specifically referred to arbitration. The position in this case

33. The arbitration clause in this case contemplates all disputes being referred to arbitration by a sole arbitrator. It refers to an Appointing Authority (Chief Engineer, CPWD), whose role is only to appoint the arbitrator. Though the arbitration clause requires the party invoking the arbitration to specify the dispute/s to be referred to arbitration, it does not require the appointing authority to specify the disputes or refer any specific disputes to arbitration nor requires the Arbitrator to decide only the referred disputes. It does not bar the arbitrator deciding any counter claims. In the absence of agreement to the contrary, it has to be held that the counter claims by the appellant were maintainable and arbitrable having regard to section 23 read with section 2(9) of the Act.

Though an arbitration agreement generally provides for settlement of future disputes by reference to arbitration, there can be “ad hoc” arbitrations relating to existing disputes. In such cases, there is no prior arbitration agreement to refer future disputes to arbitration. After a dispute arises between the parties, they enter into an arbitration agreement to refer that specific dispute to arbitration. In such an arbitration, the arbitrator cannot enlarge the scope of arbitration by permitting either the claimant to modify or add to the claim or the respondent to make a counter claim. The arbitrator can only decide the dispute refereed to him, unless the parties again agree to refer the additional disputes/counterclaims to arbitration and authorize the arbitrator to decide them.

“Reference to arbitration” can be in respect of reference of disputes between the parties to arbitration, or may simply mean referring the parties to arbitration.

Supreme Court of India

State Of Goa vs M/S Praveen Enterprises on 4 July, 2011

Author: R.V.Raveendran

Bench: R.V. Raveendran, A.K. Patnaik

Reportable

Citation; (2012) 12 SCC 581.

Print Page