Allahabad High Court Reiterates Debatable Questions Cannot Be Decided In Proceedings Under Section 11(6) of A&C Act

Allahabad High Court Reiterates Debatable Questions Cannot Be Decided In Proceedings Under Section 11(6) of A&C Act

Cites the Supreme Court verdict in the Vidya Drolia and Others vs. Gujarat Informatics Ltd case

The Allahabad High Court has reiterated that the scope of judicial review in proceedings under Section 11(6) of the Arbitration and Conciliation Act, 1996 is very narrow. The debatable questions of fact cannot be deliberated upon while adjudicating an application for the appointment of an arbitrator.

The bench comprising Acting Chief Justice Manoj Kumar Gupta stated, “The rival contentions regarding arbitrability cannot be decided in the instant proceedings. Its adjudication requires appreciation of evidence. The scope of judicial review in deciding the issue of arbitrability is very limited.”

The court cited the Vidya Drolia and Others vs. Gujarat Informatics Limited case, wherein the Supreme Court had held that the scope of adjudication under Section 11(6) was very narrow.

The bench stated, “It was observed that while deciding the issue of arbitrability under Section 11(6), the court had limited power. It was confined to cases where there was not even a vestige of doubt that the claim was non-arbitrable.”

An application was filed under Section 11(6) of the A&C Act for appointing an arbitrator in a dispute with the opposite party. The latter objected stating that that the dispute was not arbitrable as it fell within the purview of 'excepted matters'. It was excluded from arbitration by Clause 63 of the General Condition of Contract 2014 of the Indian Railways.

The opposing party argued that since the contract was determined under Clause 61.1, it was an 'excepted matter', hence, not arbitrable. It added that no claim was made before the general manager as per the General Conditions and straight away the arbitration clause was invoked by the applicant.

The applicant’s counsel argued that the determination was not made by the officer who issued the communication. Therefore, it was not determined as per Clause 61.1. After the communication, the applicant was issued communications to the work of launching by the specified dates. Thus, the claim was made before the chief general manager, who rejected it vide a separate communication order.

The court observed that the primary contention between the parties was whether the dispute was arbitral. Secondly, whether the dispute would fall under 'excepted matter'.

Justice Gupta held that for resolving the dispute between the parties, it was necessary to appreciate evidence, which could not be done in the proceedings under Section 11(6) of the A&C Act. Based on the evidence, he held that the dispute was not ‘outrightly non-arbitrable’. The facts raised in the dispute needed to be decided by an arbitrator.

The bench held that once the opposite party believed that the dispute fell under 'excepted matters' and was non-arbitrable, it was sufficient for it to refer the dispute to an arbitrator.

Thus, the court allowed the application for the appointment of an arbitrator.