Scope of Proceedings Under Section 11(6A) of the Arbitration and Conciliation Act, 1996

Introduction

Section 11 of the Arbitration and Conciliation Act, 1996 ("the Act") governs the appointment of arbitrators. Sub-section (6A) was inserted by the Arbitration and Conciliation (Amendment) Act, 2015 ("the 2015 Amendment") and provides that while considering an application under Section 11, "the Supreme Court or, as the case may be, the High Court, shall, notwithstanding any judgment, decree or order of any court, confine to the examination of the existence of an arbitration agreement." The provision thus limits the scope of inquiry at the Section 11 stage to the sole question of whether an arbitration agreement exists — nothing more.

The legislative history behind Section 11(6A) is, however, neither simple nor linear. Its insertion was itself a response to a long and chequered judicial journey that saw the Supreme Court oscillate between broad and narrow conceptions of the power exercised under Section 11. This article traces that journey, from the seven-judge bench decision in SBP & Co. v. Patel Engineering Ltd. through to the most recent articulation of Section 11(6A) in Mayavati Trading Pvt. Ltd. v. Pradyuat Deb Burman, and discusses the implications of the pending Arbitration and Conciliation (Amendment) Bill, 2019 ("the 2019 Amendment").

The Pre-Amendment Landscape: SBP & Co. v. Patel Engineering

Prior to 2005, there was a conflict in the Supreme Court's decisions on the nature of the power exercised by the Chief Justice (or his designate) under Section 11 of the Act. The question was whether this power was administrative or judicial in nature. The matter was referred to a seven-judge bench, which decided in SBP & Co. v. Patel Engineering Ltd. (2005) 8 SCC 618 that the power exercised under Section 11 was a judicial power and not a mere administrative function.

The consequences of characterising the power as judicial were far-reaching. A judicial power necessarily involved the determination of certain threshold jurisdictional questions before the appointment could be made. The seven-judge bench in SBP & Co. held that the Chief Justice or his designate, while dealing with a Section 11 application, was required to decide: (i) his own jurisdiction to entertain the request; (ii) whether the conditions for the exercise of the power had been fulfilled; and (iii) whether a valid arbitration agreement existed between the parties.

In addition to these threshold questions, the court in SBP & Co. also indicated that the Chief Justice or his designate could decide preliminary issues that went to the root of the matter — for instance, whether the claim was a dead claim barred by limitation, or whether the claimant was a party to the arbitration agreement. This broad reading of the Section 11 power meant that in practice, substantial issues that might otherwise have been decided by the arbitral tribunal itself were instead being decided at the appointment stage.

Boghara Polyfab: The Three-Category Taxonomy

The implications of SBP & Co. were worked out in considerable detail by a three-judge bench in National Insurance Co. Ltd. v. Boghara Polyfab Pvt. Ltd. (2009) 1 SCC 267. The court in Boghara Polyfab attempted to systematise the questions that could and could not be decided at the Section 11 stage by classifying them into three categories:

22.1. The issues (preliminary/threshold issues) which the Chief Justice or his designate is bound to decide are: (i) Whether the party making the application has approached the appropriate High Court; (ii) Whether there is an arbitration agreement and whether the party who has applied under Section 11 of the Act, is a party to such an agreement.

22.2. The issues which the Chief Justice or his designate may choose to decide (or leave them to be decided by the Arbitral Tribunal) are: (i) Whether the claim is a dead claim (time barred); (ii) Whether the parties have concluded the contract/transaction by recording satisfaction of their mutual rights and obligation, or by accepting performance of the contract.

22.3. The issues which should be left exclusively to the Arbitral Tribunal are: Issues relating to the merits of the claim(s) made in the arbitration.

The Boghara Polyfab taxonomy was an attempt to introduce order into the regime created by SBP & Co., but it did not succeed in definitively limiting the scope of inquiry at the Section 11 stage. The discretion in the second category — whether to decide certain issues at the Section 11 stage or leave them to the tribunal — meant that the Chief Justice or his designate retained a wide latitude to decide potentially complex questions of fact and law at the appointment stage itself.

Duro Felguera: A Narrow Approach Before the Amendment

Even before the 2015 Amendment, there were indications in the Supreme Court's jurisprudence that a narrower approach to the Section 11 inquiry was preferable. In Duro Felguera, S.A. v. Gangavaram Port Ltd. (2017) 9 SCC 729, a two-judge bench of the Supreme Court observed that after the 2015 Amendment inserted Section 11(6A), the scope of examination by the court at the Section 11 stage was limited to examining the existence of an arbitration agreement. This observation was made in the context of a case decided after the amendment, but the court's approval of the narrow approach is significant as an indication of how Section 11(6A) was to be understood.

In Duro Felguera, the Supreme Court held that the Court's jurisdiction under Section 11 was limited to examining whether an arbitration agreement existed between the parties. All other questions — including those relating to the validity and scope of the arbitration agreement — were to be left to the arbitral tribunal. The court drew support from the insertion of Section 11(6A) to hold that the legislature had clearly indicated its intent to limit the scope of the Section 11 inquiry.

Narbheram Power and Hyundai Engineering: Reinforcing the Narrow View

The narrow approach articulated in Duro Felguera was reinforced by subsequent decisions. In Narbheram Power and Steel Pvt. Ltd. v. Indo Solar Ltd. (2017), the Supreme Court reiterated that after the insertion of Section 11(6A), the scope of inquiry at the Section 11 stage was confined to examining whether an arbitration agreement existed. The court declined to go into questions such as whether the disputes fell within the scope of the arbitration agreement, holding that such questions were for the arbitral tribunal to decide.

Similarly, in Hyundai Engineering and Construction Co. Ltd. v. OIDD, the court followed the narrow approach and appointed an arbitrator without deciding any substantive questions about the scope of the arbitration agreement or the validity of the arbitration clause. The decisions in Narbheram Power and Hyundai Engineering thus represented a clean break from the broad approach of SBP & Co. and a firm embrace of the legislative intent behind Section 11(6A).

NCC Ltd. v. Indian Oil Corporation: The Question of Non-Arbitrable Disputes

A more nuanced question arose in NCC Ltd. v. Indian Oil Corporation Ltd. (2020). The issue was whether the court, at the Section 11 stage, could decline to appoint an arbitrator on the ground that the disputes were non-arbitrable — for instance, because they related to a matter that was the exclusive domain of a special court or tribunal, or because they involved allegations of fraud of such a nature as to make them unsuitable for arbitration.

The court in NCC Ltd. v. Indian Oil Corporation recognised that there might be cases where a dispute was ex facie non-arbitrable — so clearly outside the scope of arbitration that entertaining the Section 11 application would itself be an exercise in futility. In such cases, the court held, it would not be appropriate to refer the parties to arbitration merely because the formal requirements of Section 11(6A) — the existence of an arbitration agreement — were satisfied. The principle of kompetenz-kompetenz (embodied in Section 16 of the Act), which ordinarily empowers the arbitral tribunal to rule on its own jurisdiction, would not preclude the court from refusing to make an appointment where the non-arbitrability of the dispute was ex facie clear.

The decision in NCC Ltd. thus introduced a qualification to the blanket rule of Section 11(6A). The court at the Section 11 stage was required to confine itself to examining the existence of an arbitration agreement, but it was not precluded from declining to appoint an arbitrator where the dispute was ex facie non-arbitrable.

Mayavati Trading: The Current Position

The current authoritative statement on the scope of Section 11 proceedings is contained in the decision of a three-judge bench in Mayavati Trading Pvt. Ltd. v. Pradyuat Deb Burman (2019) 20 SCC 644. In Mayavati Trading, the Supreme Court directly addressed the question of whether Section 11(6A), as inserted by the 2015 Amendment, had overruled the decision in SBP & Co. and the taxonomy in Boghara Polyfab.

The court in Mayavati Trading answered this question in the affirmative. It held that Section 11(6A) had, by express legislative mandate, overruled the decisions in SBP & Co. and Boghara Polyfab insofar as they held that questions beyond the existence of an arbitration agreement could be decided at the Section 11 stage. The court held that after the insertion of Section 11(6A), the scope of the court's inquiry was confined exclusively to examining the existence of an arbitration agreement — and nothing else.

The court in Mayavati Trading also clarified the significance of the phrase "notwithstanding any judgment, decree or order of any court" in Section 11(6A). This non obstante clause, the court held, was specifically designed to override the decisions in SBP & Co. and Boghara Polyfab. The legislature had thus made its intent clear: the broad approach of those decisions was to give way to the narrow approach mandated by Section 11(6A).

The court in Mayavati Trading further held that, following the insertion of Section 11(6A), the doctrine of kompetenz-kompetenz — which empowers the arbitral tribunal to rule on its own jurisdiction — was to be given full effect. Questions such as whether the arbitration agreement was valid, whether it was enforceable, whether the claim was within the scope of the arbitration agreement, and whether the claim was time-barred were all to be decided by the arbitral tribunal rather than the court at the Section 11 stage.

The Nature of Power After the 2015 Amendment

An important corollary of the decision in Mayavati Trading concerns the nature of the power exercised under Section 11 after the 2015 Amendment. In SBP & Co., the seven-judge bench had held that the power was judicial in nature, with all the consequences that flowed from that characterisation. The 2015 Amendment, by inserting Section 11(6A) and limiting the scope of inquiry to the existence of an arbitration agreement, effectively returned the Section 11 power to something closer to an administrative function.

This shift has significant practical implications. If the court's role at the Section 11 stage is merely to verify whether an arbitration agreement exists and, if it does, to appoint an arbitrator, then the court is performing a largely ministerial or administrative function rather than a judicial one. The arbitral tribunal, once constituted, then becomes the primary decision-maker on all substantive questions of jurisdiction, validity, and merits.

This approach is consistent with the internationally accepted principle of minimal judicial intervention in arbitration — a principle that the 2015 Amendment was explicitly designed to promote. By reducing the scope of judicial inquiry at the appointment stage, the amendment sought to prevent the misuse of Section 11 proceedings as a delaying tactic and to ensure that disputes referred to arbitration were decided by arbitrators rather than courts.

The Pending 2019 Amendment

Even as the current position under Section 11(6A) has been authoritatively stated in Mayavati Trading, the landscape may soon change again. The Arbitration and Conciliation (Amendment) Bill, 2019 proposes, among other things, to omit Section 11(6A) and to constitute an Arbitration Council of India that would, inter alia, maintain a depository of arbitral awards and accredit arbitral institutions. Under the proposed amendments, the power of the Supreme Court and the High Courts to appoint arbitrators would be delegated to designated arbitral institutions.

The 2019 Amendment, if enacted, would represent a further shift away from judicial involvement in the appointment process. The designation of arbitral institutions as the appointing authority — rather than the courts — would reduce judicial intervention at the pre-arbitration stage to an even greater extent than the 2015 Amendment had achieved. The oversight of the courts would be limited to challenges to the appointments made by the designated institutions, which would themselves be required to follow established procedures and timelines.

As of the time of writing, the 2019 Amendment has been passed by the Lok Sabha but has not yet been enacted into law. The position under the 2015 Amendment — and as authoritatively stated in Mayavati Trading — therefore continues to govern the scope of proceedings under Section 11.

Conclusion

The journey of Section 11 proceedings from SBP & Co. to Mayavati Trading is a journey from judicial expansionism to legislative correction. The seven-judge bench in SBP & Co. characterised the Section 11 power as judicial and sanctioned the decision of a wide range of threshold questions at the appointment stage. The Boghara Polyfab taxonomy systematised but did not fundamentally narrow this broad approach. The 2015 Amendment, by inserting Section 11(6A), clearly and unequivocally limited the scope of the Section 11 inquiry to the sole question of the existence of an arbitration agreement. Mayavati Trading has confirmed that this legislative intent was to prevail over prior judicial decisions, and that all questions beyond the bare existence of an arbitration agreement are now within the exclusive domain of the arbitral tribunal.

The pending 2019 Amendment promises a further evolution: the delegation of appointment powers to designated arbitral institutions, with the courts playing an even more peripheral role in the pre-arbitration process. Whatever form the final legislation takes, the trajectory is clear — the legislative intent is to minimise judicial intervention and to maximise the autonomy of the arbitral process. Section 11(6A), as currently enacted and interpreted, is one important step in that direction.