SBP & Co. v. Patel Engineering Ltd.
The power of the Chief Justice/designate under Section 11 is judicial, not administrative; he must decide preliminary issues including the existence of a valid arbitration agreement and jurisdiction before appointing an arbitrator.
Facts
On a petition under Section 11(6) for appointment of an arbitrator, a question arose about the legal character of the Chief Justice's (or his designate's) power. Earlier authority (Konkan Railway v. Rani Construction) had treated the Section 11 function as purely administrative. A seven-Judge Bench was constituted to authoritatively determine the nature of the power.
Issues
- Whether the power exercised by the Chief Justice or his designate under Section 11 is administrative or judicial.
- What issues the Chief Justice/designate can and must decide before appointing an arbitrator, including the existence and validity of the arbitration agreement.
Arguments
One view urged that Section 11 is a purely administrative appointment function leaving all jurisdictional issues to the arbitral tribunal under Section 16. The contrary view urged that deciding whether to appoint necessarily requires the court to satisfy itself that a valid arbitration agreement exists between the parties, making the function judicial.
Held
Overruling Konkan Railway (Rani Construction), the Constitution Bench held that the power under Section 11 is a judicial power, not an administrative one. The Chief Justice or his designate is entitled and bound to decide preliminary or jurisdictional questions, including whether there is a valid arbitration agreement, whether the parties are bound by it, and whether the claim is a live/arbitrable one, before making an appointment. Once a judicial authority appoints an arbitrator after deciding these issues, the tribunal cannot reopen them, though it retains competence over matters left to it.
Ratio decidendi
The Section 11 appointment power is judicial; the appointing authority must determine the existence and validity of the arbitration agreement and related jurisdictional facts, and such findings bind the tribunal.
Significance
A landmark seven-Judge decision defining the nature and scope of the Section 11 reference power; it shaped Indian arbitration appointment jurisprudence until the legislative recalibration by the 2015 Amendment (Section 11(6A) confining the court to existence of the agreement) and later cases.
Related
Test yourself on Arbitration & Conciliation. Application-level MCQs with instant scoring.
Source: /Users/tiwari/Documents/All Law Books/raw/arbitration act/CHAPTER-02-Arbitration-Agreement.md
