Court Must Only Examine Existence of Arbitration Agreement at Section 11 Stage: Supreme Court Reiterates Limited Scope of Judicial Intervention

“The High Court fell in error in bisecting the claim into arbitrable and non-arbitrable parts—this is a matter for the arbitral tribunal to decide” – In a significant reaffirmation of the limited judicial role at the stage of arbitrator appointment, the Supreme Court held that the High Court exceeded its jurisdiction under Section 11 of the Arbitration and Conciliation Act, 1996, by deciding which claims were arbitrable and which were not. The Supreme Court clarified that once an arbitration agreement exists, the Court’s duty is confined to appointing an arbitrator—questions of arbitrability should be left to the arbitral tribunal.

Referring to the amendments introduced in 2015, the Court emphatically stated: “The correct course for the High Court was to leave it open to the party to raise the issue of non-arbitrability of certain claims before the arbitral tribunal…”

The dispute arose between the appellant, Office for Alternative Architecture, and the respondent, IRCON Infrastructure and Services Ltd., relating to execution of a contract. The appellant invoked arbitration under the terms of the agreement. When the respondent failed to cooperate in constituting the arbitral tribunal, the appellant approached the Delhi High Court under Section 11 of the Arbitration and Conciliation Act, 1996.

While appointing an arbitrator, the High Court simultaneously ruled that certain claims (as stated in paragraphs 48(ii), (iii), and (iv) of the claim petition) were non-arbitrable or excepted matters under the contract, citing clause 50 and 50.2 of the agreement. This prompted the appellant to approach the Supreme Court, arguing that the High Court had overstepped its jurisdiction.

The central issue before the Supreme Court was whether, under Section 11 of the 1996 Act, the High Court could determine which claims are arbitrable and which are not, even after acknowledging the existence of a valid arbitration agreement.

The Court reiterated that sub-section (6A) of Section 11—introduced through the 2015 amendment and still in force—expressly limits the Court's scope:
“While considering an application under sub-section (4), (5), or (6), the Supreme Court or the High Court… shall… confine to the examination of the existence of an arbitration agreement.”

Rejecting the High Court’s decision to exclude certain claims from arbitration, the Supreme Court clarified:
“We are of the view that the High Court fell in error in bisecting the claim… when it found arbitration agreement to be there… The correct course… was to leave it open to the party to raise the issue of non-arbitrability… before the arbitral tribunal.”

The Court found support in a recent seven-judge bench judgment (In Re: Interplay Between Arbitration Agreements under the Arbitration Act and the Indian Stamp Act) which held:
“The Supreme Court or High Court at the stage of the appointment of an arbitrator shall examine the existence of prima facie arbitration agreement and not other issues… including unnecessary judicial interference…”

This principle was reiterated by a three-judge bench in SBI General Insurance Co. Ltd. v. Krish Spinning, where the Court stated: “The scope of enquiry at the stage of appointment of arbitrator is limited to the scrutiny of prima facie existence of the arbitration agreement, and nothing else.”

The Court further held that any reliance by the High Court on earlier two-judge bench decisions such as Emaar India Ltd. v. Tarun Aggarwal Projects LLP was misplaced, stating: “The respondent cannot profit from certain observations made by a two-Judge bench… in light of the later and larger bench decisions.”

Allowing the appeal, the Supreme Court set aside the part of the High Court’s order which excluded certain claims from arbitration. It held that all issues of arbitrability must be determined by the arbitral tribunal, not the Court at the stage of appointment.

The Court concluded: “The parties are… at liberty to take the plea of non-arbitrability of certain claims before the arbitral tribunal, which shall decide the same without being prejudiced by any observations made in the order of the High Court.”
This judgment reaffirms the legislative intent behind the 2015 amendment—to minimize judicial interference in the arbitral process and ensure that arbitral tribunals retain primary jurisdiction over disputes, including the scope of arbitrability.

Date of Decision: May 13, 2025