Supreme Court holds appointment court must not decide non‑arbitrability at Section 11 stage; remands claims to arbitral tribunal

A bench of Justice Pamidighantam Sri Narasimha and Justice Manoj Misra heard an appeal against a Delhi High Court order made under Section 11 of the Arbitration and Conciliation Act, 1996, whereby the High Court appointed an arbitral tribunal but excluded certain claims as non‑arbitrable under contractual clauses. The question before the Court was whether a court, while exercising jurisdiction under Section 11, could go beyond determining the existence of an arbitration agreement and adjudicate the arbitrability of specific claims.

The Supreme Court allowed the appeal, set aside the High Court's exclusion of parts of the claim, and directed that all disputed issues be left to the arbitral tribunal to decide, subject to parties being free to raise the plea of non‑arbitrability before it. The Court relied on the statutory position introduced by sub‑section (6A) of Section 11 and recent precedents which confined the appointment court's enquiry to the existence of a prima facie arbitration agreement. The Court, in its reasoning, observed: “As the above decision has been rendered by a three‑Judge bench of this Court after considering the seven‑Judge bench decision of this Court in In Re: Interplay (supra), we are of the view that the respondent cannot profit from certain observations made by a two‑Judge bench of this Court in Emaar (supra). In our view, therefore, the High Court fell in error in bisecting the claim of the appellant into two parts, one arbitrable and the other not arbitrable, when it found arbitration agreement to be there for settlement of disputes between the parties. 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, which, if raised, could be considered and decided by it.”

Background The dispute arose from a contractual relationship between the Office for Alternative Architecture (appellant) and Ircon Infrastructure and Services Ltd. (respondent), and the appellant approached the Delhi High Court under Section 11 for appointment of an arbitral tribunal. While appointing the tribunal, the High Court excluded certain claims (referred to in para 48(ii), (iii) and (iv) of the claim petition) as non‑arbitrable relying on clause 50 and 50.2 of the agreement. The appellant contended that the High Court should have confined itself to examining the existence of an arbitration agreement and left questions of arbitrability to the tribunal. The respondent relied on earlier two‑Judge bench observations in Emaar India Ltd. v. Tarun Aggarwal Projects LLP to support exclusion of non‑arbitrable claims at the Section 11 stage.

The Supreme Court examined the statutory scheme, noting that sub‑section (6A) of Section 11 (inserted by Act 3 of 2016, effective 23.10.2015) required that the Court “shall, notwithstanding any judgment, decree or order of any Court, confine to the examination of the existence of an arbitration agreement.” The Court observed that though Act 33 of 2019 omitted sub‑section (6A), that amendment had not been notified and sub‑section (6A) remained on the statute book. The Court further placed reliance on the seven‑Judge and three‑Judge precedents which restricted the remit of the appointment court to prima facie scrutiny of an arbitration agreement and disapproved unnecessary judicial interference at the appointment stage. The Supreme Court held that the High Court erred in bifurcating the claim into arbitrable and non‑arbitrable parts, set aside the exclusion order, and permitted the parties to raise non‑arbitrability contentions before the arbitral tribunal, which would decide them without prejudice to any observations made by the High Court. There was no order as to costs.

Case Details: Case No.: 2025 INSC 665 (Corrected); Civil Appeal arising out of SLP (C) No. 28104/2023 Case Title: Office for Alternative Architecture v. Ircon Infrastructure and Services Ltd. Appearances: For the Petitioner(s): Advocate(s) not indicated in the judgment For the Respondent(s): Advocate(s) not indicated in the judgment