Kiran Raj

The Supreme Court of India Division Bench of Justice Pamidighantam Sri Narasimha and Justice Atul S. Chandurkar on Wednesday (December 17, 2025) dismissed appeals challenging a Telangana High Court order that constituted an arbitral tribunal for disputes arising from an EPC contract awarded to a consortium. The appellant purchaser objected that an individual consortium member was not entitled to invoke the arbitration clause because the arbitration agreement was with the consortium as a collective. Declining to interfere with the referral to arbitration, the Court held that once a prima facie arbitration agreement is shown at the appointment stage, objections on whether the claimant is a true party to the arbitration agreement, or otherwise eligible to trigger the clause, must be examined by the arbitral tribunal.

The dispute arose out of an EPC contract awarded for works relating to a thermal power plant, pursuant to a tender floated by the project owner, which permitted participation through a consortium. A consortium comprising three entities was constituted, with one member designated as the lead. Following acceptance of the bid, a letter of intent was issued and purchase orders were placed in favour of the consortium, incorporating tender specifications and the General Conditions of Contract, including an arbitration clause.

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During execution, one consortium member encountered financial distress, resulting in delays, and another member assumed the role of lead pursuant to amendments to the consortium arrangement. Subsequently, the financially distressed member entered insolvency proceedings. Disputes arose regarding alleged breaches, delays, and financial claims. One consortium member, acting in its individual capacity, invoked arbitration and sought appointment of an arbitral tribunal under Section 11 of the Arbitration and Conciliation Act, 1996.

The project owner and another consortium member objected, contending that the arbitration agreement existed only with the consortium as a collective entity and that an individual member lacked authority to invoke arbitration. The High Court constituted the arbitral tribunal, holding that a prima facie arbitration agreement existed. The said order was challenged before the Supreme Court.

The Supreme Court examined the scope of judicial scrutiny at the stage of appointment of an arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996. The Court recorded that, with the insertion of Section 11(6A), the legislative intent was to confine judicial examination to the existence of an arbitration agreement.

The Court observed that “the statutory scheme envisages a clear demarcation between the limited threshold scrutiny at the referral stage on the one hand and the substantive jurisdictional adjudication to be undertaken by the Arbitral Tribunal on the other.” It stated that the referral court is not required to decide contentious issues relating to authority, capacity, or maintainability at the Section 11 stage.

Referring to established precedent, the Court noted that “the enquiry under Section 11 is confined to a prima facie determination of the existence of an arbitration agreement and no further.” It recorded that a referral court must refrain from entering into disputed questions of fact or law which are properly within the jurisdiction of the arbitral tribunal under Section 16.

On the contention that an individual consortium member could not invoke arbitration, the Court observed that this question does not admit of a uniform answer and depends upon the contractual framework and consortium agreement. It stated that “the referral court will confine its enquiry only to a prima facie satisfaction as to whether a member of a consortium qualifies as a ‘party’ to the arbitration agreement.”

The Court further recorded: “Whether first respondent has validly invoked arbitration individually, whether the Consortium continues to exist, whether consent of other Consortium partners was necessary, and whether claims are maintainable after commencement of liquidation, are all matters which may legitimately be raised, contested and determined before the AT under Section 16.”

The court observed, cautioning that “entertaining these questions here would amount to conducting a mini trial at the Section 11 stage, contrary to the settled principles of minimal judicial intervention and kompetenz-kompetenz.”

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The Supreme Court recorded that “the High Court has not committed any error in constituting the Arbitral Tribunal in exercise of its powers under Sections 11(6) and 11(6-A) of the Act, 1996.  The Arbitral Tribunal will consider all questions including preliminary objections relating to maintainability of the arbitration on their own merit.”

“The civil appeals, arising out of the order dated 17.02.2023 passed by the High Court, are accordingly dismissed. There shall be no order as to costs.”

Advocates Representing the Parties

For the Appellants: Mr. Guru Krishnakumar, Sr. Adv. (arguing counsel) Mr. Venkita Subramoniam T.r, AOR Mr. Neeraj Kumar, Adv. Mr. Meenakshi Jha, Adv. Mr. N. Venkataraman, A.S.G.(arguing counsel) Ms. Prerna Singh, Adv. Mr. Guntur Pramod Kumar, AOR

For the Respondents: Mr. Anirudh Krishnan, Adv.(arguing counsel) Mr. K. Shiva, Adv. Mr. Anuraag Rajagopalan, Adv. Mr. Pranay Prakash, Adv. Mr. Varun Venkatesan, Adv. Mr. Sasank Iyer, Adv. Mr. Balaji Srinivasan, AOR M/S. Dharmaprabhas Law Associates, AOR Mr. Guntur Pramod Kumar, AOR

Case Title: M/s Andhra Pradesh Power Generation Corporation Limited v. M/s Tecpro Systems Limited & Ors.
Neutral Citation: 2025 INSC 1447
Case Number: Civil Appeal arising out of SLP (C) Nos. 8998 of 2023 and 13200 of 2023
Bench: Justice Pamidighantam Sri Narasimha, Justice Atul S. Chandurkar