Pendency of Appeal Under Section 37 Against Earlier Award Does Not Prevent Fresh Arbitration; Sole Arbitrator Appointed: Bombay High Court
Sanchayita Lahkar
The High Court of Bombay, Single Bench of Justice Gautam A. Ankhad, directed the appointment of a Sole Arbitrator to adjudicate afresh the disputes arising from an agreement for the purchase of salvage material between a contractor and a private company. The Court held that its jurisdiction under Section 11 of the Arbitration and Conciliation Act, 1996, is confined to verifying the existence of a valid arbitration agreement and does not extend to examining issues of limitation or res judicata. Consequently, all disputes under the 2011 agreement were referred to arbitration, with all contentions left open for adjudication.
The dispute arose from an Agreement for Purchase of Salvage Material dated 29 November 2011, under which the applicant, a sole proprietor engaged in real estate and development, paid a security deposit of Rs. 51,38,000 to the respondent, a private limited company. Differences emerged regarding the refund of this deposit, leading to multiple legal proceedings between the parties. Initially, after a winding-up petition and a commercial summary suit, the matter was referred to arbitration by consent. The arbitral tribunal, in its award dated 6 June 2022, dismissed the applicant’s claims as barred by limitation, though it held the agreement to be valid and enforceable.
The applicant challenged the award under Section 34 of the Arbitration and Conciliation Act, 1996. The High Court, in February 2024, set aside the arbitral award entirely, observing that it could not modify the award but that the applicant would need to initiate arbitration proceedings de novo. A subsequent application seeking correction of that order was dismissed in July 2024. The applicant then filed a fresh application under Section 11 of the Act seeking appointment of an arbitrator for a second round of arbitration while also pursuing an appeal under Section 37, which remains pending.
The applicant argued that, despite the pending appeal, it was entitled to begin arbitration afresh, relying on recent precedents, including the Supreme Court’s decision in Gayatri Balasamy v. ISG Novasoft Technologies Ltd., and Bombay High Court rulings permitting appointment of an arbitrator in similar circumstances. The respondent opposed, contending that multiple rounds of litigation on the same issue were impermissible, the claims were time-barred, and that the application was premature given the pending appeals.
The Court, after considering submissions, confined itself to determining the existence of a valid arbitration agreement under Section 11 and referred all disputes under the 2011 agreement to arbitration
The Court noted, "Whilst the arguments advanced by Mr. Shah are appealing on a first blush, I am bound by the decisions of this Court where in similar situations, an arbitrator has been appointed by this Court." Reference was made to Wadhwa Group Holdings Private Limited (supra) and Batliboi Environmental Engineers Ltd. v. Hindustan Petroleum Corporation Ltd., where arbitrators were appointed even in similar procedural contexts.
The Court stated that the jurisdiction under Section 11 was limited to examining the existence of an arbitration agreement and did not extend to questions of limitation or res judicata. "This Court cannot conduct an intricate evidentiary inquiry into questions of whether the claims raised by the Applicant are time barred or whether the issue is barred by principles of res judicata," Justice Ankhad observed. He clarified that such determinations must be left to the arbitral tribunal.
The Court stated that the Section 34 order had expressly permitted the Applicant to pursue de novo arbitration, as the Court lacked the power to modify an award. The order had stated: "The Petitioner would have to resort to de novo arbitration in respect of all the issues. However, as the law stands, this Court cannot modify an Award, but can only uphold or set aside the Award."
Justice Ankhad referred extensively to the Supreme Court’s pronouncement in Cox and Kings v. SAP India Pvt. Ltd. & Anr. (2025) 1 SCC 611, which reiterated that the role of the Section 11 court is restricted to verifying the existence of an arbitration agreement. Quoting the Supreme Court, the order stated: "Post 2015 Amendment, the jurisdiction of the Court under Section 11(6) of the 1996 Act is limited to examining whether an arbitration agreement exists between the parties — nothing more, nothing less."
The Court also cited Interplay between Arbitration Agreements under the Arbitration and Conciliation Act, 1996 and Stamp Act, 1899, In re (2024) 6 SCC 1, where the Supreme Court clarified that courts at the referral stage must only engage in a prima facie determination of the existence of an arbitration agreement. Justice Ankhad further referred to SBI General Insurance Co. Ltd. v. Krish Spinning (2025) 3 SCC (Civ) 567, which reiterated that arbitral tribunals are the primary authorities to adjudicate on jurisdiction and arbitrability, and that courts should refrain from delving into contested factual questions at the referral stage.
Justice Ankhad stated, "The pendency of any proceeding mentioned hereinabove cannot be an impediment to appoint an arbitrator in this Application. All other issues must be agitated before the Arbitral Tribunal." The Court added that while the Respondent’s concern regarding financial burden was legitimate, it could be addressed by the tribunal in the course of arbitration. The tribunal would be free to determine appropriate costs and fees as per the Fourth Schedule of the Arbitration and Conciliation Act and the Bombay High Court (Fee Payable to Arbitrators) Rules, 2018.
Having found that a valid arbitration agreement existed, the Court appointed Mr. Anish S. Karande, Advocate, as Sole Arbitrator to adjudicate the disputes between the parties arising out of and in connection with the Agreement for Purchase of Salvage Material dated 29 November 2011. The order directed that the arbitrator’s contact details be provided by the Applicant’s counsel within a week of the order’s uploading. The Court instructed that a copy of the order be communicated to the Sole Arbitrator by the Applicant’s advocate.
The Court further directed that the learned Sole Arbitrator forward the statutory disclosure under Section 11(8) read with Section 12(1) of the Act to the Applicant’s counsel, who was to file the same in the Registry. A copy was to be furnished to the Respondent. The parties were instructed to appear before the Arbitrator on a date to be fixed by the tribunal for directions on pleadings, witness examination, and scheduling of hearings. The Court clarified that communication via e-mail would constitute valid service during the arbitration.
Justice Ankhad concluded that "all issues are kept open to be agitated before the Tribunal" and that the arbitration shall be held at Mumbai. The Court thus disposed of the Commercial Arbitration Application (Lodging) No. 25035 of 2024 in the above terms.
Advocates Representing the Parties:
For the Applicant: Mr. Mayur Khandeparkar with Mr. Anuj Desai and Mr. Umesh Tawari, Advocates, instructed by S. Ashwinikumar & Co. LLP.
For the Respondent: Mr. Sheelang Shah with Mr. Nirmal Chopda, Advocates, instructed by Vraj Legal.
Case Title: Rajuram Sawaji Purohit v. The Shandar Interior Private Limited
Neutral Citation: 2025: BHC-OS:18469
Case Number: Commercial Arbitration Application (Lodging) No. 25035 of 2024
Bench: Justice Gautam A. Ankhad
