LexASLAM ISMAIL KHAN DESHMUKH versus ASAP FLUIDS PVT. LTD. & ANR.
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[2024] 12 S.C.R. 108 : 2024 INSC 849 Aslam Ismail Khan Deshmukh v. Asap Fluids Pvt. Ltd. & Anr. (Arbitration Petition No. 20 of 2019) 07 November 2024 [Dr Dhananjaya Y Chandrachud, CJI, J.B. Pardiwala* and Manoj Misra, JJ.] Issue for Consideration Petitioner sought appointment of an arbitrator for the adjudication of disputes and claims in terms of the Shareholders Agreement between the parties. Whether the reference under Section 11(6) of the Arbitration & Conciliation Act, 1996, should be declined by examining whether the substantive claims of the petitioner are ex facie and hopelessly time barred. Headnotes† Arbitration & Conciliation Act, 1996 – s.11(6) – Appointment of Arbitrators – Jurisdiction of referral court – Scope of interference – Petitions filed u/s.11(6), if within limitation: Held: Courts at the referral stage can interfere only in rare cases where it is manifest that the claims are ex facie time-barred and dead, or there is no subsisting dispute – While determining the issue of limitation in the exercise of powers u/s.11(6), the referral court must only conduct a limited enquiry for the purpose of examining whether the s.11(6) application has been filed within the limitation period of three years or not – At this stage, the referral court would not indulge in an intricate evidentiary enquiry into the question of whether the claims raised by the petitioner are time barred – Such a determination must be left to the decision of the arbitrator – Petitioner had issued notice invoking arbitration on 23.01.2017 which was delivered to both the respondents on 24.01.2017 – However, the respondents failed to reply to the said notice within 30 days i.e. within 23.02.2017 – Therefore, the period of limitation of three years, for the purposes of a s.11(6) petition, would begin to run from 23.02.2017 i.e., the date of failure or refusal by the other party to comply with the requirements mentioned *Author [2024] 12 S.C.R. 109 Aslam Ismail Khan Deshmukh v. Asap Fluids Pvt. Ltd. & Anr. in the notice invoking arbitration – Thus, the present petitions u/s.11(6) filed on 09.04.2019 were within limitation – Furthermore, at the stage of s.11 application, the referral Courts need only to examine whether the arbitration agreement exists or not – The existence of the arbitration agreement in the Shareholders Agreement is not disputed – Petitions allowed – Sole arbitrator already appointed for the adjudicating disputes between the parties in relation to the Service Agreement, appointed for adjudication of the present disputes pertaining to the Shareholders Agreement – Issue as regards the claim of the petitioner being ex facie time barred may be adjudicated as a preliminary issue – Limitation Act, 1963. [Paras 32, 39, 41, 44-46] Arbitration & Conciliation Act, 1996 – s.11(6) – Limited scope of interference by referral courts – Interests of the party forced to participate in the arbitration proceedings to be balanced, arbitral tribunal may impose costs on the party abusing process of law: Held: At the stage of s.11 application, the referral Courts need only to examine whether the arbitration agreement exists or not, nothing more, nothing less – However, some parties might take undue advantage of such a limited scope of judicial interference of the referral courts and force other parties to the agreement into participating in a time consuming and costly arbitration process in cases, including but not limited to, where the claims are either ex facie time-barred or are discharged through "accord and satisfaction", or cases where the impleadment of a non-signatory to the arbitration agreement is sought etc. – In order to balance such a limited scope of judicial interference with the interests of the parties who might be constrained to participate in the arbitration proceedings, the arbitral tribunal may impose costs of the arbitration on the party which the Tribunal ultimately finds to have abused the process of law and caused unnecessary harassment to the other party to the arbitration. [Para 44] Case Law Cited Interplay between Arbitration Agreements Under the Arbitration and Conciliation Act, 1996 and the Indian Stamp Act, 1899, In Re [2023] 15 SCR 1081 – followed. 110 [2024] 12 S.C.R. Digital Supreme Court Reports Vidya Drolia & Ors v. Durga Trading Corporation [2020] 11 SCR 1001 : (2021) 2 SCC 1; Bharat Sanchar Nigam Limited and Another v. Nortel Networks Indi
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