M/S. UTTARAKHAND PURV SAINIK KALYAN NIGAM LIMITED versus NORTHERN COAL FIELD LIMITED

Citation: [2019] 14 S.C.R. 999 · Decided: 27-11-2019 · Supreme Court of India · Bench: INDU MALHOTRA · Disposal: Disposed off

Cited by 3 judgment(s) · cites 6 · see the full citation network in Lexace

Judgment (excerpt)

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        M/S. UTTARAKHAND PURV SAINIK
KALYAN NIGAM LIMITED
v.
         NORTHERN COAL FIELD LIMITED
(Special Leave Petition (C) No. 11476 of 2018)
 NOVEMBER 27, 2019
[INDU MALHOTRA AND AJAY RASTOGI, JJ.]
Arbitration and Conciliation Act, 1996: s.11 – Whether the
High Court was justified in rejecting the application filed under
s.11 for reference to arbitration, on the ground that it was barred
by limitation – Arbitration agreement between the parties – Dispute
arose between them – Petitioner sent notices calling upon the
Respondent to nominate a Sole Arbitrator in terms of the
arbitration clause – Respondent did not respond to the notices –
Petitioner filed application under s.11 invoking the default power
of the High Court to make the appointment of a sole arbitrator –
High Court held that the claims of the Petitioner were barred by
limitation, and therefore an arbitrator could not be appointed
under s.11 of the Act – Hence the instant special leave appeal –
Held: Notice of Arbitration was issued on 09.03.2016 –  Since the
invocation took place after s.11 was amended by the 2015
Amendment Act, which came into force on 23.10.2015, the amended
provision is applicable to the instant case –  In view of the
legislative mandate contained in s.11(6A), the Court is required only
to examine the existence of the arbitration agreement – All other
preliminary or threshold issues were left to be decided by the
arbitrator under s.16, which enshrines the Kompetenz-Kompetenz
principle – The doctrine of “Kompetenz-Kompetenz”, also referred
to as “Compétence-Compétence”, or “Compétence de la
recognized”, implies that the arbitral tribunal is empowered and
has the competence to rule on its own jurisdiction including
determining all jurisdictional issues, and the existence or validity
of the arbitration agreement – This doctrine is intended to minimize
judicial intervention, so that the arbitral process is not thwarted at
the threshold, when a preliminary objection is raised by one of the
parties – In view of the provisions of s.16, and the legislative policy
 [2019] 14 S.C.R. 999
999
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SUPREME COURT REPORTS
[2019] 14 S.C.R.
to restrict judicial intervention at the pre-reference stage, the issue
of limitation would require to be decided by the arbitrator –
Thus, the issue of limitation is a jurisdictional issue, which would
be required to be decided by the arbitrator under s.16, and not the
High Court at the pre-reference stage under s.11 of the Act – In the
instant case, the issue of limitation was raised by the Respondent-
company to oppose the appointment of the arbitrator under s.11
before the High Court – The issue of limitation being a
jurisdictional issue, the same has to be decided by the tribunal
under s.16, which is based on Article 16 of the UNCITRAL Model
Law which enshrines the Kompetenze principle – The order of High
Court is, therefore, set aside – Retired judge of Supreme Court
appointed as the Sole Arbitrator – Parties directed to appear
before the Arbitrator on 02.12.2019 – Matter disposed of –
Doctrine of kompetenz-kompetenz.
Doctrines/Principles: Doctrine of kompetenz-kompetenz –
Applicability of, exception – Held:  The doctrine is subject to the
exception i.e. when the arbitration agreement itself is impeached as
being procured by fraud or deception – This exception would also
apply to cases where the parties in the process of negotiation, may
have entered into a draft agreement as an antecedent step prior to
executing the final contract – The draft agreement would be a mere
proposal to arbitrate, and not an unequivocal acceptance of the
terms of the agreement – s.7 of the Contract Act, 1872 requires the
acceptance of a contract to be absolute and unqualified – If an
arbitration agreement is not valid or non-existent, the arbitral
tribunal cannot assume jurisdiction to adjudicate upon the disputes
– Appointment of an arbitrator may be refused if the arbitration
agreement is not in writing, or the disputes are beyond the scope of
the arbitration agreement – Article V(1)(a) of the New York
Convention also states that recognition and enforcement of an award
may be refused if the arbitration agreement ‘is not valid under the
law to which the parties have subjected it or, failing any indication
thereon, under the law of the country where the award was made’ –
Arbitration law – Contract Act, 1872 – s.7.
ITW Signode India Ltd. v. Collector of Central Excise
(2004) 3 SCC 48 : [2003] 5  

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