PRAVIN ELECTRICALS PVT. LTD. versus GALAXY INFRA AND ENGINEERING PVT. LTD.

Citation: [2021] 1 S.C.R. 1162 · Decided: 08-03-2021 · Supreme Court of India · Bench: R.F. NARIMAN · Disposal: Case Partly allowed

Cited by 5 judgment(s) · cites 1 · see the full citation network in Lexace

Judgment (excerpt)

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SUPREME COURT REPORTS
[2021] 1 S.C.R.
   [2021] 1 S.C.R. 1162
1162
PRAVIN ELECTRICALS PVT. LTD.
v.
GALAXY INFRA AND ENGINEERING PVT. LTD.
(Civil Appeal No. 825 of 2021)
MARCH 08, 2021
[R. F. NARIMAN, B. R. GAVAI AND
HRISHIKESH ROY, JJ.]
Arbitration and Conciliation Act, 1996 – ss.8, 11(6), (6A),
(7) – Petition filed by respondent u/s.11(6) for appointment of a
Sole Arbitrator on the basis of an alleged Consultancy Agreement
– Appellant denied execution of the Agreement – High Court held
that there was an Arbitration Agreement between the parties and a
Sole Arbitrator was appointed to adjudicate the disputes between
the parties – On appeal, held: Certain emails and correspondence
do show that there was some dealing between the appellant and the
respondent qua a tender floated by South Bihar Power Distribution
Company Ltd. (SBPDCL) – However, that is not sufficient to
conclude that there was a concluded contract between the parties
containing an arbitration clause – A deeper consideration of
whether an arbitration agreement exists between the parties must
be left to an Arbitrator who is to examine the documentary evidence
produced before him in detail after witnesses are cross-examined
on the same – Impugned judgment in so far as it conclusively finds
that there is an Arbitration Agreement between the parties, set aside
– However, the ultimate order appointing a retired Judge the Sole
Arbitrator is upheld – Arbitrator to first determine the preliminary
issue as to whether an Arbitration Agreement exists between the
parties and decide the merits of the case only if such an agreement
exists – Arbitration and Conciliation (Amendment) Act, 2015.
Arbitration and Conciliation Act, 1996 – ss.8, 11, 11(6),
11(6A), 11(7), 37 – Law Commission Report – Arbitration and
Conciliation (Amendment) Act, 2015 – Orders appealable under
the Act – Held: By a process of judicial interpretation, Vidya Drolia
v. Durga Trading Corporation reported as (2021) 2 SCC 1 read the
“prima facie test” into s.11(6A) so as to bring the provisions of
ss.8(1) and 11(6) r/w 11(6A) on par – Considering that s.11(7) and
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s.37 were not amended, an anomaly arises – In light of what has
been decided in Vidya Drolia, the Parliament may need to have a re-
look at s.11(7) and s.37 so that orders made u/ss.8 and 11 are
brought on par qua appealability as well.
Words & Phrases – “existence” in s.11(6A) – Meaning of –
Discussed – Arbitration and Conciliation Act, 1996.
Partly allowing the appeal, the Court
HELD: 1. The 246th Law Commission Report not only
discussed the changes that are to be made bearing in mind the
difficulties that arose earlier, but also provided for amendments
that were to be made to Sections 8 and 11. Section 37 which is
the appeal provision, was also sought to be amended. When
Parliament enacted the 2015 amendment pursuant to the Law
Commission Report, it followed the Scheme of the Law
Commission’s Report qua Section 8 and Section 37 by enacting
the words “..... unless it finds that prima facie no valid arbitration
agreement exists......” in Section 8(1) and the insertion of sub-
clause (a) in Section 37(1) providing an appeal in an order made
under Section 8, which refuses to refer parties to arbitration.
However, so far as Section 11(6) and Section 11(6A) are
concerned, what was recommended by the Law Commission was
not incorporated. Section 11(6A) merely confines examination of
the Court to the existence of an arbitration agreement. Section
11(7) was retained, by which no appeal could be filed under an
order made under Section 11(6) read with Section 11(6A), whether
the Court’s determination led to a finding that the arbitration
agreement existed or did not exist on the facts of a given case.
Concomitantly, no amendment was made to Section 37(1), as
recommended by the Law Commission. However, by a process
of judicial interpretation, Vidya Drolia has now read the “prima
facie test” into Section 11(6A) so as to bring the provisions of
Sections 8(1) and 11(6) r/w 11(6A) on par. Considering that Section
11(7) and Section 37 have not been amended, an anomaly thus
arises. Whereas in cases decided under Section 8, a refusal to
refer parties to arbitration is appealable under Section 37(1)(a),
a similar refusal to refer parties to arbitration under Section 11(6)
read with Sections 6(A) and 7 is not appealable. In the light of
what has been decided in Vidya Drolia, Parliament may need to
PRAVIN ELECTRICALS PVT.

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