Uttarakhand Purva Sainik Kalyan Nigam Limited v. Nothern Coalfields Limited

Judgement Name -Uttarakhand Purva Sainik Kalyan Nigam Limited v. Nothern Coalfields Limited

Citation: (2020) 2 SCC 455

Coram: Indu Malhotra and Ajay Rastogi

Date: 27.11.2019

This case deals with the application of section 11 and the power of the court to refer matters for arbitration when application for appointment of arbitrators in time barred.

Facts & Issue: The parties entered into an agreement on 21.12.2010 under which the petitioner (Contractor) was required to provide security to the respondent company around the clock on need basis as per agreed contractual rates.

The Apex court identified the following as the main issue of the prevailing case- whether the High Court was justified in rejecting the application filed under section 11 for reference to arbitration the ground that it was barred by limitation?

Rules applied in this case are section 16 that envisages within its scope the principle of kompetenz-kompetenz and section 11(6-A) that was added to the Arbitration and Conciliation Act, 1999 by way of an amendment in 2015. The doctrine of kompetenz-kompetenz and states that the Arbitral Tribunal shall always be competent to rule on its own jurisdiction including the validity and existence of the arbitral agreement. The court then moves to look at the intent of the legislature behind enacting the Arbitration Act. It identifies the necessity of minimal judicial interference and party autonomy as the foremost reasons for the same. The court concludes by saying that the issue of limitation is a jurisdictional one that ought to be decided by the Arbitrator and not the High Court at the pre-reference stage.

Before the enactment of section 11(6-A)  th scope of power of the court extended to deciding the (i) validity of the arbitration agreement, (ii) whether person seeking the appointment of the arbitrator was a party to the arbitration agreement,  (iii) whether the party making the application had approached the appropriate high court, (iv) whether the time barred claim was sought to be resurrected or (v) whether parties had resolved their dispute by deciding upon their rights and obligations and received final payment without objection. Since the enactment of section 11(6-A) that is a non-obstante clause, these rights as identified in certain Supreme Court judgments were legislatively overruled.

It is necessary to be noted that section 11(6-A) has been omitted from the 2019 Amendment.

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