2013 (2) TMI 845 - HC - Companies Law

Summary

Issues involved: Invocation of arbitration, appointment of arbitrator, disclosure of documents, recall of orders, arbitrability of claim and counter claim, jurisdiction of Chief Justice, review on merits, procedural review, interference with ongoing arbitral proceedings.

1. Invocation of arbitration and appointment of arbitrator:
The Applicant invoked arbitration by a notice dated 31 March 2011 following the execution of various agreements between the parties. An Arbitration Application under Section 11 was instituted, resulting in the appointment of a sole Arbitrator. The claim and counter claim were lodged before the Arbitrator, who passed an interim order requiring the Applicant to hand over possession subject to conditions.

2. Disclosure of documents and recall of orders:
The Chamber Summons sought to withdraw consent for the arbitrator's appointment due to the Respondent's alleged failure to disclose mortgages created in favor of financial institutions. The Applicant argued that had these facts been known earlier, consent for arbitration would not have been given. The Applicant also filed a counter claim, questioning the absolute ownership of the properties under dispute.

3. Arbitrability of claim and counter claim:
The Respondent contended that the issues raised by the Applicant should be left to the decision of the arbitral tribunal, as the scope of an application under Section 11 is limited. The law distinguishes between matters that can be arbitrated, such as personal obligations, and those that require court intervention, like mortgage suits for enforcement of rights in rem.

4. Jurisdiction of Chief Justice and review on merits:
The jurisdiction under Section 11 is narrower compared to Section 8, with the Chief Justice tasked to determine the existence of an arbitration agreement and other procedural matters. The Court emphasized that issues of arbitrability should be left to the arbitral tribunal, and any challenge to the tribunal's decision can be made under Section 34.

5. Procedural review and interference with ongoing proceedings:
The Chamber Summons procedure is not recognized under Part-I of the Arbitration and Conciliation Act, limiting judicial intervention to specified matters. A substantive review on merits is deemed unavailable for orders passed under Section 11. The Court declined to interfere with the ongoing arbitral proceedings before the Sole Arbitrator, dismissing the Chamber Summons.

In conclusion, the Court upheld the principles of limited judicial intervention in arbitration matters and emphasized the role of the arbitral tribunal in deciding issues of arbitrability. The Chamber Summons seeking to recall orders and challenge the appointment of the arbitrator was dismissed, allowing the arbitral proceedings to continue.