1. Factual Background and Procedural History
The present case arose from an Agreement for Purchase of Salvage Material dated 29 November 2011 executed between Rajuram Sawaji Purohit, sole proprietor of M/s. Mactec Realtors & Developers (the applicant), and The Shandar Interior Private Limited (the respondent). Under the Agreement, the applicant had deposited a security amount of ₹51,38,000 with the respondent, which later became the focal point of multiple legal proceedings.
The dispute initially culminated in a winding-up petition (Company Petition No. 269 of 2016) and a Commercial Summary Suit No. 721 of 2018, wherein the Court, with the consent of the parties, referred the matter to arbitration. The first arbitral award, dated 6 June 2022, dismissed the applicant’s claims as being barred by limitation, despite affirming the legality and enforceability of the contract.
The applicant challenged the award under Section 34 of the Arbitration and Conciliation Act, 1996 (Commercial Arbitration Petition No. 305 of 2023). By order dated 7 February 2024, the Court set aside the arbitral award in its entirety, holding that the limitation issue was erroneously decided. Subsequently, the applicant’s application for correction of that order (I.A. No. 10052 of 2024) was dismissed on 11 July 2024, wherein the Court clarified that while the award stood annulled, it lacked the power to grant substantive relief and the applicant must resort to de novo arbitration.
Meanwhile, the applicant filed a Section 37 appeal (Commercial Arbitration Appeal (L) No. 31017 of 2024), which remains pending. Undeterred, the applicant instituted the present Section 11 application (Commercial Arbitration Application (L) No. 25035 of 2024) before the Bombay High Court, seeking appointment of an arbitrator for a second round of arbitration.
The matter was reserved on 3 October 2025 and pronounced on 10 October 2025.
2. Identification of Legal Issues
The Court was called upon to address the following key legal issues:
- Whether a fresh arbitration can be initiated while an appeal under Section 37 of the Arbitration and Conciliation Act, 1996 is pending concerning the earlier arbitral award.
- Whether the pendency of prior proceedings or issues of limitation and res judicata bar the Court from appointing an arbitrator under Section 11.
- What is the extent and scope of the Court’s jurisdiction under Section 11 following the 2015 amendments to the Arbitration and Conciliation Act.
3. Arguments of the Parties
Applicant’s Submissions
Counsel for the applicant, Mr. Mayur Khandeparkar, contended that:
- The Section 34 court had unequivocally held that the applicant must initiate arbitration de novo, as it could not modify the award or substitute its findings.
- Relying on the Constitution Bench decision in Gayatri Balasamy v. ISG Novasoft Technologies Ltd. (2025 SCC OnLine SC 986), it was argued that courts now possess clarity regarding modification and severance of arbitral awards, and initiation of fresh arbitration was legally sustainable.
- The Section 11 Court’s inquiry is confined to examining the existence of a valid arbitration agreement; questions of limitation, res judicata, or maintainability fall within the domain of the arbitral tribunal.
- Citing Wadhwa Group Holdings Pvt. Ltd. v. Homi Pheroze Ghandy & Anr. (2022) and Batliboi Environmental Engineers Ltd. v. Hindustan Petroleum Corporation Ltd. (2023 SCC OnLine SC 1208), it was argued that courts have consistently permitted fresh arbitration even during pendency of Section 37 appeals.
Respondent’s Submissions
Counsel for the respondent, Mr. Sheelang Shah, opposed the application, asserting that:
- Multiple rounds of arbitration over the same subject matter violate the principle of finality of litigation and offend res judicata.
- The earlier tribunal’s finding on limitation being a finding of fact could not be reopened.
- The Section 37 appeal remains pending; thus, a new arbitration could lead to conflicting outcomes.
- Further, the applicant had failed to issue a fresh notice of arbitration under Section 21, rendering the Section 11 application premature and non-maintainable.
4. Court’s Analysis and Reasoning
Justice Gautam A. Ankhad undertook a meticulous examination of statutory provisions, binding precedents, and the evolving judicial philosophy of minimal judicial interference in arbitration matters.
Limited Jurisdiction under Section 11
The Court reiterated that post the 2015 amendment, the jurisdiction under Section 11 is narrowly confined to a prima facie examination of the existence of an arbitration agreement, and “nothing more, nothing less”—as affirmed by the Supreme Court in Cox & Kings v. SAP India Pvt. Ltd. [(2025) 1 SCC 611], Interplay between Arbitration Agreements under the A&C Act, 1996 and Stamp Act, 1899 [(2024) 6 SCC 1], and SBI General Insurance Co. Ltd. v. Krish Spinning [(2025) 3 SCC (Civ) 567].
It held that the pendency of proceedings under Section 34 or Section 37 cannot operate as a legal impediment to the appointment of an arbitrator when the arbitration agreement’s existence is undisputed.
Doctrine of Kompetenz-Kompetenz
Citing Section 16 of the Arbitration Act, the Court underscored that the arbitral tribunal alone has competence to rule on its own jurisdiction, including issues of limitation, arbitrability, or res judicata. Any determination of such matters by the Section 11 court would contravene the legislative intent of minimal court interference.
Reference to Precedent
The Court relied extensively on the reasoning in Wadhwa Group Holdings and Batliboi Environmental Engineers, both of which permitted initiation of second-round arbitrations pending appellate review. The Court emphasized consistency with judicial precedent as a constitutional imperative.
On the Concern of Duplicative Proceedings
Acknowledging the respondent’s concern over financial burden and multiplicity, the Court observed that such matters may be raised before the newly appointed tribunal, which possesses power to award costs and regulate arbitration fees under the Fourth Schedule and the Bombay High Court (Fee Payable to Arbitrators) Rules, 2018.
5. Final Conclusion and Holding
Finding that a valid arbitration agreement exists between the parties, the Bombay High Court allowed the Section 11 application and appointed Mr. Anish S. Karande, Advocate, as the Sole Arbitrator to adjudicate all disputes arising out of and in connection with the Agreement dated 29 November 2011.
All substantive issues—including limitation, res judicata, and maintainability—were expressly kept open for determination by the tribunal. The arbitration was directed to be held in Mumbai, with procedural directions for disclosures under Section 12 and service protocols through email.
The Court reaffirmed that judicial intervention at the referral stage must remain minimal, cementing the principle that the existence of an arbitration agreement alone triggers arbitral reference, even amidst ongoing appellate proceedings.
FAQs:
1. Can a new arbitration be initiated while an appeal against a previous award is still pending?
Yes. As held by the Bombay High Court, pending appellate proceedings under Section 37 do not prevent the initiation of a fresh arbitration when the earlier award has been set aside and a valid arbitration clause exists.
2. What is the scope of a court’s power under Section 11 of the Arbitration Act?
Post the 2015 amendments, a court under Section 11 can only examine whether a valid arbitration agreement exists between the parties. Questions of limitation or arbitrability are for the arbitral tribunal.
3. Does res judicata apply in arbitration proceedings?
The principle of res judicata can apply if issues have been finally adjudicated; however, determination of such applicability falls within the arbitral tribunal’s jurisdiction under Section 16.
4. Can courts modify or rewrite an arbitral award while setting it aside under Section 34?
No. The Section 34 court may only uphold or set aside an award—it cannot modify or substitute it. Once an award is set aside, parties must commence arbitration afresh.
5. How are arbitration costs and fees determined in India?
Under the Fourth Schedule of the Arbitration Act and relevant High Court rules, the arbitral tribunal can determine costs proportionate to the claim value, ensuring fairness and preventing undue financial burden.
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