Summary
| Category | Data |
|---|---|
| Court | Supreme Court of India |
| Case Number | C.A. No.-014836-014836 – 2025 |
| Diary Number | 17103/2023 |
| Judge Name | HON’BLE MR. JUSTICE PAMIDIGHANTAM SRI NARASIMHA |
| Bench |
HON’BLE MR. JUSTICE PAMIDIGHANTAM SRI NARASIMHA HON’BLE MR. JUSTICE ATUL S. CHANDURKAR |
| Precedent Value | Binding authority |
| Overrules / Affirms | Affirms existing precedents on limited Section 11 inquiry |
| Type of Law | Arbitration law under the Arbitration and Conciliation Act, 1996 |
| Questions of Law |
|
| Ratio Decidendi | The Court held that Section 11(6-A) mandates only a prima facie determination of the “existence” of an arbitration agreement at the referral stage. Detailed challenges to capacity, authority or arbitrability must be left to the Arbitral Tribunal under Section 16. This approach gives effect to the doctrine of kompetenz-kompetenz and the legislative policy of minimal judicial intervention in arbitration matters. |
| Judgments Relied Upon |
|
| Logic / Jurisprudence / Authorities Relied Upon by the Court | The Court emphasised the legislative intent behind Section 11(6-A) to limit pre-arbitral judicial scrutiny to a prima facie existence test. It applied the doctrine of kompetenz-kompetenz, distinguishing the referral-stage inquiry from the detailed jurisdictional and capacity adjudication entrusted to the Arbitral Tribunal under Section 16. |
| Facts as Summarised by the Court | APGENCO invited EPC bids from a consortium (led by Tecpro Systems Ltd.). A Letter of Intent and Purchase Orders were issued to the consortium. Tecpro, facing financial distress, lost leadership and entered CIRP. It nonetheless served arbitration notices individually. APGENCO did not appoint an arbitrator, leading Tecpro to move the Telangana High Court under Section 11(6). The High Court constituted the tribunal, and APGENCO appealed. |
Practical Impact
| Category | Impact |
|---|---|
| Binding On | All courts exercising jurisdiction under Section 11 of the Arbitration and Conciliation Act, 1996 |
| Persuasive For | High Courts, Arbitral Tribunals |
| Follows |
|
What’s New / What Lawyers Should Note
- Section 11(6-A) restricts the referral court’s role to a prima facie “existence” check of an arbitration agreement, without deep dives into capacity, authority or arbitrability.
- Challenges to an individual consortium member’s right to invoke arbitration must be decided by the Arbitral Tribunal under Section 16, not at the Section 11 stage.
- The judgment reaffirms the competence-competence doctrine and legislative policy of minimal judicial intervention in pre-arbitral proceedings.
- Prima facie party-status for referral can be based on incorporation of the arbitration clause by reference into downstream Purchase Orders.
- Lawyers can cite this as binding authority to resist mini-trials in Section 11 applications.
Summary of Legal Reasoning
- Section 11(6-A) narrows the referral-stage inquiry to whether there is a prima facie arbitration agreement.
- Legislative policy and precedents (Duro Felguera; In Re Interplay; Shin-Etsu) mandate minimal judicial intervention, preserving kompetenz-kompetenz.
- Detailed questions of capacity, authority or existence of an arbitration agreement against a non-signatory or individual consortium member fall exclusively within the Arbitral Tribunal’s jurisdiction under Section 16.
- Referral court must refrain from undertaking a “mini-trial” on contentious factual or legal disputes at the Section 11 stage.
- Past orders in related disputes (same project) directing comprehensive arbitration proceedings underscore the appropriateness of referral.
Arguments by the Parties
Petitioner (APGENCO & VA Tech Wabag Ltd.)
- No arbitration agreement exists with individual consortium members; clause applies only to the consortium as a single legal “Contractor.”
- Purchase Orders omitted any arbitration clause, providing exclusive civil-court jurisdiction instead.
- Group-of-companies doctrine inapplicable; mutual intent to arbitrate exists only for the consortium.
- Tecpro lost consortium leadership and entered insolvency, thus lacking authority to invoke arbitration.
- Reliance on High Court precedents rejecting unilateral arbitration by individual consortium members.
Respondent (Tecpro Systems Ltd.)
- Tender specifications and Purchase Orders expressly incorporate the GCC and Clause 22.2 arbitration agreement by reference.
- “Contractor” includes the legal successors of the original bidder; consortium ceases on insolvency, leaving members to pursue claims individually.
- A consortium is not a separate juristic entity unless incorporated; individual members retain enforceable contractual interests.
- Jurisdiction clause in Purchase Orders indicates Hyderabad as the seat, harmonising with the GCC.
- Capacity and authority objections go to Section 16 jurisdiction and should not block a Section 11 referral.
Factual Background
APGENCO floated an EPC tender for its Rayalseema plant, inviting consortium bids. A consortium led by Tecpro Systems Ltd. won and entered into Purchase Orders incorporating a GCC arbitration clause. Tecpro faced financial distress, ceased to be lead member, and entered CIRP. It served arbitration notices individually, which APGENCO did not honour, prompting a Section 11(6) petition in the Telangana High Court. The High Court appointed an arbitrator; APGENCO appealed to the Supreme Court.
Statutory Analysis
- Section 11(6): Empowers courts to refer parties to arbitration if an agreement exists.
- Section 11(6-A): Limits court scrutiny to a prima facie examination of the arbitration agreement’s existence.
- Section 16: Vests the Arbitral Tribunal with authority to rule on its own jurisdiction, including challenges to existence, validity, capacity and authority.
- The judgment underscores legislative intent for minimal pre-arbitral intervention and strict separation between referral and jurisdictional determinations.
Alert Indicators
- ✔ Precedent Followed – The judgment affirms established Supreme Court precedents on limited Section 11 inquiry and competence-competence.