Courts cannot consider Order 2 Rule 2 CPC while deciding petition u/s 11 of Arbitration Act, Delhi HC

The Delhi High Court recently held that Courts cannot adjudicate upon the validity of a claim under Order II Rule 2 of the Civil Procedure Code (CPC) while hearing an application under Section 11 of the Arbitration and Conciliation Act..The Single Judge Bench of Justice Navin Chawla, in his judgment, said,.“The legislature by amending the Act by way of the Arbitration and Conciliation (Amendment Act) 2015 and the insertion of Section 11(6A) of the Act has also restricted the scrutiny of the Court at the stage of adjudicating an application under Section 11 of the Act only to the existence of the Arbitration Agreement.”.The petitioner in the case, Parsvnath Developers Ltd, signed a development agreement with the respondent Rail Land Development Authority. An application under Section 11 of the Arbitration Act to appoint an Arbitrator on behalf of the respondent was filed by the petitioner..The petitioner, via a notice, had appointed its Arbitrator to adjudicate on a claim and sought for the respondent to appoint its Arbitrator to set up the Arbitral Tribunal. The respondent refused to comply on the grounds that the petitioner’s claims are barred under Order II Rule 2 of the CPC and thus, there was no dispute to be adjudicated by the Arbitral Tribunal..While the said reply of the respondent was not placed on record, the same was argued before the Court. The respondent contended that claims raised by the petitioner would be barred based on the principle of res judicata and estoppel as well..Order II Rule 2 of the CPC prescribes that every suit must include the whole claim that a party is entitled to and when a part of a claim is relinquished, the same cannot be sued for thereafter..The petitioner, however, apprised the Court that the right to raise this specific claim was reserved by the petitioner in the Statement of Claim submitted in the previous Arbitration proceedings..The petitioner was represented by Senior Advocate Ciccu Mukhopadhyay along with Advocates Vijay Nair, Saurav Agrawal, Shubham Paliwal, Kapil Rustogi, Aakriti Dawar, and Vibhu Anshuman. The respondent was represented by Advocates Shaurya Sahay, Avijit Mani Tripathi, and Kumar Abhishek..The Court noted that an Arbitration agreement can be invoked any number of times and does not cease to exist “only with the invocation for the first time.”.Further, the Court clarified that the question of whether a claim is barred under provisions of the CPC, res judicata, or estoppel is a question beyond the Court’s jurisdiction under Section 11 of the Arbitration Act, which deals specifically with the appointment of Arbitrators..The Court also noted that the existence of the Arbitration agreement itself and the fact that the same was invoked by the petitioner at a previous instance are not in dispute. Owing to this, the Court held that there was “no impediment in appointing a nominee arbitrator” for the respondent..“I see no impediment in appointing a nominee Arbitrator for the respondent to adjudicate the disputes that are sought to be raised by the petitioners in relation to the abovementioned Development Agreement. In such proceedings, all objections of the respondent shall remain open and it would be for the Arbitral Tribunal to decide the same, may be as primary issues.”.The Court went on to appoint Justice Vikramajit Sen, retired Judge of the Supreme Court, as the Arbitrator on behalf of the respondent. Justice Sen, along with the Arbitrator appointed by the petitioner, would appoint the Presiding Arbitrator, the Court held..Read Judgment:

Courts cannot consider Order 2 Rule 2 CPC while deciding petition u/s 11 of Arbitration Act, Delhi HC

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