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Supreme Court of India

ASLAM ISMAIL KHAN DESHMUKHversusASAP FLUIDS PVT. LTD. & ANR.

Citation
2024 INSC 849
Decided
7 November 2024

Holding

A Section 11(6) application is valid if filed within three years of the other party's failure to comply with a valid arbitration notice, and the court must not adjudicate the substantive limitation of the underlying claims at the referral stage.

Summary

The petitioner, a non‑resident Indian, claimed entitlement to 400,000 and 200,010 equity shares under a 2011 Shareholders Agreement and sought appointment of an arbitrator under Section 11(6) of the Arbitration & Conciliation Act, 1996 after the respondents failed to issue share certificates. The respondents argued that the petitioner's claims were barred by limitation, contending that the cause of action arose either on the date of his resignation in 2013 or earlier correspondence in 2015, making the claims ex‑facie time‑barred. The Supreme Court examined whether the Section 11(6) application itself was filed within the three‑year limitation period, concluding that the limitation clock started on 23 February 2017 (the date of respondents' failure to respond to the arbitration notice) and the petitions filed on 9 April 2019 were timely. The Court reiterated that at the referral stage the court's inquiry is limited to the existence of a prima facie arbitration agreement and whether the Section 11(6) petition is within limitation, leaving substantive limitation questions to the arbitral tribunal. Consequently, the petitions were allowed and a sole arbitrator, already appointed in a related dispute, was directed to hear the present matters, with costs potentially imposed on the petitioner if the claims are later found time‑barred.

Issues considered

  • The applicability of the Limitation Act, 1963 to a Section 11(6) application for appointment of an arbitrator.
  • Whether the Section 11(6) petition filed by the petitioner is barred by the three‑year limitation period.
  • Whether the substantive claims of the petitioner are ex‑facie time‑barred and thus non‑arbitrable at the referral stage.

Legislation cited

Subjects

Section 11(6) of the Arbitration & Conciliation Act, 1996Referral courtJurisdiction of referral courtLimitationPetitions filed within limitationAppointment of an arbitratorShareholders AgreementService AgreementEx facie time‑barred claimsLimited enquiryArbitration commencement dateLock‑in periodCosts for abuse of process

Judgment

                    [2024] 12 S.C.R. 108 : 2024 INSC 849

                        Aslam Ismail Khan Deshmukh
                                      v.
                         Asap Fluids Pvt. Ltd. & Anr.
                        (Arbitration Petition No. 20 of 2019)
                                  07 November 2024
     [Dr Dhananjaya Y Chandrachud, CJI, J.B. Pardiwala*
                   and Manoj Misra, JJ.]


                               Issue for Consideration
          Petitioner sought appointment of an arbitrator for the adjudication
          of disputes and claims in terms of the Shareholders Agreement
          between the parties. Whether the reference under Section 11(6)
          of the Arbitration & Conciliation Act, 1996, should be declined by
          examining whether the substantive claims of the petitioner are
          ex facie and hopelessly time barred.

                                      Headnotes†
          Arbitration & Conciliation Act, 1996 – s.11(6) – Appointment
          of Arbitrators – Jurisdiction of referral court – Scope of
          interference – Petitions filed u/s.11(6), if within limitation:
          Held: Courts at the referral stage can interfere only in rare cases
          where it is manifest that the claims are ex facie time-barred and
          dead, or there is no subsisting dispute – While determining the
          issue of limitation in the exercise of powers u/s.11(6), the referral
          court must only conduct a limited enquiry for the purpose of
          examining whether the s.11(6) application has been filed within the
          limitation period of three years or not – At this stage, the referral
          court would not indulge in an intricate evidentiary enquiry into the
          question of whether the claims raised by the petitioner are time
          barred – Such a determination must be left to the decision of
          the arbitrator – Petitioner had issued notice invoking arbitration
          on 23.01.2017 which was delivered to both the respondents on
          24.01.2017 – However, the respondents failed to reply to the said
          notice within 30 days i.e. within 23.02.2017 – Therefore, the period
          of limitation of three years, for the purposes of a s.11(6) petition,
          would begin to run from 23.02.2017 i.e., the date of failure or refusal
          by the other party to comply with the requirements mentioned

*Author
[2024] 12 S.C.R.                                                              109

     Aslam Ismail Khan Deshmukh v. Asap Fluids Pvt. Ltd. & Anr.


     in the notice invoking arbitration – Thus, the present petitions
     u/s.11(6) filed on 09.04.2019 were within limitation – Furthermore,
     at the stage of s.11 application, the referral Courts need only
     to examine whether the arbitration agreement exists or not –
     The existence of the arbitration agreement in the Shareholders
     Agreement is not disputed – Petitions allowed – Sole arbitrator
     already appointed for the adjudicating disputes between the
     parties in relation to the Service Agreement, appointed for
     adjudication of the present disputes pertaining to the Shareholders
     Agreement – Issue as regards the claim of the petitioner being
     ex facie time barred may be adjudicated as a preliminary issue –
     Limitation Act, 1963. [Paras 32, 39, 41, 44-46]

     Arbitration & Conciliation Act, 1996 – s.11(6) – Limited scope
     of interference by referral courts – Interests of the party forced
     to participate in the arbitration proceedings to be balanced,
     arbitral tribunal may impose costs on the party abusing
     process of law:
     Held: At the stage of s.11 application, the referral Courts need
     only to examine whether the arbitration agreement exists or not,
     nothing more, nothing less – However, some parties might take
     undue advantage of such a limited scope of judicial interference
     of the referral courts and force other parties to the agreement into
     participating in a time consuming and costly arbitration process
     in cases, including but not limited to, where the claims are either
     ex facie time-barred or are discharged through "accord and
     satisfaction", or cases where the impleadment of a non-signatory
     to the arbitration agreement is sought etc. – In order to balance
     such a limited scope of judicial interference with the interests of the
     parties who might be constrained to participate in the arbitration
     proceedings, the arbitral tribunal may impose costs of the arbitration
     on the party which the Tribunal ultimately finds to have abused the
     process of law and caused unnecessary harassment to the other
     party to the arbitration. [Para 44]

                               Case Law Cited
     Interplay between Arbitration Agreements Under the Arbitration
     and Conciliation Act, 1996 and the Indian Stamp Act, 1899, In Re
     [2023] 15 SCR 1081 – followed.
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       Vidya Drolia & Ors v. Durga Trading Corporation [2020] 11 SCR
       1001 : (2021) 2 SCC 1; Bharat Sanchar Nigam Limited and Another
       v. Nortel Networks India Private Limited [2021] 2 SCR 644 : (2021)
       5 SCC 738; SBI General Insurance Co. Ltd. v. Krish Spinning
       [2024] 7 SCR 840 : 2024 SCC OnLine SC 1754 – relied on.
       Arif Azim Company Limited v. Aptech Limited [2024] 3 SCR 73 :
       (2024) 5 SCC 313 – referred to.

                                    List of Acts
       Arbitration & Conciliation Act, 1996; Limitation Act, 1963.

                                List of Keywords
       Section 11(6) of the Arbitration & Conciliation Act, 1996; Referral
       court; Jurisdiction of referral court; Limitation; Petitions filed under
       Section 11(6) of the Arbitration & Conciliation Act, 1996 within
       limitation; Appointment of an arbitrator; Shareholders Agreement;
       Service Agreement; Non-Resident Indian; Claims ex facie and
       hopelessly time barred; Limited enquiry; No intricate evidentiary
       enquiry; Period of limitation of three years for Section 11(6)
       petition; Notice invoking arbitration; Failure or refusal by the other
       party to comply with the requirements; Arbitration agreement;
       Existence of a prima facie arbitration agreement; Sole arbitrator;
       Time consuming, Costly arbitration process; Claims ex facie
       time-barred; Preliminary issue; Claims discharged through "accord
       and satisfaction"; Impleadment of a non-signatory to the arbitration
       agreement sought; Costs; Abuse of process of law; Harassment
       caused to the other party to the arbitration.

                               Case Arising From
       CIVIL ORIGINAL JURISDICTION: Arbitration Petition No. 20 of 2019
       (Under Section 11(6) read with Section 11(12)(a) of the Arbitration
       & Conciliation Act, 1996)
       With
       Arbitration Petition No. 22 of 2019

                            Appearances for Parties
       Kunal Cheema, Raghav Deshpande, Shubham Chandankhede,
       Advs. for the Petitioner.
[2024] 12 S.C.R.                                                     111

     Aslam Ismail Khan Deshmukh v. Asap Fluids Pvt. Ltd. & Anr.


     Ms. Jasmine Damkewala, Rajesh Kumar, Ms. Vaishali Sharma,
     Ms. Rachita Sood, Ms. Nishtha Tyagi, Divyam Khera, Tushar,
     Advs. for the Respondents.

                Judgment / Order of the Supreme Court
                               Judgment

     J.B. Pardiwala, J.
1.   Since the captioned petitions raise analogous issues between the
     same parties, those were taken up together and are being disposed
     of by this common judgment and order.
2.   The petitioner has filed the present two petitions in terms of
     Section 11(6) read with Section 11(12)(a) of the Arbitration
     & Conciliation Act, 1996 (for short “the Act, 1996”), seeking
     appointment of an arbitrator for the adjudication of disputes and
     claims in terms of Clause 13.10 of the Shareholders Agreement dated
     25.07.2011 entered into between the petitioner and the respondents.

     I.   FACTUAL MATRIX
3.   Aslam Ismail Khan Deshmukh (hereinafter referred to as the
     “petitioner”) is a Non-Resident Indian, who is currently residing
     and working in Dubai, UAE, having experience and expertise in the
     drilling fluid industry.
4.   ASAP Fluids Pvt. Ltd. (hereinafter referred to as the “respondent
     no.1”) is an Indian private limited company engaged in providing
     drilling fluids services to the oil and gas industry, whereas Gumpro
     Drilling Fluids Pvt. Ltd. (hereinafter referred to as the “respondent
     no. 2”) is a private limited company that specializes in oil field
     services and offers mud services.
5.   A Shareholders Agreement dated 25.07.2011 (hereinafter referred
     to as “Shareholders Agreement”) was executed by and among
     the petitioner, respondent no.1, respondent no.2, Mr. Robert
     Wayne Pantermuehl, and Mr. Sunil B. Shitole. In terms of the said
     Shareholders Agreement, the petitioner was to hold 4,00,000 equity
     shares of respondent no. 1 and also participate in the management
     of respondent no.1 company. The relevant clauses from the same
     are reproduced hereinbelow:
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       "4. RIGHT OF PRE-EMPTION FOR ISSUE OF
       NEW DILUTION INSTRUMENTS OR DILUTION OF
       SHAREHOLDING
       Present issued, subscribed and paid up share capital of
       the Company is Rs.2,64,00.000/- divided into 26,40,000
       equity shares of INR 10 each which is held by the members
       as mentioned below:
            a.   Gumpro holding 18,00,000 equity shares of
                 Rs. 10/- each in the Company.
            b.   Bob currently holding only 40,000 equity shares
                 of Rs. 10/- each and shall be allotted additional
                 360,000 equity shares subject to getting the
                 approval of Foreign Investment Promotion Board
                 (FIPB). Ministry of’ Finance and Reserve Bank of
                 India or such other approval as may be required
                 as per Indian Law.
            c.   Aslam Khan holding 400,000 equity shares of
                 Rs. 10/- each in the Company and
            d.   Sunil Shitole holding 400,000 equity shares of
                 Rs. 10/- each in the Company.
       On allotment of further 360,000 equity shares to Bob,
       the issued, subscribed and paid up share capital of the
       Company will be Rs. 3 Crores divided into 30,00,000 equity
       shares of Rs. 10/- each which will be held as follow:
            a.   Gumpro 18,00,000 equity shares of Rs. 10/-
                 each in the Company
            b.   Bob 400,000 equity shares of Rs. 10/- each in
                 the Company
            c.   Aslam Khan 400,000 equity shares of Rs. 10/-
                 each in the Company and
            d.   Sunil Shitole 400,000 equity shares of Rs. 10/-
                 each in the Company·
       Gumpro has provided Rs.4,58,39,200 Crores as unsecured
       Loan (as on 31st March 2011) and Gumpro will additionally
       raise Rs.6.6 Crores for the Company from private equity
[2024] 12 S.C.R.                                                           113

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          fund or venture capital fund and advance it to the Company
          as secured loan against the security of equipments of the
          Company.
          General. Subject to the terms and conditions specified in
          Section 4.3, the affirmative approval provisions contained
          in Section 9 and applicable Indian law, in the event that
          the Company proposes to issue any Dilution Instruments,
          the Company shall first offer such Dilution Instruments
          to all the Shareholders on rights basis, in proportion
          to their shareholding ratio in the Company on the date
          immediately prior to such further issue, in accordance
          with the procedure set forth in Section 4.2. It is clarified
          that the shareholding pattern of the Company as stated
          in Clause 4.1 shall be maintained at all times, save and
          except in the circumstances specified in Clause 4.2 below.
          It is agreed and understood by all the Parties to this
          Agreement that any Shares offered/ issued or subscribed
          by the Other Shareholder will be under lock -in period
          of 3 (Three) years from the date of its allotment. The Board
          shall prior to undertaking any such issue appoint any
          reputed investment banker/ Chartered accountant to carry
          out a valuation of the Company. The Board shall ensure
          that the capital shall be raised at valuation no lower than
          the valuation set forth in the report of such investment
          banker/ Chartered Accountant.

                 xxx                 xxx                   xxx
          5 RESTRICTIONS ON TRANSFER OF SHARES AND
          PROVISIONS RELATING TO TRANSMISSION OF
          SHARES
          5.1 Other Shareholder Share Sale Restriction.
          Notwithstanding anything contained elsewhere in this
          Shareholder’s Agreement, the Other Shareholder agree
          that they shall not, whether collectively or individually,
          directly or indirectly, Transfer any part of their shareholding
          in the Company in whatever form, or any legal or beneficial
          interest therein, until the earlier of: (a) Gumpro ceasing to
          hold a minimum of two percent (2%) of its shareholding in
          the Company and (b) the completion of a Qualified Public
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            Offering, except in compliance with this Shareholders’
            Agreement, particularly Section 6. Without prejudice to the
            generality of the foregoing. The Other Shareholder shall
            not Transfer any part of their individual shareholding until
            the expiry of three (03) years from the date of issue of
            such shares. It has been clearly understood and agreed
            that the shares of the Other Shareholder are locked-in for
            a period of three years from the date of its issuance or
            conversion of it into equity shares.

                   xxx                 xxx                  xxx
            6. RIGHT OF FIRST REFUSAL AND RIGHT OF CO-SALE
            6.1 General. Subject to the provisions of Section 5, the
            Other Shareholder (for this Section “Selling Shareholder”)
            hereby unconditionally and irrevocably grants to Gumpro
            a right (the “Right of First Refusal”) to purchase all or a
            portion of the Shares that such Selling Shareholder may
            propose to Transfer (“Sale Shares”).”
6.     Mr. Anand Gupta, the Managing Director of respondent no.2 informed
       the petitioner, vide letter dated 22.09.2011, that 2,00,010 equity
       shares of respondent no.1 which belong to the petitioner were being
       held by respondent no.2 in its name. It was stated therein that this
       arrangement was made to provide comfort to the potential investors
       in respondent nos.1 and 2 respectively. It was further clarified that
       the abovementioned shares held by respondent no.2 would be
       governed by the Shareholders Agreement dated 25.07.2011 and that
       those shall not be pledged or sold at any time without the written
       consent of the petitioner. At the time of sale of respondent no.1, it
       was confirmed that the value of these shares net of taxes would be
       paid to the petitioner or his nominee.
7.     Subsequently, the respondent no.1 along with its Dubai subsidiary
       company, ASAP Fluids DMCC (hereinafter referred to as the “Dubai
       subsidiary”) entered into a Service Agreement dated 18.10.2011
       (hereinafter referred to as, the “Service Agreement”) with the
       petitioner. By the Service Agreement, the petitioner was appointed
       as a Director of respondent no.1 and its Dubai subsidiary. Among
       his responsibilities in relation to respondent no.1, the petitioner was
       also required to carry on the responsibilities of the full operations of
[2024] 12 S.C.R.                                                         115

     Aslam Ismail Khan Deshmukh v. Asap Fluids Pvt. Ltd. & Anr.


     the Dubai subsidiary. He was obligated to hold office for an initial
     period of 3 years w.e.f. 01.01.2011. The Service Agreement provided
     for the remuneration and benefits that the petitioner was entitled to.
     The relevant clauses from the same are reproduced hereinbelow:
           "3. TERM
          3.1 The Director shall hold the office for a period of
          three years commencing from ________ subject to the
          determination thereof as hereinafter provided.

                 xxx                xxx                   xxx
          10. TERM AND TERMINATION
          […]
          10.2 Aslam Khan shall not for a period of three (3) years
          from the Effective Date (Initial Term), terminate this
          Agreement. In case if he terminates his employment prior
          to Initial Term, he shall transfer all the equity shares held
          by him in favour of the Promoter of the Company at zero
          consideration implying his outstation from the register of
          members of the Company.”
8.   On the same day, i.e., on 18.10.2011, the petitioner signed an
     Agreement for Transfer of Commercial Expertise (hereinafter referred
     to as “Commercial Expertise Agreement”) with respondent nos.
     1 and 2 respectively, agreeing to the transfer of all his commercial
     expertise, knowledge and experience in the field of getting approvals
     from the government, and handling administrative and legal aspects of
     the business to respondent no. 1. In return, respondent no. 1 agreed
     to issue 4,00,000 equity shares of Rs. 10/- each to the petitioner
     for consideration other than cash. The relevant recitals and clauses
     from the same are reproduced hereinbelow:
          “ WHEREAS
          […]
          3. The Parties have agreed before starting this venture that
          the Transferor shall transfer all his commercial expertise
          knowledge and experience in the field of getting the
          approvals of government. handling administrative and legal
          aspects of the Business (“Commercial Expertise·’) to the
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       Transferee and the Transferee shall issue him 400,000
       equity shares of Rs.10/- each in the Transferee Company
       for the consideration other than cash for transferring such
       Commercial Expertise to the Transferee and continuing
       with the transferee Company for minimum period of three
       (3) years and the such shares allotted to him shall be
       under lock in for three years.

              xxx                 xxx                   xxx
       3. TRANSFER OF COMMERCIAL EXPERTISE AND
       ISSUE OF SHARES
       3.1 It is hereby agreed by and between the parties hereto that
       all the Commercial Expertise of the Transferor pertaining
       to or referable to all expertise in the management of the
       Business and its related activities including Administration,
       ensuring smooth performance, high efficiency and
       productivity along with knowledge on tender participations
       etc. shall be transferred to and unto the transferee and
       the Transferor shall work for a minimum period of 3 years
       for the Transferee or its affiliate or group company either
       in India or Overseas effective from 1st January 2011 and
       the Transferee shall issue and allot 400,000 Equity Shares
       of Rs. 10/- each at par in the Transferee Company in
       lieu thereof by way of consideration for transfer of such
       Commercial Expertise as mentioned above and holding
       such shares under lock in for minimum period of 3 years.
       The Transferor shall then assign and transfer all the
       Transferor’s right, title and interest in all the Commercial
       Expertise for the entire world and for entire period during
       which this Commercial Expertise subsists to and unto the
       Transferee absolutely.

              xxx                 xxx                   xxx
       4. COVENANTS OF THE TRANSFEROR
       4.1 The Transferor ensures that he shall continue in the
       employment of the Transferee for minimum period of three
       years effective from 1st January 2011.
       […]
[2024] 12 S.C.R.                                                          117

     Aslam Ismail Khan Deshmukh v. Asap Fluids Pvt. Ltd. & Anr.


          4.3 If at any time after a minimum period of 3 years as
          locking of shares the transferee wish to sell his share to the
          transferee he must first offer for sale to management, all
          (and not only some unless management agrees otherwise)
          of the shares owned by him (“the Sale Shares”) at a price
          as mutually agreed with him and the management at the
          relevant time.”

                 xxx                 xxx                   xxx
          10. TERM OF THE AGREEMENT
          […]
          10.2 The term for this Agreement will start on Allotment of
          Shares by the Transferee to the Transferor and the such
          allotted Shares will be under Lock in for a period of three
          years from the date of its Allotment and the Transferor shall
          not leave the services with the Transferee for a period of
          three years from the date of Allotment of Shares in the
          Company as per terms of this Agreement”
                                                 (Emphasis supplied)
9.   Upon certain other issues arising between the parties, the petitioner
     tendered his resignation as the Director in respondent no. 1 and
     its Dubai subsidiary. The resignation was accepted by the Dubai
     subsidiary vide Director’s Resolution dated 18.07.2013.
10. The petitioner was concerned with the failure of respondent no.2 in
    transferring 2,00,010 shares in respondent no.1 which belonged to the
    petitioner despite confirmation of the same vide letter dated 22.09.2011
    and also the non-issuance of the share certificates evidencing allotment
    of additional 2,00,010 shares in the name of the petitioner by respondent
    no. 1. The petitioner further contended that despite holding 4,00,000
    equity shares in respondent no.1 as per the Shareholders Agreement,
    respondent no.1 failed to issue duly stamped, signed and sealed share
    certificates evidencing such an allotment to the petitioner.
11. It is the case of the petitioner that he had requested respondent no.1
    on several occasions to either issue the share certificates evidencing
    allotment of 4,00,000 equity shares or in the alternate, return the
    amount equivalent to such shares. The petitioner alleged that, since
    the share certificates were not issued to him, he was unable to send
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       an ‘offer notice’ to sell his portion of equity shares to respondent
       no.2 who has the “Right of First Refusal” under Clause 6 of the
       Shareholders Agreement.
12. The petitioner stated that since the respondents were not paying
    heed to his repeated requests for issuance of share certificates,
    the petitioner sent a Common Notice dated 23.01.2017 (hereinafter
    referred to as “Arbitration Notice”) to both the respondents, directing
    them to either issue the share certificates evidencing allotment of
    2,00,010 and 4,00,000 shares respectively or in the alternate, to return
    the amount equivalent to those shares. The same was received by
    both the respondents on 24.01.2017. In the event of a dispute, the
    Arbitration Notice called upon the respondents to appoint arbitrators
    in terms of Clause 13.10 of the Shareholders Agreement. The said
    clause is reproduced hereinbelow:
            "13.10. Dispute Resolution. Any dispute, claim or
            controversy arising under or relating to this Agreement,
            including without limitation any dispute concerning the
            existence or enforceability hereof, shall be resolved by
            arbitration in Mumbai in accordance with the Arbitration
            and Conciliation Act, 1996. The dispute will be referred
            to the arbitrator, and Gumpro has right to appoint 2
            (two) arbitrators and Other Shareholder have the right to
            appoint 1(one) arbitrator. All these three (03) arbitrators,
            will appoint one of them to act as umpire of the arbitral
            tribunal. The language of the arbitration shall be English.
            Any arbitration award by the arbitral tribunal shall be
            final and binding upon the Parties, shall not be subject
            to appeal, and shall be enforced by judgment of a court
            of competent jurisdiction.”
13. As there was no response from the respondents, the petitioner filed
    two separate applications dated 03.03.2017 under Section 11(6)
    of the Act, 1996, bearing Arbitration Application No. 50 of 2017 for
    adjudication of disputes pertaining to the 4,00,000 equity shares and
    Arbitration Application No. 51 of 2017 for adjudication of disputes
    pertaining to 2,00,010 equity shares, before the High Court of Bombay,
    praying for the appointment of an arbitral tribunal.
14. After nearly 10 months from the date of the arbitration notice,
    on 07.11.2017, the respondents sent a reply denying and disputing all
[2024] 12 S.C.R.                                                        119

     Aslam Ismail Khan Deshmukh v. Asap Fluids Pvt. Ltd. & Anr.


     the claims and allegations made by the petitioner. Without prejudice to
     the contentions in the reply, the respondents appointed two arbitrators
     in terms of clause 13.10 of the Shareholders Agreement and called
     upon the petitioner to nominate the third arbitrator. It was asserted
     that the alleged claim of 2,00,010 shares or the value thereof cannot
     be referred to arbitration as it does not fall within the remit of the
     dispute resolution clause of the Shareholders Agreement.
15. The High Court of Bombay vide Judgment and final order
    dated 22.02.2019 held that the petitioner is a Non-Resident Indian
    who habitually resides and works in Dubai. The proceedings would
    constitute an “international commercial arbitration” and therefore, the
    Section 11 applications filed before it were not maintainable.
16. In light of the above and upon the dismissal of the Section 11
    applications by the High Court, the petitioner has filed the present
    petitions before this Court i.e., Arbitration Petition No.20 and
    Arbitration Petition No. 22 under Section 11(6), for appointment of an
    arbitral tribunal, to adjudicate the disputes under the Shareholders
    Agreement pertaining to 2,00,010 shares and 4,00,000 shares
    respectively.

     II.   SUBMISSIONS ON BEHALF OF THE PETITIONER
17. Mr. Kunal Cheema, the learned counsel appearing for the petitioner,
    submitted that both the arbitration petitions arise out of disputes
    under the Shareholders Agreement. Clause 13.10 of the agreement
    provides for the arbitration clause and the same has not been
    disputed by the parties.
18. It was submitted that the petitioner was entitled to be allotted 4,00,000
    equity shares of Rs. 10 each in respondent no.1 company
    under the Shareholders Agreement. In addition, as per the letter
    dated 22.09.2011, respondent no.2 further confirmed that 2,00,010
    equity shares in respondent no.1 which belonged to the petitioner,
    were being held by respondent no.2. Despite repeated reminders to
    both the respondents, the share certificates of the aforementioned
    shares were not issued to the petitioner.
19. The counsel submitted that the respondents have raised two broad
    contentions - one, with respect to the merits of the dispute; and two,
    that the claims made in the petitions are not maintainable as they
    are barred by limitation. As regards the first aspect, it was submitted
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       that the merits of the dispute can be looked into by the arbitral
       tribunal and arguments on merit can be made after the parties file
       their pleadings and lead evidence therein.
20. On the issue of limitation, it was submitted that under the Shareholders
    Agreement, there was no time frame within which the share
    certificates were to be issued to the petitioner. On a reading of the
    letter dated 22.09.2011, the value of the share was to be paid to
    the petitioner at the time of sale of respondent no.1 company. As
    far as the petitioner is aware, such a sale has not been made, at
    least till the issuance of notice dated 23.02.2017. Hence, there is
    no specific date/day on which it can be ascertained that the cause
    of action had arisen.
21. The counsel submitted that it is the case of the respondents that
    certain correspondence was exchanged between the parties in
    the period between 06.08.2015 and 15.10.2015. Therefore, the
    Arbitration Notice dated 23.01.2017 was sent within 3 years from
    15.10.2015 which is the date of the last legal notice sent by the
    respondents to the petitioner. Thereafter, the petitioner filed two
    arbitration applications on 03.03.2017 before the High Court of
    Bombay which were ultimately dismissed on 22.02.2019. Immediately
    thereafter, on 09.04.2019, the present petitions were filed before
    this Court. Therefore, the arbitration petitions cannot be said to
    be ex-facie time barred and the implication or interpretation of the
    said correspondences could be looked into by the arbitral tribunal
    while deciding the claim and its maintainability on the question of
    limitation and merits.
22. It was submitted that, without prejudice to the aforesaid contention,
    even if it is assumed that the “cause of action” had arisen at any
    specific point of time, there is a continuing breach of contract since
    the respondents failed to provide the share certificates and abide
    by the Shareholders Agreement and the letter dated 22.09.2011.
    Therefore, in view of Section 22 of the Limitation Act, 1963, a fresh
    period of limitation would begin to run at every moment of time during
    which the breach continues.
23. Another submission of the counsel was that the respondents, on
    07.11.2017 had sent a reply to the Arbitration Notice dated 23.01.2017
    wherein they appointed two arbitrators as per Clause 13.10 of the
    Shareholders Agreement. The same was sent after the applications
    under Section 11(6) were filed before the High Court of Bombay. In
[2024] 12 S.C.R.                                                      121

     Aslam Ismail Khan Deshmukh v. Asap Fluids Pvt. Ltd. & Anr.


     the said letter, the respondents have not contended that the claim
     is time barred.
24. It was further submitted that, in reply to the Arbitration Notice, the
    only case of the respondents is that the issue regarding the 2,00,010
    shares cannot be referred to arbitration under clause 13.10 of the
    Shareholders Agreement and that the scope of arbitration should
    be confined only to the issue of the 4,00,000 shares. However, the
    letter dated 22.09.2011 clearly states that the 2,00,010 shares will
    be governed by the Shareholders Agreement. Therefore, this being
    a contentious issue should be considered by the arbitral tribunal.
25. The counsel finally submitted that, in the event the Court is inclined
    to allow the petition, then, considering the nature and low value of
    the claim, instead of a three-member tribunal, a sole arbitrator may
    be appointed.

     III.   SUBMISSIONS ON BEHALF OF THE RESPONDENTS
26. On the other hand, Ms. Jasmine Damkewala, the learned counsel
    appearing for the respondents submitted that the petitioner is seeking
    implementation of the Shareholders Agreement dated 25.07.2011.
    However, the petitioner has violated the Lock-in Period of 3 years,
    in as much as the petitioner’s date of employment is 01.01.2011
    and the date of acceptance of resignation vide the board resolution
    is 18.07.2013.
27. It was submitted that in terms of Clause 4 of the Shareholders
    Agreement, the petitioner was holding 4,00,000 equity shares in
    respondent no.1. Clause 5.1 of the said Shareholders Agreement
    specifically indicates that the petitioner shall not transfer any part
    of his individual shareholding until the expiry of 3 years from the
    date of issue of such shares. It was argued that there was a clear
    understanding which was agreed upon by the parties that the shares
    of the petitioner shall remain locked for a period of 3 years from the
    date of their issuance or conversion of it into equity shares. However,
    any right over the said shares would accrue only if the petitioner
    remained in employment.
28. Clause 3 of the Service Agreement indicates that the Director shall
    hold office for a period of 3 years commencing from the date of
    employment (w.e.f. 01.01.2011) which is a Lock-in Period. Further
    Clause 10.2 of the Service Agreement states that the petitioner shall
    transfer all the equity shares held by him in favour of the Promoter of
122                                                         [2024] 12 S.C.R.

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       respondent no.1 at zero consideration if he terminates his employment
       prior to the Initial Term of 3 years. Accordingly, the petitioner would
       in any case, have no valid right or claim over the subject shares
       having terminated his employment before a period of 3 years.
29. It was submitted that as per Recital 3, and Clauses 3.1 and 4.1
    respectively of the Commercial Expertise Agreement, for the petitioner
    to hold the shares, he ought to have worked for a period of 3 years.
    Since the petitioner resigned on 18.07.2013, he is not entitled to
    these shares. In any case, any claim regarding the 4,00,000 equity
    shares, howsoever misconceived, can arise only upon the date of
    resignation i.e., 18.07.2013 and the Arbitration Notice being issued
    on 23.01.2017 was clearly outside of limitation. Therefore, the present
    petition is stale, belated and misconceived.
30. The counsel, in the last, submitted that Section 43 of the Act, 1996
    lays down that the Limitation Act, 1963 is applicable to arbitrations.
    An arbitration commences upon issuing the notice of invocation of
    arbitration in accordance with the arbitral clause i.e., Clause 13.10
    of the Shareholders Agreement. Accordingly, where the petitioner
    seeks enforcement of the letter dated 22.09.2011, the Notice for
    Invocation of Arbitration was served 6 years later i.e., on 23.01.2017
    and is hopelessly outside of limitation. For the sake of argument and
    without admitting, even if limitation for the claim of the petitioner with
    respect to the 2,00,010 shares is calculated from the date when he
    ceased to be in employment, i.e., from 18.07.2013, the claim is still
    clearly time-barred.

       IV.   ANALYSIS
31. Having heard the learned counsel appearing for the parties and
    having gone through the materials on record, the short question that
    falls for our consideration is whether we should decline to make a
    reference under Section 11(6) of the Act, 1996 by examining whether
    the substantive claims of the petitioner are ex facie and hopelessly
    time barred?
32. A three-judge bench of this Court in Vidya Drolia & Ors v. Durga
    Trading Corporation reported in (2021) 2 SCC 1 while dealing with
    the scope of powers of the referral court under Sections 8 and 11
    respectively, endorsed the prima facie test and opined that Courts at
    the referral stage can interfere only in rare cases where it is manifest
[2024] 12 S.C.R.                                                           123

     Aslam Ismail Khan Deshmukh v. Asap Fluids Pvt. Ltd. & Anr.


     that the claims are ex facie time-barred and dead, or there is no
     subsisting dispute. Such a restricted and limited review was considered
     necessary to check and protect parties from being forced to arbitrate
     when the matter is demonstrably “non-arbitrable” and to cut off the
     deadwood. The relevant observations are reproduced hereinbelow:
          "148. Section 43(1) of the Arbitration Act states that
          the Limitation Act, 1963 shall apply to arbitrations as it
          applies to court proceedings. Sub-section (2) states that
          for the purposes of the Arbitration Act and Limitation Act,
          arbitration shall be deemed to have commenced on the
          date referred to in Section 21. Limitation law is procedural
          and normally disputes, being factual, would be for the
          arbitrator to decide guided by the facts found and the law
          applicable. The court at the referral stage can interfere
          only when it is manifest that the claims are ex facie time-
          barred and dead, or there is no subsisting dispute. All
          other cases should be referred to the Arbitral Tribunal for
          decision on merits. Similar would be the position in case
          of disputed “no-claim certificate” or defence on the plea
          of novation and “accord and satisfaction”. As observed
          in Premium Nafta Products Ltd. [Fili Shipping Co. Ltd. v.
          Premium Nafta Products Ltd., 2007 UKHL 40 : 2007 Bus
          LR 1719 (HL)] , it is not to be expected that commercial
          men while entering transactions inter se would knowingly
          create a system which would require that the court should
          first decide whether the contract should be rectified or
          avoided or rescinded, as the case may be, and then if the
          contract is held to be valid, it would require the arbitrator
          to resolve the issues that have arisen.

                 xxx                 xxx                   xxx
          154.4. Rarely as a demurrer the court may interfere at
          Section 8 or 11 stage when it is manifestly and ex facie
          certain that the arbitration agreement is non-existent, invalid
          or the disputes are non-arbitrable, though the nature and
          facet of non-arbitrability would, to some extent, determine
          the level and nature of judicial scrutiny. The restricted
          and limited review is to check and protect parties from
          being forced to arbitrate when the matter is demonstrably
124                                                         [2024] 12 S.C.R.

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          “non-arbitrable” and to cut off the deadwood. The court by
          default would refer the matter when contentions relating to
          non-arbitrability are plainly arguable; when consideration
          in summary proceedings would be insufficient and
          inconclusive; when facts are contested; when the party
          opposing arbitration adopts delaying tactics or impairs
          conduct of arbitration proceedings. This is not the stage
          for the court to enter into a mini trial or elaborate review
          so as to usurp the jurisdiction of the Arbitral Tribunal but
          to affirm and uphold integrity and efficacy of arbitration as
          an alternative dispute resolution mechanism.”
                                                  (Emphasis supplied)
33. In Bharat Sanchar Nigam Limited and Another v. Nortel Networks
    India Private Limited reported in (2021) 5 SCC 738, the notice
    invoking arbitration was issued 5 ½ years after the cause of action
    arose, i.e., rejection of the claims of Nortel by BSNL and the claim
    was therefore held to be ex facie time-barred. This Court clarified
    that the period of limitation for filing a petition seeking appointment
    of an arbitrator(s) cannot be confused or conflated with the period
    of limitation applicable to substantive claims made in the underlying
    commercial contract. By placing reliance on Vidya Drolia (supra)
    it was held that, a referral court exercising its jurisdiction under
    section 11 may decline to make the reference in a very limited
    category of cases, where there is not even a vestige of doubt that
    the claim is ex facie time-barred. The relevant observations are
    reproduced hereinbelow:
          "44. The issue of limitation which concerns the “admissibility”
          of the claim, must be decided by the Arbitral Tribunal either
          as a preliminary issue, or at the final stage after evidence
          is led by the parties.

                 xxx                 xxx                   xxx
          47. It is only in the very limited category of cases, where
          there is not even a vestige of doubt that the claim is ex
          facie time-barred, or that the dispute is non-arbitrable, that
          the court may decline to make the reference. However,
          if there is even the slightest doubt, the rule is to refer
          the disputes to arbitration, otherwise it would encroach
[2024] 12 S.C.R.                                                             125

     Aslam Ismail Khan Deshmukh v. Asap Fluids Pvt. Ltd. & Anr.


          upon what is essentially a matter to be determined by
          the tribunal.
          48. Applying the law to the facts of the present case, it
          is clear that this is a case where the claims are ex facie
          time-barred by over 5½ years, since Nortel did not take
          any action whatsoever after the rejection of its claim by
          BSNL on 4-8-2014. The notice of arbitration was invoked
          on 29-4-2020. There is not even an averment either in the
          notice of arbitration, or the petition filed under Section 11, or
          before this Court, of any intervening facts which may have
          occurred, which would extend the period of limitation falling
          within Sections 5 to 20 of the Limitation Act. Unless, there
          is a pleaded case specifically adverting to the applicable
          section, and how it extends the limitation from the date
          on which the cause of action originally arose, there can
          be no basis to save the time of limitation.
          49. The present case is a case of deadwood/no subsisting
          dispute since the cause of action arose on 4-8-2014, when
          the claims made by Nortel were rejected by BSNL. The
          respondent has not stated any event which would extend
          the period of limitation, which commenced as per Article
          55 of the Schedule of the Limitation Act (which provides
          the limitation for cases pertaining to breach of contract)
          immediately after the rejection of the final bill by making
          deductions.”
                                                   (Emphasis supplied)
34. This very Bench in Arif Azim Company Limited v. Aptech Limited
    reported in (2024) 5 SCC 313 was concerned with the following
    two issues while deciding an application for the appointment of an
    arbitrator under Section 11(6) of the Act, 1996 – first, whether the
    Limitation Act, 1963 is applicable to an application for appointment
    of arbitrator under Section 11(6) of the Act, 1996?; and second,
    whether the Court may decline to make a reference under Section 11
    of the Act, 1996 where the claims are ex-facie and hopelessly time
    barred.
35. On the first issue in Arif Azim (supra), it was observed that
    Section 11(6) of the Act, 1996 would be covered by Article 137 of
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       the Limitation Act, 1963 which prescribes a limitation period of 3
       years from the date when the right to apply accrues. The limitation
       period for filing an application seeking appointment of an arbitrator
       was held to commence only after a valid notice invoking arbitration
       had been issued by one of the parties to the other party and there
       had been either a failure or refusal on the part of the other party to
       comply with the requirements of the said notice.
36. On the second issue in Arif Azim (supra), which is identical to the
    issue raised in the present petitions, it was observed that, although,
    limitation is an admissibility issue, yet it is the duty of the Courts to
    prima facie examine and reject non-arbitrable or dead claims, so as
    to protect the other party from being drawn into a time-consuming
    and costly arbitration process. The findings on both the issues were
    summarized as thus:
            "92. Thus, from an exhaustive analysis of the position of
            law on the issues, we are of the view that while considering
            the issue of limitation in relation to a petition under Section
            11(6) of the 1996 Act, the Courts should satisfy themselves
            on two aspects by employing a two-pronged test — first,
            whether the petition under Section 11(6) of the 1996 Act
            is barred by limitation; and secondly, whether the claims
            sought to be arbitrated are ex facie dead claims and are
            thus barred by limitation on the date of commencement
            of arbitration proceedings. If either of these issues are
            answered against the party seeking referral of disputes
            to arbitration, the Court may refuse to appoint an Arbitral
            Tribunal.”
                                                    (Emphasis supplied)
37. However, subsequently, very pertinent observations were made by
    a seven-judge Bench of this Court in Interplay between Arbitration
    Agreements Under the Arbitration and Conciliation Act, 1996 and
    the Indian Stamp Act, 1899, In Re, reported in 2023 INSC 1066
    regarding the scope of judicial interference at the Section 11 stage
    with a view to give complete meaning to the legislative intention behind
    the insertion of Section 11(6-A) of the Act, 1996. This Court referred
    to the Statement of Objects and Reasons of the 2015 Amendment
    Act and opined that the same indicated that the referral courts shall
    “examine the existence of a prima facie arbitration agreement and
[2024] 12 S.C.R.                                                        127

     Aslam Ismail Khan Deshmukh v. Asap Fluids Pvt. Ltd. & Anr.


     not other issues” at the stage of appointment of an arbitrator. These
     “other issues” would include the examination of any other issue
     which has the consequence of unnecessary judicial interference in
     the arbitral proceedings. The relevant observations are reproduced
     hereinbelow:
          "208. The Statement of Objects and Reasons of the 2015
          Amendment Act are as follows:
                "(iii) an application for appointment of an arbitrator
                shall be disposed of by the High Court or Supreme
                Court, as the case may be, as expeditiously as
                possible and an endeavour should be made to dispose
                of the matter within a period of sixty days.
                (iv) to provide that while considering any application
                for appointment of arbitrator, the High Court or the
                Supreme Court shall examine the existence of a
                prima facie arbitration agreement and not other
                issues.”
          209. The above extract indicates that the Supreme Court
          or High Court at the stage of the appointment of an
          arbitrator shall “examine the existence of a prima facie
          arbitration agreement and not other issues”. These other
          issues not only pertain to the validity of the arbitration
          agreement, but also include any other issues which
          are a consequence of unnecessary judicial interference
          in the arbitration proceedings. Accordingly, the “other
          issues” also include examination and impounding of an
          unstamped instrument by the referral court at the Section 8
          or Section 11 stage […]”
                                                (Emphasis supplied)
38. In light of the aforesaid observations, the ratio of Arif Azim (supra)
    was reconsidered by this very Bench in SBI General Insurance Co.
    Ltd. v. Krish Spinning reported in 2024 SCC OnLine SC 1754.
    The position of law was clarified as thus:
          "128. On the first issue, it was observed by us that the
          Limitation Act, 1963 is applicable to the applications filed
          under Section 11(6) of the Act, 1996. Further, we also
          held that it is the duty of the referral court to examine
128                                                       [2024] 12 S.C.R.

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       that the application under Section 11(6) of the Act, 1996
       is not barred by period of limitation as prescribed under
       Article 137 of the Limitation Act, 1963, i.e., 3 years from
       the date when the right to apply accrues in favour of the
       applicant. To determine as to when the right to apply
       would accrue, we had observed in paragraph 56 of the
       said decision that “the limitation period for filing a petition
       under Section 11(6) of the Act, 1996 can only commence
       once a valid notice invoking arbitration has been sent by
       the applicant to the other party, and there has been a
       failure or refusal on part of that other party in complying
       with the requirements mentioned in such notice.”
       129. Insofar as the first issue is concerned, we are of the
       opinion that the observations made by us in Arif Azim
       (supra) do not require any clarification and should be
       construed as explained therein.

              xxx                  xxx                    xxx
       132. Insofar as our observations on the second issue are
       concerned, we clarify that the same were made in light of
       the observations made by this Court in many of its previous
       decisions, more particularly in Vidya Drolia (supra) and
       NTPC v. SPML (supra). However, in the case at hand, as
       is evident from the discussion in the preceding parts of
       this judgment, we have had the benefit of reconsidering
       certain aspects of the two decisions referred to above
       in the light of the pertinent observations made by a
       seven-Judge Bench of this Court in In Re : Interplay (supra).
       133. Thus, we clarify that while determining the issue of
       limitation in exercise of the powers under Section 11(6) of
       the Act, 1996, the referral court should limit its enquiry to
       examining whether Section 11(6) application has been filed
       within the period of limitation of three years or not. The
       date of commencement of limitation period for this purpose
       shall have to be construed as per the decision in Arif Azim
       (supra). As a natural corollary, it is further clarified that the
       referral courts, at the stage of deciding an application for
       appointment of arbitrator, must not conduct an intricate
       evidentiary enquiry into the question whether the claims
[2024] 12 S.C.R.                                                          129

     Aslam Ismail Khan Deshmukh v. Asap Fluids Pvt. Ltd. & Anr.


           raised by the applicant are time barred and should leave
           that question for determination by the arbitrator. Such an
           approach gives true meaning to the legislative intention
           underlying Section 11(6-A) of the Act, and also to the view
           taken in In Re : Interplay (supra).
           134. The observations made by us in Arif Azim (supra)
           are accordingly clarified. We need not mention that the
           effect of the aforesaid clarification is only to streamline
           the position of law, so as to bring it in conformity with the
           evolving principles of modern-day arbitration, and further
           to avoid the possibility of any conflict between the two
           decisions that may arise in future. These clarifications
           shall not be construed as affecting the verdict given by us
           in the facts of Arif Azim (supra), which shall be given full
           effect to notwithstanding the observations made herein.”
                                                  (Emphasis supplied)
39. Therefore, while determining the issue of limitation in the exercise of
    powers under Section 11(6) of the Act, 1996, the referral court must
    only conduct a limited enquiry for the purpose of examining whether
    the Section 11(6) application has been filed within the limitation
    period of three years or not. At this stage, it would not be proper
    for the referral court to indulge in an intricate evidentiary enquiry
    into the question of whether the claims raised by the petitioner are
    time barred. Such a determination must be left to the decision of
    the arbitrator. After all, in a scenario where the referral court is able
    to discern the frivolity in the litigation on the basis of bare minimum
    pleadings, it would be incorrect to assume or doubt that the arbitral
    tribunal would not be able to arrive at the same inference, especially
    when they are equipped with the power to undertake an extensive
    examination of the pleadings and evidence adduced before them.
40. As observed by us in Krish Spinning (supra), the power of the referral
    court under Section 11 must essentially be seen in light of the fact that
    the parties do not have the right of appeal against any order passed
    by the referral court under Section 11, be it for either appointing or
    refusing to appoint an arbitrator. Therefore, if the referral court delves
    into the domain of the arbitral tribunal at the Section 11 stage and
    rejects the application of the claimant, we run a serious risk of leaving
    the claimant remediless for the adjudication of their claims. Moreover,
130                                                          [2024] 12 S.C.R.

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       the Courts are vested with the power of subsequent review in which
       the award passed by the arbitrator may be subjected to challenge by
       any party to the arbitration. Therefore, the Courts may take a second
       look at the adjudication done by the arbitral tribunal at a later stage,
       if considered necessary and appropriate in the circumstances.
41. In view of the above discussion, we must restrict ourselves to
    examining whether the Section 11 petitions made before us are
    within limitation. The petitioner herein issued a notice invoking
    arbitration on 23.01.2017 and the same was delivered to both the
    respondents on 24.01.2017. However, the respondents failed to reply
    to the said notice within a period of 30 days i.e. within 23.02.2017.
    Therefore, the period of limitation of three years, for the purposes
    of a Section 11(6) petition, would begin to run from 23.02.2017 i.e.,
    the date of failure or refusal by the other party to comply with the
    requirements mentioned in the notice invoking arbitration. The present
    petitions under Section 11(6) were filed on 09.04.2019. Even including
    the period during which the parties proceeded before the Bombay
    High Court which ultimately held that the applications before it were
    not maintainable i.e., 03.03.2017 to 22.02.2019, these petitions are
    well within the bounds of limitation.
42. The primary issue that has been canvassed by the respondents
    is that the substantive claims of the petitioner are ex-facie time
    barred and therefore, incapable of being referred to arbitration. The
    respondents contend that, with respect to the issue relating to the
    2,00,010 equity shares, the petitioner has sought enforcement of the
    letter dated 22.09.2011 but has however, served a notice invoking
    arbitration 6 years later on 23.01.2017. Further, with respect to the
    4,00,000 equity shares, it was contended that the claim can only
    arise upon the date of resignation i.e., 18.07.2013 and the claim
    would, therefore, again be time-barred. Conversely, the case of the
    petitioners is that the date of 15.10.2015 i.e., the date of the last legal
    notice sent by the respondents to the petitioner, can be considered
    as the date of cause of action for the purposes of limitation. In the
    alternative, they assert that there is no specific date or day on which
    it can be ascertained that the cause of action had arisen since there
    is a continuous breach of contract on part of the respondents. As
    evident from the aforesaid discussion and especially in light of the
    observations made in Krish Spinning (supra), this Court cannot
    conduct an intricate evidentiary enquiry into the question of when
[2024] 12 S.C.R.                                                       131

     Aslam Ismail Khan Deshmukh v. Asap Fluids Pvt. Ltd. & Anr.


     the cause of action can be said to have arisen between the parties
     and whether the claim raised by the petitioner is time barred. This
     has to be strictly left for the determination by the arbitral tribunal.
43. All other submissions made by the parties regarding the entitlement of
    the petitioner to 4,00,000 and 2,00,010 equity shares in the respondent
    no.1 company are concerned with the merits of the dispute which
    squarely falls within the domain of the arbitral tribunal.
44. It is now well settled law that, at the stage of Section 11 application,
    the referral Courts need only to examine whether the arbitration
    agreement exists – nothing more, nothing less. This approach
    upholds the intention of the parties, at the time of entering into
    the agreement, to refer all disputes arising between themselves to
    arbitration. However, some parties might take undue advantage of
    such a limited scope of judicial interference of the referral courts
    and force other parties to the agreement into participating in a
    time-consuming and costly arbitration process. This is especially
    possible in instances, including but not limited to, where the
    claimant canvasses either ex facie time-barred claims or claims
    which have been discharged through “accord and satisfaction”, or
    cases where the impleadment of a non-signatory to the arbitration
    agreement is sought etc. In order to balance such a limited scope
    of judicial interference with the interests of the parties who might be
    constrained to participate in the arbitration proceedings, the arbitral
    tribunal may direct that the costs of the arbitration shall be borne
    by the party which the Tribunal ultimately finds to have abused the
    process of law and caused unnecessary harassment to the other
    party to the arbitration.

     V.   CONCLUSION
45. The existence of the arbitration agreement as contained in Clause
    13.10 of the Shareholders Agreement is not disputed by either of
    the parties. The submissions as regard the claim of the petitioner
    being ex-facie time barred may be adjudicated upon by the arbitral
    tribunal as a preliminary issue.
46. In view of the aforesaid, the present petitions are allowed. Taking
    into consideration the fact that an arbitral tribunal comprising of
    a sole arbitrator, Mr. Mayur Khandeparkar (Advocate, High Court
    of Judicature at Bombay) has already been constituted for the
    adjudication of disputes between the same parties in relation to
132                                                         [2024] 12 S.C.R.

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       the Service Agreement dated 18.10.2011, it would be desirable to
       constitute an arbitral tribunal comprising of the same sole arbitrator
       for adjudication of the present disputes pertaining to the Shareholders
       Agreement dated 25.07.2011. The fees of the arbitrator including
       other modalities shall be fixed in consultation with the parties.
47. In the facts of the present case, it would be apposite to observe
    that, in the event the arbitral tribunal ultimately finds the present
    claims of the petitioner to be time-barred, it may direct that the costs
    of the arbitration pertaining to these claims be borne solely by the
    petitioner herein.
48. It is made clear that all the other rights and contentions of the parties
    are left open for adjudication by the learned arbitrator.
49. Pending applications(s), if any, shall stand disposed of.

       Result of the case: Petitions allowed.



       †
           Headnotes prepared by: Divya Pandey


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