Section 16 of the Arbitration and Conciliation Act, 1996

Table of Contents

16. Competence of arbitral tribunal to rule on its jurisdiction– 1) The arbitral tribunal may rule on its own jurisdiction, including ruling on any objections with respect to the existence or validity of the arbitration agreement, and for that purpose,

(a) an arbitration clause which forms part of a contract shall be treated as an agreement independent of the other terms of the contract; and

(b) a decision by the arbitral tribunal that the contract is null and void shall not entail ipso jure the invalidity of the arbitration clause.

(2) A plea that the arbitral tribunal does not have jurisdiction shall be raised not later than the submission of the statement of defence; however, a party shall not be precluded from raising such a plea merely because that he has appointed, or participated in the appointment of, an arbitrator.

(3) A plea that the arbitral tribunal is exceeding the scope of its authority shall be raised as soon as the matter alleged to be beyond the scope of its authority is raised during the arbitral proceedings.

(4) The arbitral tribunal may, in either of the cases referred to in sub-section (2) or sub-section (3), admit a later plea if it considers the delay justified.

(5) The arbitral tribunal shall decide on a plea referred to in sub-section (2) or sub-section (3) and, where the arbitral tribunal takes a decision rejecting the plea, continue with the arbitral proceedings and make an arbitral award.

(6) A party aggrieved by such an arbitral award may make an application for setting aside such an arbitral award in accordance with section 34.

Introduction 

Section 16 of the Arbitration and Conciliation Act, 1996 (“the Act”), which was drafted in conformity with Art. 16 of the UNCITRAL Model Law1, addresses the authority of arbitral tribunals to determine their own jurisdiction. It allows tribunals to assess the existence, validity, and scope of the arbitration agreement, including any other jurisdictional objections raised by the parties. This provision reflects the principle of kompetenz-kompetenz (competence-competence), which- firstly, allows the tribunal to rule upon its own jurisdiction; secondly, grants the tribunal the authority to address and rule on jurisdictional issues before any intervention or determination by the court; and thirdly, provides for no interference of Courts, whose powers of determination should be limited to decide merely on the existence of the arbitration agreement. It also places emphasis on the doctrine of separability, which recognises the independence of the arbitration agreement from the underlying contract in which it is contained. The section is broadly worded, enabling tribunals to address jurisdictional issues at any point during arbitration proceedings. 

History and Background of Section 16 

The Arbitration Act, 19402 did not include a provision akin to Section 16 of the Act, which explicitly provides for the tribunal’s competence and autonomy. As stated earlier, Section 16 of the Act was modelled on the UNCITRAL Model Law3 to bring Indian arbitration laws in line with international standards. It incorporated the principles of kompetenz-kompetenz and separability, with the aim of reducing judicial intervention and streamlining arbitral proceedings by empowering tribunals to independently decide jurisdictional issues and minimising the supervisory role of courts. However, despite this, Indian courts often undertook an examination of jurisdictional issues, particularly under Section 11 of the Act, which diluted the autonomy of arbitral tribunals and led to procedural delays. This led to the 246th Law Commission Report4, which highlighted several shortcomings in the arbitration framework under the 1996 Act, particularly this overreach by the judiciary, and made various recommendations to clarify the legislative intent of Section 16 of the Act and minimise the supervisory role of Courts. The 2015 Amendment concretised these recommendations by introducing Section 11(6A) that restricted Courts to a prima facie determination of the existence of an arbitration agreement, leaving other jurisdictional questions to the tribunal under Section 16 of the Act. However, the 2019 Amendment later removed Section 11(6A), raising concerns about a potential revival of the pre-Section 11(6A) position. Subsequent rulings clarified these concerns and upheld arbitral autonomy, emphasising arbitration as a “one-stop forum” for dispute resolution with minimal judicial intervention.

Brief Overview of Sub-Sections 

S.16(1) of the Act provides that the arbitral tribunal has the authority to determine its own jurisdiction, including the power to rule on any disputes or challenges related to the existence or validity of the arbitration agreement. It further stipulates that if a contract contains an arbitration clause, this clause will be regarded as independent of the other clauses of the contract. Even if the tribunal finds that a contract has been frustrated, rendering it null and void, the arbitration clause is not automatically rendered invalid. In the case of Shree Subhlaxmi Fabrics v. Chand Mal Baradia and Ors5, the Supreme Court held that the arbitral tribunal may rule on its own jurisdiction, including ruling on any objections with respect to the existence or authority of the arbitration agreement. Further, Ashapura Mine-Chem Ltd v. Gujarat Mineral Development6 affirmed the independence of the arbitration agreement from the termination of an MoU, clarifying the separability intent of Section 16 of the Act. 

S.16(2) states that a challenge to the arbitral tribunal’s jurisdiction must be raised no later than the submission of the statement of defence. However, a party is not barred from raising this challenge simply because they have appointed, or taken part in the appointment of, an arbitrator. In the same vein, S.16(3) provides that a challenge asserting that the arbitral tribunal is acting beyond its authority must be raised promptly when the issue that the arbitral Tribunal is alleged to exceed its authority arises during the proceedings.

S.16(4) and (5) address the tribunal’s discretion to accept delayed challenges if justified and its authority to continue proceedings and issue an award even after rejecting such challenges. If the Tribunal rejects the objection raised by the parties and continues its proceedings, the party can later set aside the award under S.34 of the Act. 

Lastly, S.16(6) pertains to setting aside of such an award where any party dissatisfied with such an award can apply to have it set aside in accordance with S.34 of the Act. 

When can Jurisdictional Challenges be raised? 

The idea that an arbitral tribunal, as an entity created by a contract, must operate within the parameters of the contract that established it, has been repeatedly affirmed by the Courts in judgements such as MD. Army Welfare Housing Organisation v. Sumangal Service (P) Ltd7 and Indian Oil Corporation Ltd. v. M/s. Shree Ganesh Petroleum Rajgurunagar.8 Moreover, awards are liable to be set aside under Section 34 of the Act insofar as the same deal with disputes not contemplated, or beyond the scope of submissions to arbitration. 

The wording of S.16 of the Act indicates that the tribunal is capable of independently deciding on any objections to its jurisdiction. S.16(1) states, “The arbitral tribunal may rule on its own jurisdiction, including ruling on any objections with respect to the existence or validity of the arbitration agreement…” (emphasis supplied). The use of the word “including” in S.16(1) indicates that challenges to the existence or validity of the arbitration agreement are merely illustrative, and do not constitute an exhaustive list of jurisdictional challenges. Therefore, a range of jurisdictional challenges are allowed under S.16. Further, as per S.16(2), objections to the jurisdiction of the tribunal can only be raised prior to the submission of the statement of defense. This prevents questions of jurisdiction from arising later, saving time and expenses, as well as reducing the supervisory power of courts, who would be unable from revisiting such questions at a later stage. Both of these objectives tie back to the principle of kompetenz-kompetenz, which forms the bedrock of S.16 of the Act. This has been affirmed by a Constitution Bench of the Supreme Court in Konkan Railway Corporation Ltd. v. M/S. Rani Construction Pvt. Ltd.9, which stated that Section 16 allows the arbitral tribunal to rule on its own jurisdiction, and this authority is not just confined to the width of its jurisdiction, but goes to its very root. Further, in NALCO v. Subhash Infra Engineers Pvt. Ltd.10, the Court stated that any objection with respect to existence or validity of the arbitration agreement, can be raised only by way of an application under Section 16 of the Act and Courts do not have jurisdiction to go into such a question. 

In the case of M/S Lion Engineering Consultants v. Madhya Pradesh11, the Supreme Court held that a party that had failed to raise a jurisdictional challenge before the arbitral tribunal under Section 16 of the Act could still raise the challenge during the setting-aside proceedings under Section 34 of the Act, as the setting-aside proceedings are independent of the arbitral proceedings. However, M/s Lion’s observations are ostensibly against the scheme of Section 16, which allows jurisdictional challenges to be raised only before the arbitral tribunal. This judgement adds to a slew of concurring and contrasting rulings on this issue, which will be enumerated below. 

The Allahabad High Court, in Jagannath Kapoor & Anr. vs Premier Credit & Instalment 12 stands on a similar footing as M/S Lion (supra). The judgement, citing Ajit Singh And Anr. vs Fateh Singh13, allowed jurisdictional challenges to be raised for the first time during setting-aside proceedings since “whatever is without jurisdiction cannot acquire any sanctity merely because the parties do not raise the objection of jurisdiction or later on consent to the same, for no amount of consent can confer jurisdiction.” Similarly, the Bombay High Court in Atul R. Shah vs M/S. V. Vrijlal Lalloobhai And Co.14 allowed the setting-aside of an award on account of lack of jurisdiction, stating, “A Court without jurisdiction merely on account of non-objection by the parties cannot assume jurisdiction in itself. The same is also true of Arbitral Tribunals.”

However, they remain at odds with the Supreme Court’s observations in MSP Infrastructure Ltd. v. MP Road Development Corp. Ltd.15, which expressly stated that all objections to jurisdiction of whatever nature must be taken at the stage of  submission of the statement of defence, and must be dealt with under Section 16 of the Act. Rejecting the Respondent’s contentions, the Court further clarified their stance and held that the phraseology of Section 34 of the Act, which refers to the subject-matter of the arbitration, does not necessarily refer to an objection to jurisdiction under Section 16 of the Act. Rather, it refers to a situation where the dispute referred for arbitration, by reason of its subject-matter is not capable of settlement by arbitration at all. Thus, a party cannot raise the question after it has submitted to the jurisdiction of the tribunal and invited an unfavourable award as this would allow arbitrations to proceed in the same manner as civil suits with all the well-known drawbacks of delay and endless objections even after the passing of a decree. Further, the Court laid emphasis on the fact that the Parliament, in its wisdom, deliberately enacted Section 16 of the Act, with a view to require jurisdictional objections to be raised at the earliest stage, thereby distinguishing the arbitration framework from general civil procedure.

Similar reasoning has been adopted by the Supreme Court in Narayan Prasad Lohia vs Nikunj Kumar Lohia & Ors16  and M/S. Gas Authority Of India Ltd. And Anr vs M/S. Keti Construction (I) Ltd. And Ors.17 The former dealt with an issue regarding the composition of the arbitral tribunal, which was not raised before the tribunal and was only brought up during the setting-aside proceedings. The Supreme Court, citing Konkan Railway Corporation Ltd. v. M/S. Rani Construction Pvt. Ltd.18, concluded that if a party does not raise a jurisdictional challenge before the arbitral tribunal, it forfeits the right to raise that challenge later. 

In the same vein, the Supreme Court  in M/S Gas Authority (supra), while determining a similar issue held that given the objective of the Act to ensure the swift resolution of disputes, any challenges must be raised before the arbitral tribunal itself, “so that remedial measures may be immediately taken and time and expense involved in hearing of the matter before the arbitral tribunal which may ultimately be found to be either not properly constituted or lacking in jurisdiction, in proceedings for setting aside the award, may be avoided.” However, the Supreme Court qualified these observations by stating that such a plea may be permitted if “good reasons” could be shown. 

Additionally, the Supreme Court in Prasun Roy vs Calcutta Metropolitan19, had earlier stated that long participation and acquiescence in arbitration proceedings would preclude a party from contending that the proceedings were without jurisdiction and “a party shall not be allowed to blow hot and cold simultaneously”. Thus, the Court’s examination into what constitutes “good reasons” as per M/S Gas Authority could involve determinations regarding the existence of a waiver of the right to claim lack of jurisdiction. Such an interpretation could reconcile the conflicting judgements detailed above, by requiring parties to establish cogent and appropriate reasons for raising jurisdictional challenges during setting-aside proceedings. 

Judicial Interpretation of Appeals under Section 16

A plea under Section 16(2) and (3) is raised when a party wishes to challenge the tribunal’s jurisdiction. These challenges can arise from various factors, including the arbitration agreement itself, the parties involved, the validity or effectiveness of the agreement, the form of the agreement, the subject matter of the dispute, the scope of the issues, and the arbitrators’ authority. The arbitral tribunal has the authority to either accept or reject the application under Section 16(5) of the Act. If the tribunal accepts the application and deems the matter non-arbitrable, the aggrieved party may challenge the order under Section 37 of the Act. While shedding light on the interplay between Section 16 and Section 37, the Court in National Thermal Power Corpn. Ltd. v. Siemens Atkeingesellschaft20 held that sub-section (2)(a) of Section 37 provides that a direct appeal shall also lie to the Court from an order of the arbitral tribunal accepting the jurisdictional plea under sub-section (2) or sub-section (3) of Section 16.  

However, if the tribunal rejects the Section 16 application, claiming that it has jurisdiction, the aggrieved party cannot appeal the decision immediately. Instead, they must wait for the final award and challenge it in under Section 34 of the Act. This was reaffirmed in the case of Nav Sansad Vihar Coop. Group Housing Society Ltd. (Regd.) v. Ram Sharma and Associates21, where the Delhi High Court held that if a plea under Section 16 is rejected, there is no separate remedy and the aggrieved party whose challenge was rejected will have to wait until an award is given, which could then be challenged under Section 34. Further, in Pharmaceutical Products of India Ltd. vs. Tata Finance Ltd.22 and Union of India v. M/s. East Coast Boat Builders & Engineers Ltd23, it was held that the lack of an appeal mechanism within Section 16 of the Act was to allow the tribunal to continue with the arbitral proceedings and make an award without delay and without being interfered in the arbitral process at that stage by any court in their supervisory role. 

Additionally, the Supreme Court in SBP & Co. v. Patel Engineering24 expressed dissent over judicial interference with arbitral process and condemned the practice of High Courts allowing writ petitions which challenged tribunal orders. The Court highlighted that allowing High Courts to entertain petitions under Articles 226 or 227 of the Constitution for every order issued by the tribunal would undermine the objective of minimizing judicial interference during the arbitration process. Further, it was held that Section 34 of the Act provides a mechanism to address grievances not only against the final award but also against interim orders issued before the final award. Once arbitration proceedings commence, parties must await the final award before challenging it, except where a right to appeal arises under Section 37 of the Act. Subsequently, in McDermott International Inc. v. Burn Standard Co. Ltd.25, the Court highlighted the supervisory role of courts in arbitration proceedings, where intervention should happen only in cases of fraud or bias. 

Building on the principle established in SBP & Co. (supra), the Supreme Court, in Deep Industries Limited v. ONGC26, clarified that while Articles 226 and 227, by virtue of being constitutional provisions, remain unaffected by the non-obstante clause in Section 5 of the Act, High Courts should exercise extreme caution when intervening in orders passed by tribunals. Such interference should be limited strictly to cases where the order is patently without inherent jurisdiction. This understanding was further reinforced by the Supreme Court in Punjab State Power Corporation Limited v. Emta Coal Limited27, when it held that “A patent lack of inherent jurisdiction requires no argument whatsoever – it must be the perversity of the order that must stare one in the face.” 

While setting aside an earlier decision, the Supreme Court, in Bhaven Construction v. Sardar Sarovar Narmada Nigam Ltd.28 held that the term “only” in Section 34 of the Act served a twofold purpose. The first was to make the Act a complete code; and the second was to lay down the procedure for challenge. The Court acknowledged that while a legislative enactment cannot override a Constitutional right, it is well-established that when a statutory forum is provided for grievance redressal, writ petitions should not bypass the statutory mechanism. The Court emphasised that judicial discretion to allow writ petitions must be exercised with utmost caution and only in exceptional circumstances. These included instances where a party is left without any remedy under the statute or where there is clear evidence of bad faith by one of the parties. The Court further noted that this stringent standard aligns with the legislative intent to ensure that arbitration remains a fair and efficient process. However, certain conflicting decisions qualified this position further. 

In Unitech Limited & Ors. v. Telangana State Industrial Infrastructure Corporation29, the Supreme Court affirmed the Telangana High Court’s decision to entertain a writ petition despite the presence of an arbitration clause. While discussing the scope of jurisdiction under Article 226, the Court held that extraordinary jurisdiction cannot be excluded solely because the dispute stems from a contractual arrangement. However, the Court emphasised that the aptness of a public law remedy must be determined on a case-by-case basis. It further clarified that the State and its instrumentalities cannot obviate their obligation to act fairly, merely by virtue of business dealings through a contract.  

Similarly, in Uttar Pradesh Power Transmission Corp. Ltd. v. CG Power and Industrial Solutions Ltd.30, the Supreme Court observed that the existence of an arbitration clause does not preclude the exercise of writ jurisdiction in appropriate cases, and the availability of an alternative remedy does not bar High Courts from entertaining a writ petition, particularly in cases where: (i) the writ petition seeks enforcement of a fundamental right, (ii) there is failure of principles of natural justice, (iii) the impugned orders or proceedings are wholly without jurisdiction or (iv) the vires of an act is under challenge. However, the Court emphasised that since writ jurisdiction under Article 226 is discretionary, High Courts should generally avoid entertaining writ petitions involving contested questions of fact, which may require analysis of witness evidence. 

This stance has been reiterated in Oriel Financial Solutions Private Ltd v. Bestech Advisors Pvt. Ltd.31, where the Delhi High Court held that orders passed by the tribunal were not to be interfered with, unless they “shock the consciousness” of the Court. Further, the Calcutta High Court, in M.D. Creations & Others v. Ashok Kumar Gupta32 reiterated the rulings in Deep Industries and Bhaven Construction, stating that bad faith and exceptional circumstances would allow an invocation of the remedy under Article 227. 

Kompetenz-Kompetenz and the Interplay between Section 11 and Section 16 of the Act 

As stated earlier, the principle of kompetenz-kompetenz states that the arbitral tribunal has the power and authority to rule on its own jurisdiction, which includes any issues or objections raised about the existence or validity of the arbitration agreement. S.16 enshrines this principle, as restated in Food Corporation of India vs. Indian Council of Arbitration and Ors33 and Enercon (India) Ltd And Ors vs Enercon Gmbh And Anr.34, which held that legislative intent underlying the 1996 Act was to minimise the supervisory roles of courts in the arbitral process, leaving all contentious issues to be urged and agitated before the arbitral tribunal itself. S.16 is thus intended to fully implement both the procedural and substantive parts of the kompetenz-kompetenz doctrine. 

Section 11 of the Arbitration and Conciliation Act, 1996 deals with the power of the Supreme Court and High Courts to appoint an arbitrator in situations where the parties are unable to decide upon the appointment of an arbitrator. In Wellington Associates Ltd. v. Kirit Mehta35, the Supreme Court held that disputes raised at the stage of a Section 11 application regarding the very existence or the validity of the arbitration clause would be decided in accordance with Section 11. Rejecting the petitioner’s claim, the Court held that questions regarding the existence of the arbitration clause cannot be solely settled by an arbitral tribunal, as “the source of the jurisdiction of the arbitrator is the arbitration clause”. Thus, Section 16 does not take away the jurisdiction of the Supreme Court or the High Court or the person or institution designated by such Court, as the case may be, to decide the question of the existence of the arbitration agreement- it does not declare that none else but the tribunal can determine such a question. Rather it is an enabling provision, evident from the usage of the word “may”. Further, when jurisdictional issues have been decided under Sections 8 or 11 of the Act, without direct recourse to Section 16, such decisions cannot be ignored by the tribunal. This was elaborated upon in the case of State of West Bengal v. Sarkar & Sarkar which stated, “The competence to decide does not enable the Arbitral Tribunal to get over the finality conferred on an order passed prior to its entering upon the reference by the very statute that creates it.”36

The powers of the Chief Justice or their designate under S.11 were initially deemed to be administrative in nature, as held in Sundaram Finance Ltd. v. NEPC India Ltd.37, Ador Samia Private Ltd. v. Peekay Holding Ltd.38, Konkan Railway Ltd. & Ors v. M/S. Mehul Construction Co.39 and Konkan Railway Ltd. v. M/S Rani Construction Co.40 These rulings supported the view that the function performed by the Chief Justice, being essentially to aid in the constitution of the arbitral tribunal, was administrative rather than judicial in nature, since the legislature consciously chose to confer this power on the Chief Justice rather than a Court. Further, in Konkan v. Mehul Construction, the Court held, “in interpreting any provisions of the 1996 Act, Courts must not ignore the objects and purpose of the enactment of 1996. A bare comparison of different provisions of the Arbitration Act of 1940 with the provisions of the Arbitration and Conciliation Act, 1996 would unequivocally indicate that 1996 Act limits intervention of Court with an arbitral process to the minimum…”. 

This position saw a shift in the case of  SBP & Co. v. Patel Engineering41  where a 7-judge bench of the Supreme Court held that the power of the Chief Justice in the appointment of an arbitrator is a judicial act, thereby contravening the aforementioned rulings. This decision widened the scope of Section 11(6), allowing the arbitrator to venture into the questions of arbitrability of the claim, validity of the arbitration agreement and other jurisdictional matters. This position was further clarified in National Insurance v. Boghara Polyfab42, where the Supreme Court identified and segregated the preliminary issues that may arise for consideration in an application under Section 11 of the Act into three categories: i) issues which the Chief Justice or his Designate is bound to decide (first category); ii) issues which he can also decide, that is issues which he may choose to decide (second category); and iii) issues which should be left to the Arbitral Tribunal to decide (third category). The judgement further enumerated the various factors that the CJI has to decide while entertaining a Section 11 application. The first category pertained to:  i) the existence of the arbitration agreement, and ii) whether the party applying under such an agreement was a party to that agreement. The second category pertains to identifying: i) whether the claim is a dead (long-barred) claim or a live claim; and ii) whether the parties have concluded the contract/transaction by recording satisfaction of their mutual rights and obligation or by receiving the final payment without objection. Lastly, the third category consisted of cases which the Chief Justice should leave exclusively to the tribunal, i.e., (i) whether a claim made falls within the arbitration clause; and ii) merits of any claim involved in the arbitration. 

Since the court’s decision under S.11(7) of the Act was considered final, the issues had to be resolved either through affidavits and documents submitted by the parties or by the court admitting evidence. As a result, parties could potentially face a full trial at the very outset of the arbitration process. 

The decisions in SBP and Boghara Polyfab led to confusion and an unravelling of the earlier established primacy of the arbitral process. This led to the constitution of the 246th Law Commission, whose Report43 recommended the introduction of S.11(6A). The Commission specifically proposed adding an explanation stating that the court should refer parties to arbitration once it is prima facie satisfied that an arbitration agreement exists, leaving the final decision on the validity of the agreement to the arbitrator. If the court determined that the arbitration agreement was non-existent or null and void, that conclusion would be final, not just prima facie. Although this explanation clarified the meaning of “existence” in S.11(6A), it was inexplicably left out of the final version of the enacted provision. 

The Commission’s findings culminated in the 2015 Amendment to the Act which inserted section 11(6A) in the Arbitration and Conciliation Act, 1996. It confined the power of courts to “the examination of the existence of an arbitration agreement”. If in case the agreement exists, then the arbitral tribunal has to be constituted and it would adjudicate upon the matter. However, new problems arose with regards to differing interpretations of the term “existence”, which is elaborated upon below. 

“Existence” as under Section 11(6A)

In 2017, the Supreme Court in Duro Felguera44 recognized that the 2015 Amendment had narrowed the scope of S.11, stating that after the amendment, the court’s role was limited to simply determine whether an arbitration agreement exists- nothing more, nothing less. The Court stated: “From a reading of Section 11(6A), the intention of the legislature is crystal clear i.e., the Court should and need only look into one aspect- the existence of an arbitration agreement. What are the factors for deciding as to whether there is an arbitration agreement is the next question. The resolution to that is simple – it needs to be seen if the agreement contains a clause which provides for arbitration pertaining to the disputes which have arisen between the parties to the agreement.” This judgement further reaffirmed the importance of the kompetenz-kompetenz principle. While negativing the existence of the arbitration agreement, the Court interpreted the term “existence”, stating, “it needs to be seen if the contract contains a clause which provides for arbitration pertaining to the disputes which have arisen between the parties to the agreement.”

Thereafter, the Supreme Court, in United India Insurance Co. Ltd. v. Hyundai Engineering And Construction45, qualified this understanding. In its judgement, the Court declined to appoint an arbitrator as an admission of liability, which was a prerequisite for invoking arbitration, had not been satisfied. Thus, the arbitration agreement would not exist in law, when considering the fact that the insurer has not admitted or accepted liability. Further, it held that the observations in Duro Felguera were general in nature, and not specific to the context at hand. The logic employed in United India Insurance was observed in a similar vein in the case of M/S. Brightstar Telecommunications v. M/S. World Digital Solutions.46 While examining the issue of scope, the Supreme Court held that the term “existence” had a wide import, which would require the Court to prima facie ascertain whether the arbitration mechanism agreed to by the parties is relatable to the disputes arising out of the transactions, which are the subject matter of the parent contract. Thus, while the arbitrability of the dispute would fall within the scope of the tribunal’s powers, the Court has to relate the existence of the arbitration agreement to the disputes, which the parties had anticipated would arise in connection with or in relation to the transactions that they had undertaken. 

The 2019 Amendment to the Act removed Section 11(6A) and (7), with the resultant implications being addressed in M/S Mayavti Trading Pvt. Ltd. v. Pradyuat Murman47, which stated that the deletion of Section 11(6A) was not intended to revive the pre-2015 legal framework but rather to facilitate the appointment of arbitrators by arbitral institutions appointed by the Supreme Court for international commercial arbitrations or by the High Courts for other types of arbitrations. Further, the Supreme Court in Vidya Drolia48  observed that even after its deletion, Section 11(6A) and the rationale behind its introduction continued to inform a court’s jurisdiction at the referral stage. While addressing the question of whether “existence” merely referred to contract formation and excluded validity, the Supreme Court held that the two are intertwined, and a reasonable and just interpretation of “existence” would require understanding the context, purpose and relevant legal norms applicable for a binding and enforceable arbitration agreement. The purpose behind such an interpretation is to allow the court, as the judicial forum of the first instance, to prima facie screen and knockdown ex facie meritless, frivolous and dishonest litigation. The judgement also emphasised that such an inquiry needs to be on a prima facie basis- if the Courts face any doubt, they must refer the matter to arbitration. 

More recently, the Delhi High Court, in the case of NCC Ltd. v. Indian Oil49 added more understanding to the term “existence”. The Court held that the space for correlation between the arbitration agreement and the dispute between the parties is very narrow and further stated, “except for an open and shut case… the matter would have to be resolved by an Arbitral Tribunal.” Therefore, in cases where it is not patently clear that the dispute falls outside the scope of the arbitration agreement, a determination into the same would have to be conducted by the tribunal itself. This ruling by the High Court was upheld by the  Supreme Court in appeal.50

Another important development with regards to the interpretation of “existence” is with respect to the validity of unstamped arbitration agreements. The Supreme Court, in SMS Tea Estates Pvt. Ltd. v, Chandmari Tea Company Pvt. Ltd.51 held that unstamped arbitration agreements cannot be enforced. This was restated in Garware Wall Ropes Ltd. v Coastal Marina Constructions and Engineering. Ltd52, which held that all contracts are enforceable only if they are stamped, thereby including the issue of stamping in the existence inquiry. Following this, a 3-judge bench disagreed with the findings in SMS Tea and Garware Wall Ropes, and referred the matter to a larger Constitutional Bench. 

The subsequent judgement in N.N. Global Mercantile Private Ltd. v. Indo Unique Flame Ltd.53 held that an unstamped arbitration agreement would be void and unenforceable unless the stamp duty had been paid. Further, it delved into the obligations of the court in this regard, stating that such existence must be ascertained by the Court during the Section 11(6A) inquiry. The dissenting opinions by J. Roy and J. Rastogi cautioned against such an interpretation, as it could widen the ambit of judicial intervention, which would be opposed to the purpose of the Act.  

The stance taken in N.N. Global came into consideration again, in the case of In Re: Interplay between the Arbitration Agreements under the Arbitration and Conciliation Act 1996 and the Indian Stamp Act 1899.54 Here, a 7-judge bench upheld the validity of an unstamped arbitration agreement, while clarifying that such agreements would be inadmissible as evidence. It placed emphasis on the principles of arbitral autonomy and separability. The judgment underscored the primary function of arbitration as a one-stop forum for resolving disputes, with minimal interference from the judiciary. By invoking the kompetenz-kompetenz doctrine, it concluded that the arbitral tribunal, rather than the courts, holds the power and authority to determine the admissibility of and objections to an unstamped document. The Court clarified the position in Vidya Drolia, stating that the inquiry into existence was to examine merely whether the underlying contract contains an arbitration agreement which provides for arbitration pertaining to the disputes which have arisen. Further, determination of validity should be restricted to the requirement of formal validity, such as the requirement that the agreement be in writing. If such a prima facie review is taken, it does not bind the tribunal, and they are permitted to examine the issue in-depth.  

Limitation under Section 16 

Whether limitation fell within the tribunal’s jurisdiction within Section 16 was another issue which faced significant judicial interpretation. 

The ruling of the Supreme Court in M/S Indian Farmers Fertilizer Co. (IFFCO) v. M/S Bhadra Products55 laid down the three aspects of jurisdiction within S.16, namely- i) whether there is the existence of a valid arbitration agreement; ii) whether the arbitral tribunal is properly constituted; and iii) that matters submitted to arbitration should be in accordance with the arbitration agreement. This judgement created confusion regarding the scope of Section 16 by restricting it so as to not include the issue of limitation. The Court gave a narrow interpretation of the Section, stating that only matters of substantive jurisdiction such as the validity of the arbitration agreement and/or of the arbitral tribunal and arbitrability of disputes would be relevant for consideration. By providing three aspects of jurisdictional inquiries by the tribunal, preliminary issues such as limitation and non-joinder of parties were excluded under Section 16, and would have to be determined as a part of the merits of the case.  

Subsequently, in the case of Uttarakhand Purv Sainik Kalyan Nigam Ltd v. Northern Coal Field56 the Court, taking a contrarian position, held: “Section 16 of the Arbitration Act is an inclusive provision…Once the existence of the arbitration agreement is not disputed, all issues, including jurisdictional objections are to be decided by the arbitrator.” Additionally, while dealing with the issue of whether the court was entitled to reject an application under Section 11 of the Act, on the ground that it was barred by limitation, the Court held that limitation, along with other preliminary jurisdictional issues, fell within the powers of the tribunal under Section 16. The ruling in Uttarakhand was reaffirmed by the Bombay High Court in C. Shamsuddin v. Now Realty Ventures LLP57 and in 2024 by the Telangana High Court in SMS Ltd. v. Uranium Corp. of India Ltd.58 

The Delhi High Court, in the case of Home and Soul Private Limited v. T.V. Today Network Limited59 reinforced the autonomy of the tribunal by reiterating the boundaries of judicial intervention. It emphasised that limitation is a mixed question of fact and law, which would require adjudication by the tribunal when considering challenges under Section 16. 

This pro-arbitration stance, reinforced by various High Court and Supreme Court rulings, underscores the tribunal’s autonomy in determining preliminary issues and limits judicial intervention.

  1. UNCITRAL Model Law on International Commercial Arbitration, art. 16, U.N. Doc. A/40/17, Annex I (1985), as amended by U.N. Doc. A/61/17 (2006). ↩︎
  2. Arbitration Act, 1940, No. 10 of 1940, India Code (1940). ↩︎
  3. supra note 1. ↩︎
  4. Law Commission of India, 246th Report on Amendments to the Arbitration and Conciliation Act, 1996 (Report No. 246, 2014). ↩︎
  5. Shree Subhlaxmi Fabrics v. Chand Mal Baradia and Ors., 2005 SCC OnLine SC 618. ↩︎
  6. Ashapura Mine-Chem Ltd v. Gujarat Mineral Development, (2015) 8 SCC 193. ↩︎
  7. M.D. Army Welfare Housing v. Sumangal Services Pvt. Ltd., (2004) 9 SCC 619.  ↩︎
  8. Indian Oil Corporation Ltd. v. M/S. Shree Ganesh Petroleum, 2022 SCC OnLine SC 131. ↩︎
  9. M/S Konkan Railway Corporation Ltd. v. M/S Rani Construction Pvt. Ltd., (2002) 2 SCC 388. ↩︎
  10. National Aluminium Company Ltd. v. Subhash Infra Engineers Pvt. Ltd. & Anr., (2020) 15 SCC 557. ↩︎
  11. M/S Lion Engineering Consultants v. State of Madhya Pradesh & Ors., (2018) 16 SCC 758. ↩︎
  12. Jagannath Kapoor & Anr. v. Premier Credit And Instalment, AIR 1973 ALL 49. ↩︎
  13. Ajit Singh & Anr. v. Fateh Singh & Ors., AIR 1962 P&H 412. ↩︎
  14. Atul R. Shah v. M/S V. Vrijlal Lalloobhai & Co., AIR 1999 BOM 67. ↩︎
  15. M/S MSP Infrastructure Ltd. v. MP Road Development Corp. Ltd., 2015 AIR SCW 525. ↩︎
  16. Narayan Prasad Lohia v. Nikunj Kumar Lohia & Ors., (2002) 3 SCC 572. ↩︎
  17. M/S Gas Authority Of India Ltd. & Anr v. M/S Keti Construction (I) Ltd. & Ors., (2007) 5 SCC 38. ↩︎
  18. M/S Konkan Railway Corporation Ltd. v. M/S Rani Construction Pvt. Ltd., (2002) 2 SCC 388. ↩︎
  19. Prasun Roy v. Calcutta Metropolitan, (1987) 4 SCC 217. ↩︎
  20. National Thermal Power Corpn. Ltd. v. Siemens Atkeingesellschaft, (2007) 4 SCC 451. ↩︎
  21. Nav Sansad Vihar Coop. Group Housing v. Ram Sharma & Ass. & Ors., 1999 SCC OnLine Del 741. ↩︎
  22. Pharmaceutical Products Of India Ltd. v. Tata Finance Ltd., (2002) 4 BOM LR 344. ↩︎
  23. Union Of India & Anr. v. M/S East Coast Boat Builders, AIR 1999 DELHI 44. ↩︎
  24. S.B.P. & Co v. Patel Engineering Ltd. & Anr., (2005) 8 SCC 618.  ↩︎
  25. McDermott International Inc. v. Burn Standard Co. Ltd. & Ors., (2006) 11 SCC 181.  ↩︎
  26. M/S Deep Industries Ltd. v. Oil And Natural Gas Corporation Ltd., (2020) 15 SCC 706.   ↩︎
  27. Punjab State Power Corp. Ltd. v. Emta Coal Ltd., (2020) SCC Online SC 1165.  ↩︎
  28. Bhaven Construction v. Exe Engineer Sardar Sarovar Narmada, (2022) 1 SCC 75. ↩︎
  29. Unitech Limited & Ors. v. Telangana State Industrial Infrastructure Corporation, 2021 SCC Online SC 99. ↩︎
  30. Uttar Pradesh Power Transmission Corp. Ltd. v. CG Power and Industrial Solutions Ltd., 2021 SCC Online SC 383.  ↩︎
  31. Oriel Financial Solutions Pvt. Ltd. v. Bestech Advisors Pvt. Ltd., 2024 SCC OnLine Del 2221.  ↩︎
  32. M.D. Creations & Ors. v. Ashok Kumar Gupta, 2023 SCC OnLine Cal 1419. ↩︎
  33. Food Corporation Of India vs Indian Council Of Arbitration & Ors., (2003) 6 SCC 564.  ↩︎
  34. Enercon (India) Ltd & Ors. v. Enercon Gmbh & Anr., 2014 SCC OnLine SC 129.  ↩︎
  35. Wellington Associates Ltd. v. Kirit Mehta, (2000) 4 SCC 272.  ↩︎
  36. State of W.B. v. Sarkar & Sarkar, (2018) 12 SCC 736. ↩︎
  37. Sundaram Finance Ltd. v. NEPC India Ltd., (1999) 2 SCC 479.  ↩︎
  38. Ador Samia Pvt. Ltd. v. Peekay Holding Ltd. & Ors., (1999) 8 SCC 572.  ↩︎
  39. Konkan Railway Corp. Ltd. & Ors. v. M/S. Mehul Construction Co., (2000) 7 SCC 201.  ↩︎
  40. supra note 8.  ↩︎
  41. supra note 22. ↩︎
  42. National Insurance Co. Ltd. v. M/S Boghara Polyfab Pvt. Ltd., (2009) 1 SCC 267. ↩︎
  43. supra note 3. ↩︎
  44. M/S Duro Felguera S.A v. M/S. Gangavaram Port Ltd., (2017) 9 SCC 729.  ↩︎
  45. United India Insurance Co. Ltd. v. Hyundai Engineering And Construction, AIR 2018 SC 3932.  ↩︎
  46. M/S. Brightstar Telecommunications v. M/S. World Digital Solutions, AIR 2018 DEL 2843. ↩︎
  47. M/S Mayavti Trading Pvt. Ltd. v. Pradyuat Bed Murman, (2019) 8 SCC 714.  ↩︎
  48. Vidya Drolia v. Durga Trading Corporation, AIR 2020 SC 929.  ↩︎
  49. NCC Ltd. v. Indian Oil Corp. Ltd., 2019 SCC OnLine Del 6964. ↩︎
  50. Indian Oil Corp. Ltd. v. NCC Ltd., 2022 SCC OnLine SC 896.  ↩︎
  51. M/S SMS Tea Estates Pvt. Ltd. v. M/S Chandmari Tea Pvt. Ltd., (2011) 14 SCC 66. ↩︎
  52. Garware Wall Ropes Ltd. v. Coastal Marina Constructions and Engineering Ltd., 2019 SCC OnLine SC 515.  ↩︎
  53. N.N. Global Mercantile Pvt. Ltd. v. Indo Unique Flame Ltd., 2021 SCC OnLine SC 13.  ↩︎
  54. In Re: Interplay Between Arbitration…, 2023 SCC OnLine SC 1666. ↩︎
  55. M/S Indian Farmers Fertilizer Co. v. M/S Bhadra Products, AIR 2018 SC 627.  ↩︎
  56. M/S. Uttarakhand Purv Sainik Kalyan v. Northern Coal Field Ltd., (2020) 2 SCC 455. ↩︎
  57. C. Shamsuddin v. Now Realty Ventures LLP, AIR 2020 BOM 121.  ↩︎
  58. SMS Ltd. v. Uranium Corp. of India Ltd., 2024 SCC OnLine TS 321.  ↩︎
  59. Home and Soul Pvt. Ltd. v. TV Today Network Ltd., 2024 SCC OnLine Del 7252. ↩︎