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Duty of the court under Section 11 includes checking if dispute correlate to the arbitration agreement

In Dlf Home Developers Limited v. Rajapura Homes Private Limited & Anr, arbitration petition was filed before the Supreme Court by DLF Home Developers Limited u/s 11(6)  r/w/s 11(12) of the Arbitration Act, for appointment of sole arbitrator to adjudicate the differences between the parties that had arisen out of the two Construction Management Agreements.

The Respondents argued that the instant disputes could only be arbitrated as per the dispute resolution mechanism specified under a different agreement and therefore the present application was infructuous. 

Referring to judgement in Vidya Drolia and Others v. Durga Trading Corporation (2021) 2 SCC 1, the court held that the jurisdiction of this Court under Section 11 is primarily to find out whether there exists a written agreement between the parties for resolution of disputes through arbitration and whether the aggrieved party has made out a prima facie arbitrable case. The limited jurisdiction, however, does not denude this Court of its judicial function to look beyond the bare existence of an arbitration clause to cut the deadwood. A three-judge bench in Vidya Drolia (Supra), has eloquently clarified that this Court, with a view to prevent wastage of public and private resources, may conduct prima facie review at the stage of reference to weed out any frivolous or vexatious claims.

To say it differently, this Court or a High Court, as the case may be, are not expected to act mechanically merely to deliver a purported dispute raised by an applicant at the doors of the chosen Arbitrator. On the contrary, the Court(s) are obliged to apply their mind to the core preliminary issues, albeit, within the framework of Section 11(6-A) of the Act. Such a review, as already clarified by this Court, is not intended to usurp the jurisdiction of the Arbitral Tribunal but is aimed at streamlining the process of arbitration. Therefore, even when an arbitration agreement exists, it would not prevent the Court to decline a prayer for reference if the dispute in question does not correlate to the said agreement.


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