The court emphasized that disputes must be referred to arbitration unless a clear, non-arbitrable case is established, affirming the limited scope of review under Section 11 of the Arbitration Act.

JUDGMENT :

SHEEL NAGU, CJ.

1. Instant application u/s 11 of Arbitration and Conciliation Act, 1996 (for short, ‘1996 Act’), seeks appointment of an independent Arbitrator.

2. The rival parties herein entered into agreement/work order and tender document (Annexure P-1) and General Conditions (Annexure P-3) of the contract containing arbitration clause, is as follows :

“70. Arbitration- All disputes, between the parties to the Contract (other than those for which the decision of the C.W.E. or any other person is by the Contract expressed to be final and binding) shall, after written notice by either party to the Contract to the other of them, be referred to the sole arbitration of an Engineer Officer to be appointed by the authority mentioned in the tender documents. Unless both parties agree in writing such reference shall not take place until after the completion or alleged completion of the Work or termination or determination of the Contract under Condition Nos. 55, 56 and 57 hereof……..”

2.1 Dispute erupted between the parties. The applicant served notices upon respondent(s) on 18.04.2025, 18.06.2025 and 28.08.2025 seeking resolution of dispute through Arbitral Tribunal, but to no avail.

3. Mr. Vinish Singla, Senior Panel Counsel for respondent-UOI could not dispute, execution of arbitration agreement, service of notice, dispute between the parties being arbitrable and the cause not being a deadwood. However, an objection is raised that the contract contains a Dispute Resolution Board (DRB) clause, which requires that all disputes be first referred to the DRB as a mandatory precondition before initiating arbitration.

3.1. The learned counsel for the petitioner submits that the DRB was not in existence when the dispute was raised. The counsel further submits that the project is divided into three phases, and in terms of Schedule ‘A’, Notes (i), (ii) and (iii) at page 13 (R) of the CA, the final bill for each phase is required to be processed and paid separately. Moreover, a completion certificate for Phase I was duly issued by the respondents on 05.12.2022.

4. The law on the scope of examination u/s 11 (6) of 1996 Act is well settled. The Apex Court in Vidya Drolia Vs. Durga Trading Corporation , (2021) 2 SCC 1 (para 154.2, 154.3 and 154.4) held that the Court may undertake a prima facie examination at this stage and reject an application where it is manifestly and ex facie certain that the arbitration agreement is non-existent, invalid or the disputes are non-arbitrable. In this context, the relevant extract of the said judgment is as follows :-

“154.2 Scope of judicial review and jurisdiction of the Court under Sections 8 and 11 of the Arbitration Act is identical but extremely limited and restricted.

154.3 The general rule and principle, in view of the legislative mandate clear from Act 3 of 2016 and Act 33 of 2019, and the principle of severability and competence-competence, is that the Arbitral Tribunal is the preferred first authority to determine and decide all questions of non- arbitrability. The court has been conferred power of “second look” on aspects of non-arbitrability post the award in terms of sub-clauses (i), (ii) or (iv) of Section 34 (2) (a) or sub clause (i) of Section 34 (2) (b) of the Arbitration Act.

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