IMPORTANT POINT
Where dispute with respect to existence and validity of an arbitration agreement is concerned and when same is raised at pre-referral stage, referral court has to decide said issue conclusively and finally and should not leave said issue to be determined by Arbitral Tribunal.

JUDGMENT :

M.R. Shah, J.

1. Feeling aggrieved and dissatisfied with the impugned common judgment and order passed by the High Court of Delhi at New Delhi in respective Arbitration Petitions, by which, the High Court has referred the disputes for arbitration and has appointed the sole arbitrator, the original opponent – Magic Eye Developers Pvt. Ltd. has preferred the present appeals.

2. The issue involved in the present appeals is as such in a very narrow compass, namely, pre-referral jurisdiction of the Court under Section 11(6) of the Arbitration and Conciliation Amendment Act, 2015.

2.1 At the outset, it is required to be noted that before the High Court the appellant herein specifically raised an objection with regard to the existence of an arbitration agreement/clause. It was the case on behalf of the appellant that the dispute revolves entirely around MOU-2 which does not contain the arbitration clause. However, on the other hand, it was the case on behalf of the contesting respondent herein – original applicant that other agreement(s) i.e., SHA-1, SHA-2 and MOU-1 are interlinked/interconnected with the MOU-2 which contained the arbitration clause/agreement and therefore, all the aforesaid agreements are required to be read along with MOU-2.

2.2 By the impugned common judgment and order and relying upon the decision of this Court in the case of Vidya Drolia and Ors. v. Durga Trading Corporation, (2021) 2 SCC 1 and by observing that the arbitrability of the dispute raised, viz-a-viz the arbitration clause 27.3 of SHA-1, is an involved issue and the said issue can be addressed by the learned Arbitral Tribunal, given the complexity of the transaction involved, the High Court has referred the disputes for arbitration and has appointed the arbitrator.

3. Shri Preetesh Kapur, leanred Senior Advocate has appeared on behalf of the appellant and Shri Neeraj Kishan Kaul, learned Senior Advocate has appeared on behalf of the contesting respondent – original applicant.

3.1 Shri Preetesh Kapur, learned Senior Advocate appearing on behalf of the appellant has taken us to Section 11(6A) of the Arbitration Act and has submitted that post- Arbitration and Conciliation Amendment Act, 2015 by which sub-section (6A) has been added to Section 11 of the Arbitration Act, while deciding the application under Section 11(6) of the Act and while exercising the pre-referral jurisdiction, the Court has to consider and examine the existence of an arbitration agreement and it should not be left to the Arbitral Tribunal.

3.2 It is vehemently submitted that there is a difference and distinction between the existence and validity of an arbitration clause and non-arbitrability of the dispute. It is submitted that so far as the issue with respect to the existence and validity of an arbitration agreement at the stage of pre-referral jurisdiction under Section 11(6) of the Act, the Court has to give a specific finding finally on such issue and such an issue should not be left to the Arbitral Tribunal. It is submitted that therefore, the High Court has misapplied and/or misread the decision of this Court in the case of Vidya Drolia (supra).

3.3 It is vehemently submitted by Shri Kapur, learned Senior Advocate appearing on behalf of the appellant that as such it is the duty cast upon the referral court to protect the parties from being forced to arbitrate when the matter is demonstrably non-arbitrable. It is submitted that the dispute with respect to the existence and validity of an arbitration agreement/clause goes to the root of the matter and has to be decided first by the referral court. It is submitted that if ultimately it is held that there is no existence of an arbitration agreement and/or there is no valid arbitration agreement and the said issue is left to be decided by the arbitral tribunal in that case the entire exercise by the arbitral tribunal will be futile. It is submitted that therefore in order to prevent wastage of public and private resources and t