Pendency Of Appeal U/S 37 A&C Act Against First Award Does Not Bar Fresh Arbitration Proceedings: Bombay High Court

Justice Gautam A. Ankhad held that “the Section 11 Court ought not to venture beyond examining the existence of an arbitration agreement. The pendency of any proceeding mentioned hereinabove cannot be an impediment to appoint an arbitrator in this Application. All other issues must be agitated before the Arbitral Tribunal”.

The Applicant (Rajuram Sawaji Purohit) had given security deposit to The Shandar Interior Pvt. Ltd. under a salvage purchase agreement. Dispute arose when the respondent refused to refund the said amount. The matter was ultimately referred to arbitration after several rounds of litigations including a winding up petition and a Commercial Summary Suit.

The first arbitral tribunal by its award dismissed the claim of the purohit as barred by limitation but acknowledged that the agreement was valid and binding. The award was challenged under section 34 of the Arbitration Act holding that the arbitral tribunal had erred in deciding the issue of limitation. The court however held that it was not empowered to modify or re-adjudicate the claim and directed the claimant to pursue de novo arbitration. Thereafter, both parties filed an appeal under section 37 of the Arbitration Act and purohit filed an application under section 11 of the Arbitration Act seeking appointment of a new arbitrator.

The Applicant submitted that as per the Supreme Court's judgment in Gayatri Balasamy, although the arbitral tribunal was empowered to modify or severe arbitral awards, the applicant was entitled to begin a fresh arbitration since the previous arbitral award had been set aside. Relying on Wadhwa Group Holdings Ltd., it was submitted that a second round of arbitration was allowed even when appeals under section 37 of the Arbitration Act were pending.

Per contra, the Respondents submitted that the present application was premature as appeals under section 37 of the Arbitration Act were already pending before the Division Bench. It was further submitted that permitting a fresh arbitration would lead to duplicative proceedings and potential conflicting outcomes.

Findings:

The court at the outset rejected the respondents' contentions holding that its jurisdiction under section 11 of the Arbitration Act was confined to verifying the existence of an arbitration agreement. It was not empowered to adjudicate the issues of limitations and res judicata. The court further held that the issues of arbitrability and maintainability fall in the exclusive domain of the arbitrator under section 16 of the Arbitration Act.

It held that “this Court cannot conduct an intricate evidentiary inquiry into whether the claims are time-barred or hit by res judicata. These are matters for the arbitral tribunal to determine. The existence of a valid arbitration agreement is the only consideration under Section 11”.

On issue of pendency of appeals, the court held that the court under section 11 of the Arbitration Act is not prohibited from appointing the arbitrator even if appeals under section 37 of the Arbitration Act were pending against an order by which the arbitral award was set aside.

The court held that “the Section 11 Court ought not to venture beyond examining the existence of an arbitration agreement. The pendency of any proceeding mentioned hereinabove cannot be an impediment to appoint an arbitrator in this Application. All other issues must be agitated before the Arbitral Tribunal”.

It relied on the Bombay High Court's judgment in Wadhwa Group Holdings Private Limited where the arbitrator had been appointed while first arbitration was pending arbitration.

Accordingly, the present petition was allowed.

Case Title: Rajuram Sawaji Purohit Versus The Shandar Interior Private Limited

Case Number: COMMERCIAL ARBITRATION APPLICATION (LODGING) NO.25035 OF 2024

Order Date: 10/10/2025

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