Section 11 Appointments Not Barred by Pending Section 37 Appeals: Bombay High Court Orders De Novo Arbitration After Set-Aside, Confines Referral Court to Prima Facie Existence of Agreement

Introduction

In Rajuram Sawaji Purohit v. The Shandar Interior Private Limited, the Bombay High Court (Commercial Division), per Ankhad J., addressed whether a court exercising jurisdiction under Section 11 of the Arbitration and Conciliation Act, 1996 (“A&C Act”) may appoint a new arbitrator in a “second round” of arbitration after an award has been set aside under Section 34 and while Section 37 appeals are pending. The Court answered in the affirmative, emphasizing the strictly confined remit of the Section 11 court to examine the existence of an arbitration agreement and to leave all other objections—including limitation, res judicata, and alleged prematurity—to the arbitral tribunal.

The dispute arises out of an Agreement for Purchase of Salvage Material dated 29 November 2011. The Applicant (a sole proprietor) paid a security deposit of Rs. 51,38,000 to the Respondent. Following a round of company winding-up proceedings and a commercial summary suit, the parties were referred to arbitration by consent. The first tribunal dismissed the Applicant’s claims on limitation by an award dated 6 June 2022. On 7 February 2024, the Section 34 court set aside that award in its entirety; a subsequent correction application was rejected on 11 July 2024, with the Section 34 court indicating that de novo arbitration would be necessary as it could not modify the award.

The Applicant then sought appointment of an arbitrator under Section 11 to re-initiate arbitration. Meanwhile, both sides pursued Section 37 appeals. The Applicant’s appeal was noted to involve issues allegedly covered by a Constitution Bench decision in Gayatri Balasamy v. ISG Novasoft Technologies Limited (2025 SCC OnLine SC 986).

Summary of the Judgment

The Court appointed a sole arbitrator to adjudicate all disputes arising from the parties’ agreement, holding:

The Section 11 court’s jurisdiction is limited to a prima facie determination of the existence of a valid arbitration agreement. It must not enter into contested issues such as limitation, res judicata, prematurity, or the implications of pending appellate proceedings.
The existence of an arbitration clause (clause 16) was admitted. The earlier award had been set aside under Section 34. Therefore, there is no impediment to appointing an arbitrator, notwithstanding pending Section 37 appeals.
All objections—including limitation, res judicata, and concerns over costs—are left open for the arbitral tribunal to decide.
Concerns over the financial burden of a second arbitration may be addressed by the tribunal through fees and cost orders; fees are to be in accordance with the Fourth Schedule read with the Bombay High Court (Fee Payable to Arbitrators) Rules, 2018.

Operative directions include:

Appointment of Mr. Anish S. Karande, Advocate, as sole arbitrator.
Filing of the statutory disclosure under Section 11(8) read with Section 12(1).
All issues kept open to be raised before the tribunal.
Seat/venue at Mumbai, with logistics and communications directions to the parties.

Detailed Analysis

Precedents Cited and Their Role

The Court rooted its decision in a coherent line of Supreme Court authority confining referral courts under Sections 8/11 to a prima facie examination of the existence of an arbitration agreement, while channeling all other substantive objections to the arbitral tribunal under the competence-competence principle:

Interplay between Arbitration Agreements under A&C Act, 1996 and Stamp Act, 1899, In Re (2024) 6 SCC 1 (Constitution Bench): Reaffirmed the “minimum judicial interference” principle, clarifying that referral courts only undertake a prima facie determination at the Section 8/11 stage, leaving issues of arbitrability and jurisdiction to the tribunal (Section 16).
SBI General Insurance Co. Ltd. v. Krish Spg. (referred as (2025) 3 SCC (Civ) 567 and (2024) 12 SCC 1 in the extracts): Emphasized that arbitral tribunals are the preferred first authorities to decide arbitrability and jurisdiction; referral courts must avoid venturing into contested factual questions at the threshold.
Cox and Kings v. SAP India Pvt. Ltd. (2025) 1 SCC 611: The Supreme Court appointed an arbitrator despite earlier arbitral proceedings being pending, reiterating that at Section 11(6) the inquiry is confined to whether an arbitration agreement exists—“nothing more, nothing less.” The Court there relied on Duro Felguera, S.A. v. Gangavaram Port Ltd. (2017) 9 SCC 729 and Lombardi Engg. Ltd. v. Uttarakhand Jal Vidyut Nigam Ltd. (2024) 4 SCC 341.
Wadhwa Group Holdings Pvt. Ltd. v. Homi Pheroze Ghandy (Bom HC, 7 March 2022): The Bombay High Court appointed an arbitrator in a “second round” even when a Section 37 appeal was pending, reflecting a consistent local jurisprudence favoring non-interference at the referral stage.
Batliboi Environmental Engineers Ltd. v. Hindustan Petroleum Corporation Ltd. (cited as 2023 SCC OnLine SC 1208): Referred to for the proposition that appointment is not barred in analogous circumstances; the High Court followed this pro-referral stance.
Gayatri Balasamy v. ISG Novasoft Technologies Limited, 2025 SCC OnLine SC 986 (Constitution Bench): Invoked in the Section 37 appeal to argue that post-set-aside, courts may, in appropriate cases, modify or sever parts of an award. While not central to the Section 11 determination, this development was noted to have clarified the law after the Section 34 court’s earlier observation that it lacked power to modify the award.

Collectively, these authorities anchor the ruling: the Section 11 court must not decide contentious issues beyond confirming the existence of an arbitration agreement and should not be deterred by pending appellate proceedings or anticipated defenses such as limitation or res judicata.

Legal Reasoning

The Court’s analysis proceeds in three steps:

Threshold inquiry only: The judge reaffirmed that post the 2015 amendments and subsequent Supreme Court jurisprudence, a Section 11 court’s remit is strictly limited to a prima facie examination of the existence of an arbitration agreement. Here, the presence of an arbitration clause (clause 16) was admitted by both sides. That ends the Section 11 inquiry.
Non-impediment of pending proceedings: The fact that the first award was already set aside under Section 34, and that Section 37 appeals by both parties are pending, does not present an impediment to appointment. Supreme Court guidance indicates that referral courts should not stall appointments on account of collateral or appellate proceedings; instead, arbitrability and threshold defenses are to be examined first by the tribunal. The Court also noted that, when setting aside the award, the Section 34 court had indicated de novo arbitration would be required in the absence of a power to modify the award. While Gayatri Balasamy has since clarified the modification/severance power, that debate belongs in the appellate arena—not at the Section 11 threshold.
All objections reserved to the tribunal: The Respondent’s objections—limitation, res judicata following the first arbitration, alleged prematurity in view of pending appeals, and the absence of a fresh Section 21 notice—were explicitly left for the tribunal to decide under Section 16. The tribunal may also address cost/fee concerns and procedural economy. This is consistent with the competence-competence principle and the legislative policy of minimal court interference.

On costs and burden, the Court acknowledged the Respondent’s legitimate concern about a “second round” of arbitration but held that these are to be managed by the tribunal, including by applying the Fourth Schedule and the Bombay High Court fee rules.

Impact and Future Implications

This order cements a pro-arbitration, minimal-interference approach at the referral stage in several respects:

Appointment despite pending appeals: Parties are not required to await the outcome of Section 37 appeals to commence or recommence arbitration after an award has been set aside under Section 34. This reduces delay and prevents an undue chilling effect on arbitral redress.
Clear demarcation of roles: Section 11 courts verify the arbitration agreement’s existence and stop there. Defenses such as time-bar, res judicata, and alleged procedural irregularities (e.g., Section 21 notice) are to be addressed by the tribunal. This reinforces the competence-competence doctrine and Section 5’s “minimum interference” mandate.
Managing parallel tracks: While there is a risk of parallel proceedings (arbitration and Section 37 appeals), the order indicates that the arbitral process need not be paralyzed by such risks. Parties retain the ability to seek case management solutions, including stays or directions, either from the appellate court or from the tribunal, to avoid conflicting outcomes or wasted effort.
Costs discipline through tribunal oversight: By pushing fee and cost concerns to the arbitral forum, the order encourages tribunals to actively use their costs jurisdiction to discourage frivolous objections and to calibrate cost allocation to fairness and efficiency.
Interplay with Gayatri Balasamy: Although the Section 34 court had previously stated that it could not modify the award (thereby suggesting de novo arbitration), the subsequent Constitution Bench in Gayatri Balasamy (as referenced) may influence appellate consideration under Section 37. Nevertheless, at the Section 11 stage, the High Court rightly avoids anticipatory resolution of these merits issues.

Complex Concepts Simplified

Section 11 (Appointment of arbitrators): A threshold, gatekeeping stage where the court checks, on a prima facie basis, if an arbitration agreement exists between the parties. The court should not decide complex disputes or defenses at this stage.
Section 34 (Setting aside an award): Allows a court to set aside an arbitral award on limited grounds. Traditionally, courts could not modify an award under Section 34, but the Constitution Bench in Gayatri Balasamy (as referenced) suggests the law now recognizes limited modification/severance in appropriate cases. In this matter, the award was set aside in entirety.
Section 37 (Appeals): Permits appeals from orders under Section 34. The pendency of such appeals does not bar a Section 11 court from appointing an arbitrator, especially after a set-aside.
Competence-competence (Section 16): The principle that the arbitral tribunal itself decides its jurisdiction, including whether the arbitration agreement is valid, whether claims are time-barred, and whether prior proceedings render issues res judicata.
Minimum judicial interference (Section 5): Courts must not intervene in arbitration matters except where specifically permitted by the A&C Act. This principle underpins the narrow scope of Section 11 scrutiny.
De novo arbitration: Recommencing arbitration afresh after an award is set aside (where the court has not modified the award or sent it back under Section 34(4)). All issues are open for the tribunal’s determination.
Section 21 notice (Commencement of arbitration): Arbitration is deemed to commence on the date the respondent receives a request to refer disputes to arbitration. Whether a “fresh” notice is required for a second round is a matter the tribunal can consider based on the earlier invocation and procedural history.
Seat of arbitration: Designates the juridical home of the arbitration (here, Mumbai), determining the court’s supervisory jurisdiction and procedural framework.
Section 12 disclosures and fee regime: Arbitrators must disclose circumstances affecting independence or impartiality (Section 12), and their fees may be fixed according to the Fourth Schedule and applicable High Court rules.

Key Takeaways

The Bombay High Court appointed a sole arbitrator for a “second round” despite pending Section 37 appeals, after the first award had been set aside.
The Section 11 court’s remit remains confined to verifying the existence of an arbitration agreement, not to resolve limitation, res judicata, prematurity, or Section 21 issues.
All defenses and procedural objections were expressly left to the tribunal to decide under Section 16; costs and fees are to be managed by the tribunal under the Fourth Schedule and local rules.
The order aligns with Supreme Court jurisprudence (Interplay Constitution Bench; SBI General v. Krish Spg.; Cox & Kings; Duro Felguera; Lombardi) and with Bombay High Court practice (Wadhwa Group; Batliboi) favoring minimal interference and swift constitution of tribunals.
The judgment supports continuity and efficiency in arbitration by preventing appeals from stalling arbitral adjudication once an award has been set aside.

Conclusion

Rajuram Sawaji Purohit v. The Shandar Interior Private Limited is a robust reaffirmation of the limited role of referral courts under Section 11 of the A&C Act. By appointing a sole arbitrator notwithstanding pending Section 37 appeals and objections on limitation, res judicata, and Section 21 notice, the Bombay High Court aligns itself with contemporary Supreme Court jurisprudence favoring minimal judicial interference, competence-competence, and the speedy constitution of arbitral tribunals.

The ruling’s practical significance is considerable: parties whose awards have been set aside under Section 34 need not await the conclusion of appellate challenges before returning to arbitration. All threshold defenses and concerns over duplication and costs remain fully justiciable before the tribunal. In an era of increasing arbitration caseloads and delays, this order provides clarity and continuity: Section 11 courts are to keep the door to arbitration open, determine only the existence of an arbitration agreement, and let the tribunal do the rest.