Court Confirms Arbitration Clause Existence, Appoints Former Judge to Resolve Disputes
The Punjab and Haryana High Court has made a significant ruling in the case of Karan Paul v. K P H Dream Cricket Private Limited, confirming the existence of an arbitration agreement and appointing a sole arbitrator to address disputes among the company's shareholders and directors. The judgment, delivered by Justice Jasgurpreet Singh Puri on December 23, 2025, highlights the limited role of the court under Section 11 of the Arbitration and Conciliation Act, 1996, emphasizing that the arbitrability of disputes and objections should be adjudicated by the appointed arbitrator rather than during the referral stage.
The petitioner, Karan Paul, initiated proceedings under Section 11(5) of the Act, seeking the appointment of an arbitrator due to unresolved disputes within K.P.H. Dream Cricket Private Limited, where he and the respondents are shareholders and directors. The disputes arose following a company resolution that called for the rotational appointment of the Chairman, leading to disagreements among the parties.
Despite objections from the respondents, who argued that the disputes were not arbitrable and suggested alternative legal remedies under the Companies Act, the court maintained that the existence of an arbitration clause was sufficient for appointing an arbitrator. Justice Puri cited the Supreme Court's stance that courts should not delve into the arbitrability of disputes at the referral stage and that such matters should be resolved by the arbitrator.
In appointing Hon'ble Mr. Justice Harinder Singh Sidhu, a former judge of the High Court, as the sole arbitrator, the court directed the parties to appear before him and set the arbitration process in motion. The court also outlined that the arbitrator's fee will be determined based on the dispute's monetary quantification, as per Section 31A of the Act, and emphasized the need to adhere to the time limits prescribed under Section 29-A.
This ruling underscores the judiciary's commitment to uphold arbitration agreements and streamline dispute resolution processes, aligning with legislative intent to minimize judicial interference and expedite arbitration proceedings.
Bottom Line:
Arbitration and Conciliation Act, 1996 - Section 11(5) - Existence of arbitration agreement confirmed - Court held that arbitrability of disputes and objections raised by respondents are to be adjudicated by the appointed Arbitrator, not during referral stage.
Statutory provision(s): Arbitration and Conciliation Act, 1996 - Section 11(5), Section 12, Section 21, Section 29-A, Section 31A
