Whether a member qualifies as a "party" and its entitlement to invoke arbitration to be decided by the Arbitral Tribunal

Supreme Court Upholds Arbitral Tribunal Constitution in APGENCO-Tecpro Dispute Apex Court Confirms Limited Role of Referral Courts Under Arbitration and Conciliation Act. Detailed issues of maintainability, capacity, and arbitrability to be determined by the Arbitral Tribunal under Section 16.

In a significant judgment, the Supreme Court of India has upheld the decision of the Telangana High Court to constitute an Arbitral Tribunal for resolving disputes between Andhra Pradesh Power Generation Corporation Limited (APGENCO) and Tecpro Systems Limited. The ruling underscores the limited jurisdiction of referral courts under the Arbitration and Conciliation Act, 1996, emphasizing the principle of "kompetenz-kompetenz," which allows the Arbitral Tribunal to determine its own jurisdiction.

The case originated from a contract dispute involving a consortium led by Tecpro Systems Limited, which was awarded an EPC contract for works at the Rayalseema Thermal Power Plant. The consortium, including M/s VA Tech Wabag Ltd. and M/s Gammon India Ltd., faced challenges when Tecpro Systems encountered financial distress, leading to delays and subsequent invocation of arbitration by Tecpro, despite being in liquidation.

The appellants, APGENCO and VA Tech, contested the High Court's decision, arguing that the arbitration agreement was with the consortium as a whole, not with individual members, and that Tecpro, in its individual capacity, could not unilaterally invoke arbitration. They relied on the contractual definitions and previous judicial interpretations to support their contention.

However, the Supreme Court, led by Justices Pamidighantam Sri Narasimha and Atul S. Chandurkar, affirmed the High Court's order, stating that the referral court's role under Section 11(6) of the Arbitration and Conciliation Act is confined to a prima facie examination of the existence of an arbitration agreement. Detailed issues regarding maintainability, capacity, and arbitrability are to be addressed by the Arbitral Tribunal under Section 16 of the Act.

The judgment reiterated the legislative intent to minimize judicial intervention at the pre-arbitral stage, aligning with precedents that advocate for a prima facie determination by referral courts. It highlighted that complex questions of jurisdiction and party capacity should be left to the Arbitral Tribunal, which possesses the competence to adjudicate such matters comprehensively.

This decision marks a pivotal moment in arbitration law, reinforcing the doctrine of kompetenz-kompetenz and the minimalistic approach prescribed by the Arbitration and Conciliation Act. It provides clarity on the scope of judicial review in arbitration matters, ensuring that arbitration remains a viable and efficient dispute resolution mechanism.

Bottom Line:

Arbitration and Conciliation Act, 1996 - Referral court's jurisdiction under Section 11(6) and 11(6-A) is limited to prima facie examination of the existence of an arbitration agreement. Detailed issues of maintainability, capacity, and arbitrability to be determined by the Arbitral Tribunal under Section 16.

Statutory provision(s): Arbitration and Conciliation Act, 1996 Sections 11(6), 11(6-A), and 16

M/s Andhra Pradesh Power Generation Corporation Limited (APGENCO) v. M/s Tecpro Systems Limited, (SC) : Law Finder Doc Id # 2822813