Case Number: Arbitration Petition (Civil) No. 12 Of 2019

Judges Name: Hon’ble Judges N.V. Ramana, Surya Kant J, Hima Kohli J.

Order dated: 25.01.2022

Facts of the Case:

• This is a petition filed by Intercontinental Hotels Group (India) Pvt. Ltd and others (Petitioners) against Waterline Hotels Pvt. Ltd. (Respondent) for an appointment of a sole arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996 (“Act”). Petitioners entered into a hotel management agreement with the Respondent to renovate the hotel. 
• By an email dated 12.10.2018, the Respondent terminated the agreement and stated that the hotel has been rebranded. Petitioners sought interim reliefs under Section 9 of the Act before the Hon’ble High Court of Karnataka and obtained an interim order restricting the Respondent from evicting them. As the settlement talks failed, the Petitioners issued a notice of arbitration and Respondent replied stating that notice of arbitration is not a notice and does not require a reply. Petitioners approached the Singapore International Arbitration Centre (SIAC) and SIAC sent a notice to the Respondent for the appointment of arbitrator and Respondent replied stating that notice of arbitration is defective and incurable. 
• Petitioners have approached the Hon’ble Supreme Court to appoint an arbitrator. It was contended by the Respondent that the agreement was unstamped and upon directions of this Court, it was later paid by the Petitioners. The Respondent contended that the agreement was not properly certified and stamped.

Supreme Court observed/held as follows:

1. The Court’s jurisdiction to adjudicate issues at the pre appointment stage was discussed and recorded that courts have limited jurisdiction under S.11 (6) of the Act and the exception is that Courts can adjudicate to cut the deadwood. 
2. It noted that issues of arbitrability /validity are matters to be adjudicated upon by arbitrators and cases of Vidya Drolia v. Durga Trading Corporation, N.N. Global Mercantile Private Limited v. Indo Unique Flame Limited was discussed by the Court. 
3. Court observed that though there is a need to constitute a larger Bench to settle the jurisprudence regarding the extent of Court’s jurisdiction, due to the time sensitivity in arbitration matters, the Court must ensure arbitrations are carried on. 
4. On the question of insufficient stamping raised by the Respondent, the Court noted clause 22 of the agreement which required the Respondent to ensure that the agreement is valid in India and held that this issue is not deadwood for the Court to interfere. 
5. Mr. Justice A.V. Chandrashekara (retired Judge of Hon’ble High Court of Karnataka) was appointed as a sole arbitrator by the Court

The Hon’ble Supreme Court disposed the petition.