Legal provisions involved: Sections 11(6) of the Arbitration and Conciliation Act, 1996

Judgement by: Supreme Court of India

Judge/Bench: Justice Pamidighantam Sri Narasimha and Justice Atul S. Chandurkar

Facts

APGENCO invited bids for an EPC contract at Rayalseema Thermal Power Plant, won by a consortium led by the first respondent. Due to the lead member’s financial issues and delays, VA Tech took over some work, and the lead member later entered insolvency. A payment dispute arose, and the first respondent invoked arbitration individually. APGENCO objected, but the High Court allowed it.

Key legal provisions

Sections 11(6) of the Arbitration and Conciliation Act, 1996

Issues raised

Whether a member of a consortium can individually invoke arbitration under Section 11 and if the High Court was right in constituting the Arbitral Tribunal.

Arguments of the case

The appellant said a single consortium member cannot start arbitration on their own without the agreement of the other members. The respondents replied that the High Court only had to check if there was a basic reason to refer the dispute to arbitration, and the Arbitral Tribunal would handle the detailed questions later.

Judgement

The Supreme Court held that the High Court rightly conducted a prima facie check and referred the dispute to arbitration. Questions about the individual member’s right, consortium existence, or consent of other members will be decided by the Arbitral Tribunal. Detailed issues cannot be examined at the Section 11 stage. The appeals were dismissed.

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