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Aslam Ismail Khan Deshmukh vs. ASAP Fluids Pvt. Ltd. & Anr.

Not available · 2024 INSC 849Decided 7 Nov 2024
Not available
Justice D.Y. Chandrachud · Chief Justice of India · Justice J.B. Pardiwala · Justice Manoj Misra

Background

The petitioner, a Non-Resident Indian based in Dubai with expertise in the drilling-fluid industry, was a shareholder along with ASAP Fluids Pvt. Ltd., Gumpro Drilling Fluids Pvt. Ltd., and two individuals, under a Shareholders Agreement dated 25.07.2011 which contained an arbitration clause (Clause 13.10). Disputes arose between the parties, and the petitioner filed two petitions before the Supreme Court under Section 11(6) read with Section 11(12)(a) of the Arbitration & Conciliation Act, 1996, seeking appointment of an arbitrator to adjudicate his claims, since the respondents had not agreed to appoint one. One of the respondents also raised an objection that the petitioner's claims were time-barred.

Decision Breakdown

The Supreme Court held that the existence of the arbitration agreement under Clause 13.10 of the Shareholders Agreement was undisputed, and therefore an arbitrator had to be appointed. On the question of limitation, the Court held that this issue, whether the petitioner's claims were time-barred, should be left for the arbitral tribunal itself to decide as a preliminary issue, rather than being resolved by the Court at the referral stage. Noting that a sole arbitrator had already been appointed to handle a related dispute between the same parties arising from a connected Service Agreement, the Court found it appropriate to appoint the same arbitrator for these disputes as well, for consistency and efficiency, with fees and other modalities to be fixed in consultation with the parties. The Court also flagged that if the tribunal ultimately finds the claims time-barred, it may direct that the arbitration costs relating to those claims be borne solely by the petitioner.

Lesson Learnt

At the stage of appointing an arbitrator, courts generally will not themselves decide disputed questions like limitation: such issues are typically left to the arbitral tribunal to examine as a preliminary matter, keeping court intervention in arbitration minimal.

Official source (sci.gov.in)View Judgment (PDF)

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