Arbitration clause scope and arbitrability control appointment of arbitrator despite related proceedings and NCLT pendency

A specific arbitration clause covering disputes on validity, interpretation, implementation, breach and termination supported reference to arbitration, and the existence of related agreements or earlier proceedings required deeper examination rather than rejection at the Section 11(6) stage. Pending oppression and mismanagement proceedings before the NCLT did not by itself bar appointment of an arbitrator where the contractual dispute was distinct. The court therefore held that questions on interconnectedness and arbitrability should be left to the arbitral forum, and the request for appointment of an arbitrator was allowed for the Share Subscription and Shareholders Agreement dated 27.04.2016.

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Issues: Whether the High Court was justified in refusing appointment of an arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996 on the grounds of prior arbitral proceedings and pendency of proceedings before the National Company Law Tribunal.

Analysis: The agreement in question contained a specific arbitration clause covering disputes arising out of that contract, including disputes relating to validity, interpretation, implementation, breach and termination. The controversy raised by the respondent as to whether the dispute was interconnected with other agreements, or whether earlier proceedings affected maintainability, required deeper examination and could not be conclusively resolved at the stage of Section 11(6). Pendency of oppression and mismanagement proceedings before the National Company Law Tribunal also did not justify refusal of reference, since the contractual dispute was distinct and the question of arbitrability was better left to the arbitral forum.

Conclusion: The refusal to appoint an arbitrator was unsustainable. The application under Section 11(6) was allowed and the dispute arising out of the Share Subscription and Shareholders Agreement dated 27.04.2016 was directed to arbitration, leaving arbitrability to the learned Arbitrator.

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