Section 11 arbitration inquiry limited to arbitration agreement; prior arbitral service did not disqualify the proposed arbitrator.

In a Section 11 petition, the Court confined its inquiry to the existence of an arbitration agreement and left merits-based objections, including constructive res judicata and alleged prematurity of the claim, to the arbitral tribunal. It held that the earlier arbitration did not, on the record, decide the present repayment and guarantee-enforcement cause of action after election of the repayment remedy. The Court further held that Items 16 and 24 of the Fifth Schedule concern disclosure of relationships or prior involvement creating justifiable doubts, and that prior service as an independent arbitrator between the parties does not by itself create disqualification or a legally cognisable conflict. No de jure ineligibility under the Seventh Schedule was shown, so reference to arbitration was made.

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Issues: Whether, in a petition under Section 11 of the Arbitration and Conciliation Act, 1996, the Court could refuse appointment of an arbitrator on the grounds of constructive res judicata, alleged prematurity of the claim, or ineligibility under Items 16 and 24 of the Fifth Schedule.

Analysis: The scope of inquiry under Section 11(6A) was confined to examining the existence of an arbitration agreement, leaving merits-based objections such as constructive res judicata and the alleged absence of a crystallised default for the arbitral tribunal. The earlier arbitration did not, on the face of the record, adjudicate the present cause of action for repayment and enforcement of the guarantee after election of the repayment remedy. As to the Fifth Schedule, Items 16 and 24 were held to concern disclosure of relationships or prior involvement that may give rise to justifiable doubts, not the mere fact that the proposed arbitrator had earlier acted as an independent arbitrator between the parties. Reading Item 16 harmoniously with Item 24, and applying noscitur a sociis, the Court held that prior adjudication as arbitrator does not create disqualification or a legally cognisable conflict of interest. The Court also noted that no de jure ineligibility under the Seventh Schedule was alleged.

Conclusion: The objections were rejected and the parties were referred to arbitration before the same learned sole arbitrator.

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