Mohammed Masroor Shaikh vs Bharat Bhushan Gupta on 2 February, 2022

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Supreme Court of India
Mohammed Masroor Shaikh vs Bharat Bhushan Gupta on 2 February, 2022Author: Abhay S. Oka

Bench: Ajay Rastogi, Abhay S. Oka

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NON­REPORTABLE

IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 874 OF 2022
(Arising out of SLP (Civil) No. 7635 of 2021)

MOHAMMED MASROOR SHAIKH … APPELLANT
v.
BHARAT BHUSHAN GUPTA & ORS. … RESPONDENTS

WITH

CIVIL APPEAL NO. 875 OF 2022
(Arising out of SLP (Civil) No. 7655 of 2021)

AND

CIVIL APPEAL NO. 875 OF 2022
(Arising out of SLP (Civil) No. 7714 of 2021)

J U D G M E N T
ABHAY S. OKA, J.

Leave granted.

1. These three appeals take exception to the similar orders
Signature Not Verified

Digitally signed by

passed by a learned Single Judge of the Bombay High Court
Rajni Mukhi
Date: 2022.02.02
17:29:30 IST
Reason:
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on 6th March 2020 on the petitions under Section 11 of the

Arbitration and Conciliation Act, 1996 (for short “the

Arbitration Act”). The appellant, the respondent no.1 and the

respondent nos.3 to 5 were the partners of three different

partnership firms in the name and style of M/s M.M.

Developers, Nisarga, M/s M.M. Developers, Shanti Nagar and

M/s M.M. Developers, Shramjivi. The facts of these three

cases are identical and therefore, for convenience, we are

referring the facts of the case in Civil Appeal arising out of

Special Leave Petition (Civil) No. 7635 of 2021. A deed of

retirement­cum­continuation dated 12th September 2014 (for

short “the retirement deed”) in respect of the firm M/s M.M.

Developers, Nisarga (the respondent no.2) was executed by

and between the appellant, the respondent no.1 and the

respondent nos.3 to 5. The retirement deed recorded that the

respondent no.1 retired from the respondent no.2 ­

partnership firm on the terms and conditions mentioned

therein and the business of partnership firm was continued by

the appellant and the respondent nos.3 to 5.
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2. The respondent no.1 by his advocate’s notice dated 18 th

February 2019 invoked the arbitration clause (clause 19) in

the retirement deed. According to the case of the respondent

no.1, the appellant and the respondent nos.3 to 5 did not

respond to the said notice. Therefore, a petition under Section

11 of the Arbitration Act was filed by the respondent no.1. By

the impugned Order dated 6th March 2020, the learned Single

Judge of the Bombay High Court allowed the petition and

appointed a member of the Bar as the sole Arbitrator. Similar

orders were passed in relation to the two other firms. The

present appeals have been filed on 9 th June 2021.

3. A counter affidavit has been filed by the respondent no.1

contending that though the appellant was served with the

advocate’s notice of the petition under Section 11 of the

Arbitration Act, he did not appear in the petition. In the

counter affidavit, it is pointed out that on 8 th May 2021 in the

preliminary meeting held by the learned Arbitrator, the

appellant was represented by an advocate. It is pointed out

that the respondent no.1 filed an application under Section 17
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of the Arbitration Act before the learned Arbitrator claiming

certain interim directions. The respondent no.3 filed an

application under Section 16 of the Arbitration Act contending

that there was no arbitration agreement in existence and that

the claim made by the respondent no.1 before the Arbitrator

was barred by limitation. By the order dated 25 th May 2021,

the learned Arbitrator rejected the objection raised under

Section 16. The respondent no.1 has pointed out in the

counter affidavit that before the learned Arbitrator, the

appellant, the respondent no.2 and respondent nos.4 and 5

were represented by a common advocate who specifically

supported the submissions of the learned counsel appearing

for the respondent no.3 in support of the application under

Section 16. It is also pointed out that the aforesaid material

facts have been suppressed in the present appeals filed on 9 th

June 2021. It is also pointed out that by the order dated 24 th

June 2021, the learned Arbitrator allowed the application

under Section 17 filed by the respondent no.1. By filing

additional documents, the respondent no.1 has brought on
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record a copy of an appeal filed by the appellant and the

respondent no.2 for challenging the Order dated 24 th June

2021 before the Bombay High Court.

4. During the course of submissions, Mr. Manish Vashisht,

the learned Senior Counsel appearing for the appellant

accepted that the appellant has filed a petition under Section

34 of the Arbitration Act for challenging the order dated 25 th

May 2021 passed by the learned Arbitrator overruling the

objections raised by the respondent no.3.

5. The learned Senior Counsel appearing for the appellant

in support of the appeals firstly urged that the High Court did

not issue and serve a notice of the petition filed under Section

11 of the Arbitration Act. His submission is that the appellant

was admitted in intensive care unit of a hospital on 3rd May

2021 and was discharged on 3 rd June 2021. He relied upon

the documents placed on record to that effect in the rejoinder.

He submitted that clause 19 of the retirement deed does not

provide for referring a dispute between the respondent no.1,

who was the retiring partner and the continuing partners to
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arbitration. He submitted that this crucial fact has been

ignored by the learned Single Judge of the Bombay High

Court. Moreover, even the facts pleaded in the petition under

Section 11 of the Arbitration Act show that the claim of the

respondent no.1 was barred by limitation. He relied upon a

decision of this Court in the case of State of Orissa and

another v. Damodar Das1. He submitted that as the appellant

was not given a notice of the date fixed in the petition under

Section 11, he could not urge before the learned Single Judge

that the claim of the respondent no.1 was barred by limitation

and that there was no arbitration clause. He submitted that

the appellant caused appearance before the learned Arbitrator

without prejudice to his rights and contentions. The learned

counsel relied upon another decision of this Court in the case

of Vidya Drolia & Others v. Durga Trading Corporation2 and

in particular what is held in paragraphs 95 and 98 thereof.

He submitted that the issues which are concluded by the

impugned order cannot be reopened by the learned Arbitrator.

1 (1996) 2 SCC 216
2 (2021) 2 SCC 1
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6. The learned counsel appearing for the respondent no.1

submitted that a notice of arbitration petition filed under

Section 11 was served upon the appellant. He submitted that

the appellant was represented before the Arbitral Tribunal by

his advocate, Mr. Shreyans Baid, who supported the

objections raised by the respondent no.3 under Section 16 of

the Arbitration Act regarding the absence of arbitration

agreement as well as the time barred claim. He submitted

that the said objection was overruled by the learned Arbitrator

by his order dated 25th May 2021. He pointed out that this

material fact has been suppressed by the appellant while filing

these appeals. He pointed out that the appellant has filed

petitions under Section 34 of the Arbitration Act before the

Bombay High Court on 2nd December 2021 for challenging the

order dated 25th May 2021. He submitted that the appellant

can always agitate the issues raised by him in these appeals

in the arbitration petition under Section 34. He submitted that

documents have been placed on record which show that Mr.

Baid, the learned advocate was appearing on behalf of the
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appellant before the learned Arbitrator and that the said

advocate represented the appellant before the Arbitrator from

8th May 2021. The learned counsel appearing for the

respondent no.1 submitted that what is held in paragraph 154

of the decision of this Court in the case of Vidya (supra)

completely supports the case of the respondent no.1.

7. The learned Senior Counsel appearing for the appellant

clarified that though the advocate’s notice of filing the petition

under Section 11 was served upon the appellant, the date

fixed in the arbitration petition was not communicated to the

appellant. Moreover, the Court did not issue any notice on the

petition filed under Section 11.

8. We have given careful consideration to the submissions.

It is not in dispute that along with advocate’s notice dated 8 th

November 2019, the appellant and the respondent nos.2 to 5

were served a copy of the petition filed under Section 11 of the

Arbitration Act by the respondent no.1. In the impugned

Order, the learned Single Judge of the Bombay High Court has

referred to the affidavit of service of notice filed on behalf of
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the respondent no.1. A judicial notice will have to be taken of

a long standing and consistent practice followed on the

Original Side of the Bombay High Court. The practice is that

the advocates serve a notice of the proceedings filed in the

Court even before it comes up before the Court. The Court

acts upon such service effected by the advocate on proof

thereof being produced in the form of an affidavit of service.

Therefore, there is nothing illegal about the High Court acting

upon the advocate’s notice admittedly served to the appellant.

According to the case of the appellant, he was admitted to a

hospital on 3rd May 2021. However, the advocate’s notice of

the petition under Section 11 was served upon the appellant

in November 2019. Therefore, the appellant could have

always made arrangements to contest the said petition.

Therefore, we reject the first submission made by the learned

Senior Counsel appearing for the appellant regarding the

failure to serve the notice of the petition under Section 11.

9. While filing the present appeals on 9 th June 2021, the

appellant ought to have disclosed that on 8 th May 2021, his
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advocate had appeared before the learned Arbitrator in the

first preliminary meeting convened by the learned Arbitrator.

The minutes of preliminary meeting recorded by the learned

Arbitrator do not record that the appellant appeared in the

meeting without prejudice to his right of challenging the order

appointing the Arbitrator. In fact, Mr. Baid, the learned

counsel who appeared for the appellant before the learned

Arbitrator, by e­mail dated 29th May 2021 addressed to the

learned Arbitrator, sought his permission to withdraw his

appearance. In the said e­mail, the advocate stated that he

was appointed on the instructions of the present appellant.

Moreover, the order dated 25th May 2021 passed by the

learned Arbitrator by which objections under Section 16 were

overruled shows that the same advocate appeared for the

appellant and supported the objections raised by the

respondent no.3. As the objection was rejected by the learned

Arbitrator, in view of sub­section (6) of Section 16, on 21 st

December 2021, the appellant has filed a petition under
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Section 34 of the Arbitration Act, which is pending before the

Bombay High Court for challenging the said Order.

10. The learned counsel appearing for the respondent no.1

has relied upon what has been held in paragraphs 95 and 98

of the decision of this Court in the case of Vidya (supra). The

conclusions of this Court have been summarised in paragraph

154 of the said decision, which reads thus:

“154. Discussion under the heading
“Who Decides arbitrability?” can be
crystallised as under:

154.1. Ratio of the decision in Patel Engg.
Ltd. [SBP & Co. v. Patel Engg. Ltd., (2005) 8
SCC 618] on the scope of judicial review by
the court while deciding an application
under Sections 8 or 11 of the Arbitration
Act, post the amendments by Act 3 of 2016
(with retrospective effect from 23­10­2015)
and even post the amendments vide Act 33
of 2019 (with effect from 9­8­2019), is no
longer applicable.

154.2. Scope of judicial review and
jurisdiction of the court under Sections 8
and 11 of the Arbitration Act is identical
but extremely limited and restricted.
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154.3. The general rule and principle, in
view of the legislative mandate clear from
Act 3 of 2016 and Act 33 of 2019, and the
principle of severability and competence­
competence, is that the Arbitral Tribunal is
the preferred first authority to determine
and decide all questions of non­
arbitrability. The court has been conferred
power of “second look” on aspects of non­
arbitrability post the award in terms of
sub­clauses (i), (ii) or (iv) of Section 34(2)(a)
or sub­clause (i) of Section 34(2)(b) of the
Arbitration Act.

154.4. Rarely as a demurrer the court may
interfere at Section 8 or 11 stage when it is
manifestly and ex facie certain that the
arbitration agreement is non­existent,
invalid or the disputes are non­arbitrable,
though the nature and facet of non­
arbitrability would, to some extent,
determine the level and nature of judicial
scrutiny. The restricted and limited review
is to check and protect parties from being
forced to arbitrate when the matter is
demonstrably “non­arbitrable” and to cut
off the deadwood. The court by default
would refer the matter when contentions
relating to non­arbitrability are plainly
arguable; when consideration in summary
proceedings would be insufficient and
inconclusive; when facts are contested;
when the party opposing arbitration adopts
delaying tactics or impairs conduct of
arbitration proceedings. This is not the
stage for the court to enter into a mini trial
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or elaborate review so as to usurp the
jurisdiction of the Arbitral Tribunal but to
affirm and uphold integrity and efficacy of
arbitration as an alternative dispute
resolution mechanism.”
(underlines supplied)

11. Thus, this Court held that while dealing with petition

under Section 11, the Court by default would refer the matter

when contentions relating to non­arbitrability are plainly

arguable. In such case, the issue of non­arbitrability is left

open to be decided by the Arbitral Tribunal. On perusal of

the impugned order, we find that the issues of non­

arbitrability and the claim being time barred have not been

concluded by the learned Single Judge of the Bombay High

Court. In fact, in clause (vii) of the operative part of the

impugned Order, the learned Single Judge has observed that

the contentions of the parties have been kept open. The

petitions filed by the appellant under Section 34 of the

Arbitration Act, challenging the Order dated 25th May 2021 are

pending before the High Court in which the appellant can

raise all permissible contentions.
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12. Therefore, in our considered view, no case for

interference is made out. We, therefore, dismiss the appeals,

while leaving open the contentions raised by the appellant in

pending petitions under Section 34 of the Arbitration Act

before the High Court of Bombay.

13. There will be no order as to costs. Pending applications,

if any, shall stand disposed of.

…………..…………………J
(INDIRA BANERJEE)

…………..…………………J
(ABHAY S. OKA)
New Delhi;
February 02, 2022.