Bombay High Court Declines Joint Arbitration Application, Emphasizes Individual Agreements.
05 April 2025
Arbitration Law >> Business & Commercial Law
The Applicants, owners of individual ginning-pressing factories, had separate agreements with different zones of Respondent No. 1 for the 2019-20 and 2020-21 seasons. Following notices for recovery of amounts due to alleged losses from excessive trash in the cotton, the Applicants collectively sought arbitration as per Clause 15 of their agreements.
The court heard that a similar application filed earlier by the present Applicants along with another entity was partially allowed, with an arbitrator appointed for the other entity. Subsequently, the present Applicants requested the Respondents to appoint an arbitrator for their disputes, which was refused on the grounds that the ongoing arbitration involved a separate issue. This led to the current application under Section 11(6) of the Arbitration and Conciliation Act, 1996.
The Respondents raised a preliminary objection, arguing that a joint application was not maintainable as each Applicant had entered into a distinct agreement with an independent arbitration clause. The court referred to a previous order in a related matter (Misc. Civil Application No. 278/2022), where a similar joint application by a larger group of applicants was deemed unsustainable, leading to the application being restricted to a single applicant.
The Applicants' counsel argued for the maintainability of the joint application, referencing provisions of the Code of Civil Procedure (CPC) and a Supreme Court judgment regarding the applicability of the CPC to proceedings before a civil court under the Arbitration Act. However, the High Court distinguished between proceedings before a civil court and the High Court's power under Section 11(6) of the Arbitration Act to appoint an arbitrator, noting that the CPC is not automatically applicable to the latter.
The court also considered the Applicants' reliance on a writ petition where the District Court allowed the joinder of multiple factory owners in a Section 9 application (interim measures). However, the High Court clarified that Section 9 explicitly grants the court powers akin to those under the CPC, unlike Section 11(6).
Ultimately, the High Court upheld the preliminary objection, reiterating its earlier stance that a joint application for the appointment of an arbitrator was not maintainable given the individual agreements between the Applicants and the Respondents. The court emphasized the distinct nature of each contract, potentially involving varying levels of trash and consequential deductions, making a consolidated proceeding impractical.
Furthermore, the court noted that the Applicants were aware of the earlier dismissal of the joint application in the related matter and had proceeded with a fresh joint application instead of filing separate ones or challenging the previous order. Citing a Supreme Court precedent on the principle against bench-hunting and the need for judicial efficiency, the High Court found the current application untenable.
Consequently, the court dismissed the civil application. However, acknowledging the Applicants' request, the court granted them liberty to file separate applications for the appointment of an arbitrator, subject to the law of limitation. This judgment underscores the importance of individual contractual agreements in arbitration proceedings and the limited applicability of the Code of Civil Procedure in matters specifically governed by the Arbitration and Conciliation Act, particularly concerning the appointment of arbitrators under Section 11(6).
Section 9, Arbitration and Conciliation Act - 1996
Section 11, Arbitration and Conciliation Act - 1996
Section 36, Arbitration and Conciliation Act - 1996
Arbitration and Conciliation Act, 1996