In SBP and Co v Patel Engineering Ltd, and another,
reported in 2005,8
SCC ,618: ( AIR2006 SC 450, the Honble Supreme Court held that dragging a party
to an arbitration when there existed no arbitrable dispute,can certainly affect
the right of that party, and even on money tary terms, impose on him a serious
liability for meeting the meeting the expenses of the arbitration.
Whether time barred claims should be referred to for decision in the arbitration
proceedings was looked in to by this in National Polyfab Private Limited,
reported in (2009) 1 SCC 267: ( AIR 2009 SC 170) para 22 to 22.2 respectively of
the said judgement read as under " where the intervention of the court is sought
for appointment of an arbitrable tribunal u/s 11, the duty of the Chief Justice
or his designate is defined in SBP and Co( 2005) 8 SCC 618 : ( AIR 2006 SC 450).
This Court identified and segregated the preliminary issues that may arise for
consideration in an application u/s 11 of the Act, in to three categories,i.e (i)
issues which the chief justice or his designate is bound to decide, that is
issues which he may choose to decide and (III) issues which should be left to
the Arbitral Tribunal to decide.
The issues which the Chief Justice /his designate will have to decide are:
The issues (second category) which the Chief Justice/ his designate may
choose to decide ( or leave them to the decision of the Arbitral Tribunal are:
- Whether the party making the application has approached the appropriate
- Whether there is an arbitration agreement and whether the party who has
applied u/s 11 of the Act, is a party to such agreement.
- whether the claim is a dead (long barred) claim or a live claim.
- whether the parties have concluded the contract/ transaction by recoding
satisfaction of their mutual right s and obligations or by receiving the
final payment without objection.