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Arbitrability And Jurisdictional Considerations In SBP And Co v/s Patel Engineering Ltd: Analysis Of Time-Barred Claims And Preliminary Issues

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:
  1. Whether the party making the application has approached the appropriate High Court.
  2. 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.

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:
  1. whether the claim is a dead (long barred) claim or a live claim.
  2. 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.

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