/2022 INSC 0880/
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO.  6774 OF 2022
M/s. EMAAR INDIA LTD.            ...APPELLANT(S)
VERSUS
TARUN AGGARWAL PROJECTS LLP & ANR.   …RESPONDENT(S)
J U D G M E N T
M.R. SHAH, J.
1. Feeling   aggrieved   and   dissatisfied   with   the   impugned
judgment and order dated 24.12.2021 passed by the High
Court of Delhi at New Delhi in Arbitration Petition No. 637
of   2021,   by   which,   the   High   Court   in   exercise   of   powers
under Section 11(6) of the Arbitration and Conciliation Act,
1996   (hereinafter   referred   to   as   the   Arbitration   Act)   has
appointed   arbitrators   to   resolve   the   dispute   between   the
parties,   the   original   respondent   –   M/s   EMMAR   India
Limited has preferred the present appeal.
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2. That   the   original   petitioners   –   respondents   herein  entered
into   a   Collaboration   Agreement   dated   07.05.2009   for
development   of   a   residential   colony   in   Sector   62   and   65,
Gurugram.   That   thereafter,   a   further   Addendum
Agreement   dated   19.04.2011   was   executed   between   the
parties.   The   dispute   arose   between   the   parties   and   it   was
the case on behalf of the original applicants – respondents
herein   that   the   appellant   herein   did   not   comply   with   the
obligations   under   the   Addendum   Agreement   dated
19.04.2011.   The   respondents   –   original
applicants/petitioners   issued   a   legal   notice   dated
20.11.2019   raising   demand   for   physical   possession   of   5
plots   measuring   2160   sq.   yds.   and   claiming   a   sum   of   Rs.
10   crores   for   the   losses/damages   suffered   by   them.   As
according   to   the   original   petitioners   –   respondents   herein
the   dispute   between   the   parties   were   arbitrable,   the
original   petitioners   appointed   a   former   judge   of   the   High
Court   as   their   arbitrator.   The   appellant   herein   denied
appointment   of   the   arbitrator.   Therefore,   the   respondents
herein   approached   the   High   Court   for   appointment   of   the
arbitrators   in   terms   of   Clause   37   of   the   Addendum
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Agreement   by   submitting   an   application   under   Section
11(5)   &   (6)   of   the   Arbitration   Act   seeking   appointment   of
arbitrators by the Court.
2.1 The said arbitration petition was opposed by the appellant
herein   by   raising   various   grounds   including   one   of   the
grounds   that   the   dispute   falls   under   Clause   36   of   the
Addendum   Agreement   and   not   under   Clause   37   which
incorporates arbitration clause. 
2.2 Despite having noted that the Clause 36 of the Addendum
Agreement stipulates that in the event of any dispute with
regard to Clauses 3, 6 and 9, other party shall have a right
to   get   the   agreement   specifically   enforced   through
appropriate court of law, the High Court has appointed the
arbitrators   in   terms   of   Clause   37   of   the   Addendum
Agreement   by   observing   that   conjoint   reading   of   Clauses
36 and 37 makes it clear that a party does have a right to
seek enforcement of agreement before the Court of law but
it   does  not  bar   settlement  of   disputes  through   Arbitration
and   Conciliation   Act,   1996.   By   observing   so,   the   High
Court   has   allowed   the   application   under   Section   11(5)   &
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(6)   and   has   appointed   the   arbitrators,   who   shall   appoint
the third arbitrator in terms of Clause 37. 
2.3 Feeling   aggrieved   and   dissatisfied   with   the   impugned
judgment and order passed by the High Court allowing the
application under Section 11(5) & (6) of the Arbitration Act
and  appointing  the  arbitrators with  respect to  the dispute
between   the   parties,   the   original   opponent   –   respondent
has preferred the present appeal.      
3. Shri Dhanesh Relan,  learned  counsel  appearing  on  behalf
of   the   appellant   has   vehemently   submitted   that   while
allowing   the   application   under   Section   11(5)   &   (6)   and
appointing   the   arbitrators,   the   High   Court   has   not   at   all
considered that according to the appellant the dispute falls
within   Clause   36   of   the   Agreement   and   not   under   Clause
37.   It   is   submitted   that   as   per   Clause   36   in   case   of   any
conflict or difference arising between the parties or in case
the   either   party   refuses   or   neglects   to   perform   its   part   of
the obligations under Addendum Collaboration Agreement,
inter­alia ,   as   mentioned   in   Clauses   3,   6   and   9,   then   the
other   party   shall   have   every   right   to   get   the   agreement
specifically  enforced through the appropriate  court  of  law.
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It   is   submitted   that   as   per   Clause   37,   save   and   except
Clause   36   or   any   dispute   arising   out   of   or  touching   upon
or in relation to the terms of the addendum agreement……
shall   be   settled   through   under   the   provisions   of   the
Arbitration and Conciliation Act, 1996. It is submitted that
therefore   any   dispute   with   regard   to   the   Clauses   3,   6,   9
shall have to be resolved through the appropriate court of
law   and   such   dispute   is   not   arbitrable   at   all.   It   is
submitted   that   despite   the   High   Court   has   noted   Clauses
36 & 37, without deciding whether the dispute falls within
Clause 36 the High Court appointed the arbitrators.
3.1 Learned   counsel   appearing   on   behalf   of   the   appellant
submitted  that   as   observed  and   held  by   this   Court   in   the
case of   Uttarakhand Purv Sainik Kalyan Nigam Limited
Vs. Northern Coal Field Limited; (2020) 2 SCC 455,   the
appointment   of   an   arbitrator   may   be   refused   if   the
arbitration   agreement   is   not   in   writing,   or   the   dispute   is
beyond the arbitration agreement.
3.2 Learned   counsel   appearing  on   behalf   of   the   appellant   has
further submitted that as observed and held by this Court
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in   the   case   of   Vidya   Drolia   and   Ors.   Vs.   Durga   Trading
Corporation;   (2021)  2  SCC   1 , 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   non­arbitrability   would,   to   some
extent, determine the level and nature of judicial scrutiny.
It   is   further   submitted   that   in   the   said   decision   it   is   also
observed   that   such   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.  
3.3 Learned   counsel   appearing  on   behalf   of   the   appellant   has
also   relied   upon   the   recent   decision   of   this   Court   in   the
case of  Indian Oil Corporation Limited Vs. NCC Limited;
2022   SCC   OnLine   SC   896   (Civil   Appeal   No.   341   of
2022, decided on 20.07.2022) , in which after considering
the   decision   of   this   Court   in   the   case   of   Vidya   Drolia
(supra),   this   Court   after   taking   into   consideration   other
decisions   has   observed   and   held   that   at   the   stage   of
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Section   11   of   the   Arbitration   Act,   a   preliminary   inquiry   is
permissible   if   the   dispute   is   raised   with   respect   to   the
arbitrability.
3.4 Relying   upon   the   above   decisions,   it   is   vehemently
submitted   by   learned   counsel   appearing   on   behalf   of   the
appellant that in the facts and circumstances of the case,
the   High   Court   has   virtually   ignored   Clause   36   of   the
Agreement.   It   is   submitted   that   the   High   Court   was
required   to   hold   a   preliminary   inquiry   on   whether
considering   Clause   36   of   the   Agreement,   the   dispute
between   the   parties   falls   within   Clause   36   or   not.   It   is
submitted that if in preliminary inquiry it is found that the
dispute falls within Clause 36 in that case such a dispute
is not arbitrable at all. It is, therefore, prayed to allow the
present appeal and quash and set aside the judgment and
order passed by the High Court.      
4. While   opposing   the   present   appeal   Shri   Siddharth
Bhatnagar, learned Senior Advocate appearing on behalf of
the   respondents   has   vehemently   submitted   that   even   as
observed   and   held   by   this   Court   in   the   case   of   Vidya
Drolia   (supra)   whether   the   dispute   is   arbitrable   or   not,   it
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should be best left to the arbitrator in an application under
Section 16 of the Arbitration Act and it is for the arbitrator
to decide the arbitrability of the dispute.
4.1 It is submitted that on conjoint reading of Clauses 36 and
37   of   the   Agreement   and   the   intention   of   the   parties   to
resolve   the   dispute   through   arbitration   under   the
Arbitration   Act,  no   error   has   been   committed   by  the  High
Court in appointing the arbitrators.
5. We have heard learned counsel appearing on behalf of the
respective parties at length. 
6. The short question which is posed for consideration of this
Court   is   whether   in   the   facts   and   circumstances   of   the
case,   the   High   Court   is   justified   in   appointing   the
arbitrators in an application under Section 11(5) and (6) of
the Arbitration Act without holding any preliminary inquiry
or inquiry on whether the dispute is arbitrable or not?
6.1 While   considering   the   aforesaid   question/issue,   the
relevant   provisions   of   the   Agreement,   namely,   Clauses   36
and 37, are required to be referred to, which are as under:
­
“Dispute Resolution & Jurisdiction
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36. In   case   of   any   conflict   or   difference   arising
between the parties or in case the either party refused
or neglects to perform its part of the obligations under
this   Addendum   Collaboration   Agreement,   inter­alia   as
mentioned   in   Clauses   3,   6   &   9   hereinabove,   then   the
other party shall have every right to get this agreement
specifically   enforced   through   the   appropriate   court   of
law. 
37. Save & except clause 36 hereinabove mentioned,
all or any dispute arising out of or touching upon or in
relation   to   the   terms   of   this   Agreement   including   the
interpretation   and   validity   thereof,   and   the   respective
rights   and   obligations   of   the   parties,   shall   be   settled
through   under   the   provisions   of   Arbitration   &
Conciliation   Act,   1996   wherein   both   the   parties   shall
be   entitled   to   appoint   one   Arbitrator   each   and   the
Arbitrators  so   appoint   shall  appoint   a   third   Arbitrator
or   rank   of   Retired   Judge   of   any   High   Court.   The
arbitration   proceedings   shall   be   governed   by   the
provisions of Arbitration and Conciliation Act, 1996 or
any   statutory   amendments/modification   thereto   for
the   time   being   in   force.   The   arbitration   proceedings
shall be held at Delhi.”    
On   a   bare   reading   of   Clause   36   of   the   Agreement,   it
clearly   stipulates   that   in   the   event   of   any   dispute   as
mentioned in Clauses 3, 6 and 9, other party shall have a
right to get the Agreement specifically enforced through the
appropriate   court   of   law.   As   per   Clause   37,   save   and
except   Clause   36,   all   or   any   dispute   arising   out   of   or
touching upon or in relation to the terms of the addendum
agreement…….   shall   be   settled   through   under   the
provisions of Arbitration and Conciliation Act, 1996. Thus,
with respect to any dispute as mentioned in Clauses 3, 6 &
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9,   such   disputes   are   not   arbitrable   at   all.   It   cannot   be
disputed   that   both   the   parties   are   governed   by   the
Addendum Agreement dated 19.04.2011.  
6.2 In the case of  Oriental Insurance Co Ltd.   Vs.   Narbheram
Power   and   Steel   (P)   Ltd.,   (2018)   6   SCC   534 ,   it   is
observed and held by this Court that the parties are bound
by   the   Clauses   enumerated   in   the   policy   and   the   Court
does not transplant any equity  to the same by rewriting a
clause. It is  further  observed  and  held that  an  arbitration
clause is required to be strictly construed. Any expression
in   the   clause   must   unequivocally   express   the   intent   of
arbitration.   It   can   also   lay   the   postulate   in   which
situations the arbitration clause cannot be given effect to.
It is further observed that if a clause stipulates that under
certain circumstances there can be no arbitration and they
are   demonstrably   clear   then   the   controversy   pertaining   to
appointment of Arbitrator has to be put to rest (Paras 10­
23).
6.3 In   the   case   of   Rajasthan   State   Industrial   Development
and   Investment   Corporation   Vs.   Diamond   and   Gem
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Development   Corporation   Ltd.;   (2013)   5   SCC   470 ,   it   is
observed and held by this Court that a party cannot claim
anything   more   than   what   is   covered   by   the   terms   of   the
contract,   for   the  reason   that   the   contract   is   a   transaction
between   two   parties   and   has   been   entered   into   with   open
eyes   and   by   understanding   the   nature   of   contract.   It   is
further observed that thus the contract being a creature of
an   agreement   between   two   or   more   parties   has   to   be
interpreted   giving   literal   meanings   unless   there   is   some
ambiguity  therein. The contract is to be interpreted giving
the actual meaning to the words contained in the contract
and   it   is   not   permissible   for   the   Court   to   make   a   new
contract, however reasonable, if the parties have not made
it   themselves.   It   is   further   observed   that   the   terms   of   the
contract have to be construed strictly without altering the
nature of a contract as it may affect the interest of either of
the parties adversely (Para 23).
6.4 In   the   case   of   Harsha   Construction   Vs.   Union   of   India
and   Ors.;   (2014)   9   SCC   246 ,   it   is   observed   and   held   by
this Court in paragraphs 18 and 19 as under: ­
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“18.   Arbitration   arises   from   a   contract   and   unless
there   is   a   specific   written   contract,   a   contract   with
regard to arbitration cannot be presumed. Section 7(3)
of   the   Act   clearly   specifies   that   the   contract   with
regard   to   arbitration   must   be   in   writing.   Thus,   so   far
as the disputes which have been referred to in Clause
39   of   the   contract   are   concerned,   it   was   not   open   to
the   Arbitrator   to   arbitrate   upon   the   said   disputes   as
there   was   a   specific   clause   whereby   the   said   disputes
had   been   “excepted”.   Moreover,   when   the   law
specifically makes a provision with regard to formation
of   a   contract   in   a   particular   manner,   there   cannot   be
any   presumption   with   regard   to   a   contract   if   the
contract   is   not   entered   into   by   the   mode   prescribed
under the Act.
19.   If   a   non­arbitrable   dispute   is   referred   to   an
Arbitrator   and   even   if   an   issue   is   framed   by   the
Arbitrator in relation to such a dispute, in our opinion,
there  cannot   be  a  presumption  or   a  conclusion to  the
effect  that   the  parties  had  agreed to  refer  the  issue  to
the   Arbitrator.   In   the   instant   case,   the   respondent
authorities   had   raised   an   objection   relating   to   the
arbitrability   of   the   aforestated   issue   before   the
Arbitrator   and   yet   the   Arbitrator   had   rendered   his
decision   on   the   said   “excepted”   dispute.   In   our
opinion, the Arbitrator could not have decided the said
“excepted” dispute. We, therefore, hold that it was not
open to the Arbitrator to decide the issues which were
not   arbitrable   and   the   award,   so   far   as   it   relates   to
disputes   regarding   non­arbitrable   disputes   is
concerned, is bad in law and is hereby quashed.”
6.5 In the recent decision in the case of   Vidya Drolia   (supra),
which,  as   such,   is  post­insertion  of   Section  11(6­A)  of   the
Arbitration   Act,   it   is   observed   and   held   that   the   issue   of
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non­arbitrability   of   a   dispute   is   basic   for   arbitration   as   it
relates to the very jurisdiction of the Arbitral Tribunal. An
Arbitral Tribunal may lack jurisdiction for  several reasons
and   non­arbitrability   has   multiple   meanings.   After
referring   to   another   decision   of   this   Court   in   the   case
of   Booz   Allen   &   Hamiltan   Inc.   Vs.   SBI   Home   Finance
Ltd.   [(2011) 5 SCC 532   (Para 34)] , it is observed and held
that there are facets of non­arbitrability, namely
“(i)   Whether   the   disputes   are   capable   of   adjudication
and settlement by arbitration?   That is, whether the disputes,
having regard to their nature, could be resolved by a private
forum   chosen   by   the   parties   (the   Arbitral   Tribunal)   or
whether   they   would   exclusively   fall   within   the   domain   of
public fora (courts).
(ii)   Whether   the   disputes   are   covered   by   the   arbitration
agreement?   That is, whether the disputes are enumerated or
described   in   the   arbitration   agreement   as   matters   to   be
decided by arbitration or whether the disputes fall under the
“excepted   matters”   excluded   from   the   purview   of   the
arbitration agreement.
(iii)   Whether   the   parties   have   referred   the   disputes   to
arbitration?   That   is,   whether   the   disputes   fall   under   the
scope of the submission to the Arbitral Tribunal, or whether
they   do   not   arise   out   of   the   statement   of   claim   and   the
counterclaim   filed   before   the   Arbitral   Tribunal.   A   dispute,
even   if   it   is   capable   of   being   decided   by   arbitration   and
falling within the scope of an arbitration agreement, will not
be   “arbitrable”   if   it   is   not   enumerated   in   the   joint   list   of
disputes  referred  to arbitration,  or  in  the  absence  of  such  a
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joint   list   of   disputes,   does   not   form   part   of   the   disputes
raised in the pleadings before the Arbitral Tribunal.”
6.6   After   referring   to   and   considering   in   detail   the   earlier
decisions   on   the   point,   more   particularly,   with   respect   to
non­arbitrability and the ‘excepted matters’, it is ultimately
concluded in para 76 as under:
“76.   In   view   of   the   above   discussion,   we   would   like   to
propound   a   four­fold   test   for   determining   when   the   subject
matter   of   a   dispute   in   an   arbitration   agreement   is   not
arbitrable:
76.1.(1) When cause of action and subject­matter of the
dispute   relates   to   actions   in   rem,   that   do   not   pertain   to
subordinate   rights   in   personam   that   arise   from   rights   in
rem.
76.2.(2) When cause of action and subject­matter of the
dispute   affects   third­party   rights;   have   erga   omnes   effect;
require   centralized   adjudication,   and   mutual   adjudication
would not be appropriate and enforceable;
76.3.(3) When cause of action and subject­matter of the
dispute   relates   to   inalienable   sovereign   and   public   interest
functions of the State and hence mutual adjudication would
be unenforceable;
76.4   (4)   When   the   subject­matter   of   the   dispute   is
expressly   or   by   necessary   implication   non­arbitrable   as   per
mandatory statute(s).
76.5 These tests are not watertight compartments; they
dovetail   and   overlap,   albeit   when   applied   holistically   and
pragmatically   will   help   and   assist   in   determining   and
ascertaining   with   great   degree   of   certainty   when   as   per   law
in India, a dispute or subject  matter  is non­arbitrable. Only
when the answer is affirmative that the subject matter of the
dispute would be non­arbitrable.
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76.6   However,   the   aforesaid   principles   have   to   be
applied   with   care   and   caution   as   observed   in   Olympus
Superstructures   (P)   Ltd.   Vs.   Meena   Vijay   Khetan   and
Ors.; (1999) 5 SCC 651 : (SCC p. 669, para 35)
“35.   …Reference   is   made   there   to   certain   disputes   like
criminal   offences   of   a   public   nature,   disputes   arising   out   of
illegal   agreements   and   disputes   relating   to   status,   such   as
divorce,   which   cannot   be   referred   to   arbitration.   It   has,
however,   been   held   that   if   in   respect   of   facts   relating   to   a
criminal   matter,   say,   physical   injury,   if   there   is   a   right   to
damages   for   personal   injury,   then   such   a   dispute   can   be
referred to arbitration (Keir   v.   Leeman). Similarly, it has been
held that  a  husband and a  wife may  refer  to  arbitration the
terms on which they shall separate, because they can make
a   valid   agreement   between   themselves   on   that   matter
(Soilleux   v.   Herbst,   Wilson   v.   Wilson   and   Cahill   v.   Cahill).”
6.7 On   the   question,   who   decides   on   non­arbitrability   of   the
dispute,   after   referring   to   and   considering   the   earlier
decisions on  the point,  more particularly, the decisions  in
the cases of   Garware Wall Ropes Ltd.   Vs.   Coastal Marine
Constructions & Engg.;   (2019) 9 SCC 209;   United India
Insurance   Co.   Ltd.   Vs.   Hyundai   Engg.   &   Construction
Co.   Ltd.;   (2018)   17   SCC   607 ,   and   Narbheram   Power   &
Steel   (P)   Ltd.   (supra),   it   is   observed   and   held   that   the
question   of   non­arbitrability   relating   to   the   inquiry,
whether   the   dispute   was   governed   by   the   arbitration
clause,   can   be   examined   by   the   Courts   at   the   reference
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stage   itself   and   may   not   be   left   unanswered,   to   be
examined and decided by the Arbitral Tribunal. Thereafter,
in   para   153,   it   is   observed   and   held   that   the   expression,
“existence   of   arbitration   agreement”   in   Section   11   of   the
Arbitration   Act,   would   include   aspect   of   validity   of   an
arbitration   agreement,   albeit   the   Court   at   the   reference
stage   would   apply   the   prima   facie   test.   It   is   further
observed   that   in   cases   of   debatable   and   disputable   facts
and,  good  reasonably   arguable   case   etc.,   the  Court   would
force  the   parties   to   abide   by   the   arbitration   Agreement   as
the   Arbitral   Tribunal   has   the   primary   jurisdiction   and
authority   to   decide   the   disputes   including   the   question   of
jurisdiction   and   non­arbitrability.   Ultimately   in   para   154,
the proposition of law is crystallized as under:
“154.   Discussion   under   the   heading   ‘Who   decides
Arbitrability?’ can be crystallized as under:
154.1.  Ratio of  the decision  in   Patel  Engineering Ltd.   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.
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154.2.   Scope   of   judicial   review   and   jurisdiction   of   the
court   under   Section   8   and   11   of   the   Arbitration   Act   is
identical but extremely limited and restricted.
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 non­arbitrability 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.
154.3.   Rarely   as   a   demurrer   the   court   may   interfere   at
the  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   non­arbitrability   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   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.”
6.8 In   the   case   of   Vidya   Drolia   (supra),   it   is   specifically
observed and held by this Court that rarely as a demurrer,
the Court may interfere at Section 8 or 11 stage when it is
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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.   It   is   further   observed   that   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.”   It   is   further   observed   that   the   prima   facie
review   at   the   reference   stage   is   to   cut   the   deadwood   and
trim   off   the   side   branches   in   straightforward   cases   where
dismissal is barefaced and pellucid and when on the facts
and law the litigation must stop at the first stage. 
7. Applying   the   law   laid   down  by   this   Court   in   the   aforesaid
decisions   and   considering   Clauses   36   and   37   of   the
Agreement   and   when   a   specific   plea   was   taken   that   the
dispute   falls   within   Clause   36   and   not   under   Clause   37
and therefore, the dispute is not arbitrable, the High Court
was at least required to hold a primary inquiry/review and
prima   facie   come   to   conclusion   on   whether   the   dispute
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falls   under   Clause   36   or   not   and   whether   the   dispute   is
arbitrable   or   not.     Without   holding   such   primary   inquiry
and despite having observed that a party does have a right
to   seek   enforcement   of   agreement   before   the   Court   of   law
as per Clause 36, thereafter, has appointed the arbitrators
by solely  observing  that the same does not bar settlement
of disputes through Arbitration and Conciliation Act, 1996.
However,   the   High   Court   has   not   appreciated   and
considered the fact that in case of dispute as mentioned in
Clauses 3, 6 and  9 for  enforcement of  the  Agreement,  the
dispute is not arbitrable at all. In that view of the matter,
the   impugned   judgment   and   order   passed   by   the   High
Court  appointing   the arbitrators is unsustainable  and  the
same   deserves   to   be   quashed   and   set   aside.   However,   at
the   same   time,   as   the   High   Court   has   not   held   any
preliminary inquiry on whether the dispute is arbitrable or
not   and/or   whether   the   dispute   falls   under   Clause   36   or
not,   we   deem   it   proper   to   remit   the   matter   to   the   High
Court   to   hold   a   preliminary   inquiry   on   the   aforesaid   in
light of the observations made by this Court in the case of
Vidya   Drolia   (supra)   and   in   the   case   of   Indian   Oil
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Corporation   Limited   (supra)   and   the   observations   made
hereinabove and thereafter, pass an appropriate order.
8. In   view   of  the   above   and  for  the  reasons   stated  above  the
present   appeal   succeeds.   The   impugned   judgment   and
order passed by the High Court appointing the arbitrators
in   terms   of   Clause   37   of   the   Addendum   Agreement   dated
19.04.2011 is hereby quashed and set aside. The matter is
remitted to the High Court to decide the application under
Section   11(5)   and   (6)   of   the   Arbitration   Act   afresh   and   to
pass   an   appropriate   order   after   holding   a   preliminary
inquiry/review on whether the dispute is arbitrable or not
and/or   whether   the   dispute   falls   within   Clause   36   of   the
Addendum   Agreement   or   not.   The   present   appeal   is
accordingly allowed. No costs.  
………………………………….J.
 [M.R. SHAH]
NEW DELHI; ………………………………….J.
SEPTEMBER 30, 2022 [KRISHNA MURARI]
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