Andhra Pradesh Power Generation Corporation Limited Vs Tecpro Systems Limited & Ors (Supreme Court of India)
SC Upholds Referral to Arbitration at Section 11 Stage; Individual Consortium Member’s Right to Invoke Arbitration Left to Arbitral Tribunal
The Supreme Court, in M/s Andhra Pradesh Power Generation Corporation Ltd. (APGENCO) vs. M/s Tecpro Systems Ltd. & Ors., dismissed the civil appeals and upheld the order of the Telangana High Court appointing an Arbitral Tribunal u/s 11(6) of the Arbitration & Conciliation Act, 1996. The dispute arose from an EPC contract awarded to a consortium led by Tecpro Systems Ltd., where Tecpro, as an individual consortium member, invoked arbitration against APGENCO after disputes over delays, alleged breaches, and monetary claims exceeding ₹1,900 crore.
APGENCO contended that arbitration could be invoked only by the consortium collectively and not by an individual member, especially after Tecpro ceased to be the lead member and entered CIRP/liquidation. It was argued that no arbitration agreement existed between APGENCO and Tecpro in its individual capacity and that such issues ought to have been examined at the Section 11 stage.
Rejecting these objections, the Supreme Court reiterated that post insertion of Section 11(6A), the referral court’s jurisdiction is confined to a prima facie examination of the existence of an arbitration agreement and nothing more. Questions relating to authority, capacity of a consortium member, continuance or dissolution of the consortium, effect of insolvency, consent of other consortium partners, and maintainability of claims are all matters falling squarely within the jurisdiction of the Arbitral Tribunal u/s 16.
The Court emphasised the doctrine of kompetenz–kompetenz and held that undertaking a detailed inquiry at the Section 11 stage would amount to a prohibited “mini-trial”. Since an arbitration clause prima facie existed in the contractual framework, the High Court was justified in constituting the Arbitral Tribunal. All substantive and preliminary objections were expressly left open to be decided by the Tribunal on merits.
Accordingly, the Supreme Court dismissed the appeals and affirmed that the Arbitral Tribunal will adjudicate all issues, including whether Tecpro, as an individual consortium member, is a veritable party entitled to invoke arbitration
FULL TEXT OF THE SUPREME COURT JUDGMENT/ORDER
