Eminent Colonizers Private Limited Vs Rajasthan Housing Board And Ors. (Supreme Court of India)
The Supreme Court of India has held that where an arbitrator was appointed under Section 11 of the Arbitration & Conciliation Act, 1996 prior to the 2015 Amendment (SBP & Co. regime), the existence and validity of the arbitration agreement stand conclusively decided, and cannot thereafter be reopened either before the arbitrator or in proceedings u/s 34 or u/s 37.
In the present case, disputes arose under construction contracts containing Clause 23, which provided for reference of disputes to an empowered Standing Committee. When the Committee was not constituted as per contract, the contractor invoked Section 11, and the High Court appointed a sole arbitrator in 2014. The award was passed in favour of the contractor.
However, the Commercial Court and the High Court set aside the arbitral awards, holding that Clause 23 was not an arbitration clause, relying on later Rajasthan High Court decisions. Reversing these findings, the Supreme Court held that under the SBP & Co. v. Patel Engineering regime, the Section 11 court was exercising judicial power and was obliged to decide the existence and validity of the arbitration agreement. Once the appointment order attained finality and was not challenged, it operated as res judicata between the parties, irrespective of whether the reasoning was expressly articulated.
The Court clarified the crucial distinction between precedent and res judicata: while the correctness of the Section 11 decision may be debatable, between the same parties it is binding, and cannot be collaterally attacked in Section 34 proceedings. Later contrary High Court rulings on similar clauses cannot unsettle a concluded Section 11 determination.
Accordingly, the Supreme Court set aside the judgments of the High Court and Commercial Court, restored the arbitral proceedings, and remitted the matters to the Commercial Court to consider other grounds under Section 34, excluding the issue of existence or validity of the arbitration clause.
FULL TEXT OF THE SUPREME COURT JUDGMENT/ORDER
