Sections 8 and 11 of Arbitration & Conciliation Act, and Res Judicata

Recently, a division bench of Supreme Court in Anil & Ors. v. Rajendra & Ors. delivered an important ruling regarding Chief Justice’s power to appoint an arbitrator under Section 11(6). It was held that once the trial court has declined to refer the matter for arbitration under Section 8, the Chief Justice is barred to appoint an arbitrator under Section 11(6) as the earlier determination by the trial court acts as res judicata. With this, the Court set aside the order of High Court which affirmed the appointment made by CJ under Section 11(6). The reasoning of High Court was that Section 8(3) does preclude appointment of arbitrator during the course of litigation pursuant to the agreement.

Ironically, a higher judicial authority is made bound by determination of a lower judicial authority by the judgement. The same disapproval was faced by judgement of Supreme Court in SBP v. Patel Engg. Further, the Court remained silent as to what would have been appropriate remedy against such order of non-reference to arbitration under Section 8. Apparently, the applicant would approach an appellate authority. Had the Court allowed CJ to assume jurisdiction under Section 11(6), res judicata would have played out for such appellate authority. However, such a determination would require a doubtful assumption that CJ may act as an appellate authority under Section 11(6). Yet this route would clearly save the parties from the vice of the pro-longed litigation in Civil Courts.