Expression "existence of arbitration agreement" in section 11 of arbitration act includes aspect of validity of of agreement: Supreme court

16th Dec

Expression "existence of arbitration agreement" in section 11 of arbitration act includes aspect of validity of of agreement: Supreme court

The Supreme Court has held that the expression existence of arbitration agreement in section 11 of the arbitration act would includes the aspect of validity of arbitration agreement.
Three-judge bench of the court also explained that at the stages of Section 8 and section 11 of the Act, the courts should undertake a prima facie examination of the validity of the arbitration agreement.
The division bench comprising of justices N V Ramana, Sanjiv Khanna and Krishna Murari, In the case Vidya drolia and others vs Durga trading company observed that "existence and validity are intertwined and arbitration agreement does not exist if it is illegal or does not satisfy some mandatory legal requirements. Invalid agreement is considered no agreement.
The bench was essentially answering a reference made to it by a division bench on the issue with the landlord- tenant disputes under the Transfer of Property Act are arbitrable. While holding that such disputes can be subject matter of arbitration when they are not covered by rent control laws, the court also discussed the issues relating to the stage when the question of arbitrability can be decided the scope of examination under sections 8/11 etc.
The court held that the expression existence of an arbitration agreement in section 11 of the arbitration act, would include aspect of validity of an arbitration agreement. Sections 8 and section 11 of the act have the same ambit with respect to judicial interference.