EMAAR INDIA LTD. Vs.

TARUN AGGARWAL PROJECTS LLP

Facts:

Parties entered into an Agreement for the development of a residential colony in Gurugram.

Then a dispute arose between the parties due to the alleged breach of contract by the

appellants.

The respondent issued legal notice demanding possession of flats and certain sum of money

whereafter the respondent appointed its arbitrator and requested the appellants to appoint

their arbitrator. But the appellant refused to appoint the arbitrator as the alleged dispute

was outside the scope of arbitration agreement.

But the High Court allowed the application filed by the respondent for the appointment of

the arbitrator. Thereafter the appellant filed the appeal before the Supreme Court

Issue:

If the High Court has made an error in appointing the arbitrator? As the dispute between the

parties falls within the excepted category, therefore, no arbitrator could be appointed.

If a preliminary inquiry by the Court is permitted under Section 11 of the A&C Act

to check the arbitrability of disputes.

Held:

The Court answered the issue as to who decides the issue of non-arbitrability. The Court

relied on its judgment in , Vidya Drolia and Indian Oil Corporation Limited Vs. NCC Limited

to hold that the High Courts while appointing the arbitrator can launch a

preliminary inquiry to decide the issue of 'Excepted Matters' when an objection to

that effect is taken by the respondent.