In Brief
M/s EMAAR India Limited entered into a Collaboration Agreement and Addendum Agreement with Tarun Aggarwal Projects LLP for residential development in Gurugram. When disputes arose over compliance with obligations relating to physical possession of plots and damages, the respondents sought arbitration. The High Court appointed arbitrators under Clause 37, the arbitration clause. EMAAR objected, contending the dispute fell under Clause 36, which reserved disputes about enforcement of specific obligations for court resolution, not arbitration. The Supreme Court held that where an arbitration agreement explicitly excludes certain disputes through clear carve-out clauses, courts must conduct a preliminary inquiry on arbitrability before appointing arbitrators. The High Court's failure to examine whether the disputed obligations fell within the non-arbitrable Clause 36 was an error. The appeal was allowed and the matter remitted for a proper preliminary inquiry.
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