By Rupin Chopra and Shantam Sharma
The Supreme Court’s judgment in M/s Andhra Pradesh Power Generation Corporation Limited v. M/s Tecpro Systems Limited & Ors., delivered on 17 December 2025, is a pointed reminder that Section 11 of the Arbitration and Conciliation Act, 1996 is concerned with commencement, not conclusion.
The dispute before the Court arose from an infrastructure contract executed through a consortium. While such factual settings are common in public sector and EPC projects, the legal question raised was of wider relevance. Can a court, while exercising jurisdiction under Section 11, conclusively decide whether an individual consortium member was entitled to invoke arbitration, when the arbitration clause was contained in the General Conditions of Contract executed with the consortium?
The Supreme Court answered this in the negative, and in doing so, reaffirmed several first principles of Indian arbitration law.
Facts of the Dispute
The employer, APGENCO, resisted the constitution of an arbitral tribunal on the ground that the arbitration agreement existed only between APGENCO and the consortium as a single contracting entity. According to the employer, the first respondent, being merely one of the consortium members, could not invoke arbitration in its individual capacity.
The High Court rejected this objection and appointed an arbitral tribunal under Section 11(6). The Supreme Court was therefore called upon to examine whether the High Court had exceeded its jurisdiction by failing to adjudicate this objection conclusively.
Supreme Court’s Reasoning
The Court framed its analysis squarely within the statutory framework of the Arbitration and Conciliation Act, 1996. Three provisions assumed central importance.
| Provision | Purpose |
| Section 11 | Appointment of arbitrators |
| Section 16 | Tribunal’s power to rule on its own jurisdiction |
| Section 5 | Restriction on judicial intervention |
Read together, these provisions reflect a deliberate legislative choice. Courts are not expected to decide substantive jurisdictional disputes at the entry point to arbitration unless the lack of arbitrability is apparent on the face of the record. Further, the Court’s reasoning is firmly anchored in its earlier decisions:-
- It drew from Duro Felguera S.A. v. Gangavaram Port Limited, where the Supreme Court held that the scope of examination under Section 11 is confined to the existence of an arbitration agreement and nothing more. That judgment marked a decisive shift away from the pre-2015 approach where courts often engaged in detailed contractual analysis at the appointment stage.
- The Court also aligned its reasoning with Mayavati Trading Pvt. Ltd. v. Pradyuat Deb Burman, which clarified that after the 2015 amendments to the Act, the expansive review earlier permitted under SBP & Co. v. Patel Engineering no longer holds the field.
- Most significantly, the Court relied on the principles articulated in Vidya Drolia v. Durga Trading Corporation. In that case, the Supreme Court held that a court may refuse reference to arbitration only where non-arbitrability is manifest and ex facie evident. Where adjudication requires examination of facts or contractual construction, the matter must be left to the arbitral tribunal.
It is this doctrinal line that the Court applied in APGENCO v. Tecpro Systems.
Why the Objection Failed at the Section 11 Stage
The Supreme Court noted that the employer’s objection was not that no arbitration agreement existed at all. Rather, the objection was that the agreement could not be invoked by an individual consortium member.
The Court held that such an objection necessarily involves questions such as:
- how the consortium was structured,
- whether the consortium agreement permitted individual enforcement,
- how liabilities and entitlements were allocated inter se, and
- how the parties conducted themselves during performance of the contract.
These are not threshold questions capable of being decided on a prima facie review. They require evidence, interpretation of multiple contractual documents, and assessment of commercial intent. As the Court observed, these are precisely the kinds of issues that Section 16 entrusts to the arbitral tribunal.
Accordingly, the High Court was justified in constituting the tribunal and leaving these objections open.
What the Court Carefully Did Not Decide
Equally important is what the judgment does not say. The Supreme Court did not hold that a consortium member always has the right to invoke arbitration. Nor did it dilute the possibility that the tribunal may ultimately uphold the employer’s objection.
What the Court did was to draw a procedural boundary. It clarified that the correctness of invocation is a matter for the tribunal, not for a Section 11 court, unless the objection goes to the very existence of the arbitration agreement.
S.S. Rana Insights
For businesses operating under consortium or joint venture arrangements, the judgment carries several practical lessons.
- It significantly curtails the use of Section 11 proceedings as a delay tactic. Parties can no longer expect courts to resolve contested questions of locus or contractual entitlement before arbitration begins.
- It places renewed emphasis on drafting discipline. If the intention is that only the consortium collectively may invoke arbitration, that restriction must be clearly reflected in the arbitration clause or related contractual documents. Silence or ambiguity will not be resolved at the appointment stage.
- For public sector entities and project owners, the decision underscores that arbitration clauses in General Conditions of Contract are not ornamental. Once incorporated, they will be operationalised in line with the pro-arbitration framework laid down by the Supreme Court.
Conclusion
The decision in APGENCO v. Tecpro Systems does not alter substantive rights under consortium contracts. What it does is reaffirm the procedural discipline of arbitration law. Courts appoint tribunals. Tribunals decide jurisdiction. Contractual disputes are resolved through evidence and interpretation, not at the threshold.
From a business perspective, this enhances predictability. Parties know that arbitration, once contractually agreed, will commence without being derailed by preliminary litigation. The commercial focus therefore shifts to contract design, internal consortium governance, and dispute preparedness, rather than courtroom strategy.
That, ultimately, is where a mature arbitration regime is meant to lead.