IMPORTANT POINT
Judgment of the Supreme Court in Konkan Railway Corporation Ltd. v. M/s. Mehul Construction Co., 2000(5) Supreme 657 that order of the Chief Justice or his designate under Section 11 of the Arbitration and Conciliation Act, 1996 is administrative order which cannot be subjected to proceedings under Article 136 of the Constitution requires reconsideration.

ORDER

M. Jagannadha Rao, J.-Learned Solicitor General of India Sri Harish Salve, appearing for the appellants, has submitted that the order dated 4.7.97 of the learned Chief Justice of the Bombay High Court, under Section 11 of the Arbitration and Conciliation Act, 1996 on the preliminary issues is a Judicial order and, on facts, is liable to be set aside under Article 136 of the Constitution of India. It is contended that, even if it is to be treated as administrative in nature, it is amenable to Article 136.

2. The learned Chief Justice in his order dated 4.7.97 held that inasmuch as the appellant-company failed to appoint Arbitrators as required under the arbitration clause, the appellants should be compelled to furnish a panel of names of arbitrators to the respondent-contractors and one name should be suggested by the appellants. The learned Chief Justice had also rejected the plea of the appellants that no reference be made as the matters were excepted matters and held that the question whether the claims related to excepted matters or not was also to be decided by the arbitrators after recording evidence and verifying the facts. Learned Solicitor General contends that such an order of the Chief Justice deciding rights preliminary points cannot be characterised as an administrative order.

3. Appellant is confronted with the three Judge Bench in Konkan Railway Corporation Ltd. v. M/s. Mehul Construction Co.1 which has held that no appeal is maintainable under Article 136 against such an order passed by the Chief Justice directing appointment of arbitrators under Section 11 inasmuch as such orders are administrative in nature even if they contain reasons and decision on certain preliminary issues raised by the parties at the stage of appointment of arbitrator.

4. It is pointed out by the learned Solicitor General of India that the above judgment requires reconsideration. Counsel pointed out that initially in Sundaram Finance Ltd. v. NEPC India Ltd.2 in a case which arose under Section 9 (and not under Section 11), a passing observation was made by Kirpal, J. (in para 12) that under Section 11 the Chief Justice or his nominee would not be passing a judicial order. That was by way of obiter. Later on, in Ador Samia Private Ltd. v. Peekay Holdings Limited & Others3 a Bench consisting of Majmudar and Mohapatra, JJ. held that against an order under Section 11 passed by the Chief Justice, no application for special leave could be filed under Article 136 inasmuch as the order was an administrative order and the Bench relied upon the observations of Kirpal, J. in Sundaram Finance Ltd. The Bench also referred to the judgment of the Constitution Bench in Indo-China Steam Navigation Co. Ltd. v. Jasjit Singh4 which held that a purely administrative order or executive order was not amenable to Article 136. However, it appears that a Bench presided over by Majmudar, J. referred the question as to the nature of the order to a three Judge Bench in Konkan Railway Co. Limited. The three Judge Bench took the view (see 2000(6) SCALE 71) that no special leave petition could be filed under Article 136 against the order passed by the Chief Justice or his nominee under Section 11. According to the learned Solicitor General, this view of the three Judge Bench requires reconsideration.

5. Learned Solicitor General submits that, it is now well-settled in several countries, where the UNCITRAL model has been adopted and where the arbitrator also is permitted to decide questions as to the existence of the arbitration clause or validity of the agreement - that the Court can decide certain preliminary disputes which are raised before it at or before the appointment of arbitrators - such as disputes relating to existence of the arbitration agreement or a question as to the very existence of a dispute or as to whether the items of disputes fell within excepted matters or whether an arbitrator could be appointed where the invocation of the clause b