2003 Supreme(SC) 626

2003(5) Supreme 1
SUPREME COURT OF INDIA
(From Delhi High Court)
Doraiswamy Raju and D.M. Dharmadhikari, JJ.
Food Corporation of India -Appellant
versus
Indian Council of Arbitration and Ors., etc. etc. -Respondents
Civil Appeal Nos. 4655-4809 of 2003
(Arising out of SLP (C) Nos. 15578-15732 of 2000)
With
Civil Appeal Nos. 4810-4987 of 2003
(Arising out of SLP (C) Nos. 21081-21258 of 2000)
Decided on 17-7-2003
Counsel for the Parties :
For the Appellant : G.L. Sanghi, Sr. Advocate, K.C. Ranjeet and Ajit Pudussery, Advocates.
For the Respodents : A.K. Ganguli, Sr. Advocate, A.T. Patra, Nipun Malhotra, Advocates for M/s. O.P. Khaitan & Co., Advocates, Ranjan Narain, Ms. Puja Sharma, S.L. Aneja, Balbir Singh Gupta, Pradeep Kumar Bakshi, Balraj Dewan, R. Nedumaran, A.P. Mohanty and Mrs. Amita Gupta, Advocates.

IMPORTANT POINT
The legislative intent underlying the Arbitration and Conciliation Act, 1996 is to minimize the supervisory role of Courts in arbitral process and nominate/appoint the Arbitrator without wasting time, leaving all contentious issues to be urged and agitated before the Arbitral Tribunal itself.

Headnote:(i) Arbitration and Conciliation Act, 1996-Section 11(6), 16-Indian Council of Arbitration Rules-Rules 16, 21 and 22-Nomination of arbitrator-Indian Council of Arbitration refusing to proceed with Arbitration claims till FCI and opp. parties, Millers agree in writing afresh that arbitration may be conducted under Rules of Arbitration of Indian Council of Arbitration-Challenge against-There was an agreement between parties to have their disputes resolved by reference to an arbitration and that it should be through the ICA-Any objections as to the existence of an enforceable or valid arbitration agreement had to be adjudicated by the Arbitration Tribunal after a reference is made to it-It is not for the ICA or the Court to adjudicate on these issues.

       Held : The fact that there is an agreement between parties to have their disputes resolved by reference to an arbitration and that it should be through the ICA and in accordance with the rules or procedure prescribed by the ICA is not in controversy. As indicated earlier even assuming without accepting for purposes of consideration that there is any infirmity in the arbitration clause which go to undermine as claimed by the respondents the legality, propriety and validity of the constitution of the Tribunal and/or even if there be any objections as to the existence of an enforceable or valid arbitration agreement, it had to be adjudicated by the very Arbitral Tribunal after a reference is made to it on being so constituted and it is not for the ICA or the learned Judge in the High Court to undertake this impermissible adjudicatory task of adjudging highly contentious issues between the parties. As observed by the Constitution Bench of this Court, there is nothing in Section 11 of the 1996 Act that requires the party other than the party making the request to be noticed and that it does neither contemplate a response from the other party nor contemplate any decision by the Chief Justice or his nominee on any controversy that the other party may raise, even in regard to its failure to appoint an Arbitrator within the stipulated period. The legislative intent underlying the 1996 Act is to minimize the supervisory rules of courts in arbitral process and nominate/appoint the Arbitrator without wasting time, leaving all contentious issues to be urged and agitated before the Arbitral Tribunal itself. Even under the old law, common sense approach alone was commenced for being adopted in construing an arbitration clause more to perpetuate the intention of parties to get their disputes resolved through the alternate disputes redressal method of arbitration rather than thwart it by adopting a narrow, pedantic and legalistic interpretation. (Para 14)

       Keeping into consideration all these aspects, we consider it just and more appropriate, proper and reasonable - both in law and in equity and interests of justice to direct ICA to forthwith and not later than sixty days from this date nominate the Arbitrator as sought for by the appellants and place the matters before such Arbitrator, leaving open to the parties to raise and pursue all objections and contentions and thereby seek for the decision of the Arbitrator as envisaged under Section 16 of the 1996 Act, besides getting adjudication of the respective disputes in these cases on merits and in accordance with law. Both parties will have leave and liberties to do so before the Arbitrator on being nominated/appointed by the ICA, pursuant to these orders. (Para 15)

       (ii) Constitution of India-Article 136-SLPs-Maintainability-Appointment of Arbitrator-Order of Indian Council of Arbitration in refusing to proceed with Arbitration claims-Direction to get any fresh agreement for arbitration-Challenged-High Court held the petitions before the Court to be not maintainable-SLP against-Whether maintainable-(Yes)-Arbitration and Conciliation Act, 1996-Sections 11 and 16.

       Held : The Constitution Bench also held that questions relating to the improper constitution of Arbitral Tribunal or its want of jurisdiction or objections with respect to the existence or validity of the arbitration agreement are matters which should be canvassed before the Arbitral Tribunal itself which has been specifically empowered to rule on such issues and on its own jurisdiction, as well. Unfortunately, the High Court in this case seems to have proceeded to adopt an adjudicatory role and returned a verdict recording reasons as to the very existence or otherwise of the agreement as well as the tenability and legality or otherwise of making a reference to an arbitrator. In view of such peculiar situation, it would be futile for the respondents to contend that the SLPs are not maintainable, particularly in view of the fact that any recourse to have the arbitrator appointed or nominated could be forestalled by the detailed judgment and the findings recorded by the High Court in this matter. In the light of the above, the details pointed out on behalf of the ICA regarding the submission as to the provisions of law actually invoked before the High Court, the nature of the application or the character of the order passed pales into insignificance. The objections in this regard are consequently rejected. (Para 12)