IMPORTANT POINT
An order passed by a Chief Justice or his nominee u/s 11(6) of Arbitration and Conciliation Act may be a judicial order but same does not take away effect of appellate jurisdiction to be exercised by Court u/s 37(2) of the Act.

Headnote:Arbitration and Conciliation Act, 1996—Sections 2(1)(e), 16, 37(2)—Contract for execution of canal repair work—It contained an arbitration clause—Dispute arose and Superintending Engineer of Circle who was named Arbitrator entered into reference—Named arbitrator retired and his successor did not proceed with reference and finally expressed his inability to continue with proceedings—Appellant served notice u/s 14 of the Act and made proposal to nominate another independent person as Arbitrator—State Dept. asked Superintending Engineer to conclude arbitration proceedings in three months—Appellant questioned jurisdiction of said Arbitrator on ground that his nomination had already been terminated—Appellant moved application u/s 11 of the Act before High Court and former Judge of High Court was appointed as Arbitrator but Superintending Engineer proceeded with hearing and passed award on 20-2-2003—Appellant filed claim before Judge Arbitrator appointed by High Court—Respondent sought termination of mandate of Arbitrator on ground that earlier arbitrator had given his award—Judge Arbitrator held that he had no jurisdiction to proceed with matter—Appellant filed appeal u/s 37 of the Act before High Court—High Court opined that it had no jurisdiction to hear appeal and appeal would lie before District Court—Appeal—Forum of an appellate court must be determined with reference to definition thereof contained in the Act—No reason to differ with High Court.
       Held : After the 1996 Act came into force, under Section 16 of the Act the party questioning the jurisdiction of the Arbitrator has an obligation to raise the said question before the Arbitrator. Such a question of jurisdiction could be raised if it is beyond the scope of his authority. Such a question was required to be raised during arbitration proceedings or soon after initiation thereof as a preliminary issue. (Para 15)
       If the Arbitrator opines that he has no jurisdiction to hear the matter, an appeal lies before the court. ‘Court’ has been defined in Section 2(1)(e) of the 1996 Act in the following terms:
       “ “Court” means the principal Civil Court of original jurisdiction in a district, and includes the High Court in exercise of its ordinary original civil jurisdiction, having jurisdiction to decide the questions forming the subject-matter of the arbitration if the same had been the subject-matter of a suit, but does not include any civil court of a grade inferior to such principal Civil Court, or any Court of Small Causes;”
       It is not disputed before us that the Patna High Court does not exercise any original civil jurisdiction. The definition of “court” as noticed hereinbefore means the Principal Civil Court of original jurisdiction in a district and includes the High Court which exercises the original civil jurisdiction. If a High Court does not exercise the original civil jurisdiction, it would not be a ‘court’ within the meaning of the said provision.(Paras 16 and 17)
       An order passed by a Chief Justice or his nominee under Sub-section (6) of Section 11 of the 1996 Act may be a judicial order, as has been held by a Seven-Judge Bench of this Court in SBP & Co. v. Patel Engineering Ltd. and another [(2005) 8 SCC 618] but the same does not take away the effect of the appellate jurisdiction to be exercised by a court under Sub-section (2) of Section 37 of the 1996 Act.(Para 25)
       There exists a distinction between an appeal and an application. Whereas Section 31(4) of the 1940 Act or Section 42 of the 1996 Act provides for an application, Sub-section (2) of Section 37 of the 1996 Act provides for a statutory appeal. A forum of an appellate court must be determined with reference to the definition thereof contained in the 1996 Act. We, therefore, see no reason to differ with the High Court. The appeal is dismissed.(Paras 32 and 33)

JUDGMENT

S.B. Sinha, J.—Leave granted.

2. The parties hereto entered into a contract in terms whereof Appellant herein undertook a contract for execution of canal repair work for Rs. 11,33,421/-. An additional agreement was entered into by and between the parties. The said contract contained an arbitration clause being Clause 23 of the contract.

3. Disputes and differences having arisen between the parties, Appellant invoked the said arbitration clause. The Superintending Engineer of the Circle who was the named Arbitrator entered into reference. There being alleged undue delay in conclusion of the proceedings of the arbitral tribunal, a notice was served by Appellant purported to be in terms of Sections 14 and 15 of the Arbitration and Conciliation Act, 1996 (for short “the 1996 Act”). The named Arbitrator retired and his successor did not proceed with the reference for a long time. Another notice was issued by Appellant asking the then incumbent of the office of Superintending Engineer to proceed with the arbitration. He, however, instead of proceeding with the arbitration sought for directions in this behalf from his superior officers. On 23.8.2002, he expressed his inability to continue with the proceedings. A notice under Section 14 of the 1996 Act was again served. A proposal was made thereunder to nominate another independent person as an Arbitrator. The Irrigation Department of the State of Bihar asked the Superintending Engineer to conclude the arbitration proceedings within three months by an office order dated 20th November, 2002.

4. An objection, however, was filed by Appellant questioning the jurisdiction of the said Arbitrator on the premise that his nomination has already been terminated. On the said plea that the named Arbitrator in terms of Clause 23 could not have functioned as such, an application under Section 11 of the 1996 Act was filed before the Chief Justice of the Patna High Court. Justice P.S. Sahay, a former Judge of the Patna High Court was appointed but the Superintending Engineer fixed a date for hearing on 12.2.2003 by an order dated 8.2.2003, to which an objection was raised by Appellant. Appointment of Justice P.S. Sahay was intimated to the said Superintending Engineer.

5. An award was passed by the Superintending Engineer on 20th February, 2003. In the meantime, Appellant had filed his claim before Justice P.S. Sahay. Respondents also appeared on 21.2.2004 and filed an application under Section 14 of the 1996 Act seeking termination of his mandate on the ground that the earlier Arbitrator has already given his award. The learned Arbitrator held that he had no jurisdiction to proceed with the matter.

6. A purported appeal was filed thereagainst by Appellant under Section 37 of the 1996 Act before the High Court. By reason of the impugned judgment, the High Court opined that it had no jurisdiction to hear the appeal as in terms of Sub-section (2) of Section 37 of the 1996 Act, the appeal lay before the District Court. A review application filed thereagainst was also dismissed.

7. It is not in dispute that in terms of Section 16 of the 1996 Act, the Arbitrator could have determined his own jurisdiction. The learned Arbitrator, nominee of the Chief Justice of the High Court, opined that there could not be two awards in one proceeding. It was held:

“19. Thus, on a careful consideration of the submission made on behalf of the parties and after going through the papers filed by them, I hold that I have no jurisdiction to continue with this proceedings for the reasons, mentioned above.”

8. The High Court in passing the impugned judgment opined that the Patna High Court having no original jurisdiction, in view of the provisions contained in the Bengal, Agra and Assam Civil Courts Act, 1857 (for short “the 1857 Act”), the appeal filed under Section 37(2) of the 1996 Act was not maintainable before it stating:

“Accordingly, I am of the opinion that this Court being not a court of ordinary o

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2006 Supreme(SC) 1088

IMPORTANT POINTAn order passed by a Chief Justice or his nominee u/s 11(6) of Arbitration and Conciliation Act may be a judicial order but same does not take away effect of appellate jurisdiction to be exercised by Court u/s 37(2) of the Act.

Cases Referred (5)

IMPORTANT POINT
An order passed by a Chief Justice or his nominee u/s 11(6) of Arbitration and Conciliation Act may be a judicial order but same does not take away effect of appellate jurisdiction to be exercised by Court u/s 37(2) of the Act.