2007 Supreme(SC) 281

2007(2) Supreme 987
SUPREME COURT OF INDIA
(From Delhi High Court)
A.K. Mathur & P.K. Balasubramanyan, JJ.
National Thermal Power Corporation Ltd.—Appellant
versus
Siemens Atkeingesellschaft—Respondent
Civil Appeal No. 1953 of 2006
Decided on 28-2-2007
Counsel for the Parties :
For the Appellant : Ruchi Gaur Narula, Karan Kartik Yambem and Subramonium Prasad, Advocates.
For the Respondent : Dipanakar Gupta, Sr. Advocate, Anil Bhatnagar, Anil Sharma, Amit Dhingra, Ms. Tamema Malik, Manu Sharma and Rahul Prasanna Dave, Advocates.

IMPORTANT POINT
Against the order of partial award, no appeal is maintainable directly under Section 37 of the Arbitration and Conciliation Act, 1996 when the question of jurisdiction did not arise.

Headnote:Arbitration and Conciliation Act, 1996—Sections 16(2), (3), (6), 34 and 37—Appealable orders—Competence of Arbitral Tribunal to rule on its jurisdiction—Appeal u/s 37 against order of partial award—Maintainability—Works contract for setting up Power Project—Delay in execution of contract—Respondent raised several claims against appellant-NTPC for losses resulting from delay—Several decisions taken in high powered meeting of parties—As appellant NTPC did not favourably consider claims for damages, respondent made a reference to ICC Court of Arbitration—Appellant besides filing their defence to the said claims also filed several counter claims—Tribunal gave a partial award holding that claim of respondent was maintainable while counter claims of appellant NTPC was not admissible as the same were settled in the meeting between parties—NTPC filed appeal against partial award u/s 37(2)(a) of the Act—Whether the appeal filed against the partial award of ICC International Court of Arbitration filed directly u/s 37(2)(a) of the Act was maintainable—(No)—No jurisdictional issue was involved—Against the partial award the appellant has remedy u/s 34 of the Act.

       As per P.K. Balasubramanyan, J. (Concurring Judgment)

       Held : In a case where the parties had thus constituted the Arbitral Tribunal without recourse to Section 11(6) of the Act, they still have the right to question the jurisdiction of the Arbitral Tribunal including the right to invite a ruling on any objection with respect to the existence or validity of the arbitration agreement. It could therefore rule that there existed no arbitration agreement, that the arbitration agreement was not valid, or that the arbitration agreement did not confer jurisdiction on the Tribunal to adjudicate upon the particular claim that is put forward before it. Under sub-section (5), it has the obligation to decide the plea and where it rejects the plea, it could continue with the arbitral proceedings and make the award. Under sub-section (6), a party aggrieved by such an arbitral award may make an application for setting aside such arbitral award in accordance with Section 34. In other words, in the challenge to the award, the party aggrieved could raise the contention that the Tribunal had no jurisdiction to pass it or that it had exceeded its authority, in passing it. This happens when the Tribunal proceeds to pass an award. It is in the context of the various sub-sections of Section 16 that one has to understand the content of the expression ‘jurisdiction’ and the scope of the appeal provision. In a case where the Arbitral Tribunal proceeds to pass an award after overruling the objection relating to jurisdiction, it is clear from sub-section (6) of Section 16 that the parties have to resort to Section 34 of the Act to get rid of that award, if possible. But, if the Tribunal declines jurisdiction or declines to pass an award and dismisses the arbitral proceedings, the party aggrieved is not without a remedy. Section 37 (2) deals with such a situation. Where the plea of absence of jurisdiction or a claim being in excess of jurisdiction is accepted by the Arbitral Tribunal and it refuses to go into the merits of the claim by declining jurisdiction, a direct appeal is provided. In the context of Section 16 and the specific wording of Section 37(2)(a) of the Act, it would be appropriate to hold that what is made directly appealable by Section 37(2)(a) of the Act is only an acceptance of a plea of absence of jurisdiction, or of excessive exercise of jurisdiction and the refusal to proceed further either wholly or partly.(Para 6)

       In a case where a counter claim is referred to and dealt with and a plea that the counter claim does not survive in view of the settlement of disputes between the parties earlier arrived at is accepted, it could not be held to be a case of refusal to exercise jurisdiction by the Arbitral Tribunal. Same is the position when an Arbitral Tribunal finds that a claim was dead and was not available to be made at the relevant time or that the claim was not maintainable for other valid reasons or that the claim was barred by limitation. They are all adjudications by the Tribunal on the merits of the claim and in such a case the aggrieved party can have recourse only to Section 34 of the Act and will have to succeed on establishing any of the grounds available under that provision. It would not be open to that party to take up the position that by refusing to go into the merits of his claim, the Arbitral Tribunal had upheld a plea that it does not have jurisdiction to entertain the claim and hence the award or order made by it, comes within the purview of Section 16(2) of the Act and consequently is appealable under Section 37(2)(a) of the Act.(Para 7)

       In the case on hand, what the Tribunal has found is that in view of the M.O.M. wherein the various claims of either party were thrashed out and settled, N.T.P.C. could not pursue most of the claims set out in the counter claim. This is a finding on the merits of the claim of N.T.P.C. It is not a decision by the Arbitral Tribunal either under Section 16(2) or Section 16(3) of the Act. Consequently, the High Court was right in holding that the appeal filed by N.T.P.C. under Section 37(2)(a) was not maintainable.(Para 8)

       As per A.K. Mathur, J. (Concurring Judgment)

       So far as Section 37(1) (a) of the Act is concerned, it contemplates that no appeal shall lie from any orders except, namely granting or refusing to grant measure under Section 9 . Section 9 deals with interim orders and Section 37(1)(b) relates to order passed under Section 34 i.e. setting aside or refusing to set aside an arbitral award under section 34. Sub-section (2) (a) of Section 37 provides that appeal shall also lie to the Court from an order of the arbitral tribunal accepting the plea under sub-section (2) or sub-section (3) of Section 16 and sub-section (2)(b) contemplates appeal against the order granting or refusing to grant an interim measure under section 17 i.e. at the time of pendency of the arbitration proceedings by the Tribunal. Sub-section (3) says that no second appeal shall lie from the order passed in appeal under this section.(Para 12)

       A reading of sub-sections (2) & (3) of Section 16 makes it clear that it deals with jurisdiction i.e. that the arbitral tribunal has no jurisdiction or that the arbitral tribunal has exceeded its jurisdiction. In either of the two situations, a direct appeal is maintainable under sub-section (2) of Section 37. Therefore, in the light of this legal position we shall examine whether the tribunal while awarding an interim award has exceeded its jurisdiction or it had no jurisdiction whatsoever.(Para 12)

       Now, the only question that remains to be decided in the present case is whether against the order of partial award an appeal is maintainable directly under Section 37 of the Act or not. We have considered the submissions of learned counsel for the appellant and after going through the counterclaim and the partial award, we are of opinion that no question of jurisdiction arises in the matter so as to enable the appellant to file a direct appeal under Section 37 of the Act before the High Court. As already mentioned above, an appeal under sub-section (2) of Section 37 only lies if there is an order passed under Section 16(2) & (3) of the Act. Section 16(2) & (3) deals with the exercise of jurisdiction. The plea of jurisdiction was not taken by the appellant. It was taken by the respondent in order to meet their counterclaim. But it was not in the context of the fact that the Tribunal had no jurisdiction, it was in the context that this question of counterclaim was no more open to be decided for the simple reason that all the issues which had been raised in counterclaim Nos. 1 to 10 had already been settled in the minutes of meeting dated 6th/7th April, 2000 and it was recorded that no other issues to be resolved in 1st and 3rd contracts. Therefore, we fail to understand how the question of jurisdiction was involved in the matter. In fact it was in the context of the fact that the entire counterclaim have already been satisfied and settled in the meeting that it was concluded that no further issues remained to be settled. In this context, the counterclaims filed by the appellant was opposed. If any grievance was there, that should have been by the respondent and not by the appellant. It is only the finding of fact recorded by the Tribunal after considering the counterclaim vis-a-vis the minutes of the meeting dated 6th/7th April, 2000. Therefore, there was no question of jurisdiction involved in the matter so as to enable the appellant to approach the High Court directly. (Para 14)

       Therefore, the question of jurisdiction in the present controversy did not arise because the counter-claim was opposed by the respondent-SAG as the same has since been stood settled. In view of the finding of fact recorded by the Tribunal that all the counter-claims stood covered by the decisions of the minutes of meeting though it was initially opposed by the respondent-SAG that it was not arbitrable or the Tribunal could not go into counter-claim, despite that it examined on the merit of the matter and on the merits the Tribunal disposed of the counter-claim by giving partial award. We fail to understand how can the appellant-NTPC can raise the question of jurisdiction and bring its case under Section 16(2) & (3).(Para 14)

       We are satisfied that the partial award can be given and against this partial award the appellant has remedy under Section 34 of the Act and thereafter they could file appeal under Section 37 of the Act. But no direct appeal would lie before the High Court because no jurisdictional issue was involved. The counter-claim was disposed of on the basic fact that the counter-claims had been settled by the MoM dated 6th/7th April, 2000.(Para 15)