Supreme Court Of India
Dalveer Bhandari
UNION OF INDIA
Versus
RAUNAQ INTERNATIONAL LTD
Decided On : 05/08/2008
[Para 9]
DALVEER BHANDARI, J.
( 1 ) THESE civil appeals are directed against the judgment of the Madhya Pradesh High Court of Judicature at Jabalpur delivered in Miscellaneous Appeal Nos. 479/1996 and 501/1996 dated Ist December, 1999.
( 2 ) THE legal issue involved in these appeals is:
"whether the Court while deciding the application under section 20 of the Arbitration Act, 1940 can consider the issue as to what is arbitrable and what is not arbitrable, or judicial officer's role is only ministerial or mechanical in nature i. e. referring the dispute to arbitrator if there is an arbitration agreement and some disputes have arisen out of the contract between the parties?"
( 3 ) BRIEF facts which are necessary to dispose of these appeals are as under:-In the present case, the respondent/contractor had demanded arbitration as per clause 64 of the General conditions of the Contract and had raised five claims.
( 4 ) THE appellants herein agreed to refer for arbitration only claim no. 4 and the rest of the claims were "excepted" matters and were specifically excluded from the purview of the arbitration by virtue of clause 63 of the General Conditions of the Contract as well as by virtue of Special Conditions of the contract.
( 5 ) THE respondent thereafter approached the District Judge by filing an application under section 20 of the Arbitration Act, 1940 for the appointment of two independent arbitrators for settling all his five claims. The District Judge vide his judgment/order dated 11. 12. 1995 referred claims no. 3, 4 and 5 to be considered for arbitration by the arbitrators already appointed for considering the claim no. 4.
( 6 ) BEING aggrieved, both the appellants as well as the respondent/contractor approached the High Court. The High court vide impugned judgment dated 01. 12. 1999 held that the Additional District Judge should have referred all the five claims raised by the respondent/contractor to be decided by the arbitrator in accordance with law.
( 7 ) ACCORDING to the learned Judges of the High Court, the order passed by the Additional District Judge is not sustainable in law. The relevant findings of the High Court are reproduced as under:
"now the question is whether the learned Additional district Judge could have gone into the question whether the claims made by the claimant are arbitrable or not or they are excepted or they fall in the category of excepted items. In our considered opinion, at that stage, the Civil Court has only a jurisdiction to decide a very limited question whether there is arbitration agreement or not and the issues which have been raised are subject matter of the agreement or not. Once it is decided by the District Court that there is an arbitration agreement and the difference has arisen out of the agreement, thereafter the act of the Court is only ministerial to refer the matter to the arbitrator. "
( 8 ) THE High Court further held that according to section 20 of the 1940 Act, it is clear that the court need not enter into other matters after it is decided that there is an arbitration agreement and the difference has arisen from the agreement. It has to forward the case, good or bad, to the arbitrator. The high Court further held that the court should not take it upon itself the task of deciding which items are arbitrable or not. The High Court observed as under:-
"it is not the function of the Court to see that certain items fall under the excepted or non excepted category and whether the claim is vague or justified or not. This is not the stage of the Court to enter into that adjudication. The jurisdiction of the court comes to an end the moment it is decided that there is an arbitration agreement and the difference has arisen out of the agreement. It is only administrative or ministerial job of the court to refer the matter to Arbitrator. "
( 9 ) THE learned counsel appearing for the Union of India submitted that in view of the pronouncement of this court in general Manager, Northern Railway and A
General Manager, Northern Railway and Another v. Sarvesh Chopra
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