IMPORTANT POINT
Lack of jurisdiction has to be challenged before the arbitrator.

ORDER

This appeal has been filed by the Union of India challenging the judgment and order of the Calcutta High Court dated 15th June, 2005 rendered in APOT NO.643 of 2003.

We may notice here the bare essential facts, which would have a bearing on the legal controversy involved in the appeal.

On 19th October, 1992, the appellant entered into an agreement with the respondent for construction of Industrial Covered Electrical Loco Shed. Subsequently, according to the appellant, the agreement was terminated in terms of clause 64 of the General Conditions of Contract by which the agreement between the parties was governed. The twin reasons for termination of the contract were that the respondent initially delayed the commencement of the work and subsequently executed the work which was of inferior quality. Therefore, the appellant had to get the balance work completed from another contractor.

On 24th July, 1996, the respondent raised certain claims against the appellant.

On 30th September, 1996, the respondent demanded that the disputes be referred to arbitration.

Since the disputes were not referred to arbitration, the respondent approached the High Court of Calcutta under Section 11(6) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as “the Arbitration Act, 1996”) for the appointment of a sole arbitrator. The High Court by its order dated 10th July, 1998 appointed Mr. Justice Satyabrat Mitra as the sole arbitrator. The learned arbitrator duly commenced the arbitration proceedings, in which the appellant fully participated. The appellant filed statement of defence. Upon completion of the arbitration proceedings, the learned arbitrator made the award on 25th January, 2002. The claims of the respondent were accepted and the award was rendered in favour of the contractor in the sum of Rs.1,29,89,768/-.

Aggrieved by the aforesaid award, the appellant filed an application under Section 34 of the Arbitration Act, 1996 before the High Court for setting aside the award. The learned single judge of the High court dismissed the aforesaid application of the appellant on 28th October, 2003.

Aggrieved by the aforesaid order, the appellant filed Intra-Court appeal before the Division Bench of the High court, which has also been dismissed by the impugned judgment dated 15th June, 2005.

The present appeal arises out of Special Leave Petition (Civil) No.20316 of 2005.

We have heard the learned counsel for the parties at length.

Mr. P.P. Malhotra, learned Additional Solicitor General, appearing for the Union of India, submitted that the High Court committed an error of jurisdiction by appointing a former judge of the High court as the sole arbitrator. The appointment of the sole arbitrator was against the contractual conditions which cannot be ignored. Therefore, the reference was before a Arbitral Tribunal which had not been properly constituted. He also submitted that the arbitrator had no jurisdiction to entertain the claims with regard to certain excepted matters.

On the other hand, the learned counsel for the respondent has submitted that the appellant having participated in the proceedings before the learned arbitrator without any demur or objection cannot now be permitted to raise the objection with regard to the jurisdiction of the arbitrator at this belated stage. Learned counsel further submitted that in view of express provision contained in Section 16 of the Arbitration Act, 1996, the Arbitral Tribunal is competent to rule on its own jurisdiction. He submits that pleas with regard to lack of jurisdiction of the learned arbitrator ought to have been raised not later than the submission of the statement of defence. Learned counsel pointed out that no plea of lack of jurisdiction of the learned arbitrator was taken by the appellant in the statement of defence. Furthermore, the appellant also led evidence in defence. He also pointed out that the appellant, in fact, categorically accepted the jurisdiction of the learned arbitrator