Back
SUPREME COURT OF INDIA
J.B. Pardiwala, K.V. Viswanathan, JJ.
M/s Eminent Colonizers Private Limited – Appellant
Versus
Rajasthan Housing Board and Ors. – Respondents
Civil Appeal No. 753 of 2026 (@ SLP (C) No.8299 of 2021) With Civil Appeal No. 754 OF 2026 (@ SLP (C) No.8331 OF 2021)
Decided On : 04-02-2026
Certainly. Here are the key points from the provided legal document:
The core issue in both appeals concerns the interpretation of Clause 23 of the Contract Agreement and whether disputes regarding the validity or existence of this clause could have been raised before the arbitrator (!) .
The proceedings took place prior to the amendments introduced in the Arbitration and Conciliation Act, 2015, specifically before the enactment of Section 11(6A), which limits the court’s inquiry to the existence of an arbitration agreement (!) (!) .
The appellant challenged the validity of the arbitration process, asserting that the appointment of the arbitrator was made under the regime applicable before the 2015 amendments, which required the court to examine both the existence and validity of the arbitration agreement (!) (!) .
The courts below had held that Clause 23 was not an arbitration clause, and thus, the arbitration proceedings and awards were set aside on that basis (!) (!) .
The Supreme Court clarified that, under the regime prior to the 2015 amendments, the court was bound to determine the existence and validity of the arbitration agreement at the time of appointment, and such a decision would be binding on the parties in subsequent proceedings, including the arbitral process and challenge stages (!) (!) .
The Court emphasized that the order appointing the arbitrator, once final and accepted by the parties, implied a recognition of the existence and validity of the arbitration agreement, and that such findings are binding and operate as res judicata in subsequent proceedings (!) (!) .
It was highlighted that the amendments introduced in 2015 changed the scope of judicial inquiry, limiting it to the existence of the arbitration agreement, but these amendments did not apply to the proceedings in question, which occurred before their enactment (!) (!) .
The Court noted that the decisions of courts under the previous regime, which involved examining both the existence and validity of arbitration agreements, are binding and cannot be re-examined in later stages, including challenge proceedings (!) (!) .
The judgments of the courts below, which found that Clause 23 was not an arbitration clause, were held to be erroneous because they failed to recognize the binding nature of the prior orders appointing arbitrators under the regime applicable at the time (!) .
As a result, the Supreme Court set aside the judgments of the lower courts, held that the arbitration clause was valid, and remitted the matter back to the respective courts for further proceedings on issues other than the validity of Clause 23 (!) (!) .
The Court also directed that the pending arbitration proceedings be disposed of within a specified period, emphasizing the importance of finality and adherence to the legal regime applicable at the time of the proceedings (!) (!) .
The appeals were disposed of accordingly, reaffirming the binding effect of prior orders regarding arbitration agreements made under the pre-2015 legal framework (!) (!) .
Please let me know if you need a detailed analysis or specific legal advice based on these key points.
| Table of Content |
|---|
| 1. interpretation of contract and arbitration clause (Para 2 , 4 , 5 , 6 , 10 , 33 , 34) |
| 2. jurisdiction and binding nature of court's decisions regarding arbitration (Para 11 , 13 , 19 , 20 , 22) |
| 3. arguments regarding the validity of arbitration agreement (Para 14 , 15 , 16 , 18) |
| 4. distinction between precedent and res judicata (Para 24 , 27 , 30 , 31) |
| 5. conclusion of the court on the validity of arbitration agreements (Para 32) |
| 6. final orders and remedial actions by the court (Para 36 , 37) |
JUDGMENT :
K.V. Viswanathan, J.
1. Leave granted.
2. The issues that arise in both the appeals are common and they revolve around the interpretation of Clause 23 of the Contract Agreement and, more particularly, the question as to whether a dispute with regard to the existence and validity of the said clause could have been raised before the arbitrator?
3. The Arbitration and Conciliation (Amendment) Act, 2015 did not apply to the arbitral proceedings concerned in these matters. This aspect of the matter has been dealt with in detail hereinbelow.
FACTS IN CIVIL APPEAL ARISING OUT OF SLP(C) NO.8299 OF 2021: -
4. The present appeal calls in question the correctness of the judgment and order dated 20.02.2020 of the High Court of Judicature for Rajasthan, Bench at Jaipur in D.B. Civil Miscellaneous Application No. 2435 of 2019.
5. On 08.07.2009, the appellant, a sole proprietorship concern, engaged in the supply and construction business was awarded the construction work for the structure of 40 HIG-1 houses (High-Income Group) and 10 HIG-2 Flats (Stilt + 10 Storey) at Sector-29, Pratap Nagar, Jaipur, Rajasthan by the respondent. A contract agreement bearing No.11/2009- 10 for a total value of Rs. 5,27,00,070/- on a lump sum basis was entered into and the work was to be completed in 12 months’ time. It is the claim of the appellant that the work was completed before the stipulated 12 months’ deadline for a lower cost of Rs.4,67,72,922/-. The dispute pertained to non-payment of Rs.18,95,123/- towards escalation cost under Clause 45 of the agreement with regard to prices, of labour and material.
6. According to the appellant, since the respondents failed to pay the disputed amount or to alternatively constitute an empowered Standing Committee to adjudicate the dispute in accordance with Clause 23 of the agreement, despite the appellant’s application and payment of fee, a Section 11 Application came to be filed in the High Court.
7. Clause 23 reads as under: -
i) Administrative Secretary concerned
ii) Finance Secretary or his nominee, not below the rank of Dy.Secretary and/or Chief Accounts Officer.
iii) Law Secretary or his nominee, not below the rank of Joint Legal Remembrancer.
iv) Chief Engineer-cum-Additional Secretary of the concerned department.
v) Chief Engineer concerned (Member Secretary)
The Engineer-in-Charge on receipt of application alongwith non refundable prescribed fee, (the fee would be two percent of the amount in dispute, not exceeding Rs.One Lac) from the Contractor shall refer the disputes to the Committee within a period of one month from the date of receipt of application.
Procedure and Application for referring cases or settlement by the Standing Committee shall be as given in Form RPWA 90.”
AI
The existence of an arbitration clause previously determined is binding on parties in subsequent proceedings, preventing re-examination of the clause's validity once an arbitrator is appointed.
Appointment of Arbitrator – Issue of non-arbitrability of dispute is basic for arbitration as it relates to very jurisdiction of Arbitral Tribunal – Arbitral Tribunal may lack jurisdiction for severa....
Appointment of arbitrator by designation is permissible. Arbitration clauses in government contracts providing that an employee of the department will be the sole arbitrator are neither void nor unen....
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
