N.K. JAIN, C.J. - In this writ petition, the petitioner M/s. Lexicon Finance Limited has challenged the vires of Section 16(5) of the Arbitration and Conciliation Act, 1996 (for short 'the Act').

The necessary facts as stated are that the petitioner is a public limited company incorporated under the Companies Act, having its registered office at Mumbai and the 2nd respondent is also a company registered under the Companies Act, having its registered office at Manipal Karnataka. The 2nd respondent claims to have advanced finance by way of bill of discounting on various dates during February, 1998 to March, 1999 to the petitioner and has entered into a Bill Discounting agreement on 15.12.1998 with the petitioner, which contains an arbitration clause for settlement of disputes between the parties. The 2nd respondent claims to have issued a notice to the petitioner demanding payment of Rs. 33,06,794 on 1.4.2000 and on failure to make payment referred the dispute to the sole Arbitrator Sri A.S.N. Hebbar, 3rd respondent herein, as per Clause 9 of the terms and conditions of the agreement, and subsequently a notice was issued to the petitioner. On receipt of notice the petitioner ap