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2002 Supreme(Bom) 497
IN THE HIGH COURT OF BOMBAY
S.A. Bobde, J.
Pharmaceutical Products of India Limited .... Petitioner.
Versus
Tata Finance Limited another.... Respondents.
Arbitration Petition No. 179 of 2002, decided on 10-6-2002.
Advocates appeared :
H.J. Thakkar i/b. R.C. Dhuru, for petitioner.
Pooniwala with Y.R. Shah, for respondent No. 1.
Headnote:Admission Rules for Post-graduate Courses - - Sections 16, 31, 34 and 37 - Arbitral Tribunal - Jurisdiction of - Order assuming jurisdiction by Tribunal - Effect of - Held - Order assuming jurisdiction is final order - Not an interim order - Its challenge may be postponed to a stage after award is made - Since no order has been passed in this case by Tribunal - Only contemplating to pass it - Hence no award - Petition under Section 34 challenging is not maintainable. - Therefore, having regard to Section 31(6) a decision on such a question cannot be an interim Award either. It must be simply a decision under Section 16 of the Act which empowers to rule on its own jurisdiction specifically under Section 16 of the Act and that section clearly contemplates such a ruling at an interim stage of the arbitration also. Only a challenge to it is postponed to a stage after the Award is made. The petitioner who was the respondent in the arbitration had questioned the jurisdiction of the arbitrator to proceed to adjudicate the subject-matter of the claim and a decision on the arbitrator whether to proceed with it or not amounts to a ruling on its own jurisdiction. Since admittedly to Award is passed till date, the present petition under Section 34 of the Act is not tenable and must be dismissed.
Admission Rules for Post-graduate Courses - - Sections 16, 31(6), 34 and 37 - Side Industrial Companies (special provisions) Act, 1985, Section 22(1) - Arbitral Tribunal - Jurisdiction of - Who to decide - Held - Arbitral Tribunal under Section 16 of Arbitration and Conciliation Act can decide its own jurisdiction - If rejects plea - It can proceed further in matter - And such an order is appealable under Section 31(6) or under Section 37 of Arbitration Act - And if Arbitral Award is made by Tribunal - Such an award can be challenged under Section 34 of Act. - The section clearly empowers an Arbitral Tribunal to rule on its own jurisdiction vide sub-section (1). Where the Arbitral Tribunal decides to reject the plea regarding its jurisdiction, sub-section (5) clearly empowers the Tribunal to continue with the arbitral proceedings and make an Arbitral Award. Sub-section (5) provides for the manner in which such an Arbitral Award may be challenged. It provides that such an Award can only the challenged in accordance with Section 34. On the other hand, if the Arbitral Tribunal decides to accept the plea that it is has no jurisdiction then such an order is appealable under Section 37(2) of the Act.
“Whether the respondents prove that the learned Arbitrator has no jurisdiction to decide this arbitration in view of the fact that B.I.F.R. reference of the respondent company is presently pending?”
Mr. Pooniwala, learned Counsel for the respondent No. 1, has raised a preliminary objection to the maintainability of this petition. According to the learned Counsel, the Arbitral Tribunal is conferred with a power to rule on its own jurisdiction. Where, therefore, the Arbitral Tribunal rejects the plea of jurisdiction, it is entitled to continue with the proceeding and make an Arbitral Award which can only be challenged in accordance with section 34.
2. Mr. Pooniwala, learned Counsel for the respondent No. 1 , is right in his preliminary objection. Section 16 reads as follows :-
“16. Competence of Arbitral Tribunal to rule on its jurisdiction.---(1) The Arbitral Tribunal may rule on its own jurisdiction, including ruling on any objections with respect to the existence or validity of the arbitration agreement, and for that purpose,---
a) an arbitration clause which forms part of a contract shall be treated as an agreement independent of the other terms of the contract; and
(b) a decision by the Arbitral Tribunal that the contract is null and void shall not entail ipso jure the invalidity of the arbitration clause.
(2) A plea that the Arbitral Tribunal does not have jurisdiction shall be raised not later than the submission of the statement of defence; however, a party shall not be precluded from raising such a plea merely because that he has appointed, or participated in the appointment of, an arbitrator.
(3) A plea that the Arbitral Tribunal is exceeding the scope of its authority shall be raised as soon as the matter alleged to be beyond the scope of its authority is raised during the arbitral proceedings.
(4) The Arbitral Tribunal may, in either of the cases referred to in sub-section (2) or sub-section (3), admit a later plea if it considers the delay justified.
(5) The Arbitral Tribunal shall decide on a plea referred to in sub-section (2) or sub-section (3) and, where the Arbitral Tribunal takes a decision rejecting the plea, continue with the arbitral proceedings and make an Arbitral Award.
(6) A party aggrieved by such an Arbitral Award may make an application for setting aside such an Arbitral Award in accordance with section 34.”
The section clearly empowers an Arbitral Tribunal to rule on its own jurisdiction vide sub-section (1). Where the Arbitral Tribunal decides to reject the plea regarding its jurisdiction, sub-section (5) clearly empowers the Tribunal to continue with the arbitral proceedings and make an Arbitral Award. Sub-section (5) provides for the manner in which such an Arbitral Award may be challenged. It provides that such an Award can only be challenged in accordance with section 34. On the other hand, if the Arbitral Tribunal decides to accept the plea that it is has no jurisdiction, then such an order is appealable under section 37(2) of the Act which reads as follows :-
“37. Appealable orders.---(1) An appeal shall lie from the following orders
