The main legal point established in the judgment is the distinction between jurisdictional issues and decisions on the merits of the dispute under the Arbitration and Conciliation Act, 1996.

JUDGMENT :

1. The petitioner, Lindsay International, seeks setting aside of an order dated 24th August, 2019 by which the petitioner’s applications under section 16 of The Arbitration and Conciliation Act, 1996, were dismissed. Lindsay names the order as an ‘Award’/‘Interim Award’ and has hence filed the present applications under section 34 of the Act for setting it aside.

2. Section 16 empowers the arbitral tribunal to rule on its own jurisdiction including on an objection with regard to the existence or validity of the arbitration agreement.

3. The respondent IFGL Refractories takes a preliminary point of maintainability that the impugned order is not an award and is hence not amenable to the recourse provided under section 34 of the 1996 Act.

4. The first question which is required to be decided is whether the impugned order dated 24th August, 2019 - described as a “Partial Award” - qualifies as an award falling within the parameters of the Act. The petitioner claims the impugned order to be an interim arbitral award within the meaning of section 31(6) of the Act. The respondent contends otherwise; namely that the impugned decision is not an interim award and hence the present application under section 34 of the Act, for setting aside the impugned decision, is not maintainable.

The question of Maintainability

5. According to Mr. Sakya Sen, learned counsel appearing for the petitioner Lindsay, it is the pith and substance of the award rather than the nomenclature which determines the nature and character of the award. Counsel relies on several decisions to submit that any order passed by an arbitral tribunal in an application under section 16 would qualify as an award if it decides on the merits of the dispute. Counsel submits that the learned Arbitrator, while considering the scope of existence of the arbitration agreement between the parties made a categorical finding that there has been no novation of the earlier contract between the parties by virtue of the subsequent Memorandum of Understanding (MOU). It is submitted that by reason of such finding, the Counter-Claim of the petitioner would become infructuous since the stand of the petitioner before the Arbitrator was that the arbitration agreement between the parties was novated by the subsequent MOU.

6. Mr. Anindya Mitra, learned senior counsel appearing for the respondent IFGL, opposes the relief prayed for by Lindsay and submits that to be categorised as an award, the decision has to determine a claim which has been referred to in the arbitration on merits. According to counsel, the impugned order was passed by the Arbitrator under section 16 of the Act and only decides the jurisdictional issue of whether the Arbitrator can entertain any claim referred for adjudication on the merits of the claim. Counsel submits that IFGL did not make any claim on the alleged novation/supersession of the agreement by the subsequent MOU.

The controversy - as made out by the petitioner Lindsay

7. Lindsay’s case is that the Arbitrator could not have decided on the novation/supersession issue since this amounted to a decision on the merits of the case. In referring to merits, Lindsay urges that in rejecting the argument of the arbitration agreement being superseded by the MOU, the Arbitrator has given a finding on one of the primary disputes between the parties. To put it simply, Lindsay’s case is that the arbitration agreement was novated while IFGL contends that the arbitration agreement remained intact; IFGL referred the dispute to arbitration on the strength of the arbitration agreement. The other contention of Lindsay is that in rejecting the contention of novation, the Arbitrator prejudged the issue nos. 5 & 6 framed in the arbitration proceedings. Issue nos. 5 & 6 dealt with whether the termination of the MOU by the claimant IFGL was justified and whether the respondent Lindsay committed any breach of the MOU.

8. Is Lindsay correct in saying this?

The answer of the Court is as follows:

(i) I