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2002 Supreme(Del) 16

High Court Of Delhi
D-IONIC INDIA PRIVATE LIMITED - Appellant
Versus
STATE OF RAJASTHAN - Respondent
Decided On : 01/07/2002

Headnote:Arbitration and Conciliation Act, 1996 – Section 16 — Rule of jurisdiction — Reference of disputes to arbitrator, resisted by respondent on the ground of jurisdiction of arbitrator, meanwhile New Act came into being — Section 16 of New Act empowers Arbitrator to rule on his own jurisdiction and if he proceeds with the proceedings and makes an award then only aggrieved party can file application under Section 34 to set-aside award — Petition allowed — Arbitration Act, 1940, Section 20.

       Held:

       The question whether the Arbitrator has jurisdiction to decide the disputes and differences raised by the petitioner in the petition is itself subject matter of the decision of the Arbitrator Section 16 of the Arbitration Act of 1996 confers power upon the Arbitrator to 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 an arbitration clause which forms part of a contract shall be treated as an agreement independent of the other terms of the contract.

J. D. Kapoor

( 1 ) INSPITE of several opportunities given to respondent No. 1 for filing the copy of the agreement, respondent No. 1 has failed to file the same. This is a petition under Section 20 of the arbitration Act for reference of the disputes between the parties to the Arbitrator. Clause. 13 of the Agreement between the parties provided as under : "any dispute, disagreement or question arising out of or in, consequence of this agreement or relating to its construction or performance which cannot be settled amicable shall, from the date either party inform the other in writing that such dispute or disagreement exists and requests in such notice to refer the matter to arbitration, shall be submitted to arbitration for final settlement.

( 2 ) AS is apparent from the aforesaid Clause the secretary, Department of Rural Development, Government of india was required to nominate a serving officer to act as an sole Arbitrator within,30 days of the service of notice by either of the party in this regard. Since, respondent no. 1 has resisted this application and sought time to file the agreement to show that the Clause of Arbitration was not in operation as Clause 51 provided that in the event of any dispute arising between the parties in respect of any of the matters comprised in the agreement, the same. shall be settled by a competent court having Jurisdiction over the place where agreement is executed by no other court.

( 3 ) HOWEVER, another clause cited by the respondent no. 1 regarding the adjudication of the disputes and differences by the Arbitrator is Clause 23 which reads as under :

"clause 23 - If any question, difference or objection whatsoever shall arise in any way in connection with or arising out of this instrument or the meaning of operation of any part therefore of the rights, duties or liabilities of either party then save in so far as the decision of any such matter as hereinbefore provided for and has been so decided, every such matter constitution a total claim of Rs. 5,000. 00 or above, whether its decision has been otherwise provided for and whether it has been finally decided accordingly or whether the contract should be terminated or has been rightly terminated and as regards the right or obligations of the parties at the result of such termination shall be referred for adjudication to a sole arbitrator to be appointed as hereinafter provided.

FOR the purpose of appointing the sole arbitrator referred- to above, the Chief engineer will on receipt of notice and prescribed fee from the contractors send a panel of three names not below the rank of superintending Engineer of the Rajasthan government and who shall be. at presently unconnected with the contract, the contractor shall on receipt of the names, as aforesaid select any one of the persons names, to be appointed as a sole Arbitrator and communicate his name to the Chief Engineer. The Chief engineer shall thereupon appoint the said person as the sole Arbitrator without delay. The arbitration shall give reasons forward.

SUBJECT as aforesaid, the provisions of the Arbitration Act, 1940 or any statutory modification or re-enactment, thereof and the rules made thereunder and for the time being in force shall apply to the arbitration proceedings under this Clause. "

( 4 ) THE question whether the Arbitrator has jurisdiction to decide the disputes and differences raised by the petitioner in the petition is itself subject matter. of the decision of the Arbitrator,section 16 of the arbitration Act of 1996 confers power upon the Arbitrator to 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 an arbitration clause which forms part of a contract shall be treated as an agreement independent of the other terms of the contract and a decision by the arbitral tribunal that the contract is null and void shall not entail ipso jure the invalidity of the arbitration cla





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