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High Court Of Delhi
TELE COMMUNICATIONS CONSULTANTS INDIA LIMITED - Appellant
Versus
NANGIA CONSTRUCTIONS (INDIA) PRIVATE LIMITED - Respondent
ORIGINAL MISCELLANEOUS PETITION 64 of 1996
Decided On : 04/02/1998
ARBITRATION - JURISDICTION - SUIT UNDER SECTION 20 OF THE ARBITRATION ACT, 1940 - NOT A SUIT WITHIN THE MEANING OF THE CODE OF CIVIL PROCEDURE, 1908 - PROVISIONS OF SECTION 9, ORDER VII, RULE 11 (1) (D) AND ORDER XXIII, RULE 1 (4), CPC NOT APPLICABLE - CONSENT OF PARTIES TO REFER DISPUTES TO ARBITRATION - WAIVER OF PLEA OF BAR OF ORDER XXIII, RULE 1, CPC - SUBSEQUENT CHALLENGE TO JURISDICTION NOT PERMISSIBLE.
Fact of the Case:
Petitioner and respondent entered into a sub-contract agreement containing an arbitration clause. Disputes arose, and the respondent filed three petitions under Section 20 of the Arbitration Act, 1940, which were withdrawn. The petitioner challenged the jurisdiction of the court to entertain the third petition, arguing that it was barred under Order XXIII, Rule 1 (4), CPC. The court appointed an arbitrator, who decided a preliminary issue against the petitioner.
Finding of the Court:
The court held that a petition under Section 20 of the Arbitration Act is not a suit within the meaning of the Code of Civil Procedure, 1908, and therefore the provisions of Section 9, Order VII, Rule 11 (1) (d) and Order XXIII, Rule 1 (4), CPC are not applicable. The court also held that the petitioner had waived the plea of bar of Order XXIII, Rule 1, CPC by consenting to the reference of disputes to arbitration, and therefore could not challenge the jurisdiction of the court at a later stage.
Issues: 1. Whether a petition under Section 20 of the Arbitration Act, 1940 is a suit within the meaning of the Code of Civil Procedure, 1908? 2. Whether the provisions of Section 9, Order VII, Rule 11 (1) (d) and Order XXIII, Rule 1 (4), CPC are applicable to a petition under Section 20 of the Arbitration Act, 1940? 3. Whether the petitioner had waived the plea of bar of Order XXIII, Rule 1, CPC by consenting to the reference of disputes to arbitration?
Ratio Decidendi: 1. A petition under Section 20 of the Arbitration Act, 1940 is not a suit within the meaning of the Code of Civil Procedure, 1908. 2. The provisions of Section 9, Order VII, Rule 11 (1) (d) and Order XXIII, Rule 1 (4), CPC are not applicable to a petition under Section 20 of the Arbitration Act, 1940. 3. The petitioner had waived the plea of bar of Order XXIII, Rule 1, CPC by consenting to the reference of disputes to arbitration.
Final Decision: The petition was dismissed with no order as to costs.
( 1 ) THE petitioner, named above, has filed the present petition under Section 33 of the Arbitration Act 1940 (hereinafter REFERRED TO as the Act ) read with Section 151 of the Code of Civil Procedure, 1908 averring that the Ministry of Posts,telegraphs and Telephone, Kingdom of Saudi Arabia (PTT) awarded the work for outside plants, construction, installation, supply of materials and equipment etc. in Dammam (Saudi Arabia) to Abdul Aziz Zaidan and Partners (hereinafter REFERRED TO as beta ), a Company, incorporated in Saudi Arabia. A contract agreement dated the 14th February, 1985 was signed between PTT and BETA. The petitioner further awarded the sub-contract to the respondent on back to back basis and a sub-contract agreement was executed between the petitioner and the respondent on 21. 3. 85. The sub-contract agreement, executed between the parties, contained an arbitration clause to the following effect :
"if any dispute or difference arises in connection with the Main Contract and such dispute touches or concerns the sub-contract Works, then the decision by the Grievances Board of the Kingdom of Saudi Arabia (as foreseen under the provisions of the Main Contract) shall also be finally binding upon the subcontractor in so far it touches or concerns the sub-contract works.
IF any dispute or difference arises between the Contractor and the subcontractor in connection with the sub-contract cither party may give notice to the other in writing of the existence of such dispute or difference, specifically its nature, and if the Contractor determines that the dispute does not concern the Main contract, it shall be subject to the provisions of the Rules of Conciliation and Arbitration of the International Chamber of Commerce thereupon be REFERRED TO arbitration for final decision in of one or more Arbitrators appointed in accordance with said Rules. Such arbitration shall be held in English language and shall take place in Geneva, Switzerland. Notwithstanding any of the provisions of this Clause performance of the sub-contract shall continue during such arbitration proceedings except to the extent that the Ministry or the Contractor may order the suspension of the Sub-contract Works or any part thereof. "
1. 2. Clause 15 of the sub-contract provided that the terms and conditions of the contract shall not be modified, varied, changed, altered or rescinded except in writing signed by both the parties. Clause 15 further provided that the sub-contract would be governed and construed by the laws of Saudi Arabia. The sub-contract was to be executed in Saudi Arabia and the payments under the sub-contract were also to be made in Saudi Riyals. As per the case of the petitioner the sub-contract and the main contract were highly interlinked and inter-related and the subcontract was heavily dependent upon the main contract.
1. 3. It is stated that the respondent filed an application under Section 20 of the Act (Suit No. 1371-A/86) with the prayer that the petitioner be directed to file the arbitration agreement in the Court and after the same is filed, the disputes mentioned in para 17 of the petition be REFERRED TO arbitration in accordance with the arbitration clause contained in the contract. It is further stated that the respondent withdrew the above mentioned petition (Suit No. 1371-A/86) unconditionally and the same was dismissed as withdrawn vide order dated 11th August, 1986.
1. 4. It us further stated that the respondent again filed a similar petition (Suit No. 1703/87) and made identical prayer as in the earlier petition (Suit No. 1371-A/ 86 ). The above mentioned petition (Suit No. 1703/87) was also withdrawn unconditionally by the respondent. It is averred that the respondent filed yet another application (Suit No. 690/91) on similar facts and making the identical prayer as in the 1st petition (Suit No. 1371-A/86) and 2nd petition (Suit No. 1703/ 87 ). It is stated that the plea of the petitioner in the third pe
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