An ouster provision in an arbitration agreement, excluding the applicability of the Arbitration and Conciliation Act 1996, is void and in violation of public policy. Parties cannot contract out of a statute, and an agreement excluding the provisions of an Act is not valid.

1. This appeal has been filed by the appellants against the order of the learned Single Judge of this court whereby the execution petition of the appellants was dismissed as not maintainable.

2. Brief facts relevant for deciding this appeal are that the appellant M/s Ircon International Ltd. (Ircon) and the respondent M/s National Building Construction Corp. Ltd. (NBCC) entered into an agreement whereby NBCC proposed to construct the commercial building on plot no. 15, Bhikaji Cama Place, New Delhi. IRCON made a payment of Rs. 15, 93, 00,000/- to NBCC which is almost 90 per cent of the sale price. After construction of the building, however NBCC did not handover the requisite space to IRCON and sold it to others by making profits.

3. In view of the arbitration clause contained in the agreement, arbitrator entered upon the reference and made his Award dated 22.6.1999 granting partial relief to IRCON. IRCON filed an appeal in the appellate authority who by his award dated 8.10.99 directed refund of the entire advance of Rs. 15,93,00,000/- along with interest thereon @ 15 per cent per annum in case NBCC fails to make the payment of the awarded principal amount within two months.

4. On failure of NBCC to discharge their full liability IRCON approached the Committee on Disputes of the Cabinet Secretariat, which passed the order on 21.10.2003 to pursue the remedy before appropriate judicial forum.

5. IRCON filed the execution petition under Order 21 Rule 1 of CPC in this court for execution of the Award whereby they claimed a sum of Rs.4,90,43,815/- as principal and Rs.72,35,642/- as interest (total Rs.5,62,79,457/-) as outstanding dues.

6. NBCC filed their objections under Section 47 of CPC stating that the execution application was not maintainable in view of ouster provision contained in the arbitration agreement to the effect that: The Arbitration and Conciliation Act, 1996 (for short the Act)shall not be applicable to arbitration under this clause. The said provision reads as under:- In the event of any dispute or difference relating to the interpretation and application of the provisions of the contracts, such disputes or differences shall be referred by either party for arbitration to the sole Arbitrator in the Department of Public Enterprises. The Arbitration and Conciliation Act 1996 shall not be applicable to arbitration under this clause. The award of the Arbitrator shall be binding upon the parties to the dispute, provided, however, any party aggrieved by such award may make a further reference for setting aside or revision of the award to the law Secretary, Department of Legal Affairs, Minister of Law and Justice, Govt. Of India. Upon such reference the dispute shall be decided by the Law Secretary or the Special Secretary/Additional Secretary, when so authorized by the Law Secretary, whose decision shall bind the parties finally and conclusively. The parties to the dispute will share equally the cost of arbitration as intimated by the Arbitrator.

7. It has also been alleged by the respondent that the entire amount payable by the respondent to IRCON has been paid. After the appeal by IRCON was disposed off by the appellate authority, the parties arrived at settlement amount by which IRCON agreed to receive the sum of Rs 17,62,45,057/- in full and final settlement of the entire claim of IRCON. The respondent has paid the same amount to IRCON, which is not disputed.

8. In reply to this averment of the respondent, it was denied by the appellant that the entire payment has been made by the respondent to IRCON as per the Award. It was also denied that the parties arrived at a settlement amount by which IRCON agreed to received the sum of Rs.17, 62, 45,057/- in full and final settlement of the entire claim. No such settlement or any other settlement at all took place between the parties.

.9. It is stated by IRCON that arbitration means any arbitration whether or not administered by permanent arbitral in