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2013 Supreme(Del) 1487

High Court of Delhi
V.K. JAIN, J.
M/s. Steel Authority of India Ltd. & Another
Versus
Indian Council of Arbitration & Others
W.P.(C) Nos. 6328 of 2013 & 4886 of 2013 & CM No. 13822 of 2013
Decided On : 08-11-2013

Advocate Appeared:
For the Petitioners:A.K. Ganguli, Sr. Adv. with Sunil K. Jain, Madhur Jain, M. Dutta, Ms. Neelam Saini, P. Vinod, Advocates.
For the Respondents:Sandeep Sethi, Sr. Adv. with Gaurav Mitra, Dhruv Kapur, Vijender Kumar, Alif Fazzelboy, Advocates.

Headnote:

Arbitration and Conciliation Act, 1996 - Section 16 (2) - Arbitration - Preliminary issue - Rejection of - Arbitral Tribunal rejected the plea and continue with the arbitral proceeding and make an award - Whether Arbitral Tribunal is required to decide the issue of jurisdiction as a preliminary issue before taking any further pleas in the arbitration proceedings - Held, though the Arbitral Tribunal, may in its discretion, treat the plea referred to in sub-section (2) or (3) of Section 16 as a preliminary issue, it is not obligatory for the said Tribunal to do, in every case.

Constitution of India - Article 226, 227 - Arbitration and Conciliation Act, 1996 - Section 16 (2), 34 - Appeal - Writ jurisdiction - Power to entertain - If the Arbitral Tribunal decides to go ahead with the arbitral proceedings, without taking a decision on such a plea - Whether such an order of the Tribunal can be interfered with in exercise of writ jurisdiction under Article 226/227 of the Constitution - writ petition does not lie against a non-appealable order passed by the Arbitrator during the course of arbitral proceedings - Main objectives of arbitration is speedy disposal of litigation - Court would be well advised in not interfering with such an order in exercise of its writ jurisdiction - No merit was found in the writ petitions - Petition is dismissed.

Judgment :

V.K. Jain, J.

Sub-Section (2) of Section 16 of the Arbitration and Conciliation Act provides that a plea that the Arbitral Tribunal does not have jurisdiction shall be raised not later than the submission of the statement of defence. Sub-section (3) of the aforesaid Section provides that 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. Sub-section (5) of the aforesaid section, which is relevant for the purpose of these petitions, reads as under:-

“(5) The arbitral tribunal shall decide on a plea referred to in sub-section (2) or subsection (3) and, where the arbitral tribunal takes a decision rejecting the plea, continue with the arbitral proceedings and make an arbitral award.”

Section 37 of the Act, to the extent it is relevant, provides for an appeal from an order of the Arbitral Tribunal accepting the plea referred to in sub-section (2) of sub-section (3) of Section 16. No appeal, however, is provided, in case such a plea is rejected. Section 5 of the Act provides that notwithstanding anything contained in another law for the time being in force, in matter governed by Part-I of the Act, no judicial authority shall interfere, except where so provided in the said Part.

2. The following two issues of law arise for consideration in these two petitions:-

(i) Whether the Arbitral Tribunal is mandatorily required to take a decision on the plea referred to in sub-section (3) of the Act before it proceeds further in the matter or it can decide such a plea at a later stage while making the arbitral award;

(ii) If the Arbitral Tribunal decides to go ahead with the arbitral proceedings, without taking a decision on such a plea or if it rejects the said plea whether such an order of the Tribunal can be interfered with in exercise of writ jurisdiction under Article 226/227 of the Constitution.

3. In W.P.(C) No. 6328 of 2013, the petitioner before this Court, in response to the statement of claim and also by filing a separate application under Section 16 of the Act, challenged the very initiation of arbitration proceedings on the ground that there was no arbitration agreement between it and respondent No. 2-Seaspray Shipping Co. Ltd. It was also pleaded in the said application that disputes, if any, could not be classified as maritime dispute attracting applicability of clause 60 of the agreement between the parties and the agreement dated 04.12.2007 does not fulfill the ingredients of an arbitration agreement, as prescribed in Section 7 of the Act. The aforesaid application, however, was not decided by the Arbitral Tribunal which was of the view that on the first date of hearing, the claims should be decided and adjudicated. This was followed by three more applications before the Arbitral Tribunal seeking a decision of the issue of jurisdiction, competence and validity of the Arbitral Tribunal. The Arbitral Tribunal, however, decided to proceed with the matter, without giving decision on the applications filed by the petitioners. Being aggrieved from the order of the Tribunal dated 05.07.2013, deciding to proceed with the matter, the petitioner is before this Court seeking quashing of the aforesaid order, besides a direction terminating the mandate of the Arbitral Tribunal.

4. In W.P.(C) No.4886/2013, the petitioner before this Court, on receipt of notice from the Arbitrator, raised a preliminary objection with respect to maintainability of the arbitration proceedings, inter alia, on the ground that there was no arbitration agreement between the parties. The Arbitrator vide impugned order dated 15.06.2013 rejected the preliminary objection of the petitioner. Being aggrieved, the petitioner is before this Court seeking quashing of the aforesaid order dated 15.06.2013.

5. The learned counsel for the petitioner in W.P.(C) No. 6328/2013, in support of its case, has relied up

































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