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1991 Supreme(Ori) 73
High Court Of Orissa
K. C. JAGADEB ROY
NATIONAL ALUMINIUM COMPANY LTD. - Appellant
Versus
PANDA ENGINEERING WORKS PVT.LTD. - Respondent
Civil Revision 185 Of 1991
Decided On : 05/10/1991
A.K.PATNAIK, B.M.PATNAIK, GANESVAR RATH, J.C.SAHU, P.K.MOHAPATRA, R.N.MISRA
A Court has the jurisdiction to determine the effect of an arbitration agreement, including whether a particular dispute is covered by the arbitration agreement, under Section 33 of the Arbitration Act.
Headnote:
ARBITRATION - SECTION 33 - ARBITRABILITY - JURISDICTION - COURT'S POWER TO DETERMINE EFFECT OF ARBITRATION AGREEMENT - PRELIMINARY ISSUES - MAINTAINABILITY OF CLAIMS - SCOPE OF ARBITRATION CLAUSE - INTERPRETATION OF CONTRACTUAL PROVISIONS.
Fact of the Case:
The petitioner, a company, entered into a contract with the opposite party for the execution of a work. Disputes arose between the parties, and the opposite party filed a claim before the Arbitrators. The petitioner filed a petition under Section 33 of the Arbitration Act, challenging the arbitrability and maintainability of the claims raised by the opposite party. The Subordinate Judge dismissed the petition, holding that he had no jurisdiction to entertain such a petition.
Finding of the Court:
The High Court held that the Subordinate Judge erred in dismissing the petition. The Court held that Section 33 of the Arbitration Act empowers the Court to determine the effect of an arbitration agreement, including whether a particular dispute is covered by the arbitration agreement. The Court further held that the petitioner was entitled to challenge the arbitrability and maintainability of the claims raised by the opposite party before the Arbitrators.
Issues: 1. Whether the Subordinate Judge had jurisdiction to entertain the petition under Section 33 of the Arbitration Act. 2. Whether the claims raised by the opposite party were arbitrable and maintainable.
Ratio Decidendi: 1. The Court held that Section 33 of the Arbitration Act empowers the Court to determine the effect of an arbitration agreement, including whether a particular dispute is covered by the arbitration agreement. The Court further held that the petitioner was entitled to challenge the arbitrability and maintainability of the claims raised by the opposite party before the Arbitrators. 2. The Court held that the Subordinate Judge erred in dismissing the petition. The Court held that the Subordinate Judge had jurisdiction to entertain the petition and should have decided the question of arbitrability and maintainability of the claims raised by the opposite party.
Final Decision: The Court allowed the Civil Revision and set aside the order of the Subordinate Judge. The matter was remitted back to the Subordinate Judge for a fresh decision on the petition under Section 33 of the Arbitration Act.
K. C. JAGADEB ROY, J.
( 1 ) THE petitioner has preferred this Civil Revision challenging the order of the Subordinate Judge, Angul dated 22-12-1990 passed in Arbitration Misc. Case No. 52 of 1990.
( 2 ) THE petitioner had filed a petition under Section 33 of the Arbitration Act before the Subordinate Judge, Angul with a prayer to direct the Opposite Party Nos. 2 and 3, namely, the Arbitrators. (a) to take up the arbitrability, maintainability of the claims raised by the claimant-Opp. Party No. 1 M/s. Panda Engineering Works Private Limited as preliminary hearing and direct Opposite Parties Nos. 2 and 3, the Arbitrators to take up issues Nos. 33, 34, 35 and 38 as preliminary issues. (b) to decide the scope ambit and effect of clause 20 and clause 10 of the General Conditions of Contract between the petitioner and Opposite Party No. 1, (c) to hold that the claims raised by the claimant-Opposite Party No. 1 before the learned Arbitrators are not maintainable, arbitrable and not within the scope of the Arbitration Clause, and (d) to pass any other orders or direction as the Court deems fit and proper.
( 3 ) ISSUES Nos. 33, 34, 35 and 38 are as follows :- issue No. 33: Whether the claims are arbitrable and maintainable? issue No. 34: Whether the claims are covered under the terms of the Agreement? issue No. 35: Whether the claims are covered under excepted matters? issue No. 36: Whether the claims are beyond the terms of the Agreement? a very statement of facts leading to the filing of this petition under Section 33 are stated thus : the Opposite Party No. 1 was one of the tenderers for the work of Raw Water Intake Piping System for C. P. P. Angul. His tender was accepted by the petitioner-company (National Aluminium Company) and the aforesaid work was given to the Opposite Party No. 1 for execution. Opposite Party No. 1 did not complete the work and the petitioner gave a notice to the Opposite Party no. 1 to encash the bank guarantee amounting to Rs. 19,60,560/- kept with the petitioner. The Opposite Party No. 1, however, moved this Court in O. J. C. No. 3276 of 1988 praying for issue of a writ to the petitioner directing them to release the bank guarantee of the Opposite Party No. 1 amounting to Rs. 19,60,560. 00 and to give a direction to pay the aforesaid sum if encashed during the pendency of the writ application. The Hon'ble High Court after hearing the parties directed that both parties will take such steps as required under the contract entered into between them to appoint Arbitrator and to refer to the Arbitrator the disputes relating to the award in question within four weeks". That on the petitioner' (M/s. Panda Engineering Private Ltd.) furnishing an undertaking to the Opposite Parties, namely, NALCO and another that it will furnish bank guarantee for the entire sum, the Opp. Party will refund the sum of Rs. 19,60,560. 00 admittedly drawn by them on encashing the bank guarantee of the petitioner during pendency of this case and within a week after receipt of the said amount the petitioner will furnish the bank guarantee which will remain valid till the proceeding before the Arbitrator is concluded.
( 4 ) THE present petitioner being aggrieved by the said order of the Hon'ble Court passed in O. J. C. No. 3276 of 1988 preferred the Civil Appeal before the Hon'ble Supreme Court being Civil Appeal No. 2439 of 1989 arising out of S. L. P. No. 4007 of 1989 in which the Hon'ble Supreme Court modified the order of the Hon'ble High Court regarding the amount concerning the bank guarantee and directed as follows :-". . . . . . We direct the appellant No. 1 M/s. National Aluminium Co. Ltd. to pay a sum of Rs. 10 lacs (Ten lacs) out of the amount of Rs. 19,60,650/- which is in dispute, to the respondent M/s. Panda Engineering Works Pvt. Ltd. within two weeks and direct M/s. Panda Engineering Works Pvt. Ltd. to furnish the bank guarantee for Rs. 10 lacs in favour of the 1st appellant within the week thereafter. We make an order a
