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High Court Of Madhya Pradesh
Shiv Dayal, J.
HINDUSTAN STEEL LTD. - Appellant
Versus
KAUSHAL CONSTRUCTION CO., - Respondents
Civil Revn. 131 Of 1964
Decided On : 10/30/1964
When the law gives a right to the parties to get the effect of an arbitration agreement determined by the Court, it is without meaning to say that the application made for that purpose is dismissed. [Para 4]
Section 33 of the Arbitration Act contemplates application for three purposes: (i) when it is desired to challenge the existence of an arbitration agreement or the existence of an award; (ii) when it is desired to challenge the validity of an arbitration agreement or the validity of all award; and (iii) when it is desired to have the effect of an arbitration agreement or the effect of an award determined. When an application is made under this section for the last mentioned purpose, it is imperative that the Court must determine the effect of the arbitration agreement or the effect of the award as the case may be. The policy of the law is to encourage arbitration. At the same time, the arbitrators cannot exceed the jurisdiction given to them under the arbitration agreement. Where one of the parties contends that a certain dispute which is placed before the arbitration, is outside the scope of the arbitration agreement, it is his right to have the question determined by the Court Even after an award is made, a party may challenge it on the ground that the arbitration exceeded the jurisdiction given to it under the arbitration agreement, and the Court is then bound to determine the effect of the arbitration agreement.
Section 33 provides a speedy remedy for objecting to a reference of a dispute on the ground that it is beyond the scope of the arbitration agreement; The law has studiously provided for an application instead of a suit to be filed for the purpose, and the Court has further been empowered to decide the question even on affidavits, although where such a question cannot conveniently be decided on affidavits, the Court is entitled to examine witnesses. [Para 5]
Where, during the pendency of proceedings before an arbitration, any party to the arbitration agreement applies to the Court under section 33 of the Act to have the effect of the arbitration agreement determined, the Court is bound to find out the questions on which the parties have joined issues and then to hold which of such issues fall within the jurisdiction of the arbitration, having regard to the arbitration, agreement. The Court has no power to dismiss an application, not even on the ground that the arbitration agreement is a clause in a contract and the decision may involve a declaration as to the existence or validity of the contract itself. AIR 1958 All. 506 and (1942) AC 356 relied on. [Para 5]
There are no fetters imposed in section 33 of the Arbitration Act as to the stage at which a party can get the effect of an arbitration agreement determined by she Court. No question of estoppel arises for getting the question determined which of the issues fall within the jurisdiction of the arbitration and which not. [Para 10]
( 1 ) THIS revision is directed against the order passed by the District Judge, Durg at Rajnandgaon on 30th December 1963 whereby be dismissed the petitioner's application under Section 33 of the Arbitration Act. 1940 (hereinafter called the act) to have the effect of an arbitration agreement determined.
( 2 ) THE Hindustan Steel Limited, Bhilai Steel Project, Bhilai (hereinafter called the project) entered into, on 21st June 1956, a contract with Messrs. Kaushal construction Company (hereinafter called the Company) for the construction of gas Cleaning Plan) on the same rates as agreed with Messrs Khare and Tarkunde (P) Limited. Subsequently, on 30th August 1957, the work of Crane Track for Coal storage in the Coal Preparation Plant, on the same contract, conditions and rates, was also awarded to the Company. The agreement is on a printed form with two clauses (Clause 39 and Clause 40) superimposed on it and is also supplemented by a typed document styled as " Special Conditions of Contract". The construction works were completed by 31st January 1960 Certain sums of money were paid from time to lime by the Project to the Company during the construction of the works. The extent of the payments so made is undisputed. But some other disputes, for instance, in respect of final measurements, arose between the parties. According to the Project, final measurements had been recorded and they had been accepted by the Company, while the Company denying that the measurement had been accepted as final, asserted that if there was any acceptance, that was brought about by coercion and was made under protest with a view to secure speech payment of out standings. It is not necessary for the purposes of this revision to state in detail the disputes that arose between the parties
( 3 ) RELYING on certain clauses in the arbitration agreement (Clause 40 of the general Conditions and Clause 12-A of the Special Conditions), the Company served with a notice dated 5-6-1962, on the Project. The Company appointed Shri dildar Hussain. Consulting Engineer, Hyderabad, as an arbitrator and asked the petitioner to appoint another. The Chief Engineer of the Project appointed Shri m. C. Chacko, Deputy Chief Engineer (General ). Bhilai Steel Plant, as an arbitrator. The Project objected to the jurisdiction of the arbitrators in the matter The arbitrators passed a very short order on the question of jurisdiction. They just said that they were competent to decide the disputes between the parties and directed them to obtain a ruling from the Civil Court with regard to their jurisdiction.
( 4 ) THE Project then presented an application under Section 33 of the Act for determining the extent, scope and effect of the arbitration agreement. Proceedings before the arbitrators were stayed In short, the question before the Court was which of the disputes fell within the jurisdiction of the arbitration and which not when the law gives a right to the parties to get the cited of an arbitration agreement determined In the Court, it is without meaning to say that the application made for that purpose is dismissed. Can there be a dismissal of such an application ?
( 5 ) SECTION 33 of the Act enacts that" any party to an arbitration agreement. . desiring to challenge the existence of validity of an arbitration agreement or an award or to have the effect of either determined shall apply to the Court and the Court shall decide the question on affidavits. Provided that where the Court deems it just and expedient it may set down the application for hearing on other evidence also, and it may pass such orders for discovery and particulars as it may do in a suit. " it is clear enough that this section contemplates an application for three purposes' (i) when it is desired to challenge the existence of an arbitration agreement or the existence of an award, (ii) when it is desired to challenge the validity of an arbitration agreement or the validity of an award: and (iii) w
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