2005 Supreme(SC) 1487

2005(7) Supreme 720
Supreme Court of India
(Under Section 11(6) of the Arbitration Act, 1996)
A.K. Mathur, J. (Chamber Judge)
Rite Approach Group Ltd. —Petitioner
versus
M/s. Rosoboronexport —Respondent
Arbitration Petition No. 3 of 2005
Decided on 16-11-2005
Counsel for the Parties :
For the Petitioner : Dr. A.M. Singhvi, Sr. Advocate, Sanjeev Sen and Praveen Swarup, Advocates.
For the Respondent : Dushyant A. Dave, Sr. Advocate, Siddhartha Dave and Ms. Vibha Dutta Makhija, Advocates.

Important point
Where arbitration cause in agreement between parties specifically mentioned that dispute shall be submitted to Arbitration Court under the Chamber of Commerce and Trade of Russian Federation, Court in India shall have no jurisdiction u/s 11(6) of Arbitration and Conciliation Act to appoint the arbitrator.

Headnote:(i) Arbitration and Conciliation Act, 1996—Section 11(6)—Petition for appointment of Arbitrator—Clause in the Agency Agreement between parties provided that if any dispute arose between parties then same shall be submitted to Arbitration Court under the Chamber of Commerce and Trade of Russian Federation—In view of specific provision specifying the jurisdiction of Court to decide the matter, Supreme Court could not assume jurisdiction—Petition was liable to be rejected.

       Held : In the present case, as per the Agency Agreement dated 14.4.2000, Clause 6.2 categorically states that if any dispute arises between the parties then the same shall be submitted to Arbitration Court under the Chamber of Commerce and Trade of the Russian Federation. Therefore there is a specific clause mentioned in the Agency Agreement as to which court will have jurisdiction to try and dispose of the matter. In view of the specific provision specifying the jurisdiction of the Court to decide the matter, this Court cannot assume the jurisdiction. Whenever there is a specific clause conferring jurisdiction on particular Court to decide the matter then it automatically ousts the jurisdiction of other Court. In this agreement, the jurisdiction has been conferred on the Chamber of Commerce and Trade of the Russian Federation as the authority before whom the dispute shall be resolved. In view of the specific arbitration clause conferring power on the Chamber of Commerce and Trade of the Russian Federation, it is that authority which alone will arbitrate the matter and the finding of that arbitral tribunal shall be final and obligatory for both the parties. Thus, in this view of the matter, I am of the opinion that this Court has no jurisdiction and the Chamber of Commerce and Trade of Russian Federation alone has jurisdiction to act as an arbitrator and resolve the dispute. Hence this application is rejected. (Paras 20 to 22)

       (ii) Arbitration and Conciliation Act, 1996—Section 11(6)—Order passed by the Judge on designation by Hon’ble Chief Justice, order shall be judicial and not administrative, not amenable to any appeal.

       Held : Now recently on 26.10.2005 the Seven Judge Bench has delivered its decision in Civil Appeal No. 4168 of 2003 (M/s S.B.P. & Co. vs. M/s Patel Engineering Ltd. & Anr.) and the earlier decision rendered in the case of Konkan Railway Corporation Ltd. And another Vs. Rani Construction Pvt. Ltd. [(2000) 2 SCC 388] has been reversed and now it has been held that the order passed by the Judge on designation by the Hon’ble Chief Justice, the order shall be judicial order and not administrative order as was held in Konkan Railway case (supra). Therefore now legal position has been crystallized that the order passed by the Judge on nomination of the Hon’ble Chief Justice of India under Section 11 shall be judicial order not amenable to any appeal. The legal position has been summarized as under in above decision M/s S.B.P. & Co. (Supra):-

       “46. We, therefore, sum up our conclusions as follows:

       i) The power exercised by the Chief Justice of the High Court or the Chief Justice of India under Section 11(6) of the Act is not an administrative power. It is a judicial power.

       ii) The power under Section 11(6) of the Act, in its entirety, could be delegated by the Chief Justice of the High Court only to another judge of that court and by the Chief Justice of India to another judge of the Supreme Court.

       iii) In case of designation of a judge of the High Court or of the Supreme Court, the power that is exercised by the designated judge would be that of the Chief Justice as conferred by the statute.

       iv) The Chief Justice or the designated judge will have the right to decide the preliminary aspects as indicated in the earlier part of this judgment. These will be, his own jurisdiction, to entertain the request, the existence of a valid arbitration agreement, the existence or otherwise of a live claim, the existence of the condition for the exercise of his power and on the qualifications of the arbitrator or arbitrators. The Chief Justice or the judge designated would be entitled to seek the opinion of an institution in the matter of nominating an arbitrator qualified in terms of Section 11(8) of the Act if the need arises but the order appointing the arbitrator could only be that of the Chief Justice or the judge designate.

       v) Designation of a district judge as the authority under Section 11(6) of the Act by the Chief Justice of the High Court is not warranted on the scheme of the Act.

       vi) Once the matter reaches the arbitral tribunal or the sole arbitrator, the High Court would not interfere with orders passed by the arbitrator or the arbitral tribunal during the course of the arbitration proceedings and the parties could approach the court only in terms of Section 37 of the Act or in terms of Section 34 of the Act.

       vii) Since an order passed by the Chief Justice of the High Court or by the designated judge of that court is a judicial order, an appeal will lie against that order only under Article 136 of the Constitution of India to the Supreme Court.

       viii) There can be no appeal against an order of the Chief Justice of India or a judge of the Supreme Court designated by him while entertaining an application under Section 11(6) of the Act.

       ix) In a case where an arbitral tribunal has been constituted by the parties without having recourse to Section 11(6) of the Act, the arbitral tribunal will have the jurisdiction to decide all matters as contemplated by Section 16 of the Act.

       x) Since all were guided by the decision of this Court in Konkan Railway Corpn. Ltd. & Anr. Vs. Rani Construction Pvt. Ltd. [(2002) 2 SCC 388)] and orders under Section 11(6) of the Act have been made based on the position adopted in that decision, we clarify that appointments of arbitrators or arbitral tribunal thus far made, are to be treated as valid, all objections being left to be decided under Section 16 of the Act. As and from this date, the position as adopted in this judgment will govern even pending applications under Section 11(6) of the Act.

       xi) Where District Judges had been designated by the Chief Justice of the High Court under Section 11(6) of the Act, the appointment orders thus far made by them will be treated as valid; but applications if any pending before them as on this date will stand transferred, to be dealt with by the Chief Justice of the concerned High Court or a Judge of that court designated by the Chief Justice.

       xii) The decision in Konkan Railway Corpn. Ltd. & Anr. Vs. Rani Construction Pvt. Ltd. [(2002) 8 SCC 388] is overruled.” (Para 19)