JUDGMENT -S. RADHAKRISHNAN, J.:---Heard the learned Counsel for the petitioners and respondent No. 1. Perused the impugned award as well as affidavit in reply filed by the respondent No. 1. 2.By this petition the petitioner is challenging the award dated 17th September, 1998. The brief facts leading to this case are as under. 3.It appears that the Shipping Corporation of India had awarded a contract to the present petitioners on 1st May, 1998 for transportation of break bulk cargo for the vessels berthed in Mumbai Port. The petitioners started implementing the contract and started operating in view thereof, the respondent No. 1 who was the former contractor gave notice of retrenchment to their excess workmen. In view of the said notice, the Union viz. respondent No. 2 herein boycotted the clearance of cargo of all the Shipping Corporation of India's vessels. 4.In view of the difficulty faced by Shipping Corporation of India in getting their cargo cleared, finally an agreement was arrived at under section 2(p) of the Industrial Disputes Act between the petitioners herein and respondent Nos. 1 and 2 and the said agreement is titled as Settlement under section 2(p) of the Industrial Disputes Act and annexed at Exhibit 'A' to the petition. The said settlement recites certain terms of settlement viz. the issue which was referred to the Docks Manager Mr. P.K. Abraham. Under the settlement under section 2(p) of the Industrial Disputes Act, the petitioners, respondent No. 1 and respondent No. 2 were the parties who had agreed to refer to Mr. P.K. Abraham, Deputy Docks Manager, certain issues as to how many workers were surplus with M/s. Ganesh Container Movers Syndicate, the respondent No. 1 herein. Similarly the volume of work handled by respondent No. 1 for transportation of Break Bulk Cargo within the docks for the period 1996-97 and 1997-98 and the number of workmen employed by them for the above work. Another issue referred to the Arbitrator was that the Arbitrator was to identify whether any exact group of workmen were exclusively employed and the exact number of workmen who were doing the work of Shipping Corporation of India for transportation of Break Bulk Cargo within the docks. Lastly the Arbitrator was also to decide the total volume of work handled by the respondent No. 1 outside the docks. Lastly the Arbitrator was also to decide the total volume of work handled by the respondent No. 1 outside the docks. 5.The said terms of settlement entered upon between the petitioners and respondents also incorporates that the petitioners herein had agreed to absorb in their employment the surplus workmen determined by the Arbitrator on the same service conditions and emoluments they are drawing from respondent No. 1. In view of this agreement the respondent No. 2 herein had agreed to withdraw boycott with immediate effect. By Clause (7) of the settlement the parties have agreed to abide by the Award given by the sole Arbitrator. 6.In pursuance of the aforesaid settlement entered upon on 27th May, 1998 Mr. Abraham started conducting proceedings. Before the learned Arbitrator the respondent No. 1 and respondent No. 2 had filed their claims and the present petitioners had opposed the same. The present petitioners had also raised an issue that they were forced to sign the aforesaid settlement on 27th May, 1998 and undue influence, coercion was used and that they were fraudulently asked to sign this document. Under these circumstances the petitioners herein had raised an objection that there is no agreement for arbitration before the learned Arbitrator and that the learned Arbitrator had no authority to conduct and continue the said proceeding. 7.In the light of these submissions made by the petitioners before the learned Arbitrator, the leaned Arbitrator in his minutes on 26th June, 1998 which is at page 49 of the affidavit in reply has categorically stated that the learned Arbitrator had specifically questioned as to whether the respondents are questioning the basic agreement of Arbitration and the authority of the Arbitrator to continue with the arbitration. In the light of the above the learned Arbitrator had requested Mr. S.N. Pathare, Managing Director to attend in person to clarify and state emphatically whether the firm has submitted to the Arbitration Agreement or not and also to clarify whether the petitioners wish to continue with the proceedings. In the light of the above the learned Arbitrator had requested Mr. S.N. Pathare, Managing Director to attend in person to clarify and state emphatically whether the firm has submitted to the Arbitration Agreement or not and also to clarify whether the petitioners wish to continue with the proceedings. 8.With regard to the aforesaid, the petitioners herein had filed an application before the learned Arbitrator on 30th June, 1998 wherein in paras 2 and 3 the petitioners have objected to the validity of he Arbitration Agreement and also the authority of the Arbitrator to continue with the proceedings and had requested the learned Arbitrator to decide this issue as a preliminary issue as per section 16 of the Arbitration and Conciliation Act, 1996. The said paras 2 and 3 read as under :- "2. The respondent No. 1 submits that the above dispute involved various issues, including validity of the Arbitration Agreement, jurisdiction of the Arbitrator, liabilities of the respondent No. 1, applicability of the third party agreement to respondent No. 1, etc. The respondent No. 1 is from the very beginning co-operating with the Arbitrator and providing maximum details, facts, details etc. in respect of the above dispute to the Arbitrator and also asked for other relevant and necessary documents from the other parties involved in this dispute. The respondent No. 1 has even given its No Objection for extending the time of arbitration by its purshis dated 26-6-1998 with a view to get justice to the parties. 3. The respondent No. 1 submits that this Hon'ble arbitrator has all the power under section 16 of the Arbitration and Conciliation Act, 1996 to decide all the issues involved in the present dispute including the issue of jurisdiction. The respondent No. 1 further submits that the respondent No. 1 is prepared and willing to co-operate with the arbitrator in rightly deciding the above dispute. The Hon'ble arbitrator can decide all the issues involved in the above dispute together." 9.Thereafter the learned arbitrator on 30th June, 1998 after this application was submitted, records the fact of filing of such application but fails to decide the issue of lack of jurisdiction and authority and proceeds further to decide the matter on merits. 10.By the impugned award the learned arbitrator has come to the conclusion that 27 workmen have been rendered surplus who were working with respondent No. 1 herein. 10.By the impugned award the learned arbitrator has come to the conclusion that 27 workmen have been rendered surplus who were working with respondent No. 1 herein. By the said impugned award the petitioners were directed to absorb and pay the aforesaid 27 surplus workmen from the date of change of contract. 11.This award is being challenged by the petitioners herein. Mr. Surana, the learned Counsel for the petitioners firstly pointed out that this is a settlement arrived at under section 2(p) of the Industrial Disputes Act as mentioned in Exhibit 'A' on 27th May, 1998 and that the said agreement is not an Arbitration Agreement as contemplated under section 7 of the Arbitration and Conciliation Act, 1996 read with section 2. 12.Section 7(1) of the Arbitration and Conciliation Act, 1996 contemplates that an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not. Mr. Surana contends that there is absolutely no legal relationship either contractual or otherwise between the petitioners and respondent Nos. 1 and 2 prior to the aforesaid agreement dated 27th May, 1998. Even the aforesaid agreement entered upon on 27th May, 1998 the petitioners herein were fraudulently, under coercion and undue influence forced to sign the same inasmuch as the Shipping Corporation of India was under extreme pressure due to the boycott of the dock workers through their union. The petitioners had no other choice but to sign the same. Ultimately the petitioners had raised this issue before the learned arbitrator contending that there is no Arbitration Agreement and as such the learned Arbitrator had no authority to continue with the arbitration proceedings. Mr. Surana's main contention is that the respondent No. 1 is not having any direct relationship with the petitioners herein and the petitioners herein had not referred any dispute on their own for arbitration. 13.The learned Counsel Mr. Surana pointed out that this issue was raised before the learned Arbitrator and also this issue was argued at length before the learned Arbitrator. The learned Arbitrator, in fact, has considered this issue in para 12 of the award wherein the learned Arbitrator has come to the following conclusion :- "12..... 13.The learned Counsel Mr. Surana pointed out that this issue was raised before the learned Arbitrator and also this issue was argued at length before the learned Arbitrator. The learned Arbitrator, in fact, has considered this issue in para 12 of the award wherein the learned Arbitrator has come to the following conclusion :- "12..... There is no doubt that it is almost impossible to provide the unskilled, like helpers, with same salary and benefits when contracts change hand. This is the most conservative method as maximum number of workers required for all other contracts carried out by claimant-I is determined and compared with requirement for transportation of Break Bulk Cargo of S.C.I. This benefit has been given to the respondents as in the opinion of the Arbitrator that this is not a fit case to be considered under Arbitration and Conciliation Act, 1996 for the reasons and explanations given below." 14.Therefore, Mr. Surana contends that the learned Arbitrator's conclusion that this is not a matter where Arbitration and Conciliation Act, 1996 would apply and the arbitration could be proceeded by the Arbitrator. 15.Mr. Surana also points out that para 13 of the said award the learned Arbitrator has felt as under :- "13. Process of arbitration can be resorted only when certain disputes have arisen or is likely to arise in a defined legal relation or contractual obligation. In the present case, there is a defined legal relationship between Claimant I and Claimant II as the Claimant II is acting on behalf of its members who are employees of the former. But the same cannot be said to be true between Claimant II and respondent or between respondent and Claimant I. However, Claimant II decided to give a call boycotting the vessels and operations of S.C.I. is the port to bring about the current settlement. Claimant II thus assumed the role of a guarantor for employment of the workers of the previous contractor, who has other legal recourse to retrench surplus labour." Mr. Claimant II thus assumed the role of a guarantor for employment of the workers of the previous contractor, who has other legal recourse to retrench surplus labour." Mr. Surana contends that the learned Arbitrator has considered the provisions of section 7 and has came to the conclusion that in the instant case there is no such legal relationship between the petitioners and the respondent No. 1 or petitioners and respondent No. 2 that is to say that there is no legal relationship or contractual obligation between the petitioners and respondent No. 1 or petitioners and respondent No. 2. Thereafter, the learned Arbitrator goes on further holding that it will be wrong to term this settlement dated 27th May, 1998 as an Arbitration Agreement. 16.Mr. Surana contends that the learned Arbitrator after holding that this is not a matter in which it is covered by the provisions of Arbitration and Conciliation Act, 1996 himself, goes on to make an award which is totally impermissible under law as the learned Arbitrator himself has come to the conclusion that there is no Arbitration Agreement and as such he could not have proceeded ahead and published the award. Mr. Surana therefore submits that the impugned award is bad in law on two grounds viz. the learned Arbitrator was called upon to decide the preliminary issue of jurisdiction and authority and he had decided the same in favour of the petitioner but still proceeded to make and publish award, secondly ex facie there is no contract or any other legal relationship where the disputes arose or disputes were likely to arrive as such the so called terms of settlement under section 2(p) of the Industrial Disputes Act could not be construed as an Arbitration Agreement in the sense prior to that there was no other contractual or other legal relationship. 17.The learned arbitrator, according to Mr. Surana, had also failed to decide the issue of fraud, coercion and forced signature. In the sense that even if the agreement were to be construed as a valid Arbitration Agreement which was not a voluntary agreement whereby the petitioners could be forced to refer this issue for arbitration. Under these circumstances, Mr. Surana prays that this award which is impugned in this petition be quashed and set aside. 18.Mr. In the sense that even if the agreement were to be construed as a valid Arbitration Agreement which was not a voluntary agreement whereby the petitioners could be forced to refer this issue for arbitration. Under these circumstances, Mr. Surana prays that this award which is impugned in this petition be quashed and set aside. 18.Mr. Thakkar, the learned Counsel for respondent No. 1 submitted that the settlement dated 27th May, 1998 is a valid agreement containing an arbitration clause and also the same is an Arbitration Agreement under section 7 of the Arbitration and Conciliation Act, 1996. According to Mr. Thakkar the said agreement dated 27th May, 1998 creates certain legal relationship between the petitioners and respondent No. 1 and that the petitioners had undertaken certain obligations as per Clause 4. 19.The second contention of Mr. Thakkar is that the petitioners had not challenged the validity of Arbitration Agreement on the ground that it is not an Arbitration Agreement in view of section 7 of the Arbitration and Conciliation Act, 1996 before the learned Arbitrator. 20.Thirdly Mr. Thakkar contended that the learned Arbitrator had come to the conclusion that these terms of settlement dated 27th May, 1998 was not an Arbitration Agreement is erroneous. Mr. Thakkar also contended that if this Court were to come to conclusion that the aforesaid agreement dated 27th May, 1998 is not an Arbitration Agreement within the meaning of section 7 of the Arbitration and Conciliation Act, 1996 in that event the impugned award dated 17th September, 1998 though termed as an award will not be an award and hence cannot be challenged under section 34 of the Arbitration and Conciliation Act, 1996 and also the respondent No. 1 should be permitted to avail of such a remedy that may be available to enforce such an agreement. 21.The first proposition of Mr. Thakkar is that the settlement dated 27th May, 1998 is a valid agreement containing an arbitration clause and as such it is a valid agreement under section 7 and also that there is a legal relationship between the petitioners and respondent No. 1 or petitioners and respondent No. 2 as also certain obligations under the said agreement. In this context Mr. In this context Mr. Thakkar has relied upon a judgment of the Apex Court, in (Smt. Rukmanibai Gupta v. Collector, Jabalpur and others)1, reported in 1980(4) S.C.C. 556 , for the purposes that an Arbitration Agreement is not required to be in any particular form but what is required to be ascertained is only whether the parties have agreed that if disputes arise between them in respect of the subject matter of contract such dispute shall be referred to arbitration, then such an arrangement would spell out an Arbitration Agreement. In fact, the Hon'ble Supreme Court of India has observed while interpreting what is an 'Arbitration Agreement ' under section 2-A of the Arbitration Act, 1940 is that "What is required to be ascertained is whether the parties have agreed that if dispute arise between them in respect of the subject matter of contract such dispute shall be referred to arbitration, then such an arrangement would spell out an Arbitration Agreement." Admittedly, in this case terms of settlement was entered into on 27th May, 1998. It was done firstly for the purpose of resolving the dispute between respondent No. 1 and respondent No. 2 in the sense as a result of the contract the respondent No. 1 had to retrench the workmen which was objected to by respondent No. 2. Therefore, it is clear that this dispute was between respondent No. 1 and respondent No. 2 and the petitioner was in no way connected with the said dispute. Since the respondent No. 2-Union had boycotted the entire unloading operations the Shipping Corporation of India was under a tremendous pressure and in the context this issue was sought to be resolved since the Shipping Corporation of India has already awarded the said contract to the petitioner in place of respondent No. 1 therefore the agreement of 27th May, 1998 was entered into basically to resolve the dispute between respondent No. 1 and respondent No. 2. As there is no prior contract wherein the disputes arose which were to be referred to for arbitration. In fact, the Supreme Court of India has categorically held that if disputes arise between them in respect of the subject matter of the contract such a dispute should be resorted to arbitration. As there is no prior contract wherein the disputes arose which were to be referred to for arbitration. In fact, the Supreme Court of India has categorically held that if disputes arise between them in respect of the subject matter of the contract such a dispute should be resorted to arbitration. Therefore, prior to such a dispute arising there ought to be an agreement then only the contract of arbitration in pursuance of such a contract, a dispute arises, and the arbitrators can decide. It is an admitted position that on 27th May, 1998 when this agreement was entered into, the dispute had already arisen therefore there cannot be any Arbitration Agreement, subsequent to the dispute. Therefore, I hold that there was no valid Arbitration Agreement. 22.With regard to second ground of Mr. Thakkar that the petitioner had not challenged the validity of Arbitration Agreement on the ground that it is not an agreement under section 7 of Arbitration and Conciliation Act, 1996 before the learned Arbitrator. If one were to look at the minutes of the learned Arbitrator dated 26th June, 1998 as well as the application submitted by the petitioner before the learned Arbitrator on 30th June, 1998 and the minutes dated 30th June, 1998 and finally the impugned award itself, it is very clear from the impugned award that the petitioner had clearly contended that it is not an Arbitration Agreement and as such as the Arbitrator has no jurisdiction and provisions of Arbitration and Conciliation Act, 1996 could not apply. Since this issue was raised by the petitioner as well as by the respondent No. 1, the learned Arbitrator has, in fact, in paras 12 and 13 of the impugned award has clearly observed that the agreement is not governed by the Arbitration and Conciliation Act, 1996 and he has used the very same language as one finds in section 7 viz. defining legal relationship of contractual obligation. Mr. Thakkar candidly accepted that Mr. Abraham was not a lawyer and that he was only a Dock Manager. Admittedly, this issue was raised before the learned Arbitrator and the learned Arbitrator himself has come to the conclusion that para 14 of the settlement cannot be construed as an Arbitration Agreement therefore I do not find any substance in the contention that this issue was not argued before the learned Arbitrator. 23.Mr. Admittedly, this issue was raised before the learned Arbitrator and the learned Arbitrator himself has come to the conclusion that para 14 of the settlement cannot be construed as an Arbitration Agreement therefore I do not find any substance in the contention that this issue was not argued before the learned Arbitrator. 23.Mr. Thakkar contends that even though the learned Arbitrator might have concluded that the settlement dated 27th May, 1998 was not an Arbitration Agreement, which justification is not binding on this Court. For the reasons stated hereinabove it is very clear that the aforesaid settlement dated 27th May, 1998 cannot be construed as an Arbitration Agreement as contemplated under section 7 of the Arbitration and Conciliation Act, 1996. In the instant case the respondent No. 1 has failed to establish that there is any legal relationship whether contractual or otherwise prior to such a dispute arising. What is contemplated under section 7 is that whenever there is a legal relationship by contract or otherwise one can provide an Arbitration Agreement. In the instant case admittedly prior to 27-5-1998 disputes had already arisen and the so called settlement document dated 27th May, 1998 was entered into after the disputes had arisen therefore it cannot be said that this agreement would be covered under section 7 of the Arbitration and Conciliation Act, 1996. 24.With regard to the fourth argument that if it is construed that this is not an Arbitration Agreement under section 7 of the Arbitration and Conciliation Act, 1996 then no petition is maintainable under section 34 of the Arbitration and Conciliation Act, 1996. In this context if one were to read section 16 of the Arbitration and Conciliation Act, 1996 which clearly lays down that before the Arbitral Tribunal a party can always raise the issue at any stage regarding the existence or validity of Arbitration Agreement and as per section 16(5) Arbitral Tribunal shall decide the issue in the event the Arbitral Tribunal were to reject the contention of the lack of jurisdiction or invalidity of Arbitration Agreement, it can proceed and make an award and as per section 16(6) if a party is aggrieved by such an arbitral award can approach for setting aside the award in accordance with the section 34. In fact entire section 16 deals only with regard to the competency of Arbitral Tribunal to rule on its own jurisdiction. In fact entire section 16 deals only with regard to the competency of Arbitral Tribunal to rule on its own jurisdiction. Therefore, the submission of Mr. Thakkar has no substance whatsoever in view of sections 16 and 34 of the Arbitration and Conciliation Act, 1996. 25.Under the aforesaid facts and circumstances, as observed earlier the impugned award is totally unsustainable inasmuch as there is no Arbitration Agreement at all as contemplated under section 7 of the Arbitration and Conciliation Act, 1996 therefore the learned Arbitrator could not have made and published the award. Over and above, circumstances under which the said settlement on 27th May, 1998 were entered into where the petitioners had no other choice but to sign and prior to such signing the disputes had already arisen, obviously this cannot be an Arbitration Agreement as contemplated under section 7 of the Arbitration and Conciliation Act, 1996. Over and above even the learned Arbitrator also apart from holding that there is no Arbitration Agreement, even the learned Arbitrator has come to the conclusion that it is wrong to term the settlement dated 27th May, 1998 as an Arbitration Agreement, whereas after holding the same, the learned Arbitrator has proceeded to make an award which is totally impermissible in law. Under the aforesaid facts and circumstances the impugned award is quashed and set aside. Petition is made absolute in terms of prayer Clause (a) with costs. Rule made absolute. -----