RAIL INDIA T AND E SERVICES LTD v. VIDYAWATI CONSTRN CO
2001-05-24
G.P.MATHUR, S.K.JAIN
body2001
DigiLaw.ai
G. P. MATHUR, J. This writ Petition under Article 226 of the Constitution has been filed for queshing the Order dated November 17,2000 of Honble the Chief Justice appointing an arbitrator under S. 11 (5) of the Arbitration and Conciliation Act. 1996. 2. M/s. Vidyawati Construction Company, respondent No. 1 filed a petition under Section 11 (6) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the Act) on the grounds, inter alia, that the petitioner Rail India Technical and Economic Services Ltd. (in brief, RITES invited tenders for construction of institute building and staff quarters for Northern Regional Institute of Printing Technology, Allahabd and the tender submitted by it was accepted on May 1992. The stipulated period for completion of work was 12 months which was extended from time to time and the work was actually completed on July 30, 1995 but the RITES did not issue any completion certificate. A sum of Rs. 88,79,847/- was due to it towards cost of construction which had not been paid. The agreement entered into between the parties contained an an arbitration clause, and it sent a letter dated September 30, 1998 requesting the Managing Director of RITES to appoint an arbitrator within 30 days of the receipt of the request but no appointment was made. It was accordingly prayed that the Chief Justice may appoint an arbitrator under Section 11 (6) of the Act. The writ petitioner Rail India Technical and Economic Services Ltd. (RITES) filed a counter affidavit opposing the prayer for appointment of arbitrator. The Chief Justice by his order dated November 17, 2000 appointed Honble Mr. Justice S. C. Mathur, a former Chief Justice, as the sole arbitrator under Section 11 (5) of the Act, which has been assailed in the present writ petition. 3. The first question which requires consideration is what is the nature of the order passed by the Chief Justice under Section 11 (5) of the Act and whether it is amenable to writ jurisdiction of the Court. In Sundaram Finance Ltd. v. NEPC India Ltd. , (1999) 2 SCC 479 : ( AIR 1999 SC 565 ) it was observed that appointment of arbitrator under Section 11 of the Act does not require the Court to pass a judicial order.
In Sundaram Finance Ltd. v. NEPC India Ltd. , (1999) 2 SCC 479 : ( AIR 1999 SC 565 ) it was observed that appointment of arbitrator under Section 11 of the Act does not require the Court to pass a judicial order. The same view was taken in Ador Samia (P) Ltd. v. Peekay Holdings Ltd. , (1999) 8 SCC 572 : ( AIR 1999 SC 3246 ) and it was held that while exercising power under Section 11 (6) of the Act the Chief Justice of the High Court or his designate acts in an administrative capacity and such an order of the Chief Justice is not passed by any Court exercising any judicial function nor it is a tribunal having the trappings of a judicial authority. The question as to what is the nature of the order passed by the Chief Justice while making appointment of an arbitrator under Section 11 of the Act was referred for consideration to a larger Bench in Konkan Rly. Corporation Ltd. v. Mehul Construction Co. , (2000) 7 SCC 201 : ( AIR 2000 SC 2821 ). After a detailed consideration of the matter it was observed as follows in paragraph 6 of the reports. "the nature of the function performed by the Chief Justice being essentially to aid the constitution of the Arbitral Tribunal immediately and the legislature having consciously chosen to confer the power on the Chief Justice and not on a Court, it is apparent that the order passed by the Chief Justice or his nominee is an administrative order, as has been held by this Court in Ador Samia case and the observations of this Court in Sundaram Finance Ltd. Case also are quite appropriate and neither of those decisions require any reconsideration. . . " It may be noticed that in a subsequent decision in Konkan Railway Corporation Ltd. v. Rani Construction Ltd. , (2000) 8 SCC 159 : (2000 AIR SCW 3908) the question has again been referred for reconsideration. However, the decision rendered in Konkan Railway Corporation Ltd. v. Mehul Construction Company (supra) has not been overruled so far and, therefore, it is binding on this Court.
However, the decision rendered in Konkan Railway Corporation Ltd. v. Mehul Construction Company (supra) has not been overruled so far and, therefore, it is binding on this Court. Accordingly we have to proceed on the footing that the impuned Order dated November 17, 2000 of the Chief Justice is an administrative order and, therefore, the present writ petition under Article 226 of the Constitution is maintainable. 4. Sri U. N. Sharma, learned counsel for the petitioner has assailed the order of appointment of the arbitrator on two grounds. The first ground is that Clause 47 of the agreement entered into between the parties contained an arbitration clause wherein it is mentioned that any suit or application for the enforcement of the arbitration clause shall be filed in competent Court at New Delhi and no other Court of any other district of the country shall have any jurisdiction in the matter. Learned counsel has submitted that in view of this term in the agreement, the application for appointment of arbitrator could only be filed before the Chief Justice of the Delhi High Court and the Chief Justice of Allahabad High Court had no authority to appoint the arbitrator. In support of this submission reliance is placed on Hakam Singh v. M/s. Gammon (India) Ltd. , (1971) 1 SCC 286 : ( AIR 1971 SC 740 ) and Zamindara Engineering Company v. M/s. Sunil Tractor Company, 1993 Supp (1) SCC 468: ( AIR 1992 SC 1545 ) wherein it was held that where two Courts or more have jurisdiction to try a suit or proceeding under the Code of Civil Procedure, an agreement between the parties that the dispute between them shall be tried in one of such courts is not contrary to public policy and the Court mentioned in the agreement alone has the jurisdiction to entertain a proceeding for filing of an award. In our opinion, the contention raised has no substance. The writ petitioner did not raise a plea in the counter affidavit filed by it in reply to the petition filed by respondent No. 1 under Section 11 (5) of the Act, that the Chief Justice of Allahabad High Court had no jurisdiction to entertain the petition in view of the condition mentioned in Clause 47 of the agreement and that the Court at New Delhi alone had jurisdiction in the matter.
Therefore, such a plea cannot be raised for the first time in the present writ petition. That apart, it may be noted that the agreement between the parties had been executed on March 18, 1993 when the Arbitration Act, 1940 was in force. Section 41 of the said Act specifically provided that the provisions of the Code of Civil Procedure, 1908, shall apply to all proceedings before the Court and to all appeals under the Act. The position has undergone a complete change with the enforcement of the Arbitration and Conciliation Act, 1996, whereby the Arbitration Act, 1940, has been repealed. The power of appointment of an arbitrator has now been conferred upon the Chief Justice or the person or institution designated by him, under Section 11 of the Act, and the power is not with the Court. Section 2 (1) (e) of the Act defines a "court" and it means the principal civil Court of original jurisdiction in a district and includes the High Court exercising its ordinary original civil jurisdiction. The Chief Justice while exercising powers under Section 11 does not function as a Court. That apart any order passed by a "court" would be a judicial order but, as shown earlier, the order passed by the Chief Justice appointing an arbitrator is an administrative order and, therefore, he cannot be held to be a Court. The condition in Clause 47 of the agreement by which the parties had agreed that any suit or application for the enforcement of the arbitration clause shall be filed in competent Court in New Delhi and no other Court of any other district of the country shall have any jurisdiction in the matter, has become void and inoperative in view of the subsequent legislation and cannot govern the situation now. 5. The answer to the question as to the Chief Justice of which particular High Court will have the jurisdiction to entertain a petition under Section 11 of the Act is given in Clause (b) of sub-section (12) of Section 11 of the Act.
5. The answer to the question as to the Chief Justice of which particular High Court will have the jurisdiction to entertain a petition under Section 11 of the Act is given in Clause (b) of sub-section (12) of Section 11 of the Act. It provides that reference to "chief Justice" in sub-sections (4), (5), (6), (7), and (10) of Section 11 shall be construed as a reference to the Chief Justice of the High Court within whose local limits the principal Civil Court referred to in Clause (e) of sub-section (1) of Section 2 is situate, and, where the High Court itself is the Court referred to in that clause, to the Chief Justice of that High Court. Therefore, in order to ascertain the jurisdiction of the Chief Justice it has to be seen which principal civil Court of original jurisdiction or the High Court exercising its ordinary original civil jurisdiction has the jurisdiction to decide the question forming the subject-matter of the arbitration if the same had been the subject matter of a suit. The claim of respondent No. 1 is basically for the amount due on account of construction of the building at Allahabad and, therefore, in view of Section 20 of the Code of Civil Procedure the Civil Court at Allahabad has the jurisdiction, if a suit for recovery of the amount is filed. Therefore, the Chief Justice of the Allahabad High Court has the jurisdiction to entertain the petition for appointment of an arbitrator under Section 11 of the Act. 6. The second submission of the learned counsel for the petitioner is that the contractor M/s. Vidyawati Construction Ltd. (respondent No. 1) had made a request by their letter dated September 30, 1998 for appointment of an arbitrator and thereafter the Managing Director of RITES by his order dated November 5, 1998 had appointed Sri Iqbal Singh, Group General Manager, as the sole arbitrator. The general manager of RITES sent a letter dated November 9, 1998 to Sri Iqbal Singh informing him that he had been appointed as an arbitrator and a copy of the said letter was also sent to the contractor M/s. Vidyawati Construction Company (respondent No. 1) by registered post.
The general manager of RITES sent a letter dated November 9, 1998 to Sri Iqbal Singh informing him that he had been appointed as an arbitrator and a copy of the said letter was also sent to the contractor M/s. Vidyawati Construction Company (respondent No. 1) by registered post. Learned counsel has submitted that as an arbitrator had already been appointed on November 5, 1998 the conditions necessary for exercise of power by the Chief Justice under sub-section (5) or sub-section (6) of Section 11 of the Act did not exist and, therefore, the impugned Order dated 17, 2000 passed by the Chief Justice appointing an arbitrator is not only illegal but is also without jurisdiction. In support of his submission, learned counsel has placed reliance on certain observations made in Datar Switchgears v. Tata Finance Ltd. , (2000) 8 SCC 151 : (2000 AIR SCW 3925 ). 7. The principal question to be considered is whether it would be proper for the High Court, while exercising jurisdiction under Article 226 of the Constitution, to examine the correctness or validity of the order passed by the Chief Justice under sub-section (5) or (6) of Section 11 of the Act or any challenge to such an order, having regard to scheme of the Act, should be raised before the arbitral tribunal. 8. The United Nations Commission on International Trade Law (UNCITRAL) adopted in 1985 the Model Law on International Commercial Arbitration. The General Assembly of the United Nations has recommended that all countries should give due consideration to the said Model Law in view of the desirability of uniformity of the law of arbitral procedures and the specific needs of the international commerical arbitration practice. The UNCITRAL also adopted a set of Conciliation Rules. The General Assembly of the United Nations recommended the use of these rules in cases where the disputes arise in the context of International commercial relations and the parties seek amicable settlement of their disputes by recourse to reconciliation. With the liberalisation of the economy and India being a member of the World Trade Organisation, it was felt that the disputes arising out of commercial transactions may not drag on in Courts for a long time but should be settled by arbitration which is a speedier remedy.
With the liberalisation of the economy and India being a member of the World Trade Organisation, it was felt that the disputes arising out of commercial transactions may not drag on in Courts for a long time but should be settled by arbitration which is a speedier remedy. In order to attract foreign capital in the country and allay the fear of the foreign investors regarding delay in Courts. the UNCITRAL Model Law and Rules were adopted with appropriate modifications in legislation of domestic arbitration and conciliation. Keeping that in view, the present Arbitration and Conciliation Act, 1996 (Act No. 26 of 1996) was enacted. The bail moved in the Parliament mentioned several objectives and one of the objectives (No. V) is to minimise the supervisory role of Courts in the arbitral process. Sections 5 and 11 of the Act are contained in Part I of the Act. Section 5 lays down that, notwithstanding anything contained in any other law for the time being in force, in matters governed by this Part, no judicial authority shall intervence, except where it is so provided in this Part. Sub-section (7) of Section 11 lays down that a decision on a matter entrusted by sub-section (4) or sub-section (5) or sub-section (6) to the Chief Justice or the person or institution designated by him is final. Part I does not contain any provision where under such a decision may be challenged. These provisions of the Act certainly cannot curtail the power of the High Court conferred by Article 226 of the Constitution nevertheless they show the legislative intent that the order passed by the Chief Justice appointing an arbitrator is final and it should not be interfered with, unless it is likely to result in serious miscarriage of justice or causes irreparable injury. 9. Section 2 (1) (d) provides that in Part I "arbitral tribunal" means a sole arbitrator or a panel of arbitrators. Chapter IV of the Act deals with jurisdiction of arbitral tribunals and Section 16 thereof reads as follows: "16.
9. Section 2 (1) (d) provides that in Part I "arbitral tribunal" means a sole arbitrator or a panel of arbitrators. Chapter IV of the Act deals with jurisdiction of arbitral tribunals and Section 16 thereof reads as follows: "16. Competence of arbitral tribunal to rule on its jurisdiction.- (1) The arbitral tribunal may rule on its own jurisdiction, including ruling on any objections with respect of the existence or validity of the arbitration agreement, and for that purpose,- (a) an arbitration clause which forms part of a contract shall be treated as an agreement independent of the other terms of the contract; and (b) a decision by the arbitral tribunal that the contract is null and void shall not entail ipso jure the invalidity of the arbitration clause. (2) A plea that the arbitral tribunal does not have jurisdiction shall be raised not later than the submission of the statement of defence; however, a party shall not be precluded from raising such a plea merely because that he has appointed, or participated in the appointment of an arbitrator. (3) A plea that the arbitral tribunal is exeeding 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. (4) The arbitral tribunal may, in either of the cases referred to sub-section (2) or sub-section (3) admit a later plea if it considers the delay justified. (5) The arbitral tribunal shall decide on a plea referred to in sub-section (2) or sub-section (3) and, where the arbitral tribunal takes a decision rejecting the plea, continue with the arbitral proceedings and make an arbitral award. (6) A party aggrieved by such an arbitral award may make an application for setting aside such an arbitral award in accordance with Section 34. " 10. Sub-section (1) of Section 16 provides that arbitral tribunal may rule on its own jurisdiction. Sub- section (2) of Section 16 shows that a plea that the arbitral tribunal does not have the jurisdiction can be raised and the only restriction is that such a plea should be raised not later than the submission of the statement of the defence. Sub-section (4) permits the arbitral tribunal to admit a plea that it has no jurisdiction even later if it considers the delay justified.
Sub-section (4) permits the arbitral tribunal to admit a plea that it has no jurisdiction even later if it considers the delay justified. Sub-section (5) enjoins upon the arbitral tribunal to take a decision on a plea referred to in sub-section (2) namely, that it does not have the jurisdiction. Where the arbitral tribunal takes a decision rejecting the plea, it will continue with the arbitral proceedings and make an arbitral award. Sub-section (6) provides that a party aggrieved by such an arbitral award may make an application for setting aside such an arbitral award in accordance with Section 34. In view of the definition given in Section 2 (1) (c) an interim award is also an "arbitral award" which can be challenged by making an application in accordance with Section 34 of the Act. Section 34 provides that an application may be made to a Court for setting aside the arbitral award in accordance with provisions of the sub-sections (2) and (3) thereof. Sub-section (2) of Section 37 provides that an appeal shall also lie to a Court from an order of the arbitral tribunal accepting the plea referred to in sub-section (2) or sub-section (3) of Section 16 of the Act. These provisions show that a plea that the arbitral tribunal has no jurisdiction to proceed with arbitration can be raised before the arbitral tribunal itself which is under an obligation to decide such a plea. 11. What should be the approach of the Chief Justice while hearing a petition under Section 11 of the Act and whether he should entertain and decide every objection has been indicated in Konkan Railway Corporation Ltd. v. Mehul Construction Co. ( AIR 2000 SC 2821 ) (supra) at page 206 (of SCC) in the following words: ". . . . When the matter is placed before the Chief Justice or his nominee under Section 11 of the Act it is imperative for the said Chief Justice or his nominee to bear in mind the legislative intent that the arbitral process should be set in motion without any delay whatsoever and all contentious issues are left to be raised before the Arbitral Tribunal itself. At that stage it would not be appropriate for the Chief Justice or his nominee to entertain any contentious issue between the parties and decide the same. . .
At that stage it would not be appropriate for the Chief Justice or his nominee to entertain any contentious issue between the parties and decide the same. . . " In the same decision, after taking notice of the provisions of Sections 13 and 16 of the Act, the Court ruled as follows at Page 207 (of SCC): (at P. 2824 of AIR): ". . . . . Conferment of such power on the arbitrator under the 1996 Act indicates the intention of the legislature and its anxiety to see that the arbitral process is set in motion. This being the legislative intent, it would be proper for the Chief Justice or his nominee just to appoint an arbitrator without wasting any time or without entertaining any contentious issues at that stage, by a party objecting to the appointment of an arbitrator. If this approach is adhered to, then there would be no grievance of any party and in the arbitral proceeding, it would be open to raise any objection, as provided under the Act. . . . " 12. In Nimet Resources Inc. v. Essar Steels Ltd. , (2000) 7 SCC 407: ( AIR 2000 SC 3107 ) it has been held that in a matter where there has been some transaction between the parties and the existence of arbitration agreement is in challenge, the proper course for the parties is to thrash out such question under Section 16 and not under Section 11 of the Act. The reason given for taking such a view was that the power which is exercised under Section 11 of the Act is in the nature of an administrative order and in such a case unless the Chief Justice or his nominee can be absolutely sure that there exists no arbitration agreement between the parties, it would be difficult to state that there should be no reference to arbitration. It was further observed that such view may not be conclusive of the nature of the powers that are exercised under Section 11 (6) of the Act.
It was further observed that such view may not be conclusive of the nature of the powers that are exercised under Section 11 (6) of the Act. Learned counsel for the petitioner has however placed strong reliance on Wellington Associates Ltd. v. Kirit Mehta, (2000) 4 SCC 272 : ( AIR 2000 SC 1379 ) and has contended that in view of the ratio of this decision the objection of the writ petitioner that no reference can be made to the arbitral tribunal ought to have been decided by the Chief Justice, and as this question has neither been considered nor decided, the impugned order dated November 17, 2000 deserves to be set aside and the matter should be remitted to the Chief Justice for a fresh decision. We are afraid that such a view does not follow from the principle enunciated in the decision cited by the learned counsel. What has been held therein is that Section 16 does not take away the jurisdiction of the Chief Justice, if need be, to decide the question of existence of arbitration agreement and it does not declare that except the arbitral tribunal, none else can determine such a question. It has also been observed that merely because the new Act permits the arbitrator to decide this question, it does not necessarily follow that at the stage of Section 11 the Chief Justice cannot decide a question as to the existence of arbitration clause. Paragraph 16 of the reports shows that the Court repelled the contention based upon interpretation of Section 16 of the Act to the effect that only the arbitral tribunal can decide about the existence of an arbitration clause. This is a converse case where the contention raised was that in view of Section 16 of the Act a dispute about the existence of arbitration agreement could only be decided by an arbitral tribunal and not by the Chief Justice. This decision was noticed in Nimet Resources Inc. (supra) and, yet, it was held that the arbitrator should decide about the existence of the arbitration clause under Section 16 of the Act, rather than the Chief Justice under Section 11 of the Act. 13.
This decision was noticed in Nimet Resources Inc. (supra) and, yet, it was held that the arbitrator should decide about the existence of the arbitration clause under Section 16 of the Act, rather than the Chief Justice under Section 11 of the Act. 13. In Sundaram Finance Ltd. v. NEPC Ltd. ( AIR 1999 SC 565 ) (supra) it has been observed that the provisions of the 1996 Act should be interpreted keeping in mind the Model Law as the concept under the present Act has undergone a complete change. It will, therefore, be useful to take note of the corresponding provisions of the U NCITRAL Model Law. Article 16 of the Model Law, which corresponds to Section 16 of the Act is being reproduced below: "article 16. Competence to rule on own jurisdiction. (1) The arbitral tribunal has the power to rule on its own jurisdiction, including any objections with respect to the existence or validity of the arbitration agreement. For the purpose, an arbitration clause which forms part of a contract shall be treated as an agreement indpendent of the other terms of the contract. A decision by the arbitral tribunal that the contract is null and void shall not entail ipso jure the invalidity of the arbitration clause. (2) A plea that the arbitral tribunal does not have jurisdiction shall be raised not later than in the statement of defence. A party is not precluded from raising such a plea by the fact that he has appointed, or participated in the appointment of, an arbitrator. A plea that the arbitral tribunal is exceeding the scope of its authority shall be raised promptly after the arbitral tribunal has indicated its intention to decide on the matter alleged to be beyond the scope of its authority. The arbitral tribunal may, in either case, admit a latter plea if it considers the delay justified. (3) The arbitral tribunal may rule on a plea referred to in paragraph (2) of this article either as a preliminary question or in an award on the merits. In either case, a ruling by the arbitral tribunal that it has jurisdiction may be contested by any party only in an action for setting aside the arbitral award. " 14.
(3) The arbitral tribunal may rule on a plea referred to in paragraph (2) of this article either as a preliminary question or in an award on the merits. In either case, a ruling by the arbitral tribunal that it has jurisdiction may be contested by any party only in an action for setting aside the arbitral award. " 14. The commentary on the three paragraphs of the Model Law has been given under the headings A, B, C and D. Note 1 under heading A and notes 11 to 15 under Note D, which are relevant for the controversy in hand, are being reproduced below: "a. "kompetenz-Kometenz" and separability doctrine, paragraph (1 ). 1. Article 16 adopts the important principle that it is initially and primarily for the arbitral tribunal itself to determine whether it has jurisdiction, subject to ultimate Court control (see below paras 12-14. Paragraph (1) grants the arbitral tribunal the power to rule on its own jurisdiction, including any objections with respect to the existence or validity of the arbitration agreement. This power, often referred to as "kompetenz-kompetenz," is an essential and widely accepted feature of modern international abitration but, at present is not yet recognised in all national laws. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . D. Ruling by arbitral tribunal and judicial control, paragraph (3 ). . . . . . 11. Objections to the arbitral tribunals jurisdiction go to the very foundation of the arbitration. Jurisdictional questions are, thus, antecedent to matters of substance and usually ruled upon first in a separate decision, in order to avoid possible waste of time and costs. However, in some cases, in particular, where the question of jurisdiction is intertwined with the substantive issue, it may be appropriate to combine the ruling on jurisdiction with a partial or complete decision on the merits of the case. Article 16 (3) therefore, grants the arbitral tribunal discretion to rule on a plea referred to in paragraph (2) either as a preliminary question or in an award on the merits. 12. As noted earlier (above para 1) the power of the arbitral tribunal to rule on its own competence is subject to judicial control.
Article 16 (3) therefore, grants the arbitral tribunal discretion to rule on a plea referred to in paragraph (2) either as a preliminary question or in an award on the merits. 12. As noted earlier (above para 1) the power of the arbitral tribunal to rule on its own competence is subject to judicial control. Where a ruling by the arbitral tribunal that it has jurisdiction is, exceptionally, included in an award on the merits, it is obvious that the judicial control of that ruling would be exercised upon an application by the objecting party for the setting aside of that award. The less clear and in fact controversial, case is where such affirmative ruling is made on a plea as a preliminary question. The solution adopted in Article 16 (3) is that also in this case judicial control may be sought only after the award on the merits is rendered, namely in setting aside proceedings (and, although this is not immediately clear from the present text, in any recognition or enforcement proceedings ). 13. It was for the purpose of preventing dilatory tactics and abuse of any immediate right to appeal that this solution was adopted, reinforced by the deletion of previous draft article 17, which provided for concurrent court control. The disadvantage of this solution, as was pointed out by the propenents of immediate Court control, is that it may lead to considerable waste of time and money where, after lengthy proceedings with expensive hearings and taking of evidence, the Court sets aside the award for lack of jurisdiction. 14. It is submitted that the weight of these two conflicting concerns, i. e. , fear of dilatory tactics and obstruction versus waste of time and money, is difficult to assess at a general level imagining all possible cases. It seems that the assessment could better be made with respect to each particular case. Thus, it may be worth considering giving the arbitral tribunal discretion, based on its assessment of the actual potential of these concerns, to cast its ruling in the form either of an award which would be subject to instant court control, or of a procedural decision which may be contested only in an action for setting aside the later award on the merits.
In considering this suggestion, which would help to avoid the present inconsistency between Article 16 (3) and Article 13 (3), thought may be given to adopting the special elements of Article 13 (3) designed to minimize the risk of dilatory tactics, i. e. short time-limit for resort to Court, finality of court decision, discretion of arbitral tribunal to continue proceedings. 15. Article 16 (3) does not regulate the case where the arbitral tribunal rules that it has no jurisdiction. A previous draft provision which allowed recourse to the Court, not necessarily with the aim of forcing the arbitrators to continue the proceedings but in order to obtain a decision on the existence of a valid arbitration agreement, was not retained by the working Group. It was stated that such ruling of the arbitral tribunal was final and binding as regards these arbitral proceedings but did not settle the question whether the substantive claim was to be decided by a Court or by an arbitral tribunal. It is submitted that it thus depends on the general law on arbitration or civil procedure whether court control on such ruling may be sought, other than by way of request in any substantive prodeedings as referred to in Article 8 (1 ). " 15. Note 1 shows that it is initially and primarily for the arbitral tribunal itself to determine whether it has jurisdiction and this principle is an accepted feature of modern international arbitration. Note D shows that in order to avoid waste of time and expenses a plea regarding the jurisdiction of the arbitral tribunal is normally be decided as a prelimianry issue as a separate decision, unless the question of jurisdiction as closely interlinked with the substantive issue. The provisions of the Model Law and the commentary thereon clearly show that it is widely accepted practice in international arbitration to raise a plea regarding the jurisdiction of the arbitral tribunal before the arbitral tribunal itself, and a challenge to the order of reference is not to be raised before a Court at this stage. If we take it as a guiding principle for interpreting the provisions of the Act, it will be in conformity with the practice and procedure in international arbitration.
If we take it as a guiding principle for interpreting the provisions of the Act, it will be in conformity with the practice and procedure in international arbitration. Since our country is a signatory to some international conventions, the domestic law of the country should be interpreted in a manner which does not come in conflict with it. In Peoples Union for Civil Liberty v. Union of India, (1997) 1 SCC 301 : ( AIR 1997 SC 568 ) the Apex Court has held that it is almost an accepted proposition of law that rules of customary International Law, shall be deemed to be incorporated in the domestic Law. For holding this the Court relied upon the observation made by Sikri, C. J. in Kesavanand Bharati, (1973) 4 SCC 225 (at page 333): ( AIR 1973 SC 1461 ) (at page 1510) that in view of Article 51 of the directive principles the Court must interpret the language of the Constitution, if not intractable, in the light of the United Nations Charter and the solemn declaration subscribed to by India. The Court also took notice of a similar observation made by Khanna J. in A. D. M. Jabalpur, (1976) 2 SCC 521 (at page 754): ( AIR 1976 SC 1207 ) (at Page 1259) that if two constructions of the Municipal Law are possible, the Court should lean in favour of adopting such construction as would make the provisions of the Municipal Law to be in harmony with international law or treaty obligations. Applying this principle the provisions of the Act should be interpreted in conformity with the international practice and, consequently, no challenge should be permitted to be raised in a Court against an order of reference to an arbitrator and the party feeling aggrieved should raise such plea before the arbitral tribunal itself. 16. It is settled principle that if proceedings are initiated under a Statute which creates a liability and also provides for a remedy, the remedy provided by the Statute only must be availed of and not a writ petition under Article 226 of the Constitution. This question was considered in considerable detail by a Constitution Bench soon after the enforcement of the Constitution in N. P. Punnu Swami v. Returning Officer. , AIR 1952 SC 64 .
This question was considered in considerable detail by a Constitution Bench soon after the enforcement of the Constitution in N. P. Punnu Swami v. Returning Officer. , AIR 1952 SC 64 . In this case the appellant challenged the order of the Returning Officer rejecting his nomination paper for election to the Legislative Assembly by filing a writ petition under Article 226 of the Constitution. It was held that Representation of People Act is a self-contained enactment so far as the elections are concerned and that it provided for one remedy, that remedy being by an election petition to be presented after the election is over and there is no remedy provided at any intermediate stage. This was held on the principle that where a right or liability is created by a statute which gives a special remedy for enforcing it, the remedy provided by that statute only must be availed of. This principle has been reiterated in several decisions (See Mohinder Singh Gill v. Chief Election Commissioner, AIR 1978 SC 851 S. T. Mathu Swami v. Natrajan, AIR 1988 SC 616 and Anugrah Narain Singh v. State of U. P. , (1996) 8 JT (SC) 733. 17. The detention laws like National Security Act or Conservation of Foreign Exchange and Prevention of Smuggling Activities Act make serious inroad in the liberty of a person. Under these laws a person is detained without any prior notice and, that too, on the subjective satisfaction of the detaining authority which satisfaction cannot be challenged on merits. The person detained gets only a right to make representation against his detention but, that too, after he has been detained and he has been deprived of his liberty. The decision of the representation naturally takes time. The principle that the machinery provided by the Act should not be permitted to be by-passed by taking recourse to proceedings under Article 226 of the Constitution prior to execution of the detention order was reiterated even in such cases. In Additional Secretary to Government of India v. Smt. Alka Subhash Gadia, (1991) 1 JT (SC) 549 the High Court had quashed the detention order under Article 226 of the Constitution at a pre-execution stage but the Supreme Court reversed the judgment with the following observations (paragraph 30): . . . . . . . . . . .
In Additional Secretary to Government of India v. Smt. Alka Subhash Gadia, (1991) 1 JT (SC) 549 the High Court had quashed the detention order under Article 226 of the Constitution at a pre-execution stage but the Supreme Court reversed the judgment with the following observations (paragraph 30): . . . . . . . . . . . The powers under Articles 226 and 32 are wide, and are untrammelled by any external restrictions and can reach any executive order resulting in civil or criminal consequences. However, the Courts have over the years evolved certain self-restraints for exercising these powers. They have done so in the interest of the administration of justice and for better and more efficient and informed exercise of the said powers. These self-imposed restraints are not confined to the review of the orders passed under detention law only. They extend to the orders passed and decisions made under all laws. It is in pursuance of this self-evolved judicial policy and in conformity with the self-imposed internal restrictions that the Courts insist that the aggrieved person first allows the due operation and implementation of the concerned law and exhausts the remedies provided by it before approaching the High Court and this Court to invoke their discretionary extraordinary and equitable jurisdiction under Articles 226 and 32 respectively. That jurisdiction by its very nature is to be used sparingly and in circumstances where no other efficacious remedy is available. . . . . . . . . . . . . . " 18. This decision has been subsequently followed in N. K. Bapna v. Union of India, (1992) 4 JT (SC) 49 State of Tamil Nadu v. P. K. Shamsuddin, AIR 1992 SC 1937 and Subhash Mujimal Gandhi v. L. Himingliana, (1994) 6 SCC 14 : (1994) AIR SCW 4975 ). In view of these authoritative pronouncements it will not be a sound exercise of discretion to entertain a petition under Article 226 of the Constitution wherein challenge is made to an order of appointment of arbitrator under Section 11 of the Act. 19. Sri Sharma has lastly submitted that after an order has been passed by the Chief Justice making a reference, the arbitral tribunal shall feel bound by the said order and may not entertain a plea that the reference was incompetent or that no such reference could have been made.
19. Sri Sharma has lastly submitted that after an order has been passed by the Chief Justice making a reference, the arbitral tribunal shall feel bound by the said order and may not entertain a plea that the reference was incompetent or that no such reference could have been made. The apprehension expressed by the learned counsel, in our opinion, is wholly baseless as the answer to the question posed by him has been given in Konkan Railway Corporation Ltd. v. Mehul Construction Company ( AIR 2000 SC 2821 ) (at p. 2826) (supra) in paragraph 8 of the reports, which reads as under: . . . . . . . . . . It is clarified that the learned Chief Justice not having functioned as a Court or tribunal and the order being adminsitrative in nature, the observations and findings are not binding and will not be taken into consideration by the Arbitral Tribunal, if an objection to validity or existence of arbitration agreement is taken before it. Such objection, if taken, shall be decided on its own merits. . . . . . 20. We are, therefore, clearly of the opinion that the writ petitioner can raise all such pleas on which the order of the Chief Justice has been assailed here before the arbitral tribunal under Section 16 of the Act and can pursue the further remedies provided under the Act and this Court should not entertain a writ petition under Article 226 of the Constitution at the initial stage which may have the effect of delaying the arbitral proceedings and thereby defeat the very purpose for which the 1996 Act has been enacted. 21. The writ petition is accordingly dismissed at the admission stage. Petition dismissed. .