JUDGMENT A.N. JINDAL, J (ORAL) This order shall dispose of FAO Nos.5769 of 2009 and 1569 of 2010, as common questions of law and facts are involved in both the appeals being filed against a common judgment. For reference, facts are taken from FAO No. 5769 of 2009. The Arbitrator, while settling the dispute in terms of the agreement executed between the parties for custom milling of paddy crop of the year 1998-99, passed an Award dated 28.07.2004 in the sum of Rs.1,15,63,655/- as on 31.12.1999 along with interest with effect from the date of reference i.e. 01.08.2000 to 31.07.2004 i.e. for four years at the rate of 18% per annum on the aforesaid amount, which comes to Rs.83,25,832/-and future interest at the rate of 15% per annum on Rs.1,15,63,655/- from 01.08.2004 onwards till realization of the amount along with costs of Rs.10,000/-. Against the aforesaid Award, both the parties filed objections before the District Judge, Ferozepur. The main objection raised by M/s Guru Rice Mills-appellant (hereinafter referred as 'the appellant') was that the claim of the respondent No.1-corporation (hereinafter referred as 'respondent No.1') was barred by the law of limitation. It was further alleged that the claim set up by respondent No.1 was absolutely hypothetical and was fabricated by showing the paddy entrusted against securities, whereas no shortage of paddy was found for the termination of the contract. It was further submitted that the arbitration agreement is a false document and it does not bear the signatures of Malook Singh and many columns of the agreement were left blank, from where it could be inferred that no such agreement was executed between the parties. The arbitrator has exceeded jurisdiction in adjudicating the dispute. It was further averred that the appellant had already supplied due rice to the Food Corporation of India in the account of respondent No.1 pertaining to the crop year 1998-99, as such, there was nothing due against the appellant. No proper opportunity was given to the appellant to prove its case, therefore, it has been seriously prejudiced. It was further averred that the appellant had already supplied due rice to the Food Corporation of India in the account of respondent No.1 pertaining to the crop year 1998-99, as such, there was nothing due against the appellant. No proper opportunity was given to the appellant to prove its case, therefore, it has been seriously prejudiced. It was alleged that the Arbitrator took wrong view while holding that the Managing Director was the final authority to decide the rate of interest only, whereas, as per Clause 9 of the alleged agreement, the Managing Director was the final authority to decide all other clauses i.e. quality or short supply of rice and penalty at the custom milling rate fixed by the Food Corporation of India. The respondent No.1-Corporation refuted all the allegations levelled by the appellant. Both the parties led evidence. Ultimately, the District Judge, Ferozepur, vide judgment dated 05.05.2009, dismissed both the objection petitions filed by the parties. There is no denying a fact that the appellant had appeared before the Arbitrator, contested the proceedings and the Arbitrator, after providing sufficient opportunities to both the parties, settled the dispute and passed the Award dated 28.07.2004. The evidence, as already appreciated, cannot be re-appreciated at this stage, as the objections which were available to the appellant, as provided under Section 34 of the Act, are limited in nature. No such illegality is shown to this Court in order to nullify the Award or to hold that the Arbitrator had misconducted the proceedings and the Award was in any way against the facts. A prime question was raised by learned counsel for the appellant that the Arbitrator has travelled beyond jurisdiction in deciding the question, for which already an authority is provided under the agreement. The Managing Director was conferred with all the powers to order the recovery as well as pass appropriate order with regard to interest and in view of Clause 9 (3) as well as Section 22 of the Agreement, the Arbitrator had no jurisdiction to decide the dispute. In this regard, learned counsel for the appellant has relied upon a judgment delivered by this Court in case M/s Shree Krishna Rice Mills Vs. The Punjab State Cooperative Supply and Marketing Federation Ltd., 2003 (3) PLJ 341. In this regard, learned counsel for the appellant has relied upon a judgment delivered by this Court in case M/s Shree Krishna Rice Mills Vs. The Punjab State Cooperative Supply and Marketing Federation Ltd., 2003 (3) PLJ 341. To the contrary learned counsel for the respondents has contended that this objection was never raised at the relevant time when the proceedings were pending before the Arbitrator, therefore, such objection could not be raised at this stage. Even in terms of Section 16 of the Arbitration and conciliation Act, 1996 (hereinafter referred as 'the Act'), the objection with regard to jurisdiction could not be taken for the first time either by way of objection filed under section 34 of the Act or in the appeal filed under Section 37 of the Act. In order to support this argument, learned counsel for the respondents has relied upon a Division Bench judgment of the Hon'ble Delhi High Court in case S.N. Malhotra and Sons Vs. Airport Authority of India and others, 2008 (4) A.D. (Delhi) 424. In order to agitate the aforesaid contention, learned counsel for the appellant has urged that the question of jurisdiction being legal one, could be raised at any stage of the litigation. Admittedly, neither the reference order was challenged by the appellant at the time when the case was referred to the Arbitrator nor this issue was raised before the Arbitrator that he has no jurisdiction to try the dispute. The agreement between the parties was executed on 26.09.1998. The Arbitration reference was made on 10.07.2000 and the Arbitrator passed the Award on 28.07.2004. But, such issue was never raised before the Arbitrator or any authority in order to contend that the Arbitrator had no jurisdiction to decide the dispute. Even otherwise, the decision of the Arbitrator does not, in any way, prejudice the rights of the parties. Even as per Section 34 of the Act, an Arbitrator Award could be set aside by the Court on limited grounds. Section 34 of the Act reads as under:- “34. Application for setting aside arbitral award. --(1) recourse to a Court against an arbitral award may be made only by an application for setting aside such award in accordance with sub-section (2) and subsection (3). Section 34 of the Act reads as under:- “34. Application for setting aside arbitral award. --(1) recourse to a Court against an arbitral award may be made only by an application for setting aside such award in accordance with sub-section (2) and subsection (3). (2) An arbitral award may be set aside by the Court only if-- (a) the party making the application furnishes proof that- (i) a party was under some incapacity, or (ii) the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law for the time being in force; or (iii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or (iv) the arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration. Provided that,if the decisions on matters submitted to arbitration can be separated from those not so submitted, only that part of the arbitral award which contains decisions on matters not submitted to arbitration may be set aside; or (v) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of this Part from which the parties cannot derogate, or, failing such agreement, was not in accordance with this Part; or (b) the Court finds that-- (i) the subject-matter of the dispute is not capable of settlement by arbitration under the law for the time being in force, or (ii) the arbitral award is in conflict with the public policy of India. Explanation -- Without prejudice to the generality of sub-claus (ii) it is hereby declared, for the avoidance of any doubt, that an award is in conflict with the public policy off India if the making of the award was induced or affected by fraud or corruption or was in violation of Section 75 or Section 81. Explanation -- Without prejudice to the generality of sub-claus (ii) it is hereby declared, for the avoidance of any doubt, that an award is in conflict with the public policy off India if the making of the award was induced or affected by fraud or corruption or was in violation of Section 75 or Section 81. (3) An application for setting aside may not be made after three months have elapsed from the date on which the party making that application had received the arbitral award or, if a request had been made under section 33, from the date on which that request had been disposed of by the arbitral tribunal: Provided that if the Court is satisfied that the applicant was prevented by sufficient cause from making the application within the said period of three months it may entertain the application within a further period of thirty days, but not thereafter. (4) On receipt of an application under sub-section (1), the Court may, where it is appropriate and it is so requested by a party, adjourn the proceedings for a period of time determined by it in order to give the arbitral tribunal an opportunity to resume the arbitral proceedings or to take such other action as in the opinion of arbitral tribunal will eliminate the grounds for setting aside the arbitral award.” The question with regard to jurisdiction was elaborately discussed by the Hon'ble Delhi High Court in S.N. Malhotra's case (supra), wherein while making reference to Sections 16 (1) and 17 of the Act, it was observed as under:- “8. A bare perusal of Section 16(1) of the Act makes it abundantly clear that the arbitral tribunal has now been rendered competent by the legislature to rule on its own jurisdiction, including ruling on any objections with regard to the existence or validity of the arbitration agreement. 9. Sub-Section (2) to Sub-Section (6) of Section 16 are apposite for the purposes of deciding the present controversy and hence are being analyzed in depth hereinafter. While sub-section (2) relates to a plea that the arbitral tribunal does not have jurisdiction, sub-section (3) relates to a plea that the arbitral tribunal has exceeded its jurisdiction. Both sub-section (2) and sub-section (3) categorically spell out the stage at which such a plea can be raised. While sub-section (2) relates to a plea that the arbitral tribunal does not have jurisdiction, sub-section (3) relates to a plea that the arbitral tribunal has exceeded its jurisdiction. Both sub-section (2) and sub-section (3) categorically spell out the stage at which such a plea can be raised. Thus, sub-section (2) says that a plea that the arbitral tribunal does not have jurisdiction shall be raised at the earliest, i.e., not later than the submission of the statement of defence; and it further says that a party shall not be precluded from raising such a plea merely because he has appointed, or participated in the appointment of, an arbitrator. Plea under sub-section (3) that the arbitral tribunal is exceeding the scope of its jurisdiction shall be raised during the arbitral proceedings and that too, as soon as the matter alleged to be beyond the scope of its authority is raised before the arbitral tribunal. Both the aforesaid sub-sections thereby expressly lay down the precise point of time during the arbitral proceedings at which the plea shall be raised before the arbitral tribunal. 10. The limitation of time imposed by sub-section (2) and sub-section (3), however, is relaxed somewhat by the provisions of sub-section (4) of Section 16, which is really in the nature of a proviso to sub-sections (2) and (3). Sub-Section (4) stipulates that the arbitral tribunal may, in either of the cases referred to in sub-section (2) or sub-section (3), admit a later plea if it considers the delay justified. 11. Sub-Section (5) and sub-section (6) lay down the course of action to be followed by the arbitral tribunal upon a plea being raised either under sub-section (2) or under sub-section (3). Under sub-section (5), the arbitral tribunal has the obligation and duty to decide on a plea referred to in sub-section (2) or sub-section (3) and, where it takes a decision rejecting the plea, the arbitral tribunal shall continue with the arbitral proceedings and make an award. Sub-section (6) states 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. 12. Sub-section (6) states 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. 12. On an analysis of the provisions of Section 16(1) to (6), in our view, it is clear that the legislative intent was that a plea as to jurisdiction of the arbitral tribunal or as to exceeding of its authority must be raised at the threshold and cannot be entertained at a subsequent stage. In other words, a plea in terms of sub-section (2) or sub-section (3) of Section 16 of the Act not having been taken at the initial stage, must be deemed to be waived. Indications to show that the statutory mandate is that the plea should be raised at the earliest as culled out by us are set out hereunder: (i) The use of the words “shall be raised not later than the submission of the statement of defence in sub-section (2) of Section 16. (ii) The use of the words “as soon as the matter alleged to be beyond the scope of its authority is raised during the arbitral proceedings” in sub-section (3) of Section 16. (iii) The discretion given to the arbitral tribunal under sub-section (4) of Section 16 to “admit a later plea” [in either of the cases referred to in sub-section (2) of Sub-Section (3)] “if it considers the delay justified.” In other words, the arbitral tribunal must, after examining the matter, rule that the delay in raising objection in terms of sub-section (2) or sub-section (3) is justified. If the delay is not justified in the view of the arbitral tribunal, the arbitral tribunal will be at liberty not to admit the objection with regard to its jurisdiction and/or the scope of its authority, by passing an order refusing to admit the plea on the ground that there was unjustified delay. If the delay is not justified in the view of the arbitral tribunal, the arbitral tribunal will be at liberty not to admit the objection with regard to its jurisdiction and/or the scope of its authority, by passing an order refusing to admit the plea on the ground that there was unjustified delay. (iv) A ruling of the arbitral tribunal on the acceptance or rejection of the objection to its jurisdiction/competency is mandatory as is evident from a reading of sub-section (5), and particularly by the use of the words “shall decide on a plea referred to in sub-section (2) or sub-section (3).” (v) Where the arbitral tribunal rejects the plea and proceeds to make an award, the aggrieved party under sub-section (6) “may make an application for setting aside such an arbitral award” in accordance with Section 34. The use of words “such an arbitral award” are of significance. The legislative intent quite clearly is that the arbitrator will rule on the objection raised or the plea raised before the Arbitral Tribunal in terms of sub-section (2) or sub-section (3) and it is only “such an arbitral award” which can be set aside in accordance with Section 34. The words “such an arbitral award” thus have direct reference to an award rejecting the plea of want of jurisdiction of the arbitral tribunal or want of competency of the arbitral tribunal to deal with the matter. “Such an award” can only exist if the plea is raised before the arbitrator himself and not at any subsequent stage. The clear intent of the legislature thus appears to be that a plea subsequently raised as to the competence of the arbitral tribunal cannot be entertained. The Division Bench of Delhi High Court has further discussed Section 4 and 16 of the Act together and held as under: - “17. We are fortified in coming to the above conclusion by the provisions of Section 4 of the Act, which read as under: “4. Waiver of right to object. The Division Bench of Delhi High Court has further discussed Section 4 and 16 of the Act together and held as under: - “17. We are fortified in coming to the above conclusion by the provisions of Section 4 of the Act, which read as under: “4. Waiver of right to object. - A party who knows that - (a) any provision of this Part from which the parties may derogate, or (b) any requirement under the arbitration agreement, has not been complied with and yet proceeds with the arbitration without stating his objection to such non-compliance without undue delay or, if a time limit is provided for stating that objection, within that period of time, shall be deemed to have waived his right to so object.” 18. Section 4 of the Act thus deals with waiver of the right to object, postulating four pre-conditions for waiver: (i) Non-compliance of a provision of the statute from which the parties may derogate or non-compliance with any requirement under the arbitration agreement. (ii) Knowledge of such non-compliance by the opposite party. (iii) Proceeding with the arbitration by the party who has knowledge without stating his objection. (iv) Stating of objection without undue delay or it a time limit is provided for stating that objection, such objection must be stated within that period of time and failure to do so shall be deemed to be waiver of the right to object. 19. A conjoint reading of Section 4 and Section 16 yields the following result: (i) a plea that the arbitral tribunal does not have jurisdiction shall be raised not later than the submission of the statement of defence [Section 16(2)] (ii) A plea that the arbitral tribunal is exceeding the scope of its jurisdiction shall be raisd as soon as the matter alleged to be beyond the scope of its authority is raised during the arbitral proceedings [sub-section (3)]. (iii) The arbitral tribunal shall decide on a plea referred to in sub-section (2) or in sub-section (3) [Section 16(5)]. (iv) The arbitral tribunal if it takes a decision rejecting the plea shall continue with the arbitral proceedings and make an arbitral award, in which case the party aggrieved by such an arbitral award may apply for setting aside the same in accordance with Section 34 read with Section 16(6). (iv) The arbitral tribunal if it takes a decision rejecting the plea shall continue with the arbitral proceedings and make an arbitral award, in which case the party aggrieved by such an arbitral award may apply for setting aside the same in accordance with Section 34 read with Section 16(6). (v) A party who knows that (a) any provision of the statute from which the parties may derogate, or (b) any requirement under the arbitration agreement, has not been complied with by the opposite party, and yet proceeds with the arbitration without stating his objection to such non-compliance, without undue delay, shall be deemed to have waived his right to so object. (Section 4).” The conclusions drawn by the Division Bench of Delhi High Court are as under: - “33. We, therefore, hold that the respondent must be deemed to have waived any objection to the jurisdiction of the arbitral tribunal when it chose not to raise the plea now being raised by it, though it was fully aware of the terms of the agreement entered into between the parties. Section 34(iv) cannot come to the rescue of the respondent as the said section cannot be read in isolation and allowed to render otiose the provisions of Sections 4, 5 and 16 of the Act which, in a sense, are the high points of the Act. Any other interpretation of the aforesaid provisions of the statute would not only deprive the winning party of the fruit of its hard earned labour at the end of a long drawn out battle, but, in our considered opinion, would be opposed to public policy, as it would inevitably result in colossal waste of time, money and energy, all of which are necessarily expended in the arbitral process. This apart, it would frustrate the object of the Act itself viz. To provide for expeditious disposal of a dispute by recourse to arbitration.” The aforesaid judgments were also discussed by this Court in detail in case M/s Gupta Rice Mill (P) Ltd. Vs. This apart, it would frustrate the object of the Act itself viz. To provide for expeditious disposal of a dispute by recourse to arbitration.” The aforesaid judgments were also discussed by this Court in detail in case M/s Gupta Rice Mill (P) Ltd. Vs. The Punjab State Co-operative Supply and Marketing Federation Ltd. & another, FAO No. 2283 of 2008 (decided on 25.08.2010 As such, while relying upon the judgments delivered in M/s Gupta Rice Mill (P) Ltd. and S.N. Malhotra's cases (supra), it is observed that if the question of jurisdiction of the Arbitrator is not raised before him in terms of Section 16 of the Act, it cannot be raised for the first time either in the proceedings under Section 34 of the Act or in the appeal under Section 37 of the Act. Resultantly, both the appeals i.e. FAO Nos. 5769 of 2009 and 1569 of 2010, being devoid of any merit, are hereby dismissed.