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State of Orissa and Others Vs. M/S. Jagannath Choudhury Special Class Contractor - Court Judgment

LegalCrystal Citation
CourtOrissa High Court
Decided On
Case NumberW.P. (C) No. 15495 of 2011
Judge
Reported in2012AIR(NOC)194
AppellantState of Orissa and Others
RespondentM/S. Jagannath Choudhury Special Class Contractor
Excerpt:
b.n. mahapatra, j. 1. the petitioner-state in this writ petition challenges the order dated 25.06.2010 passed by the sole arbitrator in arbp no. 15 of 2008. 2. in course of hearing, the learned standing counsel for the state stated that though in the present writ petition the order of the sole arbitrator relating to four applications filed before it under section 16 of the arbitration and conciliation act, 1996 is challenged, the state is only pressing the application relating to finishing of security (annexure-4) and is not pressing other three applications. 3. the petitioners’ case in a nutshell is that opposite partycontractor was awarded with a contract for construction of left head regulator of jambhira earth dam vide agreement no.13 lcb/95-96 executed on 22.02.1996. the total.....
Judgment:

B.N. Mahapatra, J.

1. The petitioner-State in this writ petition challenges the order dated 25.06.2010 passed by the Sole Arbitrator in ARBP No. 15 of 2008.

2. In course of hearing, the learned Standing Counsel for the State stated that though in the present writ petition the order of the Sole Arbitrator relating to four applications filed before it under Section 16 of the Arbitration and Conciliation Act, 1996 is challenged, the State is only pressing the application relating to finishing of security (Annexure-4) and is not pressing other three applications.

3. The petitioners’ case in a nutshell is that opposite partycontractor was awarded with a contract for construction of Left Head Regulator of Jambhira Earth Dam vide Agreement No.13 LCB/95-96 executed on 22.02.1996. The total value of contract work awarded was Rs.4,38,31,520.70. The contract work was required to be completed within 24 consecutive calendar months. The date of commencement of the contract work was 25.01.1996 and the date stipulated for completion of the said work was 24.01.1998. The contractor has received Rs. 4,39, 67,240/- against the total value of work Rs.4,73,59,346.11 and has made a claim of Rs.s12,75,30,345/- with pendente lite interest and future interest. Opposite party-contractor filed a petition before the High Court i.e. ARBP No.15 of 2008 praying for appointment of an Arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996 (in short, “the Act, 1996”) for adjudication of the alleged dispute between opposite party contractor and the petitioner-State. Counter affidavit was filed on behalf of the State replying to the averments of the Arbitration Petition. The Hon’ble Chief Justice of this Court considering the pleadings of the parties and after hearing the counsel vide order dated 25.06.2010 appointed a retired Judge of this High Court as Arbitrator to decide the dispute between the parties. Pursuant to the said order of the Hon’ble Chief Justice, learned Arbitrator issued notice on 29.07.2010 to the parties fixing date to 21.08.2010 for appearance of the parties. The claimants appeared through their counsel and on 25.09.2010 filed their statements of claims.

4. The State filed SLP(C) No.48 of 2011 on 22.12.2010 challenging appointment of the Arbitrator by Hon’ble Chief Justice vide order dated 25.06.2010. The said SLP was dismissed by Hon’ble Supreme Court by order dated 31.01.2011 on the ground that there is no infirmity in the order of the Hon’ble Chief Justice because of nonfunctioning of the Tribunal.

5. Before the learned Arbitrator, on 8.12.2010 the State filed four petitions under Section 16 of the Act, 1996 inter alia praying for dropping of the arbitration proceeding as the same is not maintainable. Leaned Arbitrator vide order no.14 dated 25.04.2011 by a common order dismissed all the four applications filed by the State.

6. Mr. Sisir Das, learned Standing Counsel appearing for the State submits that the claimant having not furnished security as provided under Clause 53(f) of the Agreement, the learned Arbitrator could not have entered into the reference. Opposite party-contractor filed arbitration petition before this Court with a prayer to appoint an Arbitrator u/s.11 of the Act, 1996 to adjudicate the dispute between the parties. The claimant-contractor has neither raised any claim nor quantified such claim before the Hon’ble Chief Justice in Arbitration petition. Therefore, the question of taking a decision by the Hon’ble Chief Justice regarding Clause-53(f) of the written contract did not arise. In fact, there was no occasion nor any requirement in absence of any quantified claim to determine the percentage of security deposit as given in the table at Clause-53(f). Before the learned Tribunal, the State took the ground that the Arbitration Agreement provides for opportunity to move the State Arbitration Tribunal, Bhubaneswar, which has not been done by the claimant-contractor. Hon’ble Supreme Court dismissed the Special Leave Petition with regard to appointment of arbitrator. It is further argued that an order refusing Special Leave to appeal may be a non-speaking order or a speaking one and in either case it does not attract the doctrine of merger. The order refusing special leave to appeal does not stand substituted in place of the order under challenge. It means that the Hon’ble Court was not inclined to exercise its jurisdiction so as to allow the appeal being filed. If the order refusing leave to appeal is a speaking order i.e. gives reasons for refusing the grant of leave, then the order has two applications. Firstly, the statement of law contained in the order is a declaration of law by the Supreme Court within the meaning of Article 141 of the Constitution. Secondly, other than the declaration of law whatever is stated in that order are findings recorded by the Hon’ble Supreme Court which would bind the parties thereto and also the court, Tribunal or authority in any proceedings subsequent thereto by way of judicial discipline, the Supreme Court being the apex Court of the country. But this does not amount to showing that the order of the Court, Tribunal or authority below has stood merged in the order of the Supreme Court rejecting the Special Leave Petition or that the order of the Supreme Court is the only order binding as res judicata in subsequent proceedings between the parties.

7. Mr. Das relying upon the decisions of the Hon’ble Supreme Court in Kunhaymmed vs. State of Kerala, AIR 2000 SC 2587; Fuljit Kaur vs. State of Punjab (2010) 11 SCC 455, submitted that by order dated 25.06.2010 this Court only referred to Clause 53 as arbitration clause. Nothing can be added to the said order to suggest that this Court was dealing with Section 53(f) of the agreement. The order of the High Court dated 25.06.2010 is neither quashed nor is affected if the Arbitral Tribunal appointed by the High Court has to decide whether the claimant contractor is liable to deposit 10% of the amount claimed as security deposit. In fact, the claimant-contractor for the first time has filed his claim petition before the learned Arbitrator on 21.08.2010 which is much after the order of this Court dated 25.06.2010. On 8.12.2010 a petition under Section 16 of the Act, 1996 was filed before the leaned Arbitrator for direction to the claimant-contractor to deposit the amount as agreed between the parties.

8. Placing reliance upon the judgment in Ruchi Strips Alloys Ltd. vs. Tata South Asia Ltd., 2004(13) SCC 470, Mr. Das submitted that all objections with regard to the validity and existence of the Arbitration agreement can be gone into by the Arbitral Tribunal under Section 16 of the Act, 1996. Further placing reliance upon the judgment in S.K. Jain vs. State of Haryana, (2009) 4 SCC 357 it was argued that Hon’ble Supreme Court specifically turned down the argument regarding unequal bargaining power between the contractor and the State. It was further submitted that deposit of cost before the Tribunal in accordance with Section 31(8) and Section 38 of the Act cannot be pressed into service to get over clause-53(f). The quantum payable in terms of the contract is structured on the basis of the quantum involved. Higher the claim, the higher is the amount of fee chargeable. There is a logic in it. It is the balancing factor to prevent frivolous and inflated claims. If the appellant’s plea was to be accepted that there should be a cap in the figure, a claimant who is claiming higher claim stands on a better pedestal than one who makes a claim of a lesser amount.

9. Placing reliance on the judgment of Municipal Corporation vs. Rajesh Construction, (2007) 5 SCC 344, it was submitted that even the retired Chief Justice was appointed by the High Court as Arbitrator, the Hon’ble Supreme Court asked the claimant-contractor as to whether security deposit was made or not. He further submitted that the contention of opposite party-contractor that Clause 53(f) of the Agreement shall not be applicable in view of the order of the Hon’ble Chief Justice in ARBP No.15 of 2008 is without any merit. The order does not show that the High Court delves into the issue of security deposit as no claim was made in the Arbitration Petition quantifying the amount. It was further argued that in National Insurance vs. Bhogara Polyfab, 2009 (1) SCC 267 the Hon’ble Supreme Court left it to the Arbitrator to decide the issue of deposit of security deposit to be made by the claimant contractor as provided in Clause- 53(f) and therefore, the issue is correctly raised by the employer-State in the petition filed U/s.16 of the Act, 1996.

10. Referring to various parts of the arbitration petition Mr. Das submitted that the petitioner has relied upon Clause 53 for referring the matter to the Arbitration. Therefore, the petitioner cannot reprobate and approbate simultaneously by relying on one part of Clause-53 and denying the other part i.e. the claimant contractor approbates 1st paragraph of Clause-53 and denies the 2nd paragraph. From the wordings of the Clause-53(f), it is clear that Clause 53(f) is a part of the contract and the contents of the contract are not disputed by either of the parties. Further placing reliance on the decision of Hon’ble Supreme Court in Indian Oil Corporation Ltd. and others vs. Raja Transport Pvt. Ltd (2009) 8 SCC 520, it was submitted that no party can say he would be bound by only one part of the agreement and not the other part unless such other part is impossible of performance or is void being contrary to the provisions of the Act and such part is severable from the remaining part of the agreement.

11. In view of the categorical statement made in Paragraph-11 of the counter affidavit, opposite party claimant-Contractor’s submission at Page-12 of the written note is misconceived. The petitioner-State has raised plea regarding existence of Clause 53(f) and its applicability which clearly comes under Section 16(1) of the Act, 1996. Section 16(5) of the Act provides that if a plea referring to sub-section (2) or sub-section (3) is rejected the arbitral proceeding can continue and make arbitral award and 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 of the Act. Section 34 of the Act, 1996 does not provide that a party aggrieved by order passed in a petition u/s. 16 (1) of the Act, 1996 shall file appeal under Section 34 of the Act. Referring to Section 21 of the Act, 1996, it is submitted that Section 21 is not applicable which specifies that unless otherwise agreed by the parties, the arbitral proceedings is to commence on the date on which a request for that dispute to be referred to arbitration is received by the respondent. In the present case, the Arbitrator was appointed by the order of this Court under Section 11 of the Act.

12. This Court vide its order dated 17.09.2009 in ARBA No.26 of 2007 (J.S. Construction Vs. Chief Engineer) directed the Contractor to make deposit as provided in the contract.

13. Mr. Sanjit Mohanty, learned Senior Advocate appearing for opposite party submitted that the present writ petition is not maintainable before this Court. The ground taken in the writ petition is devoid of any merit in fact as well as in law calling for any interference with the order of the sole Arbitrator impugned in this writ petition. The case laws relied upon by the petitioners are not applicable to the present case. Mr. Mohanty submitted that Section 16(5) and Section 16(6) of the Act, 1996 when conjointly read envisaged that in a case in which application under Section 16 has been rejected by the Arbitrator, the arbitral proceeding shall continue and an arbitral award has to be made. The party aggrieved can challenge the award only after the arbitration proceeding is over and the award is made under Section 34 of the Act, 1996. In support of the contention, he relied upon the judgment of the Supreme Court in the case of M/s S.B.P. and Co. Vs. M/s Patel Engineering Ltd., AIR 2006 SC 450, decision of Bombay High Court in [2008 (Suppl.1) Arb.LR 122 (Bombay) (DB)] and the decision of Rajasthan High Court in [2010 (2) Arb.LR 107 (Rajasthan).

14. Placing reliance on Section 5 of the Act, 1996, Mr. Mohanty submitted that the principal object of Section 5 is to promote and encourage resolution of disputes expeditiously and less expensively. Especially when there is an arbitration agreement, the Court’s intervention should be minimal.

15. Mr.Mohanty further submitted that the prayer made in the writ petition is for depositing of security. If the prayer in the writ petition is allowed, necessarily order dated 25.06.2010 of the Hon’ble Chief Justice in ARBP No.15 of 2008 would be quashed. The contents are the same as in the counter affidavit filed on behalf of the State and others in the arbitration proceeding, as also in the applications filed under Section 16 of the Act, 1996 before the Sole Arbitrator and the Special Leave Petition [SLP (Civil) CC No.48 of 2011] filed before the Hon’ble Supreme Court. In all the above cases, the petitioner-State questioned the jurisdiction of the Hon’ble Chief Justice of Orissa and the arbitrability of the dispute between the parties including the plea of limitation. The Hon’ble Chief Justice, after hearing the parties, inter alia, held though clause 53 of the contract provides that the dispute can be referred to the Arbitration Tribunal, the same is not required to be referred to the Arbitration Tribunal after commencement of the new Act in view of Section 85 thereof. The order dated 25.06.2010 of the Hon’ble Chief Justice took notice of the questions raised by the State of Orissa and others in ARBP No.15 of 2008 including the question in respect of applicability of Clause 53(f) of the Agreement between the parties as a whole and the question of limitation and decided the said preliminary issues leaving nothing to be considered by the Arbitrator in the Arbitral Proceeding. The specific direction to the Sole Arbitrator was to enter upon the reference and decide the dispute between the parties.

16. Mr. Mohanty further submitted that Hon’ble Chief Justice under Section 11 of the Act, 1996 is otherwise empowered either to appoint Arbitrator in consonance with the stipulations of the contract or to appoint Arbitrator de hors the stipulation of the contract i.e. not with reference to the contract. The order dated 31.01.2011, passed by the Hon’ble Supreme Court is final and conclusive. The present dispute between the parties has come into existence much after the enactment of the Act, 1996 and repeal of the old 1940 Act and the State Arbitration Tribunal constituted under the said 1940 Act. In this regard, Mr. Mohanty placed reliance on the judgment of the Hon’ble Supreme Court in the case of M/s Shetty Construction Co. Pvt. Ltd. Vs. M/s. Konkon Railway Construction and Anr., AIR 1999 SC 1535. The order of the Hon’ble Chief Justice has been confirmed by the Hon’ble Supreme Court by a speaking order and not in limine. So far as the parties are concerned, the contention raised by the petitioner in respect of Clause 53 of the General Conditions of Contract (for short, ‘GCC’) is a closed one. Assuming that the Hon’ble Chief Justice did not record any finding on such issues specifically raised, under the principle of res judicata, it must be held tantamount to rejection of such plea. Referring to the judgment of the Hon’ble Supreme Court in the case of Municipal Corporation, Jabalpur (supra) it is contended that appointment of the Sole Arbitrator in the present case has been made by the Hon’ble Chief Justice under Section 11(6) of the Act, 1996 and not in terms of Section 53 of the GCC. The Arbitrator has no jurisdiction to challenge his own appointment by the Hon’ble Chief Justice. Moreover, in Municipal Corporation, Jabalpur (supra), maintainability of the writ petition under Article 226 of the Constitution of India arising out of an order passed under Section 16 of the Act, 1996 was not an issue; hence not discussed. In that case, the Hon’ble Supreme Court appointed the Arbitrator in terms of the Agreement, i.e., Clause 29 of the Contract, whereas in the present case the Hon’ble Chief Justice appointed the Arbitrator under Section 11 of the Act, 1996 without referring to Clause 53 of the Contract. The said order has been confirmed by the Hon’ble Supreme Court. Therefore, the said decision has no application to the present case.

17. The decision of the Hon’ble Supreme Court in the case of S.K.Jain Vs. State of Haryana and Anr., (2009) 4 SCC 357 has no application to the present case as in the said case the dispute was referred to the three member Tribunal in terms of Clause 25-A of the Agreement without intervention of the Court. The respondent State filed its objection with regard to non-compliance of Clause 25-A(7) of the Agreement regarding deposit of security. Learned Tribunal sustained the objection of the State placing reliance on the Municipal Corporation, Jabalpur (supra) and directed to comply with the above condition in the Agreement before taking of the steps to start arbitration proceeding whereas in the present case, the appointment has been made under Section 11(6) of the Act, 1996 by the Hon’ble Chief Justice, i.e., with intervention of the Court and not under Clause 53 of the contract.

18. The judgment of this Court in M/s. J.S. Construction Pvt. Ltd. (supra) has no application to the present case. As it appears, on the application of the claimant-Contractor for the appointment of the Arbitrator in terms of Clause 53 of the Agreement, the Arbitrator was appointed. In the present case, reference of the dispute could not have been made to the Arbitration Tribunal in terms of Clause 53 of the Agreement as the Tribunal did not exist/function vis--vis the dispute between the parties which arose after repeal of the old Act, 1940. In J.S. Construction Pvt. Ltd. (supra) maintainability of the writ petition under Article 226 of the Constitution arising out of an order passed under Section 16 of the Act, 1996 was not an issue; hence not discussed. In the present case, the order passed under Section 16 of the Act, 1996 is challenged under Article 226 of the Constitution of India. In the present case, the petitioner has right to challenge the award of the learned Arbitrator by invoking Section 34 of the Act, 1996.

19. The Hon’ble Chief Justice having already directed that fees and other charges to be fixed by the learned Arbitrator, the present application before the learned Arbitrator for giving security which is in the nature of cost as evident from Clause 53(f) of Contract is also contrary to the direction of the Hon’ble Chief Justice and is inequitable. Sub-section (6) of Section 16 of the Act, 1996 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 of the Act. So, the petitioners have right to challenge the said award of the learned Arbitrator by invoking Section 34 of the Act, 1996. The orders of this Court and Hon’ble Supreme Court are binding on the petitioners. Concluding the argument, Mr.Mohanty prays for dismissal of the writ petition.

20. In reply, it is submitted on behalf of the State that in M/s. S.B.P. and Co. (supra) Hon’ble Supreme Court has not decided as to whether an application is maintainable before High Court under Articles 226 and 227 of the Constitution of India against an order of arbitral Tribunal passed in a petition filed under Section 16 of the Act, 1996. A reading of the entire judgment in S.B.P. Co. (supra) would make it abundantly clear that the Hon’ble Supreme Court has not held that a party aggrieved by an order passed by arbitral Tribunal under Section 16 of the Act, 1996 cannot approach the Hon’ble High Court under Articles 226 and 227 of the Constitution of India. The Hon’ble Supreme Court has not laid down that all the orders passed by the arbitral Tribunal u/s. 16 of the Act, 1996 cannot be challenged before the Hon’ble High Court under Articles 226 and 227 of the Constitution, but certainly the same order can be challenged before the High Court. This has been held to be a part of the basis of the judgment of a seven Judge Bench of the Hon’ble Supreme Court in L. Chandra Kumar vs. Union of India, (1997) 3 SCC 261, wherein it is held that a basic structure cannot be amended by the Parliament by exercising its plenary power of amending the Constitution. The High Court’s power of judicial superintendence shall be taken away by interpretation of a judgment passed by the Hon’ble Supreme Court. In L. Chandra Kumar’s case the Hon’ble Supreme Court held that the power of judicial review is a basic and essential feature of the Constitution. Any interpretation which leads to a situation where the High Court is divested of the power of superintendence over the decision of all Courts and Tribunals within its jurisdiction has to be avoided.

21. On rival contentions, the following questions fall for consideration by this Court :

(i) Whether in the facts and circumstances of the case, the present writ petition is entertainable ?

(ii) If the answer to question no.(i) is in affirmative, whether the opposite party-contractor is liable to make the security deposit as provided in Clause 53(f) of the contract ?

22. To deal with the 1st question, it would be beneficial to refer Section 16 of the Act, 1996.

“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 to 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 exceeding 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 in 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.”

23. A conjoint reading of Section 16(5) and Section 16(6) of the Act, 1996 clearly reveals that in a case in which the application under Section 16 has been rejected by the Arbitrator, the arbitral proceeding shall continue and arbitral award has to be made. The party aggrieved can challenge the award only after arbitration proceedings are over and the award is made u/s.34 of the Act.

24. At this juncture, it is necessary to refer the judgment of the Hon’ble Supreme Court in the case of M/s. S.B.P. and Co. (supra). Some of the relevant findings and observations of the Hon’ble Supreme Court are quoted below :-

“44. It is seen that some High Courts have proceeded on the basis that any order passed by an arbitral tribunal during arbitration, would be capable of being challenged under Article 226 or 227 of the Constitution of India. We see no warrant for such an approach.

xx xx xx

Under Section 34, the aggrieved party has an avenue for ventilating his grievances against the award including any in-between orders that might have been passed by the arbitral tribunal acting under Section 16 of the Act. The party aggrieved by any order of the arbitral tribunal, unless has a right of appeal under Section 37 of the Act has to wait until the award is passed by the Tribunal. This appears to be the scheme of the Act. xxx We, therefore, disapprove of the stand adopted by some of the High Courts that any order passed by the arbitral tribunal is capable of being corrected by the High Court under Article 226 or 227 of the Constitution of India. Such intervention by the High Courts is not permissible.”

“45. The object of minimizing judicial intervention while the matter is in the process of being arbitrated upon will certainly be defeated if the High Court could be approached under Article 227 of the Constitution of India or under Article 226 of the Constitution of India against every order made by the arbitral tribunal. Therefore, it is necessary to indicate that once the arbitration has commenced in the arbitral tribunal, parties have to wait until the award is pronounced unless, of course, a right of appeal is available to them under Section 37 of the Act even at an earlier stage.”

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

25. It is well settled that the law declared by the Hon’ble Supreme Court shall be binding on all courts within the territory of India.

26. The Hon’ble Supreme Court in the case of State of Orissa vs. Dhaniram Luhar, 2004 (1) CJD (SC) 151, has held as under:

“Judicial discipline to abide by declaration of law by this court, cannot be forsaken, under any pretext by any authority or court, be it even the highest court in a State, oblivious to Article 141 of the Constitution of India, 1950 (in short the “Constitution”)

27. In the case of Karnataka State Road Transport Corporation v. Ashrafulla Khan and others, AIR 2002 SC 629 the Hon’ble Supreme Court has held as under :-

“The High Court under Article 226 of the Constitution is required to enforce rule of law and not to pass order or direction which is contrary to what has been injuncted by law”.

28. The Bombay High Court in Sandip Industries v. Sperpack, A Division of Bajaj Steel Industries Limited and another, 2008 (Suppl.1) Arb. LR 122 (Bombay)(DB) held as under :-

“10. Therefore, taking overall view of the scheme of Section 16, one thing is very clear that arbitrator has power to decide the applications with regard to the existence of arbitration agreement and objection in respect of jurisdiction. The arbitrator having once taken decision and rejected the objection with regard to the jurisdiction and observed further that there is existence of arbitration agreement between the parties and proceed accordingly, such order cannot be challenged except the remedy as available under Section 34 and/or Section 37 of the Arbitration Act as refereed above.”

“16. The Supreme Court judgment as cited by the learned counsel appearing for the appellant, i.e. Gas Authority of India Limited and another vs. Keti Construction (I) Ltd. and others reported in (2007) 5 SCC 38=2007 SCACTC 277 (SC)=2007(2) Arb. LR 323 (SC), in fact reiterated the said principle with further observation that the plea regarding jurisdiction must be raised right at the beginning so that remedial measures may be immediately taken and time and expenses involved in hearing of the matter may be saved on the issue of proper constitution or lacking in jurisdiction at earliest. It is further stated that plea of lack of jurisdiction must make out a strong case. The Supreme Court has observed while dealing with Section 16 of the Arbitration Act that arbitral tribunal’s authority under Section 16 is not confined to the width of its jurisdiction but goes to the very root of its jurisdiction and further that the Arbitration Act should be interpreted keeping in mind the UNCITRAL Model Law and the whole object and scheme of the Act is to secure expeditious results of disputes. The judgment in no way supports the case of the appellants that in such case party can agitate the issue or challenge the order of tribunal in civil court and/or in writ jurisdiction as sought to be contended and as done in the present case. The scheme of Section 5 read with Section 16 as elaborated above no way permits the person like the appellant as the remedy so provided under Arbitration Act itself is an effective or alternative efficacious remedy under the law. Therefore, no special case is made out by the appellant to overlook the said principle and to interfere with the order passed by the tribunal under Article 226 of the Constitution of India.”

29. In view of the provisions made in sub-sections(5) and (6) of Section 16 of the Act, 1996 and judgment of the Hon’ble Supreme Court in the case of S.B.P. and Co. (supra), this Court is of the view that the present writ petition is not entertainable.

30. In view of the finding of this Court with regard to question no.(i), there is no need to adjudicate question no.(ii) which would be academic in nature and futile exercise.

31. Before parting with the case, it is felt necessary to quote the following observations of the learned Arbitrator made in the impugned order while rejecting the petitioner’s application made under Section 16 of the Act with regard to furnishing of security deposit as per Clause 53 (f) of the Agreement :-

“………… the Arbitrator shall have no jurisdiction to over ride to cancel the reference is already made by the learned Chief Justice in the order passed under Section 11 of the Act. As stated by the Hon’ble apex Court, the Arbitrator has no jurisdiction to challenge his own appointment by the Hon’ble Chief Justice because of the finality given to the order of the Hon’ble Chief Justice on matters within his competence under Section 11 of the Act and there is no scope for the Arbitrator for reopening the issue. This application is, therefore, rejected.”

32. In view of the above observation of learned Arbitrator, it is open to the petitioners to take such steps, if so advised, to seek a clarification from the Hon’ble Chief Justice with regard to payment of security in terms of Clause 53(f) of the Agreement.

33. In the result, the writ petition is dismissed.In view of the above judgment, interim order passed earlier stands vacated.


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