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MANU/UP/0334/2001

Equivalent Citation: AIR2001All259, 2001 (44) ALR 323, 2001(3)ARBLR410(All), 2001 3 AWC1939All, 2001CriLJ274

IN THE HIGH COURT OF ALLAHABAD

C.M.W.P. No. 16445 of 2001

Decided On: 24.05.2001

Appellants: Rail India Technical and Economic Services Ltd. and another
Vs.
Respondent: Vidyawati Construction Co. and others

Hon'ble Judges/Coram:
G.P. Mathur and Satish Kumar Jain-II, JJ.

Counsels:
For Appellant/Petitioner/Plaintiff: Umesh Narain Sharma and Ravi Shanker Prasad,
Advs.

For Respondents/Defendant: Sudhir Agrawal, Adv. andS.C.

Case Note:
Arbitration and Conciliation Act, 1996 - Sections 11(5)/(6) and 16--
Appointment of Arbitrator by Chief Justice of High Court--Order of
appointment is administrative order--Contention that in view of arbitration
clause Chief Justice of Delhi High Court and not Chief Justice of Allahabad High
Court has authority to appoint arbitrator--Untenable--Such plea not raised in
objection to petition for appointment--Plea cannot be raised for first time in
writ petition--Arbitration clause speaking of Court--But Chief Justice
appointing arbitrator not Court--Claim of respondent mainly for amount due on
account of construction of building at Allahabad--Hence, civil court at
Allahabad has jurisdiction under Section 20, C.P.C.--Hence Chief Justice of
Allahabad High Court has jurisdiction to appoint arbitrator in view of Section
11(12)(b)--Not sound exercise of discretion to entertain writ petition
challenging order of appointment of arbitrator under Section 11--Writ
petitioner can raise all pleas on which order of Chief Justice assailed in writ
petition before Arbitral Tribunal under Section 16--High Court should not
entertain writ petition having effect of delaying arbitral proceedings.The writ
petitioner can raise all such please on which the order of the Chief Justice has
been assailed here before the Arbitral Tribunal under Section 16 of the
Arbitration and Conciliation Act, 1996 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.

JUDGMENT

G.P. Mathur, J.

1. This writ petition under Article 226 of the Constitution has been filed for quashing the
order dated November 17, 2000 of Hon'ble the Chief Justice appointing an arbitrator
under Section 11(5) of the Arbitration and Conciliation Act. 1996.

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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. R.I.T.E.S.) invited tenders for construction of institute building
and staff quarters for Northern Regional Institute of Printing Technology, Allahabad 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 R.I.T.E.S. 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
arbitration clause, and it sent a letter dated September 30. 1998 requesting the
Managing Director of R.I.T.E.S. 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 Hon'ble 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. N.E.P.C. India Ltd.,
MANU/SC/0012/1999 : (1999) 2 SCC 479. 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 Samin (P.) Ltd. v. Peekay Holdings Ltd.,
MANU/SC/0506/1999 : (1999) 8 SCC 572, 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. and others
v. Mehul Construction Co., MANU/SC/0523/2000 : (2000) 7 SCC 201. 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. and
another v. Rani Construction Ltd., (2000) 8 SCC 159. 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. Accordingly, we have to proceed on the
footing that the impugned 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.

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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.,
MANU/SC/0001/1971 : 1971 (1) SCC 286 and Zamindara Engineering Company v. M/s.
Sunil Tractor Company. MANU/SC/0292/1992, 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 of the High Court or person or institution designated by him, under Section
11 of the Act, and the power is not with the Court. Section 2(1)(a) of the Act defines a
"Court" and it means the principal civil court of original jurisdiction in a district and
include 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. It provides that reference to
"Chief Justice" in subsections (4), (5), (6), (7), (8) 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

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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 R.I.T.E.S. by his order dated November 5, 1998 had appointed Sri
Iqbal Singh, Group General Manager, as the sole arbitrator. The General Manager of
R.I.T.E.S. 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 November 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 Data Switchgears Ltd. v. Tata Finance Ltd. and another, MANU/SC/0651/2000 :
(2000) 8 SCC 151.

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-sections (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 (U.N.C.I.T.R.A.L.)


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 commercial arbitration
practice. The U.N.C.I.T.R.A.L. 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. In order to attract foreign capital in the country and allay the fear of
the foreign Investors regarding delay in Courts, the U.N.C.I.T.R.A.L. Model Law and
Rules were adopted with appropriate modification in legislation on domestic arbitration
and conciliation. Keeping that in view, the present Arbitration and Conciliation Act, 1996
(Act No. 26 of 1996) was enacted. The bill 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 1 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
intervene, 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 subsection (5) or sub-
section (6) to the Chief Justice or the person or institution designated by him is final.

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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 1 "Arbitral Tribunal" means a sole arbitrator or a
penal 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 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 case referred to sub-section
(2) or sub-section (3), admit a later plea if it consider 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. Subsection (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 (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

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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 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 subsection
(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. (supra) at
page 206. 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......"

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 :

".....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 legislation 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. and another v. Essar Steels Ltd., (2000) 7 SCC 407, 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 a 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. Writ Mehta, MANU/SC/0232/2000 : (2000) 4 SCC 272.
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

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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 show 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. In Sundaram Finance Ltd. v. N.E.P.C. Ltd., (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.N.C.I.T.R.A.L. 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 independent 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. 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

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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-Kompe-tenz". Is an
essential and widely accepted feature of modern international
arbitration but, at present is not yet recognized in all national
Laws.

D. Ruling by Arbitral Tribunal and judicial control, paragraph (3).....

11. Objections to the Arbitral Tribunal's jurisdiction go to the very


foundation of the arbitration. Jurisdictional questions are, thus,
antecedent to matters of substance and usually rules 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. 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 proponents 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 tack 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

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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 proceedings as referred to in Article 8(1)."

15. Note I 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 to be
decided as a preliminary 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. Since our country is a signatory to some international
conventions., the domestic law of the country should be interpreted in a manner which
do not come in conflict with it. In Peoples Union for Civil Liberty v. Union of India,
(1997) SCC 301, 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 Keshva Nand Bharati, MANU/SC/0445/1973 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 similar observation made by
Khanna, J., in A. D. M., Jabalpur, MANU/SC/0062/1976 : (1976) 2 SCC 521 (at page
754) 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 Arbitratral 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

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enforcement of the Constitution in N. P. Punnu Swami v. Returning Officer,
MANU/SC/0049/1952 : 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
Representative of Peoples 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,
MANU/SC/0209/1977 : AIR 1978 SC 851 ; S. T. Mathu Swami v. K. Natrajan,
MANU/SC/0426/1988and Anugrah Narain Singh v. State of U. P., JT 1996 (8) 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, JT 1991 (1) 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 allow the due operation and implementation
of the concerned law and exhaust 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...."

This decision has been subsequently followed in N. K. Bapna v. Union of India, JT 1992
(4) SC 49 ; State of Tamil Nadu u. P. K. Shamsuddin, MANU/SC/0377/1992 : AIR 1992
SC 1937 and Subhash Mujimal Gandhi v. L. Miningliana, MANU/SC/0835/1994 : 1994
(6) SCC 14. 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.

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18. 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 (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 administrative 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.........."

19. 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.

20. The writ petition is accordingly dismissed at the admission stage.

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