UNION OF INDIA Vs. S.R. CONSTRUCTION CO

JUDGEMENT

(1.) THIS is an application filed on behalf of the respondent for rejection of the petition filed by the petitioner under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as "the said Act") on the ground that this Court does not have jurisdiction to entertain the said petition. It has been contended by the respondent that, first of all, the arbitrator was appointed by an order dated 7.1.2004 passed by the Additional District Judge on a petition under Section 11 of the said Act. Therefore, in accordance with Section 42 of the said Act, the objections, if any, under Section 34 of the Act, would lie before the Court of the Additional District Judge, Delhi who appointed the sole arbitrator. Secondly, it was contended on behalf of the respondent that the total claims preferred before the sole arbitrator came to Rs 19.55 lakhs. Thus, this Court would not have jurisdiction inasmuch as, had a suit been filed of the same value, then the suit would have had to be filed before the District Court and not before this Court. This submission has been made in view of the provisions of Section

(2.) (1)(e) read with Section 34 of the said Act. The learned counsel for the petitioner opposed this application and advanced arguments to the contrary in respect of both the points urged on behalf of the respondent. 2. Insofar as the first point taken by the learned counsel for the respondent is concerned, it is pertinent to note that when an order is passed under Section 11(6) of the said Act for the appointment of an arbitrator, the Chief Justice or his designate does not function as a Court. This has been clearly stated by the Supreme Court in the case of Rodemadan India Ltd v. International Trade Expo Centre Ltd, (2006) 11 SCC 651: 2006(2) R.A.J. 26. The Supreme Court was of the view that neither the Chief Justice nor his designate under Section 11(6), is a "court" as contemplated under section 2(1)(e) the said Act. It was also held that the bar of jurisdiction under Section 42* is only intended to apply to a "court" as defined in Section 2(1)(e). It is, therefore, clear that an order passed under section 11(6) of the said Act by the Chief Justice or his designate would not fall within the purview of Section 42 thereof. Accordingly, the order dated 7.1.2004 passed by the learned Additional District Judge functioning as a designate of the Chief Justice under Section 11(6) of the said Act and appointing the learned arbitrator cannot be regarded as an order passed by a Court. Therefore, Section 42 would not have any applicability in respect of this order. Consequently, the first point urged on behalf of the respondent has no merit.

(3.) A plain reading of the aforesaid definition makes it clear that the word "court" has reference to the principal civil court of original jurisdiction which would have had jurisdiction to decide the questions forming the subject matter of the arbitration if the same had been the subject matter of a suit. It means that had there been no arbitration clause, the court, where the suit, for the same cause of action, could have been filed, would be the court which has been referred to under Section 2(1)(e) of the said Act. This definition of court, as it appears in Section 2(1)(e) has to be read into Section 34 of the said Act which permits the filing of an application for setting aside the arbitral award before a "court". Therefore, reading Section 2(1)(e) along with Section 34 of the said Act, an application for setting aside an arbitral award can only be filed in a court which would have had jurisdiction to entertain a suit had there been no arbitration agreement between the parties.