UNION OF INDIA Vs. AMARLAL WADHWANI

JUDGEMENT

(1.) In this appeal preferred under Section 37 (1) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as 'the 1996 Act') the appellant has called in question the validity of the order dated 24-10-2009 passed by the Trial Court by which the application preferred by the appellant under Section 9 of the 1996 Act has been rejected.

(2.) Facts giving rise to filing of the appeal in nutshell are that the appellant awarded a contract to the respondent vide agreement No. 66/EE/BCD-1/2006-2007 for construction of building of Rashtriya Sanskrit Sansthan Bhawan Bhopal. However, on account of slow progress of the work, the contract awarded to;the respondent was rescinded. Therefore, in accordance with Clause 25 of the agreement between the parties, the dispute was referred for adjudication by the sole arbitrator. The respondent submitted a statement of claim before the arbitrator. The appellant filed the written statement of claim to the statement of claim filed by the respondent in which inter alia, an objection was raised that in view of Clause 25 of the agreement executed between the parties, the dispute pertaining to rescission of the contract and the dispute whether or not the respondent had received payment of final bill under duress and coercion had not been referred to for adjudication of the arbitrator. The arbitrator vide order dated 24-10-2009 held that aforesaid issues have been referred for adjudication.

(3.) Being aggrieved by the order dated 24-10-2009 passed by the arbitrator, the appellant filed an application under Section 9 of the 1996 Act, in which a prayer was made that the order dated 24-10-2009 passed by the arbitrator be stayed and it be held that arbitrator has no jurisdiction to decide the issue of rescission of contract and the question of duress and coercion as alleged by the non-applicant. The respondent filed a reply to the aforesaid application and opposed the prayer in which inter alia it was pointed out that by way of interim relief under Section 9 of the 1996 Act the proceeding or order passed by the arbitrator cannot be stayed as the arbitrator under Section 16 of the 1996 Act has the authority to decide its jurisdiction. The Trial Court vide order dated 11-5-2010 held that under Section 16 of the 1996 Act, the Arbitral Tribunal has competence to rule on is jurisdiction. A party shall be at liberty to raise plea that Arbitral Tribunal has exceeded the scope of its authority and thereupon the Arbitral Tribunal shall decide the plea in this regard and continue with arbitral proceeding. A party being aggrieved by such an arbitral award may make an application for setting aside the award passed by the Arbitral Tribunal under Section 34 of the 1996 Act. Accordingly, the application preferred by the appellant was rejected.