Patna High Court
Heavy Engineering Corporation Ltd. vs S.P. Arya And Anr. on 30 July, 1982
Equivalent citations: AIR1983PAT64, AIR 1983 PATNA 64, 1982 BBCJ 479 (1983) 1 CIVLJ 7, (1983) 1 CIVLJ 7
ORDER Hari Lal Agrawal, J.
1. This application in revision has been filed by the applicant who had made an application under Section 33 read with Section 9 of the Arbitration Act in the Court below for a declaration that the disputes referred to by the opposite party to the arbitrator were not referable to him under the arbitration clause between the parties.
2. Opposite Party No. 1 had executed a contract work of the petitioner-company of raising the height of a slag pond embankment in Jan., 1973. After the completion of the work one arbitration proceeding had already taken place between the parties with respect to certain dispute between them and the opposite party obtained an award in their favour. After that opposite party No. 1 raised some further disputes and the stand of the petitioner in that regard was that they were not referable as they were within the "accepted matters". Some correspondence followed between the parties in this connection and on the petitioner's continued resistance the opposite party No. 1 appointed opposite party No. 2 as their sole arbitrator and asked him to decide the disputes. This led the petitioner to the filing of the application, as already indicated earlier, namely, that the disputes were not arbitrable and, therefore, the reference should be revoked.
3. The learned Subordinate Judge by the impugned order, however, has held that the petitioner has failed to satisfy him that the disputes in question fell within the "accepted matters" and he has, therefore, rejected the application.
4. Mr. Kameshwar Prasad, appearing in support of this application, argued that the learned Subordinate Judge while considering the matter has not adverted to the various affidavits and other materials that were filed before him to come to the conclusion and has recorded his finding in a cursory manner.
Reading the order of the Court below there appears to be some justification for setting aside the order and remitting it back to the Court below, but the learned counsel for the opposite party raised an entirely different contention. His argument was that the question as to whether the disputes came within the purview of "accepted matters" or not was a question that lay within the jurisdiction of the arbitrator himself and not of the Court and, therefore, the application filed by the petitioner in the Court below was entirely misconceived. The basis of this argument of the learned counsel for the opposite party was that if the Court has to refer to the terms of the arbitration clause inasmuch as existence of the arbitration agreement was undisputed, then the arbitrator was the sole judge to decide the merits of such an objection.
5. Section 33 of the Arbitration Act, inter alia, provides for making of an "application by any party to an arbitration agreement or any persons claiming under him challenging the existence or validity of an arbitration agreement ..... or to have the effect of either determined ....." The scheme of Section 33 of the Arbitration Act, therefore, in my view, empowers a Court also to determine the effect of an arbitration agreement.
6. The petitioner had applied to the Court for examining the question as to whether the disputes raised by opposite party No. 1 were covered by the arbitration clause or were outside the same. Learned counsel for the opposite party however placed implicit reliance upon the case of Jawahar Lal Barman v. Union of India (AIR 1962 SC 378) where it was held that if a party affirms the existence to an arbitration agreement or its validity, it is not open to him to file a suit for the purpose of obtaining a declaration about the existence of the said agreement or its validity. Proceeding further, with respect to Section 33 it was observed that "the person affirming the existence of an agreement" is entitled to apply to the Court under the latter part of Section 33 for making a declaration about the said existing agreement, then the first part of Section 33, i. e., where a challenge to the existence of an arbitration agreement itself can be made, would become wholly superfluous. In this view of the matter, it was held that a party affirming the existence of an arbitration agreement could not apply under Section 33 for obtaining a decision "that the agreement in question exists".
In my view, the reliance placed by the learned counsel for opposite party No. 1 on the above decision for the proposition enunciated by him is misplaced. All that the said decision lays down is that a party who admits the existence of an arbitration agreement cannot go to the Court challenging the question of its existence as such. Reference in this connection may be made also to the case of Union of India v. Salween Timber & Construction Co. (India) (AIR 1969 SC 488) where it was held that if it is necessary to take recourse to the terms of the contract for the purpose of deciding the dispute, it must be held that the matter is within ths scope of the arbitration clause and the arbitrators had jurisdiction to decide that dispute.
That might be so, i. e., the arbitrator may also have the jurisdiction to decide this question, but on that account can it be said that the jurisdiction of the Court to determine the effect of the arbitration clause is ousted ? If a party to an arbitration agreement desires to have the effect of the arbitration clause determined by the Court viz., as to whether the disputes can be referred to an arbitrator being covered by the arbitration clause, the Court also has the authority under Section 33 to decide this question, i. e., as to whether the particular dispute was within the scope of the arbitration agreement or not. By doing this the Court would simply examine the scope of the arbitration clause and it would be nothing beyond the determination of the effect of the arbitration agreement. Both the authorities of the Supreme Court, in my opinion lay down entirely different propositions and in any view do not lay down that the jurisdiction of the Court is barred and it would be the exclusive jurisdiction of the arbitrator alone.
Having given my anxious consideration to the problem I fail myself to reconcile with the contention that if such an argument could be accepted, then what could be the justification for empowering a Court under Section 33, inter alia, to determine the "effect" of an arbitration agreement. When a Court is called upon to decide this question, i. e., the effect of arbitration agreement between the parties, certainly it would go into the question as to what would be its scope and ambit as a matter of necessity and if a Court comes to the conclusion that a dispute is within the arbitration agreement, the arbitrator is the sole Judge of it and if it does not fall within the scope of the arbitration agreement, the Court is entitled to declare the effect of the arbitration agreement and incidentally upon the validity of the contract. I find full support for this view from a decision of Shah, J. in Gordhandas Pursottam Sonawala v. Natvarlal Chandulal & Co. (AIR 1952 Bom 349). I find myself unable, therefore, to accept the contention of learned counsel for the opposite party that the application of the petitioner was not maintainable as such, or for that matter, the trial Court had no jurisdiction to go into the question.
7. Coming back to the point advanced by learned counsel for the petitioner that the Court below has not properly considered the affidavits and other materials that were brought on the record to examine the question as to whether the disputes fell within the "accepted matters" or not, I find the same has got substance. I would, therefore, allow this application, set aside the order and would remit the matter back to the Court below for deciding the question in issue on the materials which have been produced by the parties as to whether the disputes are covered by the arbitration clause of the agreement or are outside thereof. If the Court comes to a conclusion that the matters are covered by the arbitration clause, then it will issue necessary direction to the arbitrator to proceed with the reference, otherwise the reference will have to be revoked. Costs will abide the result.