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23. Reference to the judgment of the Apex Court in SBP & Co.

(supra) has been made to submit that Section 16 is based on the principle of Kompetenz-Kompetenz. As per the settled principle, the Arbitral Tribunal has the competence to rule on its own jurisdiction and to define the contours of its jurisdiction, which means that when such issue arises before it, the Tribunal ought to decide the same. The jurisdictional issue of competence of the Tribunal to rule on its own jurisdiction goes to the root of the arbitration proceedings. With the rejection of the application raising the claim being barred by the plea of res judicata as well as Order 2 Rule 2 CPC, would result in the arbitral tribunal conferring jurisdiction on its own. The submission is that there is no justification to wait till the outcome of the arbitral proceeding to challenge the order of rejection of the plea of res judicata under Order 2 Rule 2 CPC.

28. It is observed by the Apex Court in SBP & Co. (supra) that Section 16 of the Act only makes explicit what is even otherwise implicit, viz. that the arbitral tribunal constituted under the Act has the jurisdiction to rule on its own jurisdiction, including ruling on objections with respect to the existence or validity of the arbitration agreement. Section 16 is said to be the recognition of the principle of Kompetenz -

43. Dealing with the above submission of the learned counsel for the respondent, the Apex Court has considered the principle NEUTRAL CITATION C/FA/1632/2019 CAV JUDGMENT DATED: 12/07/2024 undefined on which Section 16 has been formulated. It was noted that at one point of time, the law was that the arbitrator, being a creature of the contract, could not rule on the existence or validity of the arbitration clause contained in the contract. This, however, gave way to the Kompetenz principle which was adopted by the UNCITRAL Model Law. Section 16 of the Act' 1996 is based on UNCITRAL Model Law, which lays down that an arbitral tribunal may rule on its own jurisdiction, often stated to be Kompetenz-Kompetenz principle. It was further noted that the Kompetenz principle deals with the arbitral tribunal's jurisdiction in the narrow sense of ruling on objections with respect to the existence or validity of the arbitration agreement. The Court has further proceeded to examine whether in light of the language of Section 16 (1), the arbitral tribunal which is required to rule on its own jurisdiction, may embark upon an inquiry upon the issues framed by the parties to the dispute. It was, thus, observed in paragraphs '18 to 20' as under :-

53. We may further clarify that the question of bar under Section 11, Explanation 4 or under Order 2 Rule 2 CPC cannot be permitted to be raised within the scope of Section 16, which has been enacted on the Kompetenz-Kompetenz principle to rule on its own jurisdiction and the preliminary issue such as existence or validity of the arbitration agreement and matters submitted to arbitration being within the realm of the arbitration agreement. The issues such as res judicate and bar of Order 2 Rule 2 CPC though are the plea of law, which concerns the jurisdiction of the arbitrator, but they can very well be raised in the arbitration proceedings and issues have to be framed on the same by the Arbitrator, which may be decided as preliminary issues, but such plea cannot be said to fall within the scope and context of the expression "jurisdiction" in various sub-sections of Section 16.