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(3) Whether an arbitrator is not entitled to pass an award directing specific performance of an agreement of sale and the subject matter of the dispute is not capable of arbitration under section 34(2)(b)(i) of the Act?
(4) Whether the appellant could question factual findings relating to default, time being essence, readiness and willingness etc. before the arbitrator under Section 34 of the Act?

Points 1 and 2:

From the facts mentioned, it would be noticed that there were two sets of agreements, namely the main set of three agreements dated 9.3.94, 9.3.94 and 29.6.94 and the three other agreements of the same dates dealing with Interior Designing. Each of main agreements contained an arbitration clause (clause 39) of a general nature which did not specify any particular arbitrator's name while the Interior Design Agreements in each case contained a separate arbitration clause (clause 5) mentioning the name of specified arbitrators. It was the case of the appellant that the notice given on 8.7.96, the petition under Section 11 of the Act for appointment of an arbitrator and the reference covered only disputes and differences arising under the main agreements and there was no reference in respect of the disputes and differences arising out of Interior Design Agreements. It is contended for the appellant that the order appointing the arbitrator dated 13.6.97 specifically dealt with disputes and differences under the main agreements only and not those under the Interior Design Agreements.

Before we go into the interpretation of the arbitration clauses, we have to refer to the conduct of the appellant which is very much relevant for purposes of section 16 of the Act. The respondents had referred in their claim statement before the arbitrator dated 29.7.97 to the disputes and differences arising under the Main agreements as well as under the Interior Designer Agreements. The appellant filed its written statement dated 22.10.97 but no objection was raised that the disputes and differences contained in the three Interior Design Agreements were not intended to be referred to the arbitrator or that the same could not be decided by the arbitrator appointed under the main agreement. The appellants' counsel had cross-examined the respondents' witnesses upto a stage and even then no such objection as to scope of reference was raised. The arbitrator referred in his award to the sole contention of the appellant before him so far as the Interior Design Agreements were concerned and that was that the said agreements were void inasmuch as no amount was paid at the time of the agreements (though Rs.10 lakhs each was agreed to be paid). That was the only contention concerning these three Interior Design agreements. No dispute as to the power of the arbitrator to deal with disputes under these three agreements was raised. That means that the appellant accepted that disputes under these agreements were also covered by the reference. In the objections to the award filed in the Court under section 34 no such point was raised except a general ground (j) that the entire proceedings of arbitration were illegal and bad in law, null and void and that the award was liable to be set aside. In the order of the learned Single Judge in para 5 it was stated that only 3 points were raised and we find that this was not one of those points argued before the learned Single Judge. For the first time this point relating to the scope of the reference was raised/argued before the Division Bench and the same was rejected.

As to the meaning of the words "connected with, arising out of or in relation thereto", we may refer to Renusagar Power Co.Ltd. vs. General Electric Co. [1984 (4) SCC 679]. It was held that these words "are of the widest amplitude and content and include even questions as to the existence and effect (scope) of the arbitration agreement.

Question is whether the disputes and differences arising under the Interior Design Agreement are integrally "connected with" the disputes and differences arising from the main contract? In our view, they are. The main agreement refers to the payment of the last instalment of Rs.17 lakhs against `taking of possession' of the flats. Therefore the main agreements extended upto the time of taking of possession by the purchasers. Para 8 of the main agreement states that the fixtures, fittings and ameneties to be provided by the Developers in the said building and the flat/unit are those that are set out in Annexure E annexed to the main agreement. Now annexure E refers not only to the building but to the type of doors, corridors, fixtures, the nature of the flooring, the bathroom tiles and fittings, the Kitchen, the W.C. and the nature of the Electric Wiring. When we come to the Interior Design Agreement, Annexure A itself refers to the element of designs, Interior finishes/fittings/services and deals with the Walls, Balcony, type of Main Door and Internal Doors, External Doors. It also deals with the type of staircase, the flooring (Italian marbles for Hall room, Bed rooms and passages), Toilet (Italian Marbles, Designed Basin Ceiling Valve plassstering, Bath tub/Ja cuzzi all hardware fitting inclusively Germany range), Marble skirting, Lobby & Entrance (Italian Marble Flooring), Plumbering, Gas system, Electrical (Heavy Duty ISI quality concealed copper wiring) etc. Thus it will be noticed that there are several items in Schedule E of the main agreement which overlap the items in Schedule A of the Interior Design Agreement. In view of the overlapping, in our opinion it has to be said that several items in the Schedule A of the Interior Design Agreement are in modification/substitution of the items in the Main Agreement. Therefore the coverage of the two agreements makes it clear that the execution of the Interior Design Agreement is `connected with' the execution of the main Agreement. It may also be noted that the date of the main agreement and the Interior Design Agreement is the same in each of the three cases and clause 3 of the Interior Design Agreement states specifically that `the work of the said renovation, designing and installation shall commence from the execution thereof' which means that the execution of the Interior Design agreement and the main agreement is to be simultaneous.

But then, we have to explain the purpose of the arbitration agreement contained in clause 5 of the Interior Design Agreement? Is it wholly superfluous?

If there is a situation where there are disputes and differences in connection with the main agreement, and also disputes in regard to "other matters" "connected" with subject matter of the main agreement then in such a situation, in our view, we are governed by the general arbitration clause 39 of the main agreement under which disputes under the main agreement and disputes connected therewith can be referred to the same arbitral tribunal. This clause 39 no doubt does not refer to any named arbitrtators. So far as Clause 5 of the Interior Decorator Agreement is concerned, it refers to disputes and differences arising from that agreement which can be referred to named arbitrators and said clause 5, in our opinion, comes into play only in a situation where there are no disputes and differences in relation to the main agreement and the disputes and differences are solely confined to the Interior Design Agreement. That, in our view, is the true intention of parties and that is the only way by which the general arbitration provision in clause 39 of the main agreement and the arbitration provision for named arbitrator contained in clause 5 of the Interior Design Agreement can be harmonised or reconciled. Therefore, in a case like the present where the disputes and differences cover the main agreement as well as the Interior Design Agreement, - (that there are disputes arising under the main agreement and the Interior Design Agreement is not in dispute) - it is the general arbitration clause 39 in the main agreement that governs because the questions arise also in regard to disputes relating to the overlapping items in the Schedule to the main agreement and the Interior Design Agreement, as detailed earlier. There cannot be conflicting awards in regard to items which, overlap in the two agreements. Such a situation was never contemplated by the parties. The intention of the parties when they incorporated clause 39 in the main agreement and clause 5 in the Interior Design agreement was that the former clause was to apply to situations when there were disputes arising under both agreements and the latter was to apply to a situation where there were no disputes or differences arising under the main contract but the disputes and differences were confined only to the Interior Design Agreement. A case containing two agreements with arbitration clauses arose before this Court in Aggarwal Engineering Co. vs. T.H. Machine Industries [AIR 1977 S.C. 2122]. There were arbitration clauses in two contracts one for sale of two machines to the appellant and the other appointing the appellant as sales-representative. On the facts of the case, it was held that both the clauses operated separately and this conclusion was based on the specific clause in the sale contract that it was the "sole repository" of the sale transaction of the two machines. Krishna Iyer,J. held that if that were so, then there was no jurisdiction for travelling beyond the sale contract. The language of the other agreement appointing the appellant as sales representative was prospective and related to a sales agency and `later purchases', other than the purchases of these two machines. There was therefore no overlapping. The case before us and the above case exemplify contrary situations. In one case the disputes are connected and in the other they are distinct and not connected. Thus, in the present case, clause 39 of the main agreement applies. Points 1 and 2 are decided accordingly in favour of the respondents.