Arbitration and Conciliation Act, 1996 – s.16 – Constitution of India – Art.226 – Appellant sought quashing of the order of termination of contract, writ petition dismissed by Single Judge – Division Bench granted liberty to the appellant to raise all its claims before Arbitral Tribunal, which in turn was granted the liberty to decide the claims of the appellant strictly in accordance with the terms of the contract agreed upon between the parties – Arbitral Tribunal framed 12 issues including the issue of the validity of the order of termination and the question whether any claims are barred by limitation or fall under “excepted matters” or are not otherwise arbitrable – Whether the observation of the Division Bench that “the Arbitrator is at liberty to decide the claim of the appellant strictly in accordance with the terms of the contract agreed upon between the parties”, travels beyond the scope of the jurisdiction of a court exercising power of judicial review u/Art.226 of the Constitution of India and impinges upon the jurisdiction of the Arbitral Tribunal u/s.16 of the Arbitration and Conciliation Act, 1996: Held: A conjoint reading of Clause 63 and relevant part of Clause 64 of the Indian Railways Standard General Conditions of Contract (GCC), makes it clear that Clause 63 only excludes the excepted matters from the purview of the Arbitration Clause but does not exclude the jurisdiction of the Court of Law to examine the validity of the decision taken in respect of excepted matters – Under the Act, the question whether a particular claim is covered by, or falls outside, an “excepted matters” clause of a works contract is a matter squarely within the competence of the Arbitral Tribunal u/s.16, and not a question for a court exercising even the wider, appointment-stage jurisdiction u/s.11, much less for a court exercising the discretionary jurisdiction of judicial review u/Art.226 of the Constitution, whose very engagement with the merits of the dispute, in the present case, was declined on the ground that it involved complicated questions of fact – If a court exercising the power of appointment u/s.11(6A) has no jurisdiction to enter upon, still less to predetermine, the touchstone by reference to which the Arbitral Tribunal is to adjudicate a claim said to fall within an “excepted matters” clause, a writ appellate court, whose task was confined to testing the correctness of the Single Judge’s disposal of a writ petition impugning a termination notice, had, by parity of reasoning and a fortiori, no such jurisdiction – The direction that the Arbitrator “is at liberty to decide the claim of the appellant strictly in accordance with the terms of the contract agreed upon between the parties”, whatever the intention behind it, has the inevitable effect of circumscribing the width of the Arbitrator’s enquiry, including his authority u/s.16 to rule upon the scope of his own jurisdiction over the dispute relating to termination – Whether the dispute regarding termination is, in whole or in part, an “excepted matter” outside the Arbitrator’s jurisdiction, and, if so, what remedy survives to the appellant in that behalf, are questions that s.16 of the Act commits to the Arbitrator in the first instance – It was not open to the Division Bench, in the exercise of its writ appellate jurisdiction, to prescribe in advance the manner of, or to place constraints upon, that adjudication – Division Bench ought not to have made such an observation as the issue of arbitrability of termination of agreement was not an issue before it – The direction issued by the Division Bench to the Arbitrator to decide all claims of the appellant strictly in accordance with the terms of the contract agreed upon between the parties shall not be construed to impinge upon the jurisdiction of the Arbitral Tribunal, to adjudicate the dispute with regard to termination of contract. [Paras 12, 18-20, 22]
As published in the Supreme Court Reports, Supreme Court of India. Headnotes prepared by: Divya Pandey. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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