Case Note & Summary
The petitioner, M/s Chandan Builders, a partnership firm, entered into an agreement with the respondent, Union of India, which contained an arbitration clause. Disputes arose between the parties, and the respondent appointed an arbitrator. The respondent filed an application under Section 16 of the Arbitration and Conciliation Act, 1996 on 19th December 2005 before the arbitrator, contending that none of the claims were arbitrable because the petitioner had signed the final bill and the claims were made after such signing. The petitioner filed a reply opposing the application. The arbitrator passed an order dated 21st July 2006, in the form of an award, accepting the respondent's plea and holding that none of the claims were arbitrable. Aggrieved, the petitioner filed a civil appeal under Section 37(2) of the Act before the Extra Joint Ad-hoc District Judge, Pune. The District Judge, by order dated 2nd April 2015, dismissed the appeal on the ground that it was not maintainable and that the petitioner's remedy, if any, was to file an application under Section 34 of the Act. The petitioner then challenged the District Judge's order before the Bombay High Court under Article 227 of the Constitution of India. The High Court considered the issue of whether an order under Section 16 accepting a plea of lack of jurisdiction is appealable under Section 37(2)(a). The court noted that Section 37(2)(a) expressly provides for an appeal against an order of the arbitral tribunal accepting a plea under Section 16(2) or (3). The court held that the arbitrator's order dated 21st July 2006 was an order accepting a plea under Section 16(2) and was therefore appealable under Section 37(2)(a). The District Judge erred in holding that the appeal was not maintainable. The High Court set aside the District Judge's order and restored the civil appeal to the file of the District Judge for hearing on merits. The court directed the District Judge to decide the appeal expeditiously, preferably within six months from the date of the order.
Headnote
A) Arbitration Law - Appeal against jurisdictional award - Section 37(2)(a) of the Arbitration and Conciliation Act, 1996 - The petitioner challenged an order of the arbitrator dated 21st July 2006 which accepted the respondent's plea under Section 16 and held that none of the claims were arbitrable. The District Judge dismissed the appeal under Section 37(2) as not maintainable, holding that the remedy was under Section 34. The High Court held that an order under Section 16 accepting a plea of lack of jurisdiction is an award and is appealable under Section 37(2)(a). The District Judge's order was set aside and the appeal was restored. (Paras 1-6) B) Arbitration Law - Maintainability of appeal - Section 37(2)(a) read with Section 16 of the Arbitration and Conciliation Act, 1996 - The court considered whether an appeal lies against an order of the arbitrator under Section 16 accepting a plea of jurisdiction. Relying on the plain language of Section 37(2)(a), which provides for an appeal against an order of the arbitral tribunal accepting a plea under Section 16(2) or (3), the court held that such an order is appealable. The fact that the order was termed an 'award' does not take it out of the ambit of Section 37(2)(a). The District Court's view that the only remedy was under Section 34 was erroneous. (Paras 2-6)
Issue of Consideration
Whether an order passed by an arbitral tribunal under Section 16 of the Arbitration and Conciliation Act, 1996 accepting a plea of lack of jurisdiction and holding that claims are not arbitrable is appealable under Section 37(2)(a) of the Act, or whether the only remedy is to file an application under Section 34 of the Act.
Final Decision
The High Court allowed the writ petition, set aside the order of the Extra Joint Ad-hoc District Judge, Pune dated 2nd April 2015, and restored the civil appeal bearing No.457 of 2011 to the file of the District Judge for hearing on merits. The District Judge was directed to decide the appeal expeditiously, preferably within six months from the date of the order.
Law Points
- Section 37(2)(a) of the Arbitration and Conciliation Act
- 1996 provides for an appeal against an order of the arbitral tribunal accepting a plea under Section 16(2) or (3) regarding jurisdiction
- An order under Section 16 accepting a plea of lack of jurisdiction is an award and appealable under Section 37(2)(a)
- The remedy of appeal under Section 37(2)(a) is not barred merely because the order is termed an 'award' or because the tribunal has not finally determined all claims
- The District Court erred in holding that the only remedy was under Section 34 of the Act
