C.K Thakker, C.J:— This appeal is filed against an order passed by the learned single Judge on Dec. 18, 2001 in Arbitration Petition No. 613 of 2001.
2. The appellant, which was the petitioner before the learned single Judge, filed the above petition, inter alia, contending that the Arbitrator had no jurisdiction to entertain the dispute. The learned single Judge, considering the rival contentions of the parties, and keeping in mind the relevant provisions of the Arbitration and Conciliation Act, 1996 (‘the Act’, for short), held that the petition was premature. It was open to the petitioner to take appropriate proceedings only after an Award would be made by the Arbitrator. The said decision is challenged by the appellant in the present Appeal.
3. The learned counsel for the appellant contended that when a plea was raised by the appellant-petitioner before the learned single Judge that the Arbitrator had no jurisdiction in the matter, the contention ought to have been dealt with and decided. It is only at that stage that the contention is expected to be raised. If it is well founded, the proceedings cannot be continued further. By not deciding the point, the learned Judge has committed an error of jurisdiction, and the order deserves to be quashed and set aside.
4. The learned counsel for respondent No. 1, on the other hand, submitted that the learned single Judge was right in considering the provisions of the Act, and particularly Sections 13(5), 16 and 37 of the Act, and the order does not require interference.
5. Now, Section 16 speaks of competence of arbitral tribunal to rule on its jurisdiction, in our opinion, the law is well settled and it is this. Whereas a civil Court has inherent power to decide the question of its own jurisdiction, a Tribunal or an authority constituted under a relevant statute has to confine its jurisdiction in accordance with the provisions of an Act. There are two classes of cases coming before an authority or tribunal constituted by an Act, as observed in Chaube Jagdish Prasad v. Ganga Prasad Chaturvedi, AIR 1959 SC 492 : (i) where the legislature entrusts a Tribunal with the jurisdiction, including the jurisdiction to determine whether the preliminary state of facts on which the exercise of its jurisdiction depends exists; and (ii) where the Legislature confers jurisdiction on such tribunals to proceed in a case where a certain state of facts exists or is shown to exist.
6. The Supreme Court then proceeded to state:
“The difference is that in the former case the Tribunal has power to determine the facts giving it jurisdiction and in the latter case it has only to see that a certain state of facts exists.”
From the above decision, it is clear that if a statute confers jurisdiction on a Tribunal or an authority as to existence of certain state of facts, by deciding those facts wrongly, a Tribunal or authority does not confer upon itself jurisdiction which it otherwise does not possess. But where the Legislature confers jurisdiction on such Tribunal or authority to determine whether the preliminary state of facts exists and then to exercise such jurisdiction, it has also power to decide those facts and to proceed with the matter for holding that it has jurisdiction. Such a finding, therefore, cannot be challenged by a Writ of Certiorari [See Smt. Ujjam Bai v. State of Uttar Pradesh, AIR 1962 SC 1621].
7. So far as the Act is concerned, Section 16 confers jurisdiction on arbitral Tribunal. Sub-section (1) specifically declares that the arbitral tribunal may rule on its own jurisdiction, including an objection with respect to the existence or validity of the arbitration agreement, etc. sub-section (2) states that the plea that the arbitral tribunal does not have jurisdiction shall be raised at a particular stage.
8. Sub-sections (5) and (6) are relevant and they read as under:—
“(5) The arbitral tribunal shall decide on a plea referred to in sub-section (2) or sub-section (3) and, where the arbitral tribunal takes a decision rejecting the plea, continue with the arbitral proceedings and make an arbitral award.
(6) A party aggrieved by such an arbitral award may make an application for setting aside such an arbitral award in accordance with Section 34.”
9. Section 37 provides for appeals, and sub-section (2) of the said section expressly and specifically states that an appeal shall lie against an order accepting the plea referred to in sub-sections (2) and (3) of Section 16, which state that where the Arbtirator has come to the conclusion that it has no jurisdiction.
10. In our considered opinion, therefore, the scheme of the Act is clear, and it is that if the arbitral Tribunal holds that it has jurisdiction, such an order order cannot be said to be illegal or without jurisdiction at that stage, inasmuch as the competent Legislature has conferred the power on arbitral Tribunal “to rule on its own jurisdiction.” Hence, such an order can be challenged only in the manner laid down in sub-sections (5) and (6) of S. 16, viz., after the arbitration proceedings are over and the award is made. If, on the other hand, it holds that it has no jurisdiction, an order can be challenged under sub-section (2) of Section 37 of the Act.
11. Our attention in this connection, was invited by the learned counsel for respondent No. 1 to a decision of the Supreme Court in Babar Ali v. Union of India (2002) 2 SCC 178. In that case, the constitutional validity of sub-section (5) of Section 16 of the Act was challenged on the ground that the appeal is provided only after passing of an award, and if a party is deprived of right of appeal on the ground that the Arbitrator had no jurisdiction, such a provision would be ultra vires. The Court, however, observed that judicial review is available for challenging the award in accordance with the procedure laid down in the Act, and only because the question of jurisdiction of the Arbitrator is required to be considered after the award is passed, and not at any penultimate stage before an appropriate Court, it would not be a ground for submitting that such an order is not subject to any judicial scrutiny. Accordingly, the Special Leave Petition filed by the appellant came to be dismissed.
12. The counsel for the appellant tried to distinguish the judgment by urging that the point canvassed by him before us did not stand negatived by the Supreme Court. It was on a hypothetical consideration that the Supreme Court indicated that such a provision could not be held ultra vires. He also submitted that from what has been observed in Babar Ali, it cannot be concluded that the Court ruled that in no case, such an argument would be raised before a Court of law.
13. In our opinion, however, looking to the scheme of the Act, as also the ratio in Babar Ali, it cannot be said that by dismissing the Arbitraion Petition, the learned single Judge has committed any error of law and/or of jurisdiction. The contention, therefore, does not detain us, and deserves to be rejected.
14. It was then contended that the Arbitrator was biased. In this connection, reference was made to some of the communications between the appellant, on the one hand, and reply by the Arbitrator, on the other hand. We may state that we express no opinion on that question, as we are of the view of that the Arbitrator has jurisdiction in the matter and the arbitration proceedings could go on. After the award is passed, it can be challenged in the manner laid down in Section 16 of the Act. We, therefore, make it clear that we may not be understood to have expressed any opinion on the second question. As and when the question will arise for consideration at an appropriate stage, the same will be considered, dealt with and decided in accordance with law.
15. The appeal is, therefore, dismissed. No costs.
Appeal dismissed.