Judgment:
Sangeet Lodha, J.
1. By this writ petition, the petitioner has challenged order dated 12.10.01 passed by the District Judge, Merta in Arbitration Application No. 50/01 directing it to appoint Arbitrator on its behalf, the arbitration proceeding initiated by the Arbitral Tribunal constituted in pursuant thereto and the award dated 13.12.04 passed by the Arbitral Tribunal.
2. In nutshell the relevant facts are that the petitioner institute which is a deemed to be university notified under Section 3 of the University Grant Commission Act, 1956, invited the designs from Architects all over the country to develop university's new campus. After considering the various proposal received the design proposed by the respondent No. 2 M/s. Matharoo Associates was selected and accordingly, after deliberation and negotiation an agreement dated 24.5.93 was entered into with the respondent No. 2 for providing professional services for the project.
3. It was agreed upon between the parties under the agreement that the dispute arising shall be resolved by way of arbitration. Article 13 of the agreement contains the Arbitration Clause which reads as under:
Arbitration of all question in disputes under this Agreement shall be at the choice of the either party and shall be in accordance with the provisions, then, obtaining, of the Standard form of Arbitration procedure of the Indian Institute of Architects. This Agreement shall be specifically enforceable under the prevailing arbitration law and judgment upon the award rendered may be entered in the Court of the form state or federal having jurisdiction. The decision of the arbitrators shall be a condition precedent to the right of any legal action.
4. The respondent No. 2 served the petitioner with notice dated 19.8.97 and raised a claim for compensation to the tune of Rs. 46,65,660/-. While invoking the arbitration clause, the petitioner was informed by the respondent No. 2 that if it disputes the said claim, then, the matter be referred to arbitrator under Article 13 of the agreement dated 24.5.93. The respondent No. 2 proposed name of Shri Muzaffar Ali Khan as its nominated arbitrator and called upon the petitioner to appoint one arbitrator from its side. The petitioner having failed to nominate the arbitrator, the respondent No. 2 filed an application before the District Judge, Merta City, authority designate of the Chief Justice, praying that the petitioner be directed to propose and appoint one arbitrator for adjudication of the dispute.
5. The said application was contested by the petitioner by filing a reply thereto, It is submitted that an objection with regard to jurisdiction specifically raised was not at all dealt with by the District Judge, Merta and the application preferred by the respondent No. 2 was allowed vide order dated 12.10.01 and while appointing Shri Muzaffar Ali as arbitrator on behalf of respondent No. 2, directed the petitioner for appointment of arbitrator on its behalf.
6. In pursuance of the order dated 12.10.01 the Arbitral Tribunal was constituted wherein the respondent No. 3(1) Hon'ble Mr. Justice N.L. Tibrewal (Retd.) was appointed as Presiding Officer of the Tribunal and the respondent No. 3(2) Mr. Gulab Singh Bhandari and respondent No. 3(3) Mr. Muzaffar Ali Khan were appointed as members of the said Tribunal.
7. The respondent No. 2 filed claim petition before the Arbitral Tribunal. The petitioner submitted its preliminary objections about the maintainability of the arbitration proceedings before the Arbitral Tribunal. It was stated therein that the appointment of the Arbitral Tribunal by the District Judge, Merta was itself without jurisdiction inasmuch as the subject matter was beyond the pecuniary jurisdiction of the District Judge, Merta. A para wise reply to the claim petition was also filed on behalf of the respondent No. 2.
8. The objection about the jurisdiction of the District Judge, Merta for appointment of the arbitrator was rejected by the Arbitral Tribunal by passing an order dated 31.1.03. The Arbitral Tribunal conducted the arbitral proceedings and thereafter passed an award dated 13.12.04, awarding compensation in favour of the respondent No. 2 to the tune of Rs. 18.65 lacs alongwith the interest @ 11% from 12.3.96 and cost to the tune of Rs. 3.5 lacs. The said award passed by the Arbitral Tribunal has already been challenged by the petitioner by way of filing an application under Section 34 of the Act of 1996, before the learned District Judge, Merta.
9. In this writ petition, the petitioner has basically challenged the validity and propriety of the order dated 12.10.01 passed by the learned District Judge, whereby the learned Judge has allowed the application preferred by the respondent No. 2 under Section 11 of the Act of 1996 and directed the petitioner to appoint arbitrator on its behalf. The challenge to the arbitration proceedings and the award passed by the Arbitral Tribunal is only consequential.
10. It is contended by the learned Counsel for the petitioner that the District Judge, Merta has seriously erred in deciding the application filed by the respondent No. 2 under Section 11 of the Act of 1,996, in pursuance of notification dated 6.3.97 bearing No. 2/SRO/97, despite the fact that the said notification had already been amended by subsequent notification dated 12.2.01 followed by the corrigendum dated 22.2.01 providing that all matters beyond pecuniary limits of 5 lacs should be placed only before Hon'ble the Chief Justice or any Judge nominated by the Hon'ble Chief Justice. It is submitted that vide notification dated 6.3.97 issued by the Hon'ble Chief Justice in exercise of power conferred under Section 10 & 11 of the Act of 1996, Scheme for Appointment of Arbitrator was notified and as per Clause 3 of the Scheme to deal with the request for appointment of arbitrator, the Chief Justice designated Civil Judge (Senior Division), where value of subject matter is less than Rs. 50,000/- and the District Judge/Additional District Judge, where the value of subject matter exceeds Rs. 50,000/-. However, vide notification dated 12.2.01, it was provided that where value of the subject matter exceeds Rs. 5 lacs, the request for appointment of arbitrator shall be placed before the Chief Justice or any Judge of the High Court for appropriate allotment. But immediately after issuing the said notification dated 12.2.01, sub para (b) of para 3(1) of the Scheme was further amended vide notification dated 22.2.01 and it was provided that the District Judge/Additional District Judge, shall deal with the request for appointment of arbitrator where value of the subject matter exceeds Rs. 50,000/- but does not exceed Rs. 5 lacs. It is contended by the learned Counsel for the petitioner that there was no saving clause incorporated in the amended notifications and, therefore, there was no specific provision to save the application pending before the subordinate courts as authority designate of the Hon'ble Chief Justice. Accordingly, it is submitted that since, the value of subject matter was admittedly more than Rs. 5 lacs, therefore, the District Judge, Merta had no jurisdiction to entertain the application preferred on behalf of the respondent No. 2 under Section 11 of the Act of 1996. It is submitted that as on the date of passing of the order, the learned District Judge was not having the jurisdiction to adjudicate, entertain and decide the application preferred by the respondent No. 2, therefore, the same is void abinitio and consequently, the arbitral proceedings and the award dated 13.12.04 are not sustainable in the eye of law.
11. It is submitted that objection with regard to jurisdictional error of the District Judge, Merta in passing the order dated 12.10.01, has been taken in the application preferred by the petitioner under Section 34 of the Act of 1996, however, since, the question raised by the petitioner goes to the root of the matter and if it is compelled to pursue only the said application, the same would amount to waste of time, energy and money. That apart, it is submitted by the learned Counsel that against the order dated 31.1.03 passed by the Arbitral Tribunal, no writ petition was maintainable and, therefore, even otherwise, the petitioner could not have challenged the validity of the said order before this Court. In this regard, the learned Counsel has relied upon a decision of the Hon'ble Supreme Court in the matter of 'SBP and Co. v. Patel Engineering Ltd. and Anr.' : (2005) 8 SCC 618 : RLW 2006 (2) SC 1386. It is further submitted by the learned Counsel that the contention regarding the lack of jurisdiction can be raised at any stage and, therefore, the challenge of the petitioner to order dated 12.10.01 passed by the District Judge, Merta, directing the petitioner to appoint arbitrator, even after conclusion of the arbitration proceedings is maintainable. In support of his contention, the learned Counsel has relied upon a decision of the Hon'ble Supreme Court in the matter of 'Jagadguru Anandanishwara Maha Swamiji v. V.C. Allipur and Anr.' : (2009) 4 SCC 625 and a Bench decision of this Court in the matter of 'Deep Chand Kothari v. Commissioner of Income Tax' : (1988) 171 ITR 381. Relying upon a decision of the Supreme Court in the matter of 'Kiran Singh and Ors. v. Chaman Paswan and Ors.' : AIR 1954 SC 340, it is submitted by the learned Counsel that a defect of jurisdiction whether it is pecuniary or territorial or in respect of subject matter of the action, it strikes at the very root of the authority of the Court and such defect cannot be cured even by the. consent of the parties, therefore, the order impugned cannot be sustained. Accordingly, it is submitted by the learned Counsel that the order dated 12.10.01 passed by the District Judge, Merta, the arbitration proceedings taken in pursuant thereto and consequently, the award passed; deserves to be quashed and set aside.
12. Per contra, learned Counsel appearing on behalf of the respondent No.2 submitted that if the petitioner was aggrieved by order dated 12.1001 passed by the District Judge, Merta City, then, nothing prevented him to assail the validity and propriety thereof before entering into arbitration proceedings initiated in pursuant thereto. It is submitted by the learned Counsel that after commencement of the arbitration proceedings, the question even with regard to the constitution and the jurisdiction of Arbitral Tribunal could only be raised before the Arbitral Tribunal and thereafter in between orders which are passed by the Arbitral Tribunal can only be challenged by way of application under Section 34 of the Act of 1996, and the petitioner has already availed the said remedy and, therefore, the writ petition assailing the validity of the order dated 12.10.01 passed by the District Judge, Merta City, is not maintainable before this Court. In support of his contention, the learned Counsel has relied upon the decision of the Hon'ble Supreme Court in the matter of SBP's case (supra). The learned Counsel submitted that the writ petition preferred by the petitioner assailing the validity of the order dated 12.10.01 passed by the District Judge, Merta, at such a belated stage after conclusion of the arbitration proceedings badly suffers from vice of delay and laches and, therefore, deserves to be dismissed on this count alone.
13. It is next contended by the learned Counsel for the respondent No. 2 that admittedly, as on the date of filing of the application the subject matter was well within the pecuniary jurisdiction of the District Judge, Merta City and, therefore, the subsequent notification amending the Scheme shall not affect the pending actions unless, intention to the contrary is shown by incorporating a specific provision therein. In support of his contention the learned Counsel has relied upon a decision of the Hon'ble Supreme Court in the matter of Commissioner of Income Tax, Orissa v. Dhadi Sahu' (1993) 1999 ITR 610. It is submitted by the learned Counsel that once the matter reaches the Arbitral Tribunal or the sole Arbitrator, the order passed during the course of arbitration proceedings cannot be interfered with by this Court and the parties could approach the Court only in terms of Section 37 of the Act of 1996. To buttress the argument advanced, the learned Counsel has relied upon a decision of this Court in the matter of 'Hindustan Copper Limited v. M/s. Paramount Limited and Anr. RLW 2005 (5) raj 730. Lastly, it is submitted by the learned Counsel that in pursuance of the order dated 12.10.01 passed the District Judge, Merta City, the petitioner appointed arbitrator on its behalf and thereafter the arbitrator appointed by the parties, appointed a Presiding Arbitrator. Accordingly, it is submitted by the learned Counsel that the petitioner having acquiesced with the order passed by the District Judge has waived his right to question the validity thereof and, therefore, the writ petition deserves to be dismissed for this reason also.
14. I have given thoughtful consideration to the rival submissions of the parties and also perused the material on record.
15. Indisputably, on 1.4.98 when the respondent No. 2 filed an application under Section 11 of the Act of 1996, before the District Judge, Merta City, for appointment of arbitrator, in terms of Scheme framed by the Chief Justice of the Rajasthan High Court notified vide notification dated 6.3.97, the District Judge, Merta City, was the competent authority to deal with the request for appointment of arbitrator where the value of the subject matter exceed Rs. 50,000/-. It is stated in the petition and was reiterated during the course of the arguments by the learned Counsel for the petitioner that an objection with regard to jurisdiction was specifically raised before the District Judge, Merta City but the same was not at all dealt with by the learned Judge while passing the impugned order. It is to be noticed that the reply to the application under Section 11 of the Act of 1996, was filed by the petitioner on 12.10.2000 and, therefore, the question of its raising any objection as to pecuniary jurisdiction before the learned District Judge, Merta City, at the relevant time does not arise inasmuch as till then, the provision of the Scheme conferring jurisdiction upon the District Judge to deal with all request for appointment of arbitrator where the value of subject matter exceeds Rs. 50,000/- was not even amended. As a matter of fact, in the reply filed, the objection as to the jurisdiction has been taken in terms that by virtue of provision of Section 42 of the Act of 1996, the District Judge, Merta City, had no jurisdiction to entertain and decide the application filed on behalf of the respondent No. 2. That apart, from perusal of the order impugned dated 12.10.01 also it appears that no such objection regarding the jurisdiction of the District Judge to entertain the application in terms of subsequent amendment introduced in the Scheme vide notification dated 12.2.01 and 22.2.01 was taken by the petitioner, therefore, the allegation that the District Judge has not considered the objection despite being raised by the petitioner does not appear to be correct.
16. Be that as it may, if the petitioner was aggrieved by the order dated 12.10.01 passed by the District Judge, Merta City, appointing Mr. Muzaffar AH as the arbitrator nominated on behalf of the respondent No. 2 and directing the petitioner to appoint the arbitrator on its behalf, then, nothing prevented the petitioner to assail the validity of the order by way of writ petition before this Court. However, instead of assailing the validity of the order by taking appropriate proceedings, the petitioner acquiesced with the order and appointed Mr. Gulab Singh Bhandari as an arbitrator on its behalf and thereafter Hon'ble Mr. Justice N.L. Tibrewal (Retd.) was appointed as Presiding Officer of the Arbitral Tribunal by the arbitrators appointed by the parties.
17. It is common ground between the parties that the objection as to the jurisdiction of learned District Judge to appoint the arbitrator was raised by the petitioner before the Arbitral Tribunal, which stands rejected vide order dated 31.1.03 and further that the objection with regard to jurisdictional error of the District Judge, Merta in passing the order dated 12.10.01 has also been taken by the petitioner in the application preferred under Section 34 of the Act of 1996, for setting aside the arbitral award.
18. Section 16 of the Act of 1996, empowers the Arbitral Tribunal to rule on its own jurisdiction. As per Sub-section (2) of Section 16 a plea that a Arbitral Tribunal does not have jurisdiction shall be raised not later than the submission of the statement of defence. However, as per Sub-section (3) of Section 16, a plea that Arbitral Tribunal is exceeding the scope of its authority shall be raised as soon as the matter, alleged to be beyond the scope of its authority is raised during the arbitral proceedings. However, Sub-section (4) of Section 16 provides that a later plea with regard to the jurisdiction in terms of Sub-section (2) or Sub-section (3) can be admitted by the Arbitral Tribunal, if it considers the delay justified. But then, Sub-section (5) of Section 16 mandates specifically that if the Arbitral Tribunal takes a decision rejecting the plea shall continue with the arbitral proceedings and make an arbitral award.
19. Yet another aspect of the matter which needs to be noticed is that an order of the Arbitral Tribunal accepting the plea referred in Sub-section (2) or Sub-section (3) of Section 16 is appealable Under Section 37 of the Act, but decision rejecting the plea is not appealable. Thus, if the arbitrator rules against the party seeking arbitration resulting in termination of the arbitration proceedings then, the aggrieved party shall be entitled to invoke the appeal Under Section 37(i)(a) of the Act but, if the arbitrator rejects the plea then, the person challenging the jurisdiction of the arbitrator has no right to appeal whatsoever.
20. Thus, the Scheme of the Act reveals that once the arbitrator enters into reference, the challenge to his jurisdiction has to be made before the arbitrator himself. Further, if the challenge of the party to the arbitrator fails then the arbitrator will proceed with the arbitration proceedings and the party aggrieved has to wait till the passing of the award and thereafter, the validity of the award can be assailed by the aggrieved party only by invoking the provisions of Section 34 of the Act.
21. In this view of the matter, the petitioner having participated in the arbitration proceedings and after conclusion of the arbitration proceedings having challenged the award by invoking provision of Section 34 of the Act, cannot be permitted to invoke the extra ordinary jurisdiction of this Court under Article 226 of the Constitution of India at such a belated stage assailing the validity of order passed by the District Judge, Merta City, appointing the arbitrator.
22. The learned Counsel for the parties have heavily relied upon the decision of the Hon'ble Supreme Court in the matter of SBP's case, therefore, it will be appropriate to refer the law laid down therein. In the said decision the Hon'ble Apex Court while dealing with the question regarding the nature of proceedings under Section 11(6) held that such proceedings are adjudicatory and outcome of the said adjudication is a judicial order. However, the Hon'ble Court observed that while the matter is in process of being arbitrated upon, the parties cannot be permitted to approach the High Court under Article 226 or 227 of the Constitution of India against the every order made by the Arbitral Tribunal and the parties have to wait till the award is pronounced except in case covered by Section 37 of the Act, where the right to appeal is available. Thus, the learned Counsel for the petitioner is justified in arguing that the order dated 31.1.03 passed by the Arbitral Tribunal over ruling the objection to jurisdiction raised could not have been challenged by way of writ petition. But then, it is not so insofar the challenge to the order dated 12.10.01 passed by the learned District Judge, Merta City, is concerned. To the contrary, later in the matter of 'Punjab Agro Industries v. Kewal Singh Dhillon' : 2008 (10) SCC 128, the Hon'ble Apex Court after due consideration of ratio decidendi of the decision in S.B.P. Co.'s case (supra) specifically held that if the order Under Section 11 is passed by a subordinate court as designate of the Chief Justice, the validity of such order can be assailed by way of writ petition under Article 227 of the Constitution of India. The Hon'ble Supreme Court clarifying the position of law laid down in S.B.P. Co.'s case (supra) held:
9. We have already noticed that though the order under Section 11(4) is a judicial order, having regard to Section 11(7) relating to finality of such orders and the absence of any provision for appeal, the order of the Civil Judge was open to challenge in a writ petition under Article 227 of the Constitution. The decision in SBP does not bar such a writ petition. The observations of this Court in SBP that against an order under Section 11 of the Act, only an appeal under Article 136 of the Constitution would lie, is with reference to the orders made by the Chief Justice of a High Court or by the designate Judge of that High Court. The said observations do not apply to a subordinate court functioning as designate of the Chief Justice.
10. This Court has repeatedly stressed that Article 136 is not intended to permit direct access to this Court where other equally efficacious remedy is available and the question involved is not of any public importance; and that this Court will not ordinarily exercise its jurisdiction under Article 136, unless the appellant has exhausted all other remedies open to him. Therefore, the contention that the order of the Civil Judge, Senior Division rejecting a petition under Section 11 of the Act could only be challenged, by recourse to petition under Section 11 of the Act could only be challenged, by recourse to Article 136 is untenable. The decision in SBP did not affect the maintainability of the writ petition filed by the appellant before the High Court.
Thus, it can safely be concluded that if the petitioner was aggrieved by order dated 12.10.01 passed by the District Judge, Merta City, then, it was open for it to assail the validity thereof by invoking supervisory jurisdiction of this Court under Article 227 of the Constitution of India at the appropriate stage. However, the challenge to the said order cannot be entertained by this Court in exercise of its extra ordinary jurisdiction under Article 226 & 227 of the Constitution of India at such a belated stage when the arbitration proceedings has already been concluded and the petitioner has already filed an appropriate application before the Court of competent jurisdiction under Section 34 of the Act of 1996 for setting aside of the award. In this view of the matter, the writ petition lacks merit and deserves to be dismissed.
23. However, as discussed above, all questions with regard to jurisdiction of the authority designate to deal with the request for appointment of arbitrator and in respect of the validity of the order dated 31.1.03 passed by the Arbitral Tribunal, rejecting the plea questioning the jurisdiction of the Arbitral Tribunal are open to be raised by the petitioner before the District Court in proceedings under Section 34 of the Act of 1996.
24. In the result, the writ petition fails, it is hereby dismissed. No orders as to costs.