Gulf (Oil) Corporation Limited Vs. Steel Authority of India and ors. - Court Judgment

Excerpt:
[mohit s. shah; s.j. vazifdar, jj.] - the respondents contended that they are the proprietors inter-alia of the trade mark 555 written in a stylized manner. the respondents claim to be the assignees of this mark. the mark was assigned from time to time. ultimately by a deed of assignment dated 14.9.2004, the registered trade mark label 555 was assigned to the respondents. the application for renewal of the mark is pending. the respondents have used the trade mark label 555 in conjunction with other marks such as meredian, merelane delux and merelane premium. see also, fuentes trade marks (1891, 2 ch.,166)." the above observations establish that it is a defence even to an action for passing off or infringement of a trade mark that the plaintiffs (in this case the respondents) marks are an imitation of the mark of another to wit that the respondents had themselves infringed the mark of another. it is thus clear that the principle was applied to an action for infringement of trade mark and passing off. if the purchasers were in such a case to stamp their goods with the trade mark, "a.b. the basis of the ratio is to deny an infringer a right based on the mark or work which infringes the mark or work of another. the respondents in their affidavit in rejoinder denied the allegations that they had infringed the mark of state express 555. there are no averments, much less is there any evidence, to indicate that the respondents' marks/cartons/labels are an imitation of the mark state express 555. it is significant to note that there is no evidence whatsoever to the effect that the third party has used the mark 555 or created the labels/cartons or marks prior to the creation of and use by the respondents of these marks/labels and cartons which may have persuaded the court to come to the conclusion that the respondents had infringed the mark. if it is established that the mark is a well known mark, the mark being used in respect of different goods may make no difference. firstly, whether the principle would apply even if the mark is not established to be a well known mark. secondly, whether the principle would apply if such a mark i.e. not a well known mark, infringed by the respondents is applied to different goods. the goods need not be identical even if a well known mark is not involved. 1. this instant appeal is preferred against a judgment and/or order dated 29th october, 2009 in a.p. no. 252 of 2007 passed by the hon'ble first court. 2. an application was filed under section 34 of the arbitration and conciliation act, 1996 (hereinafter referred to as the said act) for setting aside of an arbitral award dated 7th may, 2007 passed by the learned arbitrator. 3. after filing affidavits by the parties before the court, the matter was finally disposed of on 29th october, 2009 by the hon'ble first court. 4. his lordship was pleased to set aside the award and held as follows :- the learned arbitrator, in my view, committed a patent error in recording a finding contrary to the judicial finding of the chief justice of there being a concluded contract. the impugned award cannot be sustained and the same is thus set aside. 5. being aggrieved, this appeal has been filed by the appellant. 6. the facts of the case briefly are as follows:- 7. the appellant gulf (oil) corporation limited invoked the arbitration clause for referring the dispute to the arbitration in terms of the arbitration agreement contained in the letter of intent. 8. on 24th september, 2004 steel authority of india, respondent herein floated a request for quotation for procurement of explosives through online reverse auction. gulf (oil) corporation limited, appellant herein participated in the price bid of the said request on 18th october, 2004 and submitted its price break up for the explosives to be supplied under the said request for quotation on 19th october, 2004. the chief material manager of the respondent requested the appellant herein over telephone to supply certain explosives on urgent supply basis. pursuant to the said request appellant supplied 5 (five) truck loads of explosives to the steel authority of india limited in response of the urgent requirement by them. 9. on 19th november, 2004 steel authority of india limited published a letter of intent bearing no rmd/c/mm/expl/0014/(r-1)/3803. the appellant wrote a letter to the respondent inter alia informing about the non-acceptance of letter of intent on 3rd december, 2004. the respondent replied the said letter by a letter dated 3rd december, 2004 intimating the risk purchase action shall be initiated against the appellant. the appellant wrote a letter to the respondent denying and disputing that risk purchase action can be invoked against gulf (oil) corporation limited. in these circumstances, on 7th december, 2004 the appellant received a letter of intent at hyderabad and further received a letter advising to resume immediate supply of the balance quantity of explosives failing which threat to invoke the risk purchase clause against them. such threat was denied by the appellant by a letter dated 10th december, 2004 and on 15th december, 2004. the appellant forwarded bills in respect of the explosives supplied by them. thereafter the appellant received letters from the respondent herein whereby the respondent alleged that they had incurred additional expenses to the tune of rs 20,28,412/- due to alternate procurement of such explosive and was directed to pay the said amount. the said fact was denied by the appellant and objected to such the illegal deductions from the outstanding dues of the appellant by their letter dated 20th january, 2005. 10. in these circumstances, on 3rd march, 2005 another letter was issued by the appellant for invocation of the arbitration clause since no steps were taken on behalf of the respondent. an application under section 11 (6) of the said act was filed and after filing the affidavits a judgment and/or order was passed in a.p. no 194 of 2005. the hon'ble chief justice was pleased to appoint a sole arbitrator in the matter. 11.thereafter the disputes between the parties referred before the arbitrator. 12. steps were taken by the parties and hearing was concluded. the arbitrator published his award on 7th may, 2007. 13. the application under section 34 of the said act was filed on behalf of the respondent on 3rd august, 2007. 14. it is submitted on behalf of the appellant that due to some unavoidable circumstances, it was not possible to accept the letter of intent and in fact the supply was made by the appellant on emergency basis at a rate other than the rate quoted in the letter of intent. eventually the rate at which the emergency supply was made at a higher price than the rate stated in the letter of intent. it is further submitted that during such emergency supply there was no question of any reference of letter of intent or any purchase order in terms of letter of intent, since the letter of intent was issued subsequent thereto. it is submitted that at the time of naming of an arbitrator by the hon'ble chief justice all relevant documents and records were not placed before the hon'ble chief justice and accordingly, it is submitted that the hon'ble chief justice had no occasion to deal with the relevant documents or records to come to the conclusion in respect of the merit of disputes between the parties, apart from the fact remains that at that point of time the court had already come to a conclusion in respect of arbitrarily of the disputes between them. 15. it is further submitted on behalf of the appellant that the respondent did not challenge the authority and/or jurisdiction of the learned arbitrator under section 16 of the said act. the learned arbitrator accordingly passed an award holding that there was no concluded contract between the parties. therefore, the sum deducted by the respondent to the extent of rs 20,28,412/- from the outstanding bills of the appellant is illegal, apart from the interest to be paid on the said amount for the pendente lite period and further period. 16. it is further submitted that the main ground which has been taken before the hon'ble first court by the respondent that whether the observations made by the hon'ble chief justice while naming the arbitrator, shall be binding upon the learned arbitrator for passing an award in respect of disputes between the parties. 17. learned counsel appearing on behalf of the appellant submitted as follows:- a) the observations made by the hon'ble chief justice is not binding upon the learned arbitrator which making the award and as such the same is an obiter. b) the hon'ble trial court while deciding the application under section 11 (6) of the said act, decided the same being the designated judge of the honble justice having jurisdiction to decide the said application upon the said jurisdiction being conferred by hon'ble chief justice to the court to hear the said application except naming the arbitrator. such delegation of judicial jurisdiction even if withdrawn subsequently has to be prospectively and not retrospectively. c) section 34(2) of the said act, enumerates the grounds on which an award can be challenged by the parties and from bare perusal of the said section, it does not appear that the observations made by the naming court shall be binding upon the learned arbitrator while making the award and non adherence of such observations shall be one of the grounds to challenge the award under section 34 (2) of the said act. d) when a dispute is referred to the arbitrator the said dispute is referred in totality and / or its entirety and therefore the arbitrator shall not be bound by any observation being made by naming court. e) the respondent herein were absolutely without jurisdiction and authority to club together the money receivable in terms of the other agreements and to recover a sum of rs 20,28,412/- as those agreements are distinct in nature and having a separate entity. 18. it is submitted that the conclusion being arrived at by his lordship was binding upon the parties. 19. he further submitted that the application under section 11 (6) of the said act was decided by his lordship while the matter was sent to hon'ble chief justice for naming the arbitrator except the portion by which the dispute was referred to the learned arbitrator the said order of the hon'ble chief justice was an obitor. 20. he also relied upon a decision reported in air 1974 sc 1265 (union of india vs raman iron foundry) which reads as follows:- in the instant judgment it has been held that in view of recovery of damages from the contractor, clubbing of contracts through between the self same parties it is not permissible. in the instant case the petitioner herein allegedly were entitled to recover any sum due from the contractor (under the contract or due and payable under the contract). the emphasis is given under the contract. it is the case of the respondent herein that from the records and documents it is evident that there was no concluded contract between the parties and thus question of any recovery (under the contract) cannot and does not arise. 21. hence, recovery being made by the petitioner herein of rs 20,28,412.00 lakhs by clubbing the other contracts being separate and distinct is arbitrary illegal and bad in law. 22. he further submitted that the respondent herein relied upon the decision in the case of 2007 (5) scc 295 (m dayanand university and anr. v. anand cooperative l/c society limited & anr.) and in the said decision it is submitted that on the question that all questions to be decided by the learned arbitrator and therefore, in the instant case of the respondent when the disputes have ultimately been referred to the learned arbitrator, it was the prerogative of the learned arbitrator to go into the merit of the dispute and come to a rightful conclusion, which the learned arbitrator did after perusing the relevant contemporaneous records and documents. 23. he further contended that in 2007 (7) scc 120 aurohill global commodities ltd vs maharashtra stc ltd, where it has been held that the question as to whether there is a concluded contract. the question as to whether the alleged contract was nonest. all the questions to be decided in the arbitration proceedings. 24. in (2002) 3 scc 572 (mp lohia v. n.k. lohia & ors.), it is stated that under section 16 of the said act the arbitral tribunal can rely on any objection with respect to objection and/or validity of arbitration agreement. 25. in (2009) 3 scc 337 (bsnl & ors. v. motorola india pvt. ltd.), the court also held that if no object is being made under section 16 of the said act, in view of section 4 of the said act, it shall be deemed that the parties have waived their right to object so far as the existence of the arbitration agreement and reference and jurisdiction of the arbitral tribunal is concerned. 26. it is submitted by the learned advocate, appearing on behalf of the respondent that the appellant by its letter dated 3rd december, 2004 flatly refused to make any supply of explosives to various sail/iisco mines against the said letter of intent i.e. the letter dated 19th november, 2004 and thus violated the contract. 27. he further submitted that the said contract was a concluded one, therefore, it was the obligation on the part of the appellant to accept the letter of intent which was issued to show in the manner in which the transaction already agreed to be performed and undertaken by the parties. 28. he also submitted that the appointment of the arbitrator was made on the basis of the said agreement which was concluded between the parties. 29. it is submitted by the respondent that if there was no concluded contract then there was no reason to apply in terms of arbitration clause. therefore without such concluded contract, the appellant could not have a right to apply for appointment of an arbitrator, since the arbitration clause contained in the said contract and an arbitrator could not have been appointed by the hon'ble chief justice. therefore, the learned counsel appearing on behalf of the steel authority of india relied on the decision of sbp & co. v. patel engineering (p) ltd. (supra) and submitted that the judgment of the chief justice in respect of such contract has to be accepted as final. 30. when the arbitrator was appointed on 6th april, 2006 and the application was filed and was allowed by the court on 23rd august, 2005 and the matter was placed before the hon'ble chief justice for naming the arbitrator at that point of time, the decision in konkan railway corporation limited and anr. vs rani construction (p) limited reported in (2000) 8 scc 159, was prevailing in the said field. on 26th october, 2005, the hon'ble supreme court in sbp & co. vs patel engineering limited and anr. reported in 2005 (8) scc 618 overruled the said decision of konkan railway corporation limited and anr. vs rani construction (p) limited (supra) and thus the law laid down in sbp & co. v. patel engineering limited & anr (supra) is the authority in the said field. it is submitted that when the arbitrator was appointed by the hon'ble chief justice, the matter was decided in accordance with the law laid down in sbp & co. v. patel engineering limited & anr (supra). 31. it is the case of the respondent that the offer by the claimant and acceptance by sail was complete and the contract was concluded and the claimant was under an obligation to act in terms of the concluded contract i.e. to accept the letter of intent wherein it was specifically mentioned that the formal orders will be released by respective sail/ iisco mines. therefore, it would be evident that the agreement was concluded and the conduct of the parties would show that parties have acted on the basis of a concluded contract. 32. in these circumstances, he submitted that this appeal should be dismissed since the appeal has no merit. 33. after considering the facts and circumstances of this case and the decisions cited before us in the case of sbp & co. v. patel engineering (p) ltd. (supra) where the court held as follows:- section 16 of the act only makes explicit what is even otherwise implicit, namely, that the arbitral tribunal constituted under the act has the jurisdiction to rule on its own jurisdiction, including ruling on objections with respect to the existence or validity of the arbitration agreement. sub-section (1) also directs that an arbitration clause which forms part of a contract shall be treated as an agreement independent of the other terms of the contract. it also clarified that a decision by the arbitral tribunal that the contract is null and void shall not entail ipso jure the invalidity of the arbitration clause. sub-section (2) of section 16 enjoins that a party wanting to raise a plea that the arbitral tribunal does not have jurisdiction, has to raise that objection not later than the submission of the statement of defence, and that the party shall not be precluded from raising the plea of jurisdiction merely because he has appointed or participated in the appointment of an arbitrator. subsection (3) lays down that a plea that the 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. when the tribunal decides these two questions, namely, the question of jurisdiction and the question of exceeding the scope of authority or either of them the same is open to immediate challenge in an appeal, when the objection is upheld and only in an appeal against the final award, when the objection is overruled. sub-section (5) enjoins that if the arbitral tribunal overrules the objections under sub-section (2) or (3), it should continue with the arbitral proceedings and make an arbitral award. sub-section (6) provides that a party aggrieved by such an arbitral award overruling the plea on lack of jurisdiction and the exceeding of the scope of authority, may make an application on these grounds for setting aside the award in accordance with section 34 of the act. the question, in the context of subsection (7) of section 11 is, what is the scope of the right conferred on the arbitral tribunal to rule upon its own jurisdiction and the existence of the arbitration clause, envisaged by section 16 (1), once the chief justice or the person designated by him had appointed an arbitrator after satisfying himself that the conditions for the exercise of power to appoint an arbitrator are present in the case. prima facie, it would be difficult to say that in spite of the finality conferred by sub-section (7) of section 11 of the act, to such a decision of the chief justice, the arbitral tribunal can still go behind that decision and rule on its own jurisdiction or on the existence of an arbitration clause. it also appears to us to be incongruous to say that after the chief justice had appointed an arbitral tribunal, the arbitral tribunal can turn round and say that the chief justice had no jurisdiction or authority to appoint the tribunal, the very creature brought into existence by the exercise of power by its creator, the chief justice. the argument of the learned senior counsel, mr. k.k. venugopal that section 16 has full play only when an arbitral tribunal is constituted without intervention under section 11 (6) of the act, is one way of reconciling that provision with section 11 of the act, especially in the context of sub-section (7) thereof. we are inclined to the view that the decision of the chief justice on the issue of jurisdiction and the existence of a valid arbitration agreement would be binding on the parties when the matter goes to the arbitral tribunal and at subsequent stages of the proceeding except in an appeal in the supreme court in the case of the decision being by the chief justice of the high court or by a judge of the high court designated by him. 34. it further appears to us that the order of the hon'ble chief justice is a judicial order as held in sbp & co. (supra) the order being a judicial order the finding of the hon'ble chief justice that there being a concluded contract and on the basis of such concluded contract the court held that at the time of appointing an arbitrator that there was a concluded contract between the parties. the appointment of the arbitrator based on the said concluded contract since the arbitration clause is part and parcel of the said concluded contract. therefore, it appears to us that as held by his lordship that the finding of there being a concluded contract not having been questioned, the said finding has become final and binding. the said finding has in fact and in effect been accepted by the petitioner. after considering the facts and circumstances of the case an order/judgment was delivered by the hon'ble chief justice at the time of appointment of an arbitrator which was recorded in the judgment and order dated 6th april, 2006. 34. we have noticed that in the said judgment and/or order dated 6th april, 2006 of the hon'ble chief justice observed as follows : however, the only objection raised by the respondents is to be considered here as to whether there is an agreement between the parties and whether the petitioner has repudiated the contract and whether the arbitration clause still remains intact. for deciding this, recourse would have to be taken to section 4 of the indian contract act. it is as under : .. 35. it is obvious that the advertisement by the respondents for tenders was an invitation to make an offer. therefore, when the petitioner submitted to the respondent the tender, that amounted to an offer in terms of section 4 of the act. this communication of proposal and offer was complete when the offer by the petitioner was received by the respondents. it is an admitted position here that it was so received. therefore, it is a case of completed proposal since it has come to the knowledge of the respondents. it is also an admitted position here that this offer was accepted by the respondents by letter dated 19th november, 2004. therefore, as against the petitioner the communication of an acceptance was complete when the said letter was put in the course of transmission or when it was posted. the moment it came to the knowledge of the petitioner, that is when he received the letter, the communication of acceptance became complete against the respondents. 36.under section 5 of the contract act, the proposal could be revoked at any time before the communication of the acceptance was complete as against the petitioner, but no afterwards. therefore, in this case, the petitioner could not validly revoke the acceptance by the respondents because the acceptance had become complete. in this case, the proposal made was accepted absolutely in express terms. thus here was a case, where the petitioner had come promissory by making a proposal and the respondents had become promissee by accepting the same. there was an agreement in writing in terms of loi containing an arbitration clause. therefore, the respondents cannot say now that merely because the petitioner had repudiated the contract, there was no contract at all. the contract would have to be held to be existing on account of the loi having been sent by the respondents to the petitioner. this objection by the respondents, sail, would, therefore, has to be rejected and is rejected. 37. in the light of the said decision the award which has been published by the learned arbitrator that there was no concluded contract between the petitioner and the respondent. the court held that the order of appointment on the basis of such arbitration clause has been accepted and the parties have acted there upon. therefore, at this time, in our considered opinion it is too late in the day to submit that there was no concluded contract between the parties as has been held by the arbitrator. 38. it further appears to us that by the award impugned, the learned arbitrator held that there was no concluded contract between the petitioner and the respondent. it further appears to us that after pronouncement of the case in sbp & co. v. patel engineering (p) ltd. (supra) the order which was passed by the hon'ble chief justice is nothing but a judicial order. the order being a judicial order and finding of the hon'ble chief justice that there being a concluded contract is binding on the learned arbitrator. therefore, we have proceeded in the matter accepting the fact that there was a concluded contract between the parties. in our opinion, when a court has already expressed its opinion without challenging the said fact and the finding of the court can an arbitrator express its opinion, otherwise, in our considered opinion, such finding was accepted by the appellant and in fact, acted upon and, therefore, at this stage the arbitrator has no right to declare that there was no concluded contract between the parties. the appellant has no right to turn around and to make it a point that there was no concluded contract. if we accept that there was no scope for applying in terms of the arbitration clause in the matter. therefore, we come to the conclusion that the appellant at this stage cannot say that there was no concluded contract between them. 39. therefore, we come to the conclusion that a) it would be evident from the act and conduct of the parties that there was a concluded contract; b) the arbitration clause contained in the said concluded contract and thereby gave a right to the parties to apply before the court for appointment of an arbitrator; c) if there was concluded contract then there was no question of giving any effect to the arbitration clause and then there could not have been any reason to appoint an arbitrator therefore, in our opinion, the hon'ble first court correctly held that the arbitrator committed a patent error recording a contrary finding with regard to the judicial opinion expressed by the hon'ble chief justice. hence, in our opinion, the hon'ble first court correctly set aside the said award. accordingly, we do not find that the said order and/or judgment does not suffer from any illegality or irregularity. we also do not find any merit in the appeal. hence the appeal is dismissed. the order passed by the hon'ble first court is affirmed. 40.for the reasons stated herein above the appeal is disposed of. 41. xerox certified copy of this order, if applied for, be supplied to the parties on usual undertakings.

Judgment:
1. This instant appeal is preferred against a judgment and/or order dated 29th October, 2009 in A.P. No. 252 of 2007 passed by the Hon'ble First Court.

2. An application was filed under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the said Act) for setting aside of an arbitral award dated 7th May, 2007 passed by the Learned Arbitrator.

3. After filing affidavits by the parties before the Court, the matter was finally disposed of on 29th October, 2009 by the Hon'ble First Court.

4. His Lordship was pleased to set aside the award and held as follows :-

The learned Arbitrator, in my view, committed a patent error in recording a finding contrary to the judicial finding of the Chief Justice of there being a concluded contract. The impugned award cannot be sustained and the same is thus set aside.

5. Being aggrieved, this appeal has been filed by the appellant.

6. The facts of the case briefly are as follows:-

7. The appellant Gulf (Oil) Corporation Limited invoked the Arbitration Clause for referring the dispute to the arbitration in terms of the Arbitration Agreement contained in the Letter of Intent.

8. On 24th September, 2004 Steel Authority of India, respondent herein floated a Request for Quotation for procurement of explosives through Online Reverse Auction. Gulf (Oil) Corporation Limited, appellant herein participated in the price bid of the said request on 18th October, 2004 and submitted its price break up for the explosives to be supplied under the said request for quotation on 19th October, 2004. The Chief Material Manager of the respondent requested the appellant herein over telephone to supply certain explosives on urgent supply basis. Pursuant to the said request appellant supplied 5 (five) truck Loads of Explosives to the Steel Authority of India Limited in response of the urgent requirement by them.

9. On 19th November, 2004 Steel Authority of India Limited published a Letter of Intent bearing No RMD/C/MM/EXPL/0014/(R-1)/3803. The appellant wrote a letter to the respondent inter alia informing about the non-acceptance of Letter of Intent on 3rd December, 2004. The respondent replied the said letter by a letter dated 3rd December, 2004 intimating the Risk Purchase Action shall be initiated against the appellant. The appellant wrote a letter to the respondent denying and disputing that Risk Purchase Action can be invoked against Gulf (Oil) Corporation Limited. In these circumstances, on 7th December, 2004 the appellant received a Letter of Intent at Hyderabad and further received a letter advising to resume immediate supply of the balance quantity of explosives failing which threat to invoke the Risk Purchase Clause against them. Such threat was denied by the appellant by a letter dated 10th December, 2004 and on 15th December, 2004. The appellant forwarded bills in respect of the explosives supplied by them. Thereafter the appellant received letters from the respondent herein whereby the respondent alleged that they had incurred additional expenses to the tune of Rs 20,28,412/- due to alternate procurement of such explosive and was directed to pay the said amount. The said fact was denied by the appellant and objected to such the illegal deductions from the outstanding dues of the appellant by their letter dated 20th January, 2005.

10. In these circumstances, on 3rd March, 2005 another letter was issued by the appellant for invocation of the Arbitration Clause since no steps were taken on behalf of the respondent. An application under Section 11 (6) of the said Act was filed and after filing the affidavits a judgment and/or order was passed in A.P. No 194 of 2005. The Hon'ble Chief Justice was pleased to appoint a sole Arbitrator in the matter.

11.Thereafter the disputes between the parties referred before the Arbitrator.

12. Steps were taken by the parties and hearing was concluded. The Arbitrator published his award on 7th May, 2007.

13. The application under Section 34 of the said Act was filed on behalf of the respondent on 3rd August, 2007.

14. It is submitted on behalf of the appellant that due to some unavoidable circumstances, it was not possible to accept the Letter of Intent and in fact the supply was made by the appellant on emergency basis at a rate other than the rate quoted in the Letter of Intent. Eventually the rate at which the emergency supply was made at a higher price than the rate stated in the Letter of Intent. It is further submitted that during such emergency supply there was no question of any reference of Letter of Intent or any purchase order in terms of Letter of Intent, since the Letter of Intent was issued subsequent thereto. It is submitted that at the time of naming of an Arbitrator by the Hon'ble Chief Justice all relevant documents and records were not placed before the Hon'ble Chief Justice and accordingly, it is submitted that the Hon'ble Chief Justice had no occasion to deal with the relevant documents or records to come to the conclusion in respect of the merit of disputes between the parties, apart from the fact remains that at that point of time the Court had already come to a conclusion in respect of arbitrarily of the disputes between them.

15. It is further submitted on behalf of the appellant that the respondent did not challenge the authority and/or jurisdiction of the learned Arbitrator under Section 16 of the said Act. The Learned Arbitrator accordingly passed an award holding that there was no concluded contract between the parties. Therefore, the sum deducted by the respondent to the extent of Rs 20,28,412/- from the outstanding bills of the appellant is illegal, apart from the interest to be paid on the said amount for the pendente lite period and further period.

16. It is further submitted that the main ground which has been taken before the Hon'ble First Court by the respondent that whether the observations made by the Hon'ble Chief Justice while naming the Arbitrator, shall be binding upon the Learned Arbitrator for passing an award in respect of disputes between the parties.

17. Learned Counsel appearing on behalf of the Appellant submitted as follows:-

a) The observations made by the Hon'ble Chief Justice is not binding upon the Learned Arbitrator which making the Award and as such the same is an obiter.

b) The Hon'ble Trial Court while deciding the application Under Section 11 (6) of the said Act, decided the same being the Designated Judge of the Honble Justice having jurisdiction to decide the said application upon the said jurisdiction being conferred by Hon'ble Chief Justice to the Court to hear the said application except naming the Arbitrator. Such delegation of judicial jurisdiction even if withdrawn subsequently has to be prospectively and not retrospectively.

c) Section 34(2) of the said Act, enumerates the grounds on which an award can be challenged by the parties and from bare perusal of the said section, it does not appear that the observations made by the naming court shall be binding upon the Learned Arbitrator while making the award and non adherence of such observations shall be one of the grounds to challenge the award under Section 34 (2) of the said Act.

d) When a dispute is referred to the Arbitrator the said dispute is referred in totality and / or its entirety and therefore the Arbitrator shall not be bound by any observation being made by naming court.

e) The respondent herein were absolutely without jurisdiction and authority to club together the money receivable in terms of the other agreements and to recover a sum of Rs 20,28,412/- as those agreements are distinct in nature and having a separate entity.

18. It is submitted that the conclusion being arrived at by His Lordship was binding upon the parties.

19. He further submitted that the application under Section 11 (6) of the said Act was decided by His Lordship while the matter was sent to Hon'ble Chief Justice for naming the Arbitrator except the portion by which the dispute was referred to the learned Arbitrator the said order of the Hon'ble Chief Justice was an obitor.

20. He also relied upon a decision reported in AIR 1974 SC 1265 (Union of India Vs Raman Iron Foundry) which reads as follows:-

In the instant judgment it has been held that in view of recovery of damages from the contractor, clubbing of contracts through between the self same parties it is not permissible. In the instant case the petitioner herein allegedly were entitled to recover any sum due from the contractor (under the contract or due and payable under the contract). The Emphasis is given under the contract. It is the case of the respondent herein that from the records and documents it is evident that there was no concluded contract between the parties and thus question of any recovery (under the contract) cannot and does not arise.

21. Hence, recovery being made by the petitioner herein of Rs 20,28,412.00 Lakhs by clubbing the other contracts being separate and distinct is arbitrary illegal and bad in law.

22. He further submitted that the respondent herein relied upon the decision in the case of 2007 (5) SCC 295 (M Dayanand University and Anr. v. Anand Cooperative L/C Society Limited & Anr.) and in the said decision it is submitted that on the question that all questions to be decided by the Learned Arbitrator and therefore, in the instant case of the respondent when the disputes have ultimately been referred to the Learned Arbitrator, it was the prerogative of the Learned Arbitrator to go into the merit of the dispute and come to a rightful conclusion, which the Learned Arbitrator did after perusing the relevant contemporaneous records and documents.

23. He further contended that in 2007 (7) SCC 120 Aurohill Global Commodities Ltd Vs Maharashtra STC Ltd, where it has been held that the question as to whether there is a concluded contract. The question as to whether the alleged contract was nonest. All the questions to be decided in the arbitration proceedings.

24. In (2002) 3 SCC 572 (MP Lohia v. N.K. Lohia & Ors.), it is stated that under Section 16 of the said Act the Arbitral Tribunal can rely on any objection with respect to objection and/or validity of Arbitration Agreement.

25. In (2009) 3 SCC 337 (BSNL & Ors. v. Motorola India Pvt. Ltd.), the Court also held that if no object is being made under Section 16 of the said Act, in view of Section 4 of the said Act, it shall be deemed that the parties have waived their right to object so far as the existence of the Arbitration Agreement and reference and jurisdiction of the Arbitral Tribunal is concerned.

26. It is submitted by the learned Advocate, appearing on behalf of the respondent that the appellant by its letter dated 3rd December, 2004 flatly refused to make any supply of explosives to various SAIL/IISCO mines against the said Letter of Intent i.e. the letter dated 19th November, 2004 and thus violated the contract.

27. He further submitted that the said contract was a concluded one, therefore, it was the obligation on the part of the appellant to accept the Letter of Intent which was issued to show in the manner in which the transaction already agreed to be performed and undertaken by the parties.

28. He also submitted that the appointment of the Arbitrator was made on the basis of the said agreement which was concluded between the parties.

29. It is submitted by the respondent that if there was no concluded contract then there was no reason to apply in terms of arbitration clause. Therefore without such concluded contract, the appellant could not have a right to apply for appointment of an Arbitrator, since the arbitration clause contained in the said contract and an Arbitrator could not have been appointed by the Hon'ble Chief Justice. Therefore, the Learned Counsel appearing on behalf of the Steel Authority of India relied on the decision of SBP & Co. v. Patel Engineering (P) Ltd. (Supra) and submitted that the judgment of the Chief Justice in respect of such contract has to be accepted as final.

30. When the Arbitrator was appointed on 6th April, 2006 and the application was filed and was allowed by the Court on 23rd August, 2005 and the matter was placed before the Hon'ble Chief Justice for naming the Arbitrator at that point of time, the decision in Konkan Railway Corporation Limited and Anr. Vs Rani Construction (P) Limited reported in (2000) 8 SCC 159, was prevailing in the said field. On 26th October, 2005, the Hon'ble Supreme Court in SBP & Co. Vs Patel Engineering Limited and Anr. reported in 2005 (8) SCC 618 overruled the said decision of Konkan Railway Corporation Limited and Anr. Vs Rani Construction (P) Limited (Supra) and thus the law laid down in SBP & Co. v. Patel Engineering Limited & Anr (Supra) is the authority in the said field. It is submitted that when the Arbitrator was appointed by the Hon'ble Chief Justice, the matter was decided in accordance with the law laid down in SBP & Co. v. Patel Engineering Limited & Anr (Supra).

31. It is the case of the respondent that the offer by the claimant and acceptance by SAIL was complete and the contract was concluded and the claimant was under an obligation to act in terms of the concluded contract i.e. to accept the Letter of Intent wherein it was specifically mentioned that the formal orders will be released by respective SAIL/ IISCO mines. Therefore, it would be evident that the agreement was concluded and the conduct of the parties would show that parties have acted on the basis of a concluded contract.

32. In these circumstances, he submitted that this appeal should be dismissed since the appeal has no merit.

33. After considering the facts and circumstances of this case and the decisions cited before us in the case of SBP & Co. v. Patel Engineering (P) Ltd. (Supra) where the Court held as follows:-

Section 16 of the Act only makes explicit what is even otherwise implicit, namely, that the Arbitral Tribunal constituted under the Act has the jurisdiction to rule on its own jurisdiction, including ruling on objections with respect to the existence or validity of the arbitration agreement. Sub-section (1) also directs that an arbitration clause which forms part of a contract shall be treated as an agreement independent of the other terms of the contract. It also clarified that a decision by the Arbitral Tribunal that the contract is null and void shall not entail ipso jure the invalidity of the arbitration clause. Sub-section (2) of Section 16 enjoins that a party wanting to raise a plea that the Arbitral Tribunal does not have jurisdiction, has to raise that objection not later than the submission of the statement of defence, and that the party shall not be precluded from raising the plea of jurisdiction merely because he has appointed or participated in the appointment of an Arbitrator. Subsection (3) lays down that a plea that the 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.

When the Tribunal decides these two questions, namely, the question of jurisdiction and the question of exceeding the scope of authority or either of them the same is open to immediate challenge in an appeal, when the objection is upheld and only in an appeal against the final award, when the objection is overruled. Sub-section (5) enjoins that if the Arbitral Tribunal overrules the objections under Sub-section (2) or (3), it should continue with the arbitral proceedings and make an arbitral award. Sub-section (6) provides that a party aggrieved by such an arbitral award overruling the plea on lack of jurisdiction and the exceeding of the scope of authority, may make an application on these grounds for setting aside the award in accordance with Section 34 of the Act. The question, in the context of subsection (7) of Section 11 is, what is the scope of the right conferred on the Arbitral Tribunal to rule upon its own jurisdiction and the existence of the arbitration clause, envisaged by Section 16 (1), once the Chief Justice or the person designated by him had appointed an Arbitrator after satisfying himself that the conditions for the exercise of power to appoint an Arbitrator are present in the case. Prima facie, it would be difficult to say that in spite of the finality conferred by Sub-section (7) of Section 11 of the Act, to such a decision of the Chief Justice, the Arbitral Tribunal can still go behind that decision and rule on its own jurisdiction or on the existence of an arbitration clause. It also appears to us to be incongruous to say that after the Chief Justice had appointed an Arbitral Tribunal, the Arbitral Tribunal can turn round and say that the Chief Justice had no jurisdiction or authority to appoint the Tribunal, the very creature brought into existence by the exercise of power by its creator, the Chief Justice. The argument of the learned Senior Counsel, Mr. K.K. Venugopal that Section 16 has full play only when an Arbitral Tribunal is constituted without intervention under Section 11 (6) of the Act, is one way of reconciling that provision with Section 11 of the Act, especially in the context of sub-section (7) thereof. We are inclined to the view that the decision of the Chief Justice on the issue of jurisdiction and the existence of a valid arbitration agreement would be binding on the parties when the matter goes to the Arbitral Tribunal and at subsequent stages of the proceeding except in an appeal in the Supreme Court in the case of the decision being by the Chief Justice of the High Court or by a Judge of the High Court designated by him.

34. It further appears to us that the order of the Hon'ble Chief Justice is a judicial order as held in SBP & Co. (supra) the order being a judicial order the finding of the Hon'ble Chief Justice that there being a concluded contract and on the basis of such concluded contract the Court held that at the time of appointing an Arbitrator that there was a concluded contract between the parties. The appointment of the Arbitrator based on the said concluded contract since the arbitration clause is part and parcel of the said concluded contract.

Therefore, it appears to us that as held by His Lordship that the finding of there being a concluded contract not having been questioned, the said finding has become final and binding. The said finding has in fact and in effect been accepted by the petitioner.

After considering the facts and circumstances of the case an order/judgment was delivered by the Hon'ble Chief Justice at the time of appointment of an Arbitrator which was recorded in the judgment and order dated 6th April, 2006.

34. We have noticed that in the said judgment and/or order dated 6th April, 2006 of the Hon'ble Chief Justice observed as follows :

However, the only objection raised by the respondents is to be considered here as to whether there is an agreement between the parties and whether the petitioner has repudiated the contract and whether the arbitration clause still remains intact. For deciding this, recourse would have to be taken to Section 4 of the Indian Contract Act. It is as under :

..

35. It is obvious that the advertisement by the respondents for tenders was an invitation to make an offer. Therefore, when the petitioner submitted to the respondent the tender, that amounted to an offer in terms of Section 4 of the Act. This communication of proposal and offer was complete when the offer by the petitioner was received by the respondents. It is an admitted position here that it was so received. Therefore, it is a case of completed proposal since it has come to the knowledge of the respondents. It is also an admitted position here that this offer was accepted by the respondents by letter dated 19th November, 2004. Therefore, as against the petitioner the communication of an acceptance was complete when the said letter was put in the course of transmission or when it was posted. The moment it came to the knowledge of the petitioner, that is when he received the letter, the communication of acceptance became complete against the respondents.

36.Under Section 5 of the Contract Act, the proposal could be revoked at any time before the communication of the acceptance was complete as against the petitioner, but no afterwards. Therefore, in this case, the petitioner could not validly revoke the acceptance by the respondents because the acceptance had become complete. In this case, the proposal made was accepted absolutely in express terms. Thus here was a case, where the petitioner had come promissory by making a proposal and the respondents had become promissee by accepting the same. There was an agreement in writing in terms of LOI containing an arbitration clause. Therefore, the respondents cannot say now that merely because the petitioner had repudiated the contract, there was no contract at all. The contract would have to be held to be existing on account of the LOI having been sent by the respondents to the petitioner. This objection by the respondents, SAIL, would, therefore, has to be rejected and is rejected.

37. In the light of the said decision the award which has been published by the learned Arbitrator that there was no concluded contract between the petitioner and the respondent. The Court held that the order of appointment on the basis of such arbitration clause has been accepted and the parties have acted there upon. Therefore, at this time, in our considered opinion it is too late in the day to submit that there was no concluded contract between the parties as has been held by the Arbitrator.

38. It further appears to us that by the award impugned, the Learned Arbitrator held that there was no concluded contract between the petitioner and the respondent. It further appears to us that after pronouncement of the case in SBP & Co. v. Patel Engineering (P) Ltd. (Supra) the order which was passed by the Hon'ble Chief Justice is nothing but a judicial order. The Order being a judicial order and finding of the Hon'ble Chief Justice that there being a concluded contract is binding on the Learned Arbitrator. Therefore, we have proceeded in the matter accepting the fact that there was a concluded contract between the parties. In our opinion, when a Court has already expressed its opinion without challenging the said fact and the finding of the Court can an Arbitrator express its opinion, otherwise, in our considered opinion, such finding was accepted by the appellant and in fact, acted upon and, therefore, at this stage the Arbitrator has no right to declare that there was no concluded contract between the parties. The appellant has no right to turn around and to make it a point that there was no concluded contract. If we accept that there was no scope for applying in terms of the arbitration clause in the matter. Therefore, we come to the conclusion that the appellant at this stage cannot say that there was no concluded contract between them.

39. Therefore, we come to the conclusion that a) it would be evident from the act and conduct of the parties that there was a concluded contract; b) the arbitration clause contained in the said concluded contract and thereby gave a right to the parties to apply before the Court for appointment of an Arbitrator; c) if there was concluded contract then there was no question of giving any effect to the arbitration clause and then there could not have been any reason to appoint an Arbitrator Therefore, in our opinion, the Hon'ble First Court Correctly held that the Arbitrator committed a patent error recording a contrary finding with regard to the judicial opinion expressed by the Hon'ble Chief Justice. Hence, in our opinion, the Hon'ble First Court correctly set aside the said award. Accordingly, we do not find that the said order and/or judgment does not suffer from any illegality or irregularity. We also do not find any merit in the appeal. Hence the appeal is dismissed. The order passed by the Hon'ble First Court is affirmed.

40.For the reasons stated herein above the appeal is disposed of.

41. Xerox certified copy of this order, if applied for, be supplied to the parties on usual undertakings.