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2007 (5) TMI 563 - SC - Indian LawsWhether Arbitral Tribunal has jurisdiction? Held that - Where a party has received notice and he does not raise a plea of lack of jurisdiction before the arbitral tribunal, he must make out a strong case why he did not do so if he chooses to move a petition for setting aside the award under Section 34(2)(v) of the Act on the ground that the composition of the arbitral tribunal was not in accordance with the agreement of the parties. If plea of jurisdiction is not taken before the arbitrator as provided in Section 16 of the Act, such a plea cannot be permitted to be raised in proceedings under Section 34 of the Act for setting aside the award, unless good reasons are shown. Though respondent no.1 had ample opportunity to appear before Justice N.N. Goswami (Retd.) and raise a plea of jurisdiction to the effect that he had been wrongly appointed as arbitrator by appellant no.1, yet, it chose not to do so. This feature of the case weighs heavily against respondent no.1. The learned Single Judge has taken this fact as an additional ground for rejecting the petition filed by respondent no.1 under Section 34 of the Act and we are in agreement with the said view. Appeal is allowed with costs throughout and the judgment and order dated 7.12.2004 of the Division Bench of the High Court is set aside.
Issues Involved:
1. Validity of the arbitrator's appointment. 2. Compliance with the arbitration clause. 3. Jurisdiction of the arbitral tribunal. 4. Procedural fairness in arbitration proceedings. Detailed Analysis: 1. Validity of the Arbitrator's Appointment: The central issue was the validity of the appointment of Justice N.N. Goswami (Retd.) as the arbitrator by appellant no.1 (Gas Authority of India Ltd., GAIL). Respondent no.1 (M/s Keti Construction (I) Ltd.) contended that GAIL forfeited its right to appoint an arbitrator by not responding to the notice within 30 days. Consequently, respondent no.1 appointed Brig. Nardip Singh (Retd.) as the arbitrator. However, GAIL argued that a panel of three names, including Justice N.N. Goswami, had already been sent on 16.2.1999, and reiterated on 15.11.1999. The Supreme Court found that GAIL had complied with the arbitration clause by sending the panel within the stipulated period, making the appointment of Brig. Nardip Singh (Retd.) by respondent no.1 unjustified. 2. Compliance with the Arbitration Clause: Clause 107 of the contract required the appointing authority to send a panel of three names within 30 days of a notice invoking arbitration. If the appointing authority failed to do so, the contractor could send its panel. The Supreme Court noted that GAIL had sent the panel on 16.2.1999 and reiterated it on 15.11.1999, covering all four contracts, including the disputed one. The Court held that GAIL's actions were in compliance with the arbitration clause, and there was no need for a separate panel for each contract. 3. Jurisdiction of the Arbitral Tribunal: Respondent no.1 did not challenge the jurisdiction of Justice N.N. Goswami (Retd.) before the arbitrator as required under Section 16 of the Arbitration and Conciliation Act, 1996. The Supreme Court emphasized that objections to the jurisdiction must be raised at the earliest before the arbitral tribunal. The Court cited the UNCITRAL Model Law and previous rulings, noting that jurisdictional challenges should be made promptly to avoid unnecessary time and cost. The Court concluded that respondent no.1's failure to raise such objections before the arbitrator precluded it from challenging the award on jurisdictional grounds under Section 34 of the Act. 4. Procedural Fairness in Arbitration Proceedings: The Supreme Court observed that respondent no.1 did not appear before Justice N.N. Goswami (Retd.) or submit any statement of claim, despite being given multiple opportunities. The arbitrator even issued a final notice before proceeding with the award. The Court found that the arbitrator's actions were procedurally fair and in accordance with the law. The Court also noted that respondent no.1's non-participation weighed heavily against it, supporting the learned Single Judge's decision to dismiss the petition under Section 34 of the Act. Conclusion: The Supreme Court allowed the appeal, setting aside the Division Bench's judgment and restoring the learned Single Judge's order dismissing the petition under Section 34 of the Act. The Court affirmed that GAIL had complied with the arbitration clause, the appointment of Justice N.N. Goswami (Retd.) was valid, and respondent no.1's procedural lapses precluded it from challenging the award.
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