2005 (5) TMI 669 - HC - Indian Laws

Summary

Issues Involved:

1. Jurisdiction of the Arbitrator under Section 16 of the Arbitration and Conciliation Act, 1996.
2. Validity of counter-claims without notice under Clause 24 of the contract.
3. Maintainability of the appeal under Section 37 of the Arbitration and Conciliation Act, 1996.

Issue-wise Detailed Analysis:

1. Jurisdiction of the Arbitrator under Section 16 of the Arbitration and Conciliation Act, 1996:

The primary issue was whether the Arbitrator could rule on the application of the respondent under Section 16 of the Act to exclude certain counter-claims of the appellant. The court examined the provisions of Section 16, which allows the arbitral tribunal to rule on its own jurisdiction, including objections regarding the existence or validity of the arbitration agreement. The court noted that the power conferred on the Arbitrator under Section 16 is of wide amplitude and includes the power to rule on whether any claim or counter-claim can be considered a dispute within the meaning of the Arbitration Agreement. The court concluded that the application filed by the respondent under Section 16 was maintainable and rightly answered by the learned Arbitrator.

2. Validity of counter-claims without notice under Clause 24 of the contract:

The Arbitrator had excluded certain counter-claims on the grounds that no notice was given under Clause 24 of the contract, which required a written notice to constitute a dispute. The court analyzed the clause and the letter dated 8.5.2000, which reserved the right to claim additional amounts. The court held that it is not unusual for parties to supplement their claims and counter-claims during the arbitration process, as provided under Section 23 of the Act. The court disagreed with the Arbitrator's finding that the counter-claims were pre-mature and outside the ambit of the expression 'dispute,' stating that once parties have agreed to arbitration, it should cover all disputes arising from the contract.

3. Maintainability of the appeal under Section 37 of the Arbitration and Conciliation Act, 1996:

The respondent contended that the appeal under Section 37 was misconceived and not maintainable, arguing that the Arbitrator's order was within jurisdiction under Section 16 of the Act. The court rejected this argument, noting that the respondent itself had invoked Section 16 to challenge the jurisdiction of the Arbitrator regarding the counter-claims. The court held that the impugned order fell under sub-sections 2 or 3 of Section 16, making the appeal maintainable.

Conclusion:

The court allowed the appeal, setting aside the Arbitrator's order that excluded certain counter-claims. The court directed the Arbitrator to entertain and adjudicate upon all the counter-claims made by the appellant in accordance with law.