2007 (4) TMI 760 - SC - Indian Laws

Summary

Issues Involved:
1. Non-appearance of the respondent.
2. Existence of an arbitration agreement.
3. Applicability of Clause 25A of the tender conditions.
4. Jurisdiction of the arbitrator.
5. Validity of the appointment of the arbitrator.

Summary:

1. Non-appearance of the respondent:
Despite repeated notices, the respondent did not appear. The court decided to proceed without further indulgence and heard the appellant's counsel.

2. Existence of an arbitration agreement:
The appellant invited tenders for construction work, and the respondent submitted a tender containing Clause 25A, which included an arbitration agreement. The tender was accepted, but no formal contract was signed. The appellant later decided not to proceed with the work and refunded the earnest money. The respondent invoked Clause 25A, claiming losses due to the cancellation. The appellant contended that no arbitration agreement existed as no formal contract was signed.

3. Applicability of Clause 25A of the tender conditions:
The respondent sought the appointment of an arbitrator u/s 11 of the Arbitration and Reconciliation Act, 1996. The District Judge appointed an arbitrator based on Clause 25A, leaving objections to be raised before the arbitrator. The appellant filed a writ petition, arguing that the dispute was outside Clause 25A and no payment was due unless a formal contract was signed.

4. Jurisdiction of the arbitrator:
The court noted that the case was governed by the pre-S.B.P. & Company v. Patel Engineering Ltd. and Anr. dispensation, where prior orders and proceedings were saved. The court decided that the arbitrator should determine the existence of an arbitration agreement u/s 7 of the Act and whether the claim fell within Clause 25A. The arbitrator must decide these issues while proceeding to pronounce the award.

5. Validity of the appointment of the arbitrator:
The court saw no reason to interfere with the appointment of the arbitrator. The appeal was dismissed, allowing the parties to raise all contentions regarding the arbitral tribunal's jurisdiction before the arbitrator. The arbitrator was permitted to allow amendments or supplements to the objections if necessary. No order as to costs was made.