Karamjit Singh and Others vs Nirmal Rani and Others

Gurdev Singh, J.

Heard.

This revision petition by the Petitioners is directed against the order dated 14.10.2010 (Annexue P/1) passed by the arbitrator vide which he dismissed the application filed by the present Petitioners for treating the issue qua the maintainability of arbitration proceedings as preliminary issue.

The arbitrator framed issues on the pleadings of the parties and dismissed the application filed by the present Petitioners on the ground that the issue regarding maintainability of the agreement cannot be treated as preliminary issue as it requires to be decided on the basis of the evidence to be produced by the parties and taking into account the ratio of the judgment of the Supreme Court reported in 2007(3) RCR (Civil) 128 Maharshi Dayanand University and Anr. v. Anand Coop. L/C Society Ltd., and Anr.

The submission of learned Counsel for the Petitioner is that the judgment of the Hon''ble Supreme Court has not been properly appreciated by the arbitrator and that Order 14 C.P.C requires the issue regarding the maintainability of the arbitration proceedings to be decided as the preliminary issue.

The ratio of the judgment of the Hon''ble Supreme court was very well appreciated by the arbitrator and there cannot be any other interpretation of the judgment as has been drawn by him. For the proper appreciation of the matter, the relevant para of that judgment is reproduced as under:

"11. But we make it clear that the arbitrator, in the first instance, has to decide whether the existence of an arbitration agreement in terms of Section 7 of the Act is established and also to decide whether the claim now made is claim that comes within the purview of Clause 25A of the tender conditions in case it is found to be an agreement within the meaning of Section 7 of the Act. Only on deciding these two aspects can the arbitrator go into the merits of the claim made by the Respondent. But we clarify that it does not mean, that he should treat these two aspects as preliminary issues and decide them first; but only that he must decide them without fail while proceeding to finally pronounce his award."

The position has been made very clear by the Apex Court that such an issue cannot be decided as preliminary issue though the arbitrator is required to decide the same, first before deciding the other issues on merits. The Petitioners are challenging the arbitration agreement not only on the ground that the same is vague and ambiguous, but also on the ground the same is result of fraud and misrepresentation. Therefore the same cannot be decided without first allowing the parties to produce their evidence and the law always discourages the piecemeal recording of evidence.

There is no illegality in the order passed by the arbitrator and the revision petition is dismissed accordingly.