Legal Provisions Involved: Sections 11, 16, 34 and 37 of the Arbitration and Conciliation Act, 1996.

Judgement By: Supreme Court of India.

Judge/Bench: Justice J.B. Pardiwala and Justice K.V. Viswanathan.

Facts

The dispute arose from housing construction contracts between a contractor and a statutory housing authority. The contractor claimed unpaid escalation costs and wrongful deductions. Although the contracts referred disputes to a Standing Committee, the committee was never formed as required. 

Due to this failure, the contractor approached the High Court, which appointed sole arbitrators in 2014. The arbitrators later passed awards in favour of the contractor.

Key Legal Provisions

Sections 11, 16, 34 and 37 of the Arbitration and Conciliation Act, 1996

Issues Raised

Whether a party can question the existence or validity of an arbitration agreement after accepting a court order appointing an arbitrator.

Arguments of the Case

The housing authority argued that the dispute resolution clause was not an arbitration clause. The contractor argued that once the arbitrator’s appointment was accepted and not challenged, this issue could not be raised later.

Judgement

The Supreme Court held that under the law applicable before the 2015 amendment, the court appointing an arbitrator decides issues relating to the existence and validity of the arbitration agreement. Once such an order is accepted and becomes final, the parties cannot reopen the issue at later stages. The Court set aside the High Court and Commercial Court orders and sent the matters back to the Commercial Court to decide the remaining objections within three months.

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