ANDHRA PRADESH TOURISM DEVELOPMENT CORPN. LTD. & ANR. versus M/S. PAMPA HOTELS LTD.

Citation: [2010] 4 S.C.R. 942 · Decided: 20-04-2010 · Supreme Court of India · Bench: R.V. RAVEENDRAN · Disposal: Disposed off

Judgment (excerpt)

A 
B 
c 
[2010] 4 S.C.R. 942 
ANDHRA PRADESH TOURISM DEVELOPMENT CORPN. 
LTD. & ANR. 
v. 
M/S. PAMPA HOTELS LTD. 
(Civil Appeal No. 3272 of 2007) 
APRIL 20, 2010 
[R.V. RAVEENDRAN AND H.L. DATTU, JJ.] 
Arbitration and Conciliation Act, 1996: 
ss. 7 and 2(h) -
Party to arbitration agreement -
Company entering into contract before the date on which it 
was entitled to commence business - On dispute invoking 
arbitration clause of the contract - Held: Since the company 
D was non-existent on the date of contract, there was no contract 
- Consequently there was no arbitration agreement - The 
agreement would have been valid, if the contract were entered 
into by the promoters of the non-existing company on its 
behalf - Companies Act, 1956 - s. 149 (4) - Specific Relief 
E 
Act, 1963 - s. 15(h). 
ss. 11 and 16 - Decision as regards existence or validity 
of arbitration agreement - Whether to be decided by Chief 
Justice/Designate or by the arbitrator - Chief Justice! 
Designate in application uls. 11 appointing the arbitrator and 
F 
leaving the question as regards validity of the arbitration 
agreement to be decided by arbitrator relying on *Konkan 
Railway cases - Subsequent decision in **SBP case over-
ruling Konkan Railway cases - SBP case resorting to 
prospective over-ruling - Held: In view of decision in SBP 
G case, validity of arbitration agreement is to be decided by the 
Chief Justice/Designate - However, in view of prospective 
over-ruling direction in SBP case, the validity of the arbitration 
agreement in the present case, has to be decided by the 
arbitrator - The appeal to the Supreme Court cannot be 
H 
942 
ANDHRA PRADESH TOURISM DEV. CORPN. LTD. v. 943 
PAMPA HOTELS LTD. 
treated as a pending application u/s. 11 and hence decision A 
in SBP case will not apply - Prospective Over-ruling -
Doctrine of Merger. 
The questions which arose for consideration in the 
present appeal were: 
B 
(i) where the party seeking arbitration is a company 
which was not in existence on the date of the signing 
of the contract containing the arbitration agreement, 
whether it can be said that there is an arbitration 
agreement between the parties; and 
C 
(ii) whether the question as to the existence or validity 
of the arbitration agreement, has to be decided by the 
" 
Chief Justice/Designate while considering the 
petition u/s. 11 of the Act or by the Arbitrator. 
D 
Disposing of the appeal, the Court 
HELD: 1.1. The certificate of registration issued by 
Registrar of companies shows the date of its 
incorporations as 9.4.2003. Section 149(4) of the E 
Companies Act, 1956 provides that any contract made by 
a company (which is already registered) before the date 
at which it is entitled to commence business shall be 
provisional only, and shall not be binding on that 
company until that date, and on that date it shall become 
F 
binding. The Lease Agreement and also the Management 
Agreement were made on 30.3.2002 between the 
appellant and the respondent. A certificate u/s. 149(3) of 
the Companies Act was issued by the Registrar of 
Companies only on 6.6.2003 certifying that respondent is G 
entitled to commence business. It is thus clear that the 
applicant in application u/s. 11 of the Act was non-
existent on 30.3.2002 when the arbitration agreement was 
entered into. [Paras 8 and 9) [951-B-E; 952-D-F] 
1.2. Section 7 of Arbitration and Conciliation Act, H 
944 
SUPREME COURT REPORTS 
[2010] 4 S.C.R. 
A 
1996 defines an arbitration agreement as an agreement 
by the parties to submit to arbitration. The word 'party' is 
defined in Section 2(h) of the Arbitration Act as a party 
to an arbitration agreement. An agreement enforceable by 
law is a contract. An agreement has to be between two 
B or more persons. Therefore if one of the two parties to 
the arbitration agreement was not in existence when the 
contract was made, then obviously there was no contract 
and if there was no contract, there is no question of a 
clause in such contract being an arbitration agreement 
c between the parties. [Para 10] [952-G-H; 953-A] 
1.3. The agreements are not entered by the.promoters 
of the company, but purportedly by the company itself, 
represented by its Managing Director. Admittedly on 
30.3.2002 there was no such company in existence. 
D Admittedly there was no such company having its 
registered office at the address mentioned on that date. 
Admittedly, one of the signatories of the agreements was 
not the Managing Direct

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