HYTHRO POWER CORPORATION LTD. versus DELHI TRANSCO LTD.

Citation: [2003] SUPP. 1 S.C.R. 940 · Decided: 30-07-2003 · Supreme Court of India · Bench: SHIVARAJ V. PATIL · Disposal: Appeal(s) allowed

Judgment (excerpt)

A 
B 
HYTHRO POWER CORPORATION L TO. 
v. 
DELHI TRANSCO LTD. 
JULY 30, 2003 
[SHIVARAJ V. PATIL AND D.M. DHARMADHIKARJ, JJ.] 
Arbitration and Conciliation Act, 1996-Sections 11 and 16-Constitution 
of India, 1950-Article 226-Nominee or designate of Chief Justice-Dispute 
C regarding validity and existence of arbitration agreement and its reference to 
arbitrator-Jurisdiction to adjudicate-Held: Designate of the Chief Justice 
acting under Section /I merely exercises administrative function thus, has no 
jurisdiction to adjudicate upon such dispute and also the High Court exercising 
power under Article 226 has no jurisdiction-Only arbitral Tribunal is 
conferred with jurisdiction to decide such dispute as provided under Section 
D 16(1). 
Appellant-Corporation filed an application for reference of its 
disputes with the respondent for adjudication through the arbitration in 
accordance with arbitration clause in the alleged agreement arrived at 
between them. Single Judge of High Court acting as designate or nominee 
E of the Chief Justice, in exercise of his powers under Section 11 of the 
Arbitration and Conciliation Act, 1996 rejected the prayer as no 
agreement in writing was executed by the parties with an arbitration 
clause. Appellant-Corporation filed a writ petition. Division Bench 
dismissed the same. Hence the present appeal. 
F 
Appellant-Corporation contended that when the nominee or 
designate of the Chief Justice, invokes its power under Section 11 of the 
Act, it merely exercises administrative functions and has no jurisdiction 
to adjudicate upon the contentious issues between the parties on 'the 
existence or the validity of the arbitration agreement'; and that only 
G 'arbitral tribunal' is conferred with jurisdiction to decide the existence 
or validity of the arbitration agreement as provided in Section 16(1) of 
the Act. 
Allowing the appeal, the Court 
H 
940 
HYTHRO POWER CORPN. LTD. i·. DELHI TRANSCO LTD. 
94} 
HELD: 1. The designate of the Chief Justice acting administratively A 
under Section It of the Arbitration and Conciliation Act, 1996 and the 
Division Bench of the High Court exercising powers under Article 226 of 
the Constitution erred in adjudicating upon the dispute regarding 'the 
validity and existence of the arbitration agreement' and holding that the 
dispute was not referable to arbitration. Appellant sought reference of its B 
disputes with the respondent/company for adjudication through the 
arbitration in accordance with arbitration clause in the alleged agreement 
arrived at between them. Whether an arbitration agreement can be said 
to have existed by recourse to arbitration clause in the Notice Inviting 
Tender was itself a dispute which deserved to be referred to the arbitral 
Tribunal in accordance with the arbitration clause. Section 16 empowers C 
the arbitral Tribunal to decide the question of existence and validity of 
the arbitration agreement. Thus, the order of Single Judge under Section 
11 of the Act and order of Division Bench of High Court in writ petition 
under Article 226 are quashed. [945-E-H; 946-A) 
Konkan Railway Corporation Ltd. v. Mehu/ Construction Co., [2000) 7 D 
SCC 201; Konkan Railway Corporation Ltd. v. Rani Construction P. Ltd., 
[2002) 2 SCC 388; NimetResources Inc. v. Essar Steels Ltd., [20001 7, SCC 
497 and Food Corporation of India v. Indian Council of Arbitration and Ors. 
etc. etc. JT 12003) 5 SC 480, referred to. 
2. The case is remanded to the Chief Justice or his designate for 
hearing the parties on the limited question of constitution of an arbitral 
Tribunal in accordance with the arbitration clause in the NIT and for 
making a reference for arbitration in accordance with Section 11 of the 
Act. [946-A-B) 
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 5315 of 2003. 
From the Judgment and Order dated 29.8.2001 of the Delhi High Court 
in C.W. No. 2675 of 2001. 
E 
F 
Sudhir Chandra, Dharmesh Mishra and Rajat Navet for Pradeep Kumar G 
Bakshi for the Appellant. 
Rakesh Kumar Sharma for the Respondent. 
The Judgment of the Court was delivered by 
H 
942 
SUPREME COURT REPORTS [2003] SUPP. I S.C.R. 
A 
DHARMADHIKARI, J. Heard learned counsel appearing for the 
parties. Leave to appeal, as prayed for. is granted. 
The appellant Hythro Power Corporation Limited has approached this 
Court aggrieved by rejection of its application under Section 11 of the 
Arbitration and Conciliation Act, 1996 (hereinafter referred to as the "Act" 
B 

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