M/S GAS AUTHORITY OF INDIA LTD. AND ANR. versus M/S KETI CONSTRUCTION (I) LTD. AND ORS.

Citation: [2007] 6 S.C.R. 439 · Decided: 11-05-2007 · Supreme Court of India · Bench: G.P. MATHUR · Disposal: Appeal(s) allowed

Cited by 2 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

r 
MIS GAS AUTHORJTY OF INDIA LTD. AND ANR. 
A 
v. 
MIS KET! CONSTRUCTION (I) LTD. AND ORS. 
'. 
MAY 11, 2007 
[G.P. MA THUR AND LOKESHW AR SINGH PANT A, JJ.] 
B 
~ 
Arbitration & Conciliation Act, 1996-Sections 16, 34, & 3 7-
Arbitrator appointed by appellant passing an award against respondent-
Petition by respondent before High Court to set aside the award on the c 
ground of lack of jurisdiction-High Court allowing the petition-Correctness 
of-Held, object and scheme of the Arbitration Act is to secure an expeditious 
resolution of disputes-Plea of jurisdiction of an arbitrator must be raised 
before the arbitrator under section I 6 of the Act and not under section 34 
of the Act after the award is passed--On facts, no good reasons given by the 
respondent for setting aside the award of the arbitrator-Hence, the award D 
of the arbitrator is valid in law. 
~ 
Appellant no. 1 awarded four construction contracts to respondent no. 
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1. Certain disputes arose between the parties. Appellant no. 1 referred the 
dispute to an Arbitrator under the arbitration clause of thi: contracts who 
gave a 'no claim award'. 
E 
Respondent No. 1 filed a petition under section 34 of the Arbitration 
and Conciliation Act, 1996 before High Court for setting aside the award of 
the arbitrator on the ground of jurisdiction. Respondent no. 1 contended that 
it had appointed an arbitrator under arbitration agreement before the F 
appointment of the arbitrator is made by the appellant; and that the arbitrator 
~ 
appointed by it has already entered into reference. Appellant no. 1 contested 
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the petition contending that it appointed the arbitrator first for settling the 
disputes relating to different contracts before the appointment of arbitrator 
is made by the respondent; that it challenged the appointment of the arbitrator 
by respondent no. 1 by sending a notice to the arbitrator of respondent no. 1 G 
to desist from proceeding from arbitration; that respondent no. 1 never 
challenged the jurisdiction of the arbitrator appointed by the appellant under 
section 16 of the Act; and hence there is no ground to set aside the award of 
the arbitrator. Single Judge of the High Court dismissed the petition. A 
439 
H 
440 
SUPREME COURT REPORTS 
(2007] 6 S.C.R. 
A Division Bench of the High Court allowed the appeal preferred by Respondent 
no. 1 by directing the parties to appear before the arbitrator appointed by 
respondent no. 1 and proceed in accordance with law. Hence the appeal before 
this Court. 
B 
Allowing the appeal, the Court 
HELD: 1.1. The correspondence exchanged between the parties is not 
like evidence in a suit or trial where a piece of evidence given in a particular 
suit or trial cannot be read or taken into consideration in another suit or 
trial. The stand of the appellant right from the beginning was that all the 
C disputes should be referred to a single arbitrator, which will be cost effective, 
economical and quick. The stand was very reasonable. There is material on 
record to show that a panel of three names had already been sent by appellant 
no. 1 to respondent no. 1 which was a sufficient compliance of the clause of 
the agreement. There is neither any such clause in the agreement nor there 
any requirement in law that for each of the contract, a separate panel ought 
D to have been sent The same panel could very well be utilized for resolving 
the disputes arising out of different contracts. In these circumstances, 
respondent no. I was not at all erititled to nominate an arbitrator which it chose 
to do subsequently. There is nothing wrong on the part of the appellant when 
it intimated that a panel had already been sent earlier for appointment of a 
E single arbitrator for resolution of all the disputes between the parties. 
[Paras 13 and 141 [452-E-F-G; 453-D] 
1.2. The whole object and scheme of the Arbitration and Conciliation 
Act, 1996 is to secure an expeditious resolution of disputes. Therefore, where 
a party raisesaplea that the arbitral tribunal has not been properly constituted 
F or has no jurisdiction, it must do so at the threshold before the arbitral 
tribunal so that remedial measures may be immediately taken and time and 
expense involved in hearing of the matter before the arbitral tribunal which 
may ultimately be found to be either not properly constituted or lacking in 
jurisdiction, in proceedings for setting aside the award, may be avoided. 
[Para 18] [457-E-F) 
G 
1.3. Where a party 

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