MAHARSHI DAYANAND UNIVERSITY & ANR. versus ANAND COOP. L/C SOCIETY LTD. & ANR.

Citation: [2007] 5 S.C.R. 596 · Decided: 25-04-2007 · Supreme Court of India · Bench: TARUN CHATTERJEE · Disposal: Dismissed

Judgment (excerpt)

A 
B 
MAHARSHI DAY ANAND UNIVERSITY & ANR. 
v. 
ANAND COOP. L/C SOCIETY LTD. & ANR. 
APRIL 25, 2007 
[TARUN CHATTERJEE AND P.K. BALASUBRAMANYAN,JJ.] 
Arbitration and Conciliation Act, I996-Sections I I and I6-
Appointment of arbitrator-Interference with-Tender invited, tender submitted 
C and acceptance conveyed, time for work stipulated and payment not to be 
made until formal contract signed containing detailed specifications as 
contemplated by letter of acceptance-However, formal contract not signed-
Party deciding not to execute contract-Contractor invoking clause in tender 
conditions for appointment of arbitrator-Application u/s I I-Appointment 
of Engineer as arbitrator leaving it to the parties to raise all objections 
D before the arbitrator uls. I 6-Correctness of-Held: Appointment of arbitrator 
calls for no interference-Since the question can be raised before the 
arbitrator u/s I 6, it must be left to be decided by the arbitrator-Instant case 
not being governed by the principles in S.B.P. & Company's case, it would 
be appropriate to leave this in these proceedings. 
E 
Appellant invited tenders for construction work. Respondent no.l 
submitted the tender and the appellant accepted the same. Tender form 
submitted by the respondent contained a clause for reference of dispute to 
the arbitrator. Appellant submitted the letter of acceptance and the date of 
commencing the work to be from the date of issuance of the letter. It further 
F stipulated that the document containing the detailed terms and conditions of 
the contract was to be signed by the parties otherwise no payment would be 
made; and that the contract stood concluded with the issue of this 
communication. Respondent deposited earnest money. However, the parties did 
not sign the contract. Thereafter, appellant informed the respondent that it 
had decided not to get the work executed and called upon the respondent to 
G take refund of the earnest money. Respondent issued notice invoking clause 
25A of the tender conditions for appointment of arbitrator since the respondent 
had made arrangements for commencing the work and on cancellation it 
suffered losses. Appellant invoked clause 13 of the tender conditions that 
appellant could decide not to proceed with work and as such clause 25 A had 
H 
596 
.. 
'~ .... 
, 
MAHARSHI DAYANAND UJ\'IVERSITY 1.: ANAND COOP. UC SOCIETY LTD 
597 
no application. Respondent then filed an application under section 11 of the A 
Arbitration and Conciliation Act, 1996 for appointment of arbitrator. Appellant 
accepted that the tender of the respondent had been accepted but was not liable 
to pay any damages in view of clause 13 of the tender. District Judge relying 
upon Konkan Railway Corporation Ltd. & Anr. v. Rani Construction Pvt. 
Ltd's* case appointed the Engineer as arbitrator in terms of the clause 25A 
of the tender conditions, leaving it to the parties to raise all objections before B 
the arbitrator under section 16 of the Act. Appellant filed writ petition. High 
Court dismissed the writ petition holding that the appellant could raise 
objections before the arbitrator and interference with the order appointing 
an arbitrator was not called for. Hence the present appeal. 
Appellant contended that contract as contemplated by the parties 
containing the detailed terms and conditions was not signed by the parties 
and in the circumstances there was no arbitration agreement justifying the 
appointment of an arbitrator; that a question whether there was an arbitration 
clause or not, had to be decided by the court even under the dispensation; and 
c 
that there being no concluded contract, it was just and necessary to interfere D 
with the order appointing the arbitrator. 
Dismissing the appeal, the Court 
HELD: 1.1. There is no reason to interfere with the appointment of an 
arbitrator. Liberty is given to the parties to raise all their contentions based E 
on lack of jurisdiction of the arbitral tribunal before the arbitrator. 
[Para 12) [606-F) 
1.2. The instant case is governed by the procedure that was available 
when Konkan Railway Corporation Ltd. & Anr's* case held the field. That 
orders already made were not to be affected by the ratio of the decision in 
S.B.P. & Company's** case. Therefore, the only question for decision is 
whether the fact that the parties have not signed the contract containing the 
detailed specifications as contemplated by the letter of acceptance would 
preclude the res

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