SECUR INDUSTRIES LTD. versus M/S. GODREJ AND BOYCE MFG. CO. LTD. AND ANR.

Citation: [2004] 2 S.C.R. 705 · Decided: 26-02-2004 · Supreme Court of India · Bench: RUMA PAL · Disposal: Appeal(s) allowed

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

Judgment (excerpt)

SECUR INDUSTRIES LTD. 
A 
v. 
MIS. GODREJ AND BOYCE MFG. CO. LTD. AND ANR. 
FEBRUARY 26, 2004 
[RUMA PAL AND P. VENKATARAMA REDD!, JJ.] 
B 
Interest on Delayed Payments to Small Scale and AncillG1y Industrial 
Undertakings Act, 1993-Section 6(2)-Claim Petition under Section making 
reference to the Council to act as arbitrator-Suit for declaration that claim 
petition ultra vires the provisions of the Act and also application for interim C 
relief-Dismissal of application by Civil Court as it had no jurisdiction to stay 
the proceedings before the Council-Appeal-Application for interim relief 
during pendency of appeal-High Court staying arbitration proceedings before 
the Council only on the ground that no notice served by supplier on the 
buyer-On appeal-Held: Having regard to the scope of the authority of the D 
Arbitral Tribunal, Court could not adjudicate upon the matter, thus, High 
Court erred in staying the proceedings before the Council--Hence order of 
High Court set aside-Further as issue of notice was not raised before High 
Court, it could not be made a ground for interfering with the Council's 
jurisdiction-Arbitration and Conciliation Act, 1996, Sections 16 and 21. 
E 
The appellant filed a claim petition under section 6 of the Interest on 
Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 
I993 for referring its demand against the respondent to the State Industry 
Facilitation Council. The respondent No.I then filed a suit in the Civil Court 
against the appellant and the Council for a declaration that the claim petition 
was ultra vires the provisions of the Act; and also filed an application for F 
interim relief. The Civil Court granted an ad interim injunction but ultimately 
dismissed the application for interim relief holding that the Court could not 
intervene in arbitration proceedings except to the extent prescribed under the. 
I996 Act, under which the Court had no jurisdiction to stay the proceedings 
before the Council. The respondent No.I then filed an appeal. During G 
pendency, on an application filed for interim relief the High Court stayed 
arbitration proceedings before the Council only on the ground that no notice 
had been served by the appellant on the respondent No.1 under Section 21 of 
the 1996 Act. Hence the present appeal. 
705 
H 
706 
SUPREME COURT REPORTS 
[2004] 2 S.C.R. 
A 
Allowing the appeal, the Court 
HELD: 1.1. The High Court erred in staying proceedings before the 
Council. It had no jurisdiction to do so. [711-FJ 
1.2. The proceedings before the Council are proceedings under the 
B Arbitration and Conciliation Act, 1996, pursuant to a deemed agreement 
between the parties to the dispute. With the applicability of Part I of the 1996 
Act in all its force, the extent of judicial intervention in arbitrations is limited 
by the non-obstante provisions of Section 5 of the 1996 Act. Therefore, the 
Civil Court rightly held that the Court could only intervene in respect of 
C matters expressly provided for in the 1996 Act. [710-B-C] 
Konkan Railways Corporation Ltd v. Rani Construction Pvt. Ltd, [2002] 
2 sec 388, referred to. 
1.3. Under the 1996 Act, the_Arbitral Tribunal has been given a very 
wide area of operation and it is the Court's powers which have been statutory 
D curtailed. Having regard to the scope of the authority of the Arbitral Tribunal 
under Section 16 of the 1996 Act, the validity of the proceedings before the 
Arbitral Tribunal is an issue which the Council could adjudicate upon, and 
not the Court. Therefore, the Council can go into the question whether its 
authority had been wrongly invoked by the appellant and it is open to it to 
E hold that it had no jurisdiction to proceed with the matter. Indeed ~t is 
incumbent on the Court to refer the parties tci. arbitration under Section 8(1) 
of the_ 1996 Act if a suit is filed in a matter which is the subject matter of an 
arbitration agreement. Furthermore, even while this question is pending 
decision before a Court, the Arbitral Tribunal may proceed with the 
arbitration under Section 8(3) and make its award. [711-C; 710-F-G] 
F 
1.4. The submission that Section 16 of the 1996 Act does not appl~ to 
the instant case because. the. reference is a statutory one cannot be accepted. 
[710-H] 
Rohtaslndustries Ltd and Anr. v. Rohtas Industries Staff Union and Ors., 
G [19761 2 sec 82, distinguished. 
1.5. The High Court stayed the proceedings before the Council, only 
on the grou

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