In the High Court of Punjab and Haryana at Chandigarh [CASE NUMBER] Date of decision: May 22, 2009 M/s [ENTITY] Petitioner Vs. M/s [ENTITY]. Respondent Coram: Hon'ble Mr. Justice [ENTITY] Present: Mr. [ENTITY], Advocate for the petitioner. [ENTITY], J This is a petition under [SECTION] of [ACT] for setting aside the judgment dated 18.3.2009 (Annexure P-11) passed by the Additional Civil Judge (Senior Division), Panipat. The plaintiff-respondent (herein referred as 'the respondent') had challenged the existence and validity of the contract and had sought the injunction against defendant No.1-petitioner from initiating the arbitration proceedings. I have gone through the observations made in the impugned order dated 18.3.2009. The court has declined to act on the contracts dated 15.7.2008 and 6.8.2008 as referred by the defendant No.1 for the reasons; firstly these do not bear the signatures of the plaintiff-respondent (herein referred as 'the plaintiff') and the defendants have no explanation in not getting the signatures on the agreement, on the basis of which they assert for referring the matter to the arbitrator. Secondly, the letter dated 19.8.2008 referred by the defendants allegedly written by the plaintiff has been seriously disputed by the plaintiff and it has no reference of the arbitration agreement. Thirdly; there is no denial of the defendant that the agreement clause referred to by them is very much part and parcel of these disputed contracts dated 15.7.2008 and 6.8.2008 which by themselves are in serious dispute qua their existence. For the application of the terms of the agreement, it was essential that the party should sign the agreement. Since the letter does not speak of any existence of the agreement, therefore, the same cannot be imposed upon the plaintiff to abide by the conditions as [CASE NUMBER] -2-
mentioned in the agreement. On the other hand, defendant has urged that to determine the existence or non existence of the arbitration agreement, was also the domain of the arbitrator. In this regard reliance has been placed on the judgment delivered by the Apex Court in case [PRECEDENT] wherein it was observed as under :-
" In the present case, therefore, the question as to whether the draft purchase order acquired the character of a concluded contract or not and the question as to whether the contract was non est can only be decided by the arbitrator "
In the aforesaid case the argument was that the draft purchase order could be termed as the agreement but in this case, there is no such agreement. Apparently, unsigned agreement could not be treated as concluded contract and the agreement sought to be placed reliance could be termed as incomplete contract between the parties for want of his signatures thereon.
Learned counsel for the plaintiff has further placed reliance on the judgment delivered by the Apex Court in case [PRECEDENT], wherein it was observed as under :-
" [SECTION] of the Act says that the Arbitral Tribunal may rule on its own jurisdiction, including ruling on any objections with respect to the existence or validity of the arbitration agreement. In [PRECEDENT], in para 21 a Constitution Bench of 5 learned Judges has ruled that if the Arbitral Tribunal has been improperly constituted, it would be open to the aggrieved party to require the Arbitral Tribunal to rule on its own jurisdiction in view of [SECTION] of the Act. It was also observed that the expression used in sub-section (1) that the "Arbitral Tribunal may rule on any objections with respect to the existence or validity of the arbitration agreement" shows that the Arbitral Tribunal's authority under [SECTION] is not confined to the width of its jurisdiction, but goes to the very root of its jurisdiction and there is no impediment in contending before the Arbitral Tribunal that it had been wrongly constituted. This decision has been partly overruled on another point by a larger Bench of 7 Judges in [PRECEDENT] But the aforesaid view has not been dissented from or reversed. This will be evident from the conclusions arrived at by the larger Bench which have been summarized in para 47 of the Report and sub- para (ix) thereof reads as under :-
(ix) In a case where an Arbitral Tribunal has been constituted by the parties without having recourse to [SECTION] of the Act, the Arbitral Tribunal will have the jurisdiction to decide all matters as contemplated by [SECTION] of the Act."
I have gone through the judgment and the same is not applicable to the facts of the present case. In order to refer the matter to the arbitrator, the first essential, necessarily is existence of contract between the parties, secondly, the requirement of [SECTION] to be complied with where it is mentioned that subject matter of the reference must be covered by the arbitration agreement but here in this case, the plaintiff has apparently challenged the existence of the agreement itself, which apparently is clear from the record. Notwithstanding the fact that arbitral tribunal is vested with powers to examine its constitution, the validity of the agreement and its jurisdiction after the matter is referred to it yet before the reference has been made, the court is not divested with powers to examine what matter is referable to the arbitrator and whether there was a valid agreement which is binding over the parties.
Learned counsel for the petitioner has also relied upon the judgment delivered in case [PRECEDENT], wherein it was observed as under :-
" The City Civil Court was right in its approach when it said that the court could only intervene in respect of matters expressly provided for in the year [ACT]. The validity of the proceedings before the arbitral tribunal is an issue which the Council, and not the court, could decide under [SECTION] of the [ACT]. [SECTION] opens with the words "the arbitral tribunal may rule on its jurisdiction ". has been held by this Court that the arbitral tribunal's authority under [SECTION] is not confined to the width of its jurisdiction but goes to the very root of its jurisdiction. [PRECEDENT] Therefore, the Council can go into the question whether its authority had been wrongly invoked by the appellant land it is open to it to hold that it had no jurisdiction to proceed with the matter.
The Apex Court in the aforesaid judgment further observed that there is, in this case, no question of dispute spilling into areas where the arbitral tribunal does not have jurisdiction. Under the [ACT], the arbitral tribunal has been given a very wide and deep area of operation and it is the court's power which have been statutorily curtailed.
After going through the impugned judgment, there is no dispute with the fact that the arbitrator had been given wide powers to go into the dispute having arisen between the parties out of the contract but existence of the agreement was essential for referring the same to the arbitrator, where there is no such contract then the civil court could, in the absence of the contract, had jurisdiction to refuse to refer the same to the arbitrator.
No other argument has been advanced.
In view of the above, finding no merit in the petition, the same dismissed.
May 22, 2009 ([ENTITY]) deepak Judge