Case: Andhra Pradesh Tourism Development Corporation Ltd. &amp; Another Vs. M/s. Pampa Hotels Ltd

is no arbitration agreement between the respondent (applicant in the application under section 11 of the Act) and APTDC against whom such agreement is sought to be enforced. Re : Question (ii) : 12. Let us next consider the question as to who should decide the question whether there is an existing arbitration agreement or not. Should it be decided by the Chief Justice or his Designate before making an appointment under section 11 of the Act, or by the Arbitrator who is appointed under section 11 of the Act? This question is no longer res integra. It is held in SBP & Co. v. Patel Engineering Ltd. [2005(8) SCC 618] and National Insurance Co. Ltd. v. Boghara Polyfab Pvt. Ltd. [2009(1) SCC 267] that the question whether there is an arbitration agreement and whether the party who has applied under section 11 of the Act, is a party to such an agreement, is an issue which is to be decided by the Chief Justice or his Designate under section 11 of the Act before appointing an arbitrator. Therefore there can be no doubt that the issue ought to have been decided by the learned Designate of the Chief Justice and could not have been left to the arbitrator. But as noticed above, the learned Designate proceeded on the basis that while acting under section 11 of the Act, he was not acting under a judicial capacity but only under an administrative capacity and therefore he cannot decide these contentious issues. He did so by following the two decisions in Konkan Railway (supra) which were then holding the field. 13. In SBP (supra), a seven-Judge Bench of this Court overruled the two decisions in Konkan Railway. The decision in SBP was rendered on 26.10.2005, a few weeks after the impugned decision by the Designate on 16.8.2005. Having regard to the fact that several decisions rendered under section 11 of the Act had followed the decisions in Konkan Railway, this court, when it rendered its decision in SBP, restored to prospective overruling by directing as follows: "(x) Since all were guided by the decision of this Court in Konkan Rly. Corpn. Ltd. v. Rani Construction (P) Ltd. [2002(2) SCC 388] and orders under Section 11(6) of the Act have been made based on the position adopted in that decision, we clarify that appointments of arbitrators or Arbitral Tribunals thus far made, are to be treated as valid, all objections being left to be decided under Section 16 of the Act. As and from this date, the position as adopted in this judgment will govern even pending applications under Section 11(6) of the Act." (emphasis supplied) This Court in Sarwan Kumar v. Madan Lal Aggarwal [2003(4) SCC 147] observed: "The doctrine of "prospective overruling" was initially made applicable to the matters arising under the Constitution but we understand the same has since been made applicable to the matters arising under the statutes as well. Under the doctrine of "prospective overruling" the law declared by the Court applies to the cases arising in future only and its applicability to the cases which have attained finality is saved because the repeal would otherwise work hardship to those who had trusted to its existence. Invocation of doctrine of "prospective overruling" is left to the discretion of the court to mould with the justice of the cause or the matter before the court." 14. Learned counsel for the appellants contended that the impugned order was rendered on 16.8.2005; that as on 26.10.2005 when the decision in SBP was rendered, the time for filing a special leave petition under Article 136 of the Constitution had not expired; that the special leave petition was filed by the appellant on 22.11.2005, which has been entertained by granting leave. The appellants therefore contend that this appeal should be considered as a continuation of the application under section 11 of the Act or as pending matter to which the decision in SBP would apply, even though the Designate had rendered the decision on 16.8.2005. The appellants submitted that a pending matter would refer not only to the original proceedings but also would include any appeal arising therefrom and therefore any proceeding which has not attained finality is a pending matter. 15. What the appellants contend, would have been the position if there was a statutory provision for appeal and SBP had directed that in view of prospective overruling of Konkan Railway pending matters will not be affected. But sub-section (7) of Section 11 of the Act makes the decision of the Chief Justice or his designate final. There is no right of appeal against the decision under Section 11 of the Act. Further, the seven Judge Bench in SBP issued the categorical direction that appointment of Arbitrators made till then are to be treated as valid and all objections are to be left to be decided under Section 16 of the Act.16. On account of the prospective overruling direction in SBP, any appointment of an arbitrator under Section 11 of the Act made prior to 26.10.2005 has to be treated as valid and all objections including the existence or validity of the arbitration agreement, have to be decided by the arbitrator under section 16 of the Act. The legal position enunciated in the judgment in SBP will govern only the applications to be filed under Section 11 of the Act from 26.10.2005 as also the applications under section 11(6) of the Act pending as on 26.10.2005 (where the Arbitrator was not yet appointed). In view of this categorical direction in SBP, it is not possible to accept the contention of the appellant that this case should be treated as a pending application. In fact we may mention that in Maharishi Dayanand University v. Anand Coop. L/C Society Ltd. & Anr. [2007(5) SCC 295], this Court held that if any appointment has been made before 26.10.2005, that appointment has to be treated as valid even if it is challenged before this Court.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]15. What the appellants contend, would have been the position if there was a statutory provision for appeal and SBP had directed that in view of prospective overruling of Konkan Railway pending matters will not be affected. But(7) of Section 11 of the Act makes the decision of the Chief Justice or his designate final. There is no right of appeal against the decision under Section 11 of the Act. Further, the seven Judge Bench in SBP issued the categorical direction that appointment of Arbitrators made till then are to be treated as valid and all objections are to be left to be decided under Section 16 of the Act.16. On account of the prospective overruling direction in SBP, any appointment of an arbitrator under Section 11 of the Act made prior to 26.10.2005 has to be treated as valid and all objections including the existence or validity of the arbitration agreement, have to be decided by the arbitrator under section 16 of the Act. The legal position enunciated in the judgment in SBP will govern only the applications to be filed under Section 11 of the Act from 26.10.2005 as also the applications under section 11(6) of the Act pending as on 26.10.2005 (where the Arbitrator was not yet appointed). In view of this categorical direction in SBP, it is not possible to accept the contention of the appellant that this case should be treated as a pending application. In fact we may mention that in Maharishi Dayanand University v. Anand Coop. L/C Society Ltd. & Anr. [2007(5) SCC 295], this Court held that if any appointment has been made before 26.10.2005, that appointment has to be treated as valid even if it is challenged before this Court.