Case: Maharshi Dayanand University  Vs. Anand Coop. L/C Society Ltd.

accepted. But the appellant was not liable to pay any damages in view of clause 13 of the tender conditions. No payment was to be made unless the contract agreement was signed. It also contended that the dispute that was sought to be raised by the respondent was outside clause 25A of the tender conditions relied on by the respondent.8. The District Judge, controlled as he then was, by the decision in Konkan Railway Corporation Ltd. & Anr. vs. Rani Construction Pvt. Ltd. (2002 (2) SCC 388 ), appointed the Superintending Engineer as arbitrator by relying on clause 25A of the tender conditions, leaving it to the parties to raise all objections, including the objection to his jurisdiction, before the arbitrator in terms of Section 16 of the Act. Feeling dissatisfied, the appellant filed a writ petition before the High Court relying on the decision of this Court that since the order based on the application under Section 11 was an administrative order, a writ petition was maintainable, by referring to State of Orissa and others vs. Gokulananda Jena (2003 (6) SCC 465 = AIR 2003 SC 4207 ). The High Court held that the objections sought to be raised could be raised by the appellant before the arbitrator and there was no reason for the High Court to interfere with the order appointing an arbitrator in the circumstances of the case. It is feeling aggrieved thereby that the appellant has come up with this appeal by special leave.9. Learned counsel for the appellant submitted that no contract as contemplated by the parties containing the detailed terms and conditions was signed by the parties and in the circumstances there was no arbitration agreement as understood in the Act justifying the appointment of an arbitrator. Counsel brought to our notice Section 7 of the Act. Counsel also referred to the fact that in the subsequent decision in S.B.P. & Company vs. Patel Engineering Ltd. & Anr. (2005 (8) SCC 618 ) this Court has overruled the decision in Konkan Railway Corporation Ltd. & anr. (supra) and the ratio thereof is no more available to the respondent. Counsel also referred to the decision in Willington Associates Ltd. vs. Kirit Meta (2000(4) SCC 272) to submit that a question whether there was an arbitration clause or not, had to be decided by the court even under the dispensation recognized by the earlier decision in Konkan Railway Corporation Ltd. & anr. (supra). Counsel submitted that in view of the fact that a contract in writing had not come into existence by both the parties by affixing their signatures as contemplated by them, there was no concluded contract in the case on hand and it was just and necessary to interfere with the order appointing the arbitrator. As we have indicated earlier, the respondent has not chosen to appear before us to answer these contentions.10. The present case is governed by the procedure that was available when Konkan Railway Corporation Ltd. & anr. (supra) held the field. That orders already made were not to be affected by the ratio of the decision in S.B.P. & Company (supra) is clear from paragraph 46 of that decision wherein prior orders and proceedings have been saved. 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 respondent from seeking an arbitration by falling back on clause 25A of the tender conditions quoted above. It is true that when parties during negotiations contemplate the execution of a formal agreement incorporating the terms of the bargain, so long as a formal agreement has not been entered into, it may be open to contend that there was no concluded contract between the parties. As against this, what is the position in a case where the tender submitted is accepted, its acceptance conveyed and the time for completing the work is stipulated to start from such acceptance, and the work was to commence on the basis of that acceptance but no payment was to be made until a formal contract was signed, is the first question that arises in this case. We think that in the circumstances, this is a question that must be left to be decided by the arbitrator, since in terms of Section 16 of the Act the question can be raised before the arbitrator. Considering that we are dealing with the pre S.B.P. & Company (supra) dispensation, we do not think that it is necessary or proper for us to go into that question and decide the same in these proceedings. Same is the position regarding the scope of clause 13 of the tender and the clauses relied on by counsel for the appellant in his attempt to take the present claim out of clause 25A of the tender conditions. We are, therefore, satisfied that it would be appropriate to leave this question, as also the other questions to be decided by the arbitrator rather than our trying to answer them at this stage in view of the fact that this case is not governed by the principles recognized by S.B.P. & Company (supra).11. But we make it clear that the arbitrator, in the first instance, has to decide whether the existence of an arbitration agreement in terms of Section 7 of the Act is established and also to decide whether the claim now made is a claim that comes within the purview of clause 25A of the tender conditions in case it is found to be an agreement within the meaning of Section 7 of the Act. Only on deciding these two aspects can the arbitrator go into the merits of the claim made by the respondent. But we clarify that it does not mean, that he should treat these two aspects as preliminary issues and decide them first; but only that he must decide them without fail while proceeding to finally pronounce his award.

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

Explanation:
0[ds]10. The present case is governed by the procedure that was available when Konkan Railway Corporation Ltd. & anr. (supra) held the field. That orders already made were not to be affected by the ratio of the decision in S.B.P. & Company (supra) is clear from paragraph 46 of that decision wherein prior orders and proceedings have been saved. 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 respondent from seeking an arbitration by falling back on clause 25A of the tender conditions quoted above. It is true that when parties during negotiations contemplate the execution of a formal agreement incorporating the terms of the bargain, so long as a formal agreement has not been entered into, it may be open to contend that there was no concluded contract between the parties. As against this, what is the position in a case where the tender submitted is accepted, its acceptance conveyed and the time for completing the work is stipulated to start from such acceptance, and the work was to commence on the basis of that acceptance but no payment was to be made until a formal contract was signed, is the first question that arises in this case. We think that in the circumstances, this is a question that must be left to be decided by the arbitrator, since in terms of Section 16 of the Act the question can be raised before the arbitrator. Considering that we are dealing with the pre S.B.P. & Company (supra) dispensation, we do not think that it is necessary or proper for us to go into that question and decide the same in these proceedings. Same is the position regarding the scope of clause 13 of the tender and the clauses relied on by counsel for the appellant in his attempt to take the present claim out of clause 25A of the tender conditions. We are, therefore, satisfied that it would be appropriate to leave this question, as also the other questions to be decided by the arbitrator rather than our trying to answer them at this stage in view of the fact that this case is not governed by the principles recognized by S.B.P. & Company (supra).11. But we make it clear that the arbitrator, in the first instance, has to decide whether the existence of an arbitration agreement in terms of Section 7 of the Act is established and also to decide whether the claim now made is a claim that comes within the purview of clause 25A of the tender conditions in case it is found to be an agreement within the meaning of Section 7 of the Act. Only on deciding these two aspects can the arbitrator go into the merits of the claim made by the respondent. But we clarify that it does not mean, that he should treat these two aspects as preliminary issues and decide them first; but only that he must decide them without fail while proceeding to finally pronounce his award.