Case: M/S. P. Manohar Reddy &amp; Bros Vs. Maharashtra Krishna Valley Dev.Corp.&amp;Ors

arbitral tribunal may rule on its own jurisdiction, including ruling on any objections with respect to the existence or validity of the arbitration agreement, and for that purpose,-(a) An arbitration clause which forms part of a contract shall be treated as an agreement independent of the other terms of the contract; and(b) A decision by the arbitral tribunal that the contract is null and void shall not entail ipso jure the invalidity of the arbitration clause." (Emphasis supplied). Modern laws on arbitration confirm the concept. The United States Supreme Court in the recent judgment in Buckeye Check Cashing, Inc. v. Cardegna (546 US 460) acknowledged that the separability rule permits a court "to enforce an arbitration agreement in a contract that the arbitrator later finds to be void." The Court, referring to its earlier judgments in Prima Paint Corp. v. Flood & Conklin Mfg. Co., (388 U. S. 395), and Southland Corp. v. Keating, (465 U. S. 1), inter alia, held :- "Prima Paint and Southland answer the question presented here by establishing three propositions. First, as a matter of substantive federal arbitration law, an arbitration provision is severable from the remainder of the contract." But this must be distinguished from the situation where the claim itself was to be raised during the subsistence of a contract so as to invoke the arbitration agreement would not apply. M/s Bharat Heavy Electricals Limited, Ranipur vs. M/s Amar Nath Bhan Prakash (1982) 1 SCC 625 , whereupon reliance has been placed by Mr. Sundaravaradan is not applicable as it was held therein that the question whether there was discharge of the contract by accord and satisfaction or not, is itself arbitrable. The said question need not detain us having been considered by this Court in Bharat Coking Coal Ltd. vs. Annapurna Construction [(2003) 8 SCC 154] holding: "14. The question is as to whether the claim of the contractor is de hors the rules or not was a matter which fell for consideration before the arbitrator. He was bound to consider the same. The jurisdiction of the arbitrator in such a matter must be held to be confined to the four-corners of the contract. He could not have ignored an important clause in the agreement; although it may be open to the arbitrator to arrive at a finding on the materials on records that the claimants claim for additional work was otherwise justified." 27. In Chairman and MD, NTPC Ltd. vs. Reshmi Constructions, Builders & Contractors [(2004) 2 SCC 663] , this Court held: "18. Normally, an accord and satisfaction by itself would not affect the arbitration clause but if the dispute is that the contract itself does not subsist, the question of invoking the arbitration clause may not arise. But in the event it be held that the contract survives, recourse to the arbitration clause may be taken. [See Union of India v. Kishorilal Gupta (AIR 1959 SC 1362 ) and Naihati Jute Mills Ltd. v. Khyaliram Jagannath (AIR 1968 SC 522 )." It was furthermore opined "28. Further, necessitas non habet legem is an age-old maxim which means necessity knows no law. A person may sometimes have to succumb to the pressure of the other party to the bargain who is in a stronger position.29. We may, however, hasten to add that such a case has to be made out and proved before the Arbitrator for obtaining an award.30. At this stage, the Court, however, will only be concerned with the question whether trial issues have been raised which are required to be determined by the Arbitrators." 28. We, however, as noticed hereinbefore, are concerned with a different fact situation. As arbitration clause could not be invoked having regard to the limited application of clauses 37, 54 and 55 of the General Conditions of the Contract, we are of the opinion that the trial court was not correct in directing appointment of an arbitrator. 29. We may notice that in Wild Life Institute of India, Dehradun vs. Vijay Kumar Garg [(1997) 10 SCC 528] , a Division Bench of this Court held as under: "It is also necessary to refer to the arbitration clause under the contract which clearly provides that if the contractor does not make any demand for arbitration in respect of any claim in writing within 90 days of receiving the intimation from the appellants that the bill is ready for payment, the claim of the contractor will be deemed to have been waived and absolutely barred and the appellants shall be discharged and released of all liabilities under the contract in respect of these claims. The liability, therefore, of the appellants cease if no claim of the contractor is received within 90 days of receipt by the contractor of an intimation that the bill is ready for payment. This clause operates to discharge the liability of the appellants on expiry of 90 days as set out therein and is not merely a clause providing a period of limitation. In the present case, the contractor has not made any claim within 90 days of even receipt of the amount under the final bill. The dispute has been raised for the first time by the contractor 10 months after the receipt of the amount under the final bill." 30. The High Court has relied upon a decision of this Court in M/s K. Ramaiah and Company Vs. Chairman & Managing Director, National Thermal Power Corpn. [1994 Supp. (3) SCC 126]. We need not deal therewith in details as the effect thereof has been considered by us in Bharat Coking Coal Ltd. vs. Annapurna Construction (supra). 31. It is also not a case where sub-section (4) of Section 37 of the Act could be invoked. Appellant did not invoke Section 37(4) of the Act. No reason has been assigned as to why the said discretion of the court should be invoked particularly when the claim has been raised only after completion of the work.32. For the reasons aforementioned, we,

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

Explanation:
0[ds]Court, however, will only be concerned with the question whether trial issues have been raised which are required to be determined by thehowever, as noticed hereinbefore, are concerned with a different fact situation. As arbitration clause could not be invoked having regard to the limited application of clauses 37, 54 and 55 of the General Conditions of the Contract, we are of the opinion that the trial court was not correct in directing appointment of anis also not a case where sub-section (4) of Section 37 of the Act could be invoked. Appellant did not invoke Section 37(4) of the Act. No reason has been assigned as to why the said discretion of the court should be invoked particularly when the claim has been raised only after completion of the work.