Court Denies Premature Challenge to Arbitrator’s Decision on Forgery Allegation in Sale Agreement
In a significant ruling, the Karnataka High Court has upheld the decision of an arbitral tribunal to continue proceedings despite jurisdictional objections raised by petitioner Smt. G.S. Sridevi. The petitioner had challenged the validity of an Agreement of Sale, claiming it was forged, and sought to halt the arbitration process. However, the court, presided over by Justice Suraj Govindaraj, ruled that such objections are to be examined post-arbitral award under the Arbitration and Conciliation Act, 1996.
The dispute traces back to an Agreement of Sale dated August 25, 2021, between Sridevi and respondent Shri H. Mahadev Goud. The petitioner alleged that the agreement, which included an arbitration clause, was fabricated, and that a complaint had been lodged with the local police. Despite these allegations, the arbitral tribunal, headed by sole arbitrator Sri Bailur Shankar Rama, rejected the jurisdictional plea under Section 16 of the Arbitration and Conciliation Act, prompting Sridevi to file a writ petition.
Justice Govindaraj emphasized the kompetenz-kompetenz principle under Section 16, affirming that the arbitral tribunal is competent to rule on its own jurisdiction. The court noted that the legislative intent of the Arbitration and Conciliation Act is to limit judicial intervention during ongoing arbitral proceedings, thus deferring challenges to jurisdiction until the final award stage under Section 34.
The court further clarified that the rejection of a jurisdictional plea does not independently attain finality and is not amenable to challenge under Articles 226 or 227 during the pendency of arbitral proceedings. The petitioner is entitled to challenge the arbitral award, including jurisdictional findings, once it is rendered.
The ruling underscores the legal framework's aim to prevent fragmentation of arbitral proceedings and ensure expeditious dispute resolution. The High Court's decision reinforces the statutory mechanism provided under the Arbitration and Conciliation Act, highlighting that premature challenges could undermine the arbitration process's integrity and efficiency.
Bottom line:-
Arbitration and Conciliation Act, 1996 - Jurisdictional objections under Section 16 - Rejection of jurisdictional plea does not independently attain finality and is not amenable to challenge under Articles 226 or 227 during pendency of arbitral proceedings.
Statutory provision(s):
Arbitration and Conciliation Act, 1996 Sections 16, 34, 37
G.S. Sridevi v. H. Mahadev Goud, (Karnataka) : Law Finder Doc id # 2928164
