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Arbitration - jurisdiction - agreement - competent - void - voidable - Supreme Court

1) M/s  Nussli  (Swtizerland)  Ltd.  Vs.  Organizing         Commit. Commonwealth  Game.  2010, dated  11th  April,  2012
2)  N.  Radhakrishnan  Vs. Maestro Engineers & Ors., Supreme Court (not correct)
3) Guru Granth Saheb Sthan Meerghat Vanaras Vs. Ved Prakash & Ors
4) India  Household  and  Healthcare Ltd. Vs. LG Household and Healthcare Ltd.
5) Hindustan Petroleum Corpn. Ltd. Vs. Pinkcity Midway Petroleums, SC
6) Today Homes  &  Infrastructure  Pvt.  Ltd.  Vs. Ludhiana Improvement Trust & Anr.
7) SBP & Co. Vs. Patel Engineering Ltd
8) Reva Electric  Car Company Private Limited Vs.  Green  Mobil  [(2012)  2  SCC  93]




 IN THE SUPREME COURT OF INDIA
  CIVIL ORIGINAL JURISDICTION


                     ARBITRATION PETITION NO. 34 OF 2013

      Swiss Timing Limited
      …Petitioner
                             Versus
      Organising Committee, Commonwealth Games 2010, Delhi.                 ….Respondent


The issue regarding the continued existence of the arbitration  agreement, notwithstanding the main agreement itself being  declared  void, was considered by the 7-Judge Bench in SBP & Co. (supra) and  it was held that an arbitration agreement could  stand  independent of the main agreement and did  not  necessarily  become  otiose, even if the main agreement, of which it is a part,  is  declared void.

..........reasoning was adopted by a member  of   this  Bench  (S.S. Nijjar, J.), while deciding the case of Reva Electric  Car  Company Private Limited Vs.  Green  Mobil  [(2012)  2  SCC  93],  wherein the provisions of Section 16(1) in the backdrop  of  the  doctrine of kompetenz kompetenz were considered and it was inter  alia held that under Section 16(1),  the  legislature  makes  it  clear that while considering any objection with  regard  to  the  existence  or  validity  of  the  arbitration   agreement,   the  arbitration clause, which formed part of the contract, had to be  treated as an agreement independent of the other  terms  of  the  contract. Reference  was  made  in  the  said  judgment  to  the  provisions of Section 16(1)(b) of the 1996 Act,  which  provides  that even if the arbitral tribunal concludes that  the  contract  is null and void, it should not result, as a matter of  law,  in  an automatic invalidation of the arbitration clause. It was also  held  that  Section  16(1)(a)  of  the  1996  Act  presumes  the  existence of a valid arbitration clause and mandates the same to  be treated as an agreement independent of the other terms of the  contract. By virtue of Section 16(1)(b) of  the  1996  Act,  the  arbitration clause continues to be enforceable, notwithstanding  a declaration that the contract was null and void.

  27. I am of the opinion that whenever a plea is  taken  to  avoid

 arbitration on the ground that  the  underlying  contract  is  void, the Court is required to ascertain the true  nature  of  the defence.  Often, the  terms  “void”  and  “voidable”  are  confused and  used  loosely  and  interchangeably  with  each  other.  Therefore, the Court ought to  examine  the  plea  by  keeping in mind the  relevant  statutory  provisions  in  the  Indian Contract Act, 1872,  defining  the  terms  “void”  and  “voidable”......... 



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