Home Bank Investment Inc And Anr. vs M.M.T.C. Limited And Anr.
2007 Latest Caselaw 2454 Del

JUDGMENT

Badar Durrez Ahmed, J.

1. This is a petition filed under Section 34 of the Arbitration and Conciliation Act, 1996 for setting aside the award dated 30.10.2004 made and published by the Arbitral Tribunal comprising of three learned Arbitrators. However, this petition is limited to the conclusion arrived at in the award in respect of issue No. 11- "Relief".

2. The petitioners had filed their claim before the Arbitrators. The case of the petitioners was that the petitioner No. 2 had made an offer through the petitioner No. 1 on 24.02.1995 for supply of Prilled Urea to the respondent MMTC Limited for a total quantity of 240,000 MTs. The petitioner No. 1 along with its letter of offer enclosed a bid bond dated 22.02.1995 in the form of a bank guarantee in favor of the respondent. According to the petitioners, no contract materialised between the petitioners and the respondent. However, despite the fact that there was no contract between the petitioners and the respondent, the respondent invoked the bank guarantee and encashed the entire amount covered under the bank guarantee. The petitioners contended that the invocation of the bank guarantee was illegal and that they were entitled to the refund of the said amount with interest. On the other hand, the respondent's case was that a concluded contract had been executed between the respondent and the petitioner No. 2 and under the said contract they were entitled to encash the bank guarantee. It was further the case of the respondent that, because of the fact that the supply was not made by the petitioners, the respondent suffered huge losses and had to make risk purchases. In respect of this, the respondent filed a counter claim against the petitioners under the contract.

3. The question before this Court does not relate to the merits of the matter but pertains to the question of jurisdiction of the Arbitral Tribunal. To appreciate the exact extent of the question involved before this Court, it would be necessary to refer to the issues framed before the Arbitral Tribunal. The said issues are as under :

ISSUE NO.1. Whether the claim filed by the claimants No 1 and 2 is liable to be rejected against Claimant No. 1, for the alleged reason that claimant No. 1 was not a party to the contract ?

ISSUE NO.2. Whether the contract in question remain un-concluded between the parties ?

ISSUE NO.3. Whether the claimants acknowledged the receipt of the purchase order dated 15.03.1995 without any reservation ? If not to what effect?

ISSUE NO.4. Whether the alleged letter dated 17.03.1995 was in fact sent by the Claimants to the Respondent and was received by the Respondent and its effect on the validity of the purchase order dated 15.03.1995 ?

ISSUE NO.5. Whether the variations / amendments suggested in the proposed contract / purchase order by the claimants vide letter dated 27.031995 could not bind the respondent ?

ISSUE NO.6. Whether the respondent was entitled to encash the Bid Bond furnished by the claimant ?

ISSUE NO.7. Are the claimants entitled to return of the Bid Bond amount ?

ISSUE NO.8. Are the claimants entitled to interest ? If so, at what rate and for what period and for what period ?

ISSUE NO.9. Is the respondent entitled to any counter claims ? If so, to what amount ?

ISSUE NO.10. Is the respondent entitled to any interest ? If so, at what rate and for what period ?

ISSUE NO.11. Relief.

4. With regard to all issues i.e., from issue No. 1 to issue No. 10, the Arbitral Tribunal has decided the same in favor of the petitioners and only, while considering the question of relief, the Arbitral Tribunal concluded that the arbitrators did not have jurisdiction to decide the disputes and differences between the parties. The exact words used in the award are as under :

ISSUE NO. 11. Relief

As it has been found that there was no concluded contract between the parties, the Arbitration clause also has no existence. Even the notice dated 30.12.1996, calling upon the respondent to appoint arbitrators and calling for the adjudication of disputes and differences between the parties in the absence of the Arbitration agreement, cannot give jurisdiction to the Arbitral Tribunal. Also on the basis of this notice the provisions of Arbitration and Conciliation Act, 1996, cannot be pressed into service. Thus, the Arbitrators did not have jurisdiction to decide the disputes and differences between the parties. As the matter of jurisdiction of Arbitrators could be decided only after evidence in the main case had been recorded, we have proceeded to give our findings on all the issues, but we cannot grant any relief to either party under the same.

Anyhow we do suggest to the Respondent M.M.T.C. Ltd. to re-consider the case of the claimants.

5. The award that is impugned before this Court is a detailed one in which findings have been returned in respect of each of the issues. For example, with regard to issue No. 1, the decision of the Arbitral Tribunal was that the bank guarantee was furnished by the petitioner No. 1 for itself as a supplier and on behalf of the petitioner No. 2. It was further held that the bank guarantee was the subject matter of the dispute and that the respondent had invoked the same. The Arbitral Tribunal concluded that the petitioner No. 1 was not only a necessary and proper party but also a party to the contract and that even otherwise the petitioner No. 1 was also the agent of the petitioner No. 2. It was, therefore, concluded that the contention of the respondent that the petitioner No. 1was not a party to the contract was misplaced and was without substance. The issue was decided against the respondent.

6. In the discussion on issue Nos 2-7, the Arbitral Tribunal noted that the contract was not concluded between the parties, particularly, as the letter dated 27.03.1995 and the other letters which followed were only in the form of counter proposals on the part of the petitioners and there was no consensus ad idem consensus between the parties. Consequently, the Arbitral Tribunal held that the question of any subsequent sale also did not arise and there could be no question of the petitioners failing to perform any of the obligations undertaken by them. The Arbitral Tribunal concluded that the respondent was not entitled to encash the bid bond furnished by the claimants. And, therefore, the claimants were entitled to the return of the bid bond amount.

7. While considering issue No. 8, the Arbitral Tribunal even discussed the rate of interest that would be allowable to the petitioners. It was stated that though interest at the rate of 24% per annum was claimed, 8% would be a reasonable rate of interest. As regards issue No. 9 which pertains to the question of counter claims, the tribunal was of the view that as there was no concluded contract between the parties regarding the sale of Urea, there was no question of any failure on the part of the claimants to supply Urea to the respondent and thus there was no breach of any obligations on the part of the claimant. Consequently, in the view of the Arbitral Tribunal, the respondent could not take recourse to any risk purchase of Urea from any other person at the cost of the petitioners and, therefore, the respondent was not entitled to any counter claim. The question of interest on counter claim raised in issue No. 10 also did not arise.

8. Having decided all the issues in favor of the petitioners and having concluded that the bid bond amount was liable to be returned by the respondent to the petitioners along with interest @ 8 % per annum, while considering the question of relief under issue No. 11, the Arbitral Tribunal appears to have taken a complete volte face in concluding that the arbitrators did not have jurisdiction to decide the disputes and differences between the parties as there was no concluded contract between them.

9. The learned Counsel for the petitioners submitted that the petitioners are not challenging the findings of the Arbitral Tribunal with regard to issue Nos 1 - 10 and are only aggrieved by the finding on issue No. 11. He submitted that the Arbitral Tribunal had gone completely wrong in assuming that since there was no concluded contract between the parties, the arbitration clause contained in such a document also did not have any existence. The learned Counsel for the petitioners submitted that the arbitration had been invoked not merely under the said arbitration clause contained in the contract which was held not to have been concluded but on the basis of three letters dated 20.12.1996, 30.12.1996 and 18.01.1997 read with the provisions of Section 7 of the said Act.

10. On the other hand, the learned Counsel for the respondent submitted that it was all along the plea of the petitioners that there was no concluded contract between the petitioners on the one hand and with the respondent on the other hand. He submitted that if this was the case then the arbitration clause which was part of the contract also did not exist. Therefore, there was no question of arbitration de hors the contract. He submitted that once the petitioners take the plea that the contract was not in existence then they cannot rely on the very same contract for the purposes of invoking the arbitration clause. Furthermore, the learned Counsel for the respondent submitted, with reference to the respondent's letter dated 18.01.1997, that the disputes had arisen under the contract and it is in this context that the arbitrator had been appointed by the respondent.

11. The question, therefore, is whether the Arbitral Tribunal had jurisdiction in respect of the disputes. According to the learned Counsel for the petitioners, arbitration had been ought de hors the contract whereas, according to the learned Counsel for the respondent, the respondent had agreed to arbitration under the contract. The petitioners claim that there is no binding contract whereas the respondent is of the view that there is a binding contract. It was, therefore, the contention of the learned Counsel for the respondent that though the parties had proceeded to arbitration and the Arbitral Tribunal had also pronounced its award, there was no consensus ad idem with regard to arbitration.

12. In order to decide this question, it would be necessary to refer to the three letters which are of great significance. The first letter is of 20.12.1996 which has been written by the advocate on behalf of the petitioner No. 1. The letter is addressed to the respondent (MMTC). In this letter, there is reference to an earlier notice dated 20.09.1996 where a claim for the return/refund of the bid bond amount along with interest @ 24% per annum was made. It was stated in the letter dated 20.12.1996 that more than 15 days had elapsed and no reply having been received to the earlier letter, disputes and differences had arisen between the respondent and the petitioners. Paragraphs 3, 4 and 5 of this letter are material and are reproduced herein below :

3. My said client is desirous of the disputes and differences being resolved by way of arbitration in accordance with the Arbitration and Conciliation Act, 1996.

4. Accordingly, under instructions and on behalf of my client I hereby notify to you the names and designation of the following suggested arbitrators from the panel of Arbitrators as maintained by the Indian Council of Arbitration, New Delhi. The said names are as under :

(i) Mr Justice S.S. Chadha

99, Sukhdev Vihar, Mathur Road,

New Delhi-25.

(ii) Mr Justice S.N. Sapra

B-64, Sector 14,

NOIDA, U.P.

In addition to the names mentioned hereinabove, my said client suggests that the Ex-Chairman, STC, may also be considered as an arbitrator. His particulars are as under :

(iii) Mr Bhupinder Singh

Ex-Chairman STC

K-43, 1st Floor,

Kailash Colony,

New Delhi.

5. Under instructions from and on behalf of my client, I hereby call upon you to convey your consent for appointment of either of the 3 Learned Arbitrators as mentioned hereinabove to arbitrate on the disputes and differences as has arisen between the parties as mentioned hereinabove. The said consent shall have to be conveyed within 30 days of receipt of this notice failing which my client shall be constrained to file appropriate petition in Court in this regard as may be advised.

A copy of this letter was also marked to the petitioner No. 2 through its advocate for consent. On the said letter, an endorsement was made by the advocate for the petitioner No. 2 to the effect "agreed to any of the names above".

13. Not having received any response from the respondent, another notice for appointment of arbitrators was issued on 30.12.1996 by the petitioner No. 1 through its advocate. It was clearly stated in this letter also that disputes and differences had arisen between the petitioners and the respondent and that the petitioner was desirous of the disputes and differences being resolved by way of arbitration in accordance with the Arbitration and Conciliation Act, 1996. The exact manner in which the appointment of the arbitrator was sought and the arbitration was invoked is as under :

2. That even after expiry of the said 15 days, you failed to settle the claim of my said client. My client was, therefore, satisfied that disputes and differences have arisen between you and my client. My said client is desirous of the disputes and differences being resolved by way of arbitration in accordance with the Arbitration and Conciliation Act, 1996.

3. Accordingly, I, under instructions and on behalf of my said client served upon you another notice on 20.12.1996 at 2.30 p.m., thereby notifying you the names and designation of arbitrators, as mentioned in para 4 of the said notice and seeking your consent to appoint a sole arbitrator to resolve the said disputes.

4. Since, you have not responded to my notice dated 20.12.1996, till date, and my client is desirous of resolving the matter expeditiously, I under instructions from and on behalf of my client hereby notify that my client has now appointed Hon'ble Mr Justice S.N. Sapra, retired Judge of the High Court of Delhi, R/o B-64, Sector 14, NOIDA, U.P. as its Arbitrator to arbitrate on the disputes and differences as has arisen between the parties as mentioned hereinabove. "This is without prejudice to the rights and contentions of my client as mentioned in my legal notice dated 20.09.1996 and notice dated 20.12.1996.

5. Now under instructions and on behalf of my said client, I call upon you to appoint your Arbitrator to arbitrate jointly with the Arbitrator appointed by my client, on the aforesaid disputes and differences within 30 days of receipt of this notice, failing which my said client shall be constrained to initiate appropriate legal proceedings in the Court of Law.

As in the case of the letter dated 20.12.1996, at the foot of this letter also, there is an endorsement by the advocate for the petitioner No. 2 agreeing to the appointment of Justice S.N. Sapra (retired) as an arbitrator.

14. By the letter dated 18.01.1997, the respondent's advocate wrote to the petitioner No. 2 and marked a copy of the said letter to the advocate of the petitioner No. 1. The material portion of the letter reads as under :

That my client received a letter dated 30.12.1996 issued by your lawyer Mr Dipak K Nag, Advocate, intimating my client about appointment of Arbitrator, namely, Hon'ble Mr Justice S.N. Sapra and calling upon my client to appoint our Arbitrator for adjudication of certain alleged disputes and differences purportedly arising out of and/or under contract No. MMTC/95/96/EZ (UREA)/1 dated 15.03.1996 executed between you and my client.

While denying that you have any claim against my client under the said contract and without prejudice to my client's legal rights under the said contract, I on behalf of my client hereby nominate and appoint Hon'ble Mr Justice Jagdish Chandra, Former Judge of Delhi High Court, 123, Dayanand Vihar, Delhi-92 as the Arbitrator.

15. Section 7 of the Arbitration and Conciliation Act reads as under:

7. Arbitration agreement.

(1) In this Part, 'arbitration agreement' means an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not.

(2) An arbitration agreement may be in the form of an arbitration clause in a contract or in the form of a separate agreement.

(3) An arbitration agreement shall be in writing.

(4) An arbitration agreement is in writing if it is contained in -

(a) a document signed by the parties;

(b) an exchange of letters, telex, telegrams or other means of telecommunication which provide a record of the agreement; or

(c)an exchange of statements of claim and defense in which the existence of the agreement is alleged by one party and not denied by the other.

(5) The reference in a contract to a document containing an arbitration clause constitutes an arbitration agreement if the contract is in writing and the reference is such as to make that arbitration clause part of the contract.

16. A plain reading of the said provision indicates that an arbitration agreement may be in the form of an arbitration clause in a contract or in the form of a separate agreement. The Arbitration agreement has to be in writing and it may be contained in a document signed by the parties, an exchange of letters, telex, telegrams or other means of telecommunication which provide a record of the agreement. It may even be an exchange of statements of claim and defense in which the existence of the agreement is alleged by one party and not denied by the other. It is the contention of the learned Counsel for the petitioner that by the two letters dated 20.12.1996 and 30.12.1996, the petitioners specifically desired that the disputes which had arisen between the petitioners and the respondent be resolved through arbitration. They had, in this context, appointed and nominated an arbitrator which was communicated to the respondent. In response, though the respondent denied the claim of the petitioners, it agreed to arbitration and also appointed and nominated its arbitrator. Thereafter, the two arbitrators got together and appointed the third arbitrator constituting the Arbitral Tribunal. It is also contended by the learned Counsel for the petitioners that no dispute or objection whatsoever was raised with regard to the arbitration proceedings or the jurisdiction of the Arbitral Tribunal. In fact, it was submitted that 55 hearings took place before the Arbitral Tribunal and there was no written application or even any whisper in any of the proceedings which go to challenge the jurisdiction of the Arbitral Tribunal. It is also submitted by the learned Counsel for the petitioners that the parties had exchanged letters and thereafter proceeded to arbitration. It is not as if the petitioners had invoked the arbitration clause contained in the contract which, according to the tribunal, was not a concluded contract. Arbitration was sought by the petitioners on the basis of the arbitration agreement which was contained in the exchange of letters referred to above and not on the basis of any clause of a contract.

17. It would also be necessary to examine the provisions of Section 16 of the said Act. The same reads as under :

Competence of arbitral tribunal to rule on its jurisdiction.

16. (1) The 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.

(2) A plea that the arbitral Tribunal does not have jurisdiction shall be raised not later than the submission of the statement of defense; however, a party shall not be precluded from raising such a plea merely because that he has appointed, or participated in the appointment of, an arbitrator.

(3) A plea that the arbitral Tribunal is exceeding the scope of its authority shall be raised as soon as the matter alleged to be beyond the scope of its authority is raised during the arbitral proceedings.

(4) The arbitral Tribunal may, in either of the cases referred to in Sub-section (2) or Sub-section (3), admit a later plea if it considers the delay justified.

(5) The arbitral Tribunal shall decide on a plea referred to in Sub-section (2) or Sub-section (3) and, where the arbitral Tribunal takes a decision rejecting the plea, continue with the arbitral proceedings and make an arbitral award.

(6) A party aggrieved by such an arbitral award may make an application for setting aside such an arbitral award in accordance with Section 34.

18. It is pertinent to note that Section 16(1)(b) specifically stipulates that if the Arbitral Tribunal decides that a contract is null and void, it would not entail ipso jure the invalidity of the arbitration clause contained in the contract. Secondly, Section 16(2) specifically stipulates that the plea that the Arbitral Tribunal does not have jurisdiction has to be raised not later than the submission of the statement of defense. In the present case, no such plea was ever raised. The effect of Section 16(2) is that if such a plea is not raised within the stipulated period of time, as indicated therein, then such a plea cannot be raised at all and the parties would be deemed to have subjected themselves to arbitration.

19. The learned Counsel for the respondent had placed reliance on several decisions. Firstly, he referred to Union of India v. Uttam Singh Dugal & Co. (Pvt) Ltd. for the proposition that an acceptance must be absolute before it could be said that a contract has come into being. This decision was referred to in the context of exchange of three letters dated 20.12.1996, 30.12.1996 and 18.01.1997. According to the learned Counsel, the letter dated 18.01.1997 was a letter whereunder the arbitrator was appointed because the respondent was acting under the contract in respect of the disputes under the contract. On the other hand, he submits that the petitioners had appointed their arbitrator de hors the contract. Therefore, there was no acceptance of the petitioners' offer in absolute terms and consequently there was no arbitration agreement. The next decision referred to by the learned Counsel for the respondent was that of Badri Prasad v. The State of Madhya Pradesh and Anr. AIR 1970 SCC 706. Reliance was placed on this decision for the proposition that unless there was an unconditional acceptance of an offer, no contract would come into being. He submitted that the letter dated 18.01.1997 was a variation and was not an unconditional acceptance and, therefore, there was no arbitration Agreement. It was then contended by the learned Counsel for the respondent that even if the letter dated 18.01.1997 was to be construed as a counter offer, it would amount to a rejection of the initial offer as was held in the case of Rao Girdhari Lal v. Societe Belge de Banque S.A. AIR 1938 Lahore 341. He submitted that there was no arbitration Agreement. A reference was also made to the decision of the Supreme court in the case of K.K. Modi v. K.N. Modi to indicate as to what constitutes an arbitration agreement.

20. Finally a decision of the Supreme Court in the case of U.P. Rajkiya Nirman Nigam Ltd. v. Indure Pvt Ltd. and Ors. was referred to by the learned Counsel for the respondent to indicate that where there was no concluded contract, the arbitration clause of such a contract would also not be invokable and, therefore, the disputes would not be arbitrable. The learned Counsel for the respondent submitted that the award did not call for any interference and the petition ought to be rejected. The learned Counsel for the respondent also submitted that the conclusion with regard to the jurisdiction as contained in the discussion under issue No. 11 was not a finding by itself but a result of the conclusions arrived at in respect of issue Nos 1-10 that there was no concluded contract between the parties.

21. The learned Counsel for the petitioners reiterated the submissions and stressed upon the fact that no plea whatsoever was raised by the respondent on the question of jurisdiction at any stage before the arbitration proceedings. He also submitted that as many as 11 issues had been framed before the Arbitral Tribunal and not one of them pertained to jurisdiction. It was, therefore, clear, according to him, that the question of jurisdiction of the Arbitral Tribunal was not an issue at all. The conduct of the parties and the exchange of letters clearly demonstrate that the arbitration agreement contained in those letters was also acted upon without any demur. He also submitted that Section 16(2) of the said Act prohibited the respondent from raising any plea in respect of jurisdiction at any stage subsequent to the filing of the statement of defense. No plea of jurisdiction was raised at any point of time before the Arbitral Tribunal. The learned Counsel for the petitioner also submitted that the question of jurisdiction was, in fact, not even argued before the learned tribunal. The learned Counsel submitted that the only issue that was raised by the respondent was with regard to the locus of the petitioner No. 1 and that formed issue No. 1 which was decided against the respondent and in favor of the petitioners.

22. The learned Counsel for the petitioners also placed reliance on the decision of the Supreme Court in the case of State of Andhra Pradesh and Anr. v. T. Suryachandra Rao to submit that the issues which have not been raised at all ought not to be adjudicated upon. He submitted that the question of jurisdiction was a non issue before the Arbitral Tribunal. Yet, the Arbitral Tribunal had virtually non suited the petitioners on this issue itself. A reference was also made to the decision in Secretary to the Government and Anr. v. M Senthil Kumar for the proposition that a relief beyond pleadings would be unconstitutional. A refernece was also made to the decision in Smt Elizabeth Mathew v. Prof S.K. Narayana and Anrr. 2000(1) RAJ 13 to indicate as to what constitutes an arbitration agreement.

23. In view of the discussion above, it is apparent that by virtue of the letter dated 20.12.1996, the petitioner No. 1 had expressed the desire that the disputes and differences be resolved by way of arbitration in accordance with the Arbitration and Conciliation Act, 1996. By the same letter, the names of 3 arbitrators had been suggested. The petitioner No. 2 had agreed to any of the said names. However, the respondent (MMTC) did not reply to this letter. A further letter was issued by the petitioner No. 1 on 30.12.1996 where, once again, the desire of the petitioner No. 1 was expressed with regard to having the disputes and differences resolved by way of arbitration in accordance with the said Act. By virtue of this letter, the petitioner No. 1 nominated its arbitrator and called upon the respondent to appoint / nominate its arbitrator to jointly arbitrate the disputes and differences which had arisen between them. It is in response to these letters that the respondent issued the letter dated 18.01.1997 whereunder the respondent, while denying the claim of the petitioners under the contract dated 15.03.1996, nominated and appointed its arbitrator. Subsequently, both the arbitrators got together and appointed the third arbitrator thereby constituting the arbitral tribunal of three arbitrators. In view of the provisions of Section 7 of the said Act, as noted above, an arbitration agreement is an agreement between the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not. Thus, though there may be no contract binding the parties, if they have a defined legal relationship and disputes arise in the context of such a relationship, the parties could by agreement submit such disputes to arbitration. In the present case, although there was no concluded contract between the petitioners and the respondent, there was a defined legal relationship and it is in pursuance of this legal relationship that the bid bond was extended by the petitioners to the respondent. The respondent invoked the bid bond which was in the shape of a bank guarantee and appropriated the amount. The petitioners raised a dispute with regard to this appropriation which was definitely in connection with their defined legal relationship. The petitioners and, in particular, the petitioner No. 1 desired to have the dispute resolved through arbitration under the said Act. This was concurred upon by the petitioner No. 2. The respondent also responded by its letter dated 18.01.1997 by nominating its arbitrator. Therefore, the respondent agreed to have the disputes resolved through arbitration. The agreement was contained in the exchange of letters dated 20.12.1996, 30.12.1996 and 18.01.1997. Consequently, the condition that the agreement for arbitration shall be in writing was also satisfied in view of the provisions of Section 7 (4) of the said Act. This agreement to refer the matter to arbitration was de hors the contract which was held to be inconclusive by the arbitral tribunal.

24. It must also be remembered that after the arbitral tribunal was constituted, as indicated above, no plea was raised with regard to the arbitral tribunal not having jurisdiction. The respondent did not take any objection with respect to the existence or validity of the arbitration agreement. In fact, the respondent participated, as did the petitioners, in the arbitral proceedings and led evidence and advanced arguments on all the issues framed before the arbitral tribunal. The fact that no objection with regard to the existence or validity of the arbitration agreement had been taken by any of the parties is indicated by the circumstances that no issue with regard to the jurisdiction of the arbitral tribunal was framed. Nor was any such issue sought to be framed on behalf of any of the parties. The provisions of Section 16 of the said Act have already been extracted above. Section 16 (2) of the said Act makes it abundantly clear that a plea that the arbitral tribunal does not have jurisdiction can only be raised before or at the time of submission of the statement of defense and, not later. In the present case, not only has no such objection been raised prior to or at the time of filing of the statement of defense by the respondents, in point of fact, no such plea has been raised at all during the entire arbitral proceedings. The only conclusion which can, therefore, be arrived at is that no party, and that includes the respondent, could challenge the jurisdiction of the arbitral tribunal and, this is what makes the decision of the arbitral tribunal on issue No. 11 difficult to comprehend. When no plea was raised with regard to the jurisdiction of the arbitral tribunal and when no issue was framed in respect thereof, why did the arbitral tribunal suddenly take a volte face and conclude that since no contract had been concluded between the parties, the tribunal did not have any jurisdiction in the matter ? As noted above, there was an arbitration agreement de hors the so-called unconcluded contract and that agreement was within the parameters of Section 7 of the said Act. Therefore, the conclusion of the arbitral tribunal that it had no jurisdiction to entertain the arbitration proceedings is clearly untenable.

25. Consequently, the conclusion of the arbitral tribunal under issue No. 11 is set aside. No objections have been raised in respect of the findings and conclusions in respect of issue Nos. 1 to 10. As a result, the relief that was denied to the petitioners under issue No. 11 would now be available to them in view of the findings and conclusions arrived at in respect of issue Nos. 1 to 10 in the impugned award.

This petition is allowed. The parties shall bear their own costs.