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2011 (7) TMI 1313 - SC - Indian LawsApplication u/s 11 of the Arbitration and Conciliation Act - enforcement of arbitration clause - Jurisdiction of arbitrator to consider the counter claim - Under agreement, the Appellant entrusted a construction work to the Respondent. Clause 25 of the agreement provided for settlement of disputes by arbitration. As per the contract, the work had to be commenced on 16.11.1992 and completed by 5.5.1994. On the ground that the contractor did not complete the work even by the extended date of completion (31.3.1995), the contract was terminated by the Appellant. Respondent raised certain claims and gave a notice to the Appellant to appoint an arbitrator in terms of the arbitration clause. As the Appellant did not do so, the Respondent filed an application u/s 11, and the said application was allowed and arbitrator was appointed. The arbitrator called upon the parties to file their statement. the Respondent filed its claim statement before the arbitrator. The Appellant filed its Reply Statement with counter claim. The arbitrator considered the fourteen claims of the contractor and four counter claims of the Appellant. he rejected the other claims of Respondent and Appellant. Feeling aggrieved the Respondent filed an application to the civil court. The Appellant challenged the civil court judgment by filing an arbitration appeal before the High Court. The Bombay High Court held that the arbitrator had No jurisdiction to entertain or allow such a counter claim as the same had neither been placed before the court in the proceedings u/s 20 nor the court had referred it to the arbitrator. The said judgment of the High Court is challenged in this appeal by special leave. HELD THAT:- The arbitration clause in this case contemplates all disputes being referred to arbitration by a sole arbitrator. It refers to an Appointing Authority (Chief Engineer, CPWD), whose role is only to appoint the arbitrator. Though the arbitration clause requires the party invoking the arbitration to specify the dispute/s to be referred to arbitration, it does not require the appointing authority to specify the disputes or refer any specific disputes to arbitration nor requires the Arbitrator to decide only the referred disputes. It does not bar the arbitrator deciding any counter claims. In the absence of agreement to the contrary, it has to be held that the counter claims by the Appellant were maintainable and arbitrable having regard to Section 23 read with Section 2(9) of the Act. In view of the above, this appeal is allowed and the order of the High Court affirming the judgment of the trial court, is set aside. Consequently the award of arbitrator is upheld in its entirety and the challenge thereto by the Respondent is rejected.
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