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2013 (5) TMI 381 - SC - Companies LawScope of arbitration agreement - whether once the main agreement between the parties was declared void, the entire contents thereof, including any arbitration clause in the main agreement were rendered invalid? - Held that:- The learned designated Judge exceeded the bounds of his jurisdiction, as envisaged in SBP & Co. (2005 (10) TMI 495 - SUPREME COURT). The designated Judge was not required to undertake a detailed scrutiny of the merits and de-merits of the case, almost as if he was deciding a suit as he was only required to decide such preliminary issues such as jurisdiction to entertain the application, the existence of a valid arbitration agreement, whether a live claim existed or not, for the purpose of appointment of an arbitrator. By the impugned order, much more than what is contemplated under Section 11(6) of the 1996 Act was sought to be decided, without any evidence being adduced by the parties. 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. Also in the case of Reva Electric Car Company Private Limited Vs. Green Mobil [2012 (10) TMI 270 - Supreme Court] wherein held that 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. Thus the designated Judge misunderstood the scope of the order passed in the earlier proceedings and the provisions of Section 16 of the 1996 Act in going into a detailed examination regarding the merits of the case and the existence of an arbitration agreement and in holding that once the main agreement between the parties was declared void, the entire contents thereof, including any arbitration clause that may have been incorporated in the main agreement, were rendered invalid - no hesitation in setting aside the impugned judgment and the order of the designated Judge once again and directing that the matter be again considered de novo in the light of the observations made hereinabove and the various decisions cited at the Bar.
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