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PETITIONER: OLYMPUS   SUPERSTRUCTURES  PVT.   LTD.         ...

       Vs.

RESPONDENT: MEENA   VIJAY  KHETAN  &  ORS.                 ...

DATE OF JUDGMENT:       11/05/1999

BENCH: M. JAGANNADHA RAO, & S.N. PHUKAN.

JUDGMENT:

M.JAGANNADHA RAO,J.

Leave granted.

These  three Civil Appeals are directed against the Judgment of  the  Bombay High Court in A.Nos.  175-177 of 1998  dated 2.4.98  in Arbitration Petitions 281-283 of 1997.  By virtue of  this judgment dated 2.4.98, the decision of the  learned Single  Judge in Arbitration Petitions 281-283 of 1997 dated 12.1.1998  was confirmed.  The learned Single Judge had,  by his decision dismissed the objections filed by the appellant under  Sections 5 and 34 of the Arbitration and Conciliation Act,  1996 (hereinafter called the ‘Act’) to the awards  and confirmed  the  three  Awards passed by  the  Arbitrator  on 13.11.1997.   The  learned Chief Justice of the Bombay  High Court  had  appointed  a  retired Judge  of  that  Court  on 13.6.1997  as  sole arbitrator and the said  arbitrator  had passed the three awards on 13.11.1997.

The facts are as follows:

There  were  three main agreements dated 9.3.94, 9.3.94  and 29.6.1994 under which the appellant agreed to sell Flat Nos. 101-102,  201-202  and  301-302 on first, second  and  third floors  of  the  proposed building Wembley at,  Play  ground Road,  Vile  Parle (East) Bombay to the respondents  on  the terms  contained  in the agreements.  The consideration  was Rs.76,  72 and 74 lakhs respectively.  The possession of the flats was to be handed over alongwith amenities by 30.10.94. The  terms  of the contract provided the time- schedule  for payments  by  the  purchasers and said time was  to  be  the essence  of  the contract and it was stated that failure  to pay   would  entail  termination  of  the  agreement.    The purchasers  were  to  pay 21% interest in case  of  default. There  were various other terms.  Clause 7 provided that the power  of  termination  should  not   be  exercised  by  the appellant  unless  and until the appellant had given to  the purchasers  15 days prior notice in writing of the intention to   terminate  the  agreement   and  given  the  purchasers opportunity  to  set right the breaches, if  any  committed, within  the  said  period.   Clause  39  in  each  agreement contained an arbitration clause which read as follows:

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         "39.  All disputes of differences whatsoever which shall  at any time hereafter (whether during the continuance and  in  force  of  this  Agreement  or  upon  or  after  it discharges  or  determination)  arise  between  the  parties hereto  or their respective successors in title and  assigns touching  or concerning this Agreement or its interpretation or  effect or as to the rights duties and liabilities of the parties  and liabilities of the parties hereto or either  of them under or by virtue of this Agreement or otherwise as to any other matter in any way connected with arising out of or in relation to the subject matter of this Agreement shall in accordance  with  the  subject  to  the  provisions  of  the Arbitration  Act, 1940 or any statutory modification or  re- enactment thereof for the time being in force be referred to a  single  arbitrator  if  agreed upon  by  the  parties  or otherwise  to  the  arbitration  of two  arbitrators  to  be appointed  by  each party to the dispute whose decision  ins the  matters  shall  be  final and binding  on  the  parties hereto."

         It  will have to be noticed that the above  clause did   not  refer  to  any   specific  named  arbitrator   or arbitrators.

         Considerable  amounts  were paid under  the  above said  three main agreements to the appellant.  The appellant would  contend there was default on part of the  respondents while  the  respondents  would  contend that  there  was  no progress in the construction.

         There  were three other separate agreements  dated 9.3.94,  9.3.94 and 29.6.94 (hereinafter called the Interior Design  Agreements)  between  the  appellant  and  the  same identical purchasers in which the appellant was appointed as ‘Interior Designer’ for carrying out renovation and interior designing  and  decorating  the  respective  flats  and  the exterior  area and to provide/install the special  amenities in  the flats for a lumpsum payment of Rs.10 lakhs each.  No amount was, however, paid to the appellant under these three agreements before or at the time of executing of these three agreements.  There is again a separate arbitration clause in each of these three agreements.  It reads as follows:

         "5.   All disputes and difference which may  arise between the parties hereto in connection with this agreement of  interpretation and effect thereof or in connection  with the  rights  and obligations of the parties hereto shall  be referred  to  the Joint Arbitration of Shri  P.N.   Nanavati (Solicitor)  and  Mr.Rashmi  Mehta   (Solicitor).   If   the aforesaid  Arbitrators then and in such event such  disputes and  differences  shall  be referred to arbitration  of  two arbitrators,  one  to  be appointed by each of  the  parties hereto.   The  Arbitrators  so appointed  shall  appoint  an umpire  before entering upon the reference.  The Arbitrators of  the  umpire as the case may be shall be governed by  the provisions  of  the  Indian  Arbitration Act,  1940  or  any statutory  modification or re-enactment thereof from time to time in force."

         It  will  be  noticed that  this  clause  required reference to specific named arbitrators.

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         On  24.4.95, the respondent wrote to the appellant seeking  information as to the stage of the construction and as to when the appellant would be handing over possession of the  flats.   The  appellant replied on  6.6.95  complaining default  on the part of the purchasers as some cheques  were dishonored  and  stated  that he was terminating  the  three agreements   giving   15  days   notice.   On  22.6.95   the respondents wrote to the appellant that considerable amounts were  paid  under each of the main agreements and  that  the appellant  had not cared to inform the respondents about the progress  of the construction, that the story of default was false,  that the dishonored cheques had been substituted  by Banker’s  cheques  or  cash  and that  the  termination  was invalid.  The respondents were ready and willing to complete the  contract.   On  21.10.95 the respondents wrote  to  the appellant giving details of payments and the mode of payment of  the  balance  under  the main and  the  Interior  Design Agreements and stating that 10 lakhs were paid under each of the  three Interior Design Agreement, by way of cash to  the appellant’s solicitor, that only 6 lakhs remained to be paid after  the 6th slab was laid and that the termination of the main agreement was bad in law etc.  The appellant was called upon  to  withdraw the contention regarding termination  and was  asked as to when the 6th of the slabs would be laid  so that  the  payment  of  Rs.  6 lakhs  could  be  made.   The appellant  did not send any reply.  The respondent then gave a  notice on 19.3.96 making various allegations against  the appellant.   A  reply was sent by the appellant  on  27.7.96 limited to the allegations in the said letter dated 19.3.96. A  final  notice  was  given by the  respondents  on  8.7.96 stating  that as there were several disputes and differences between  the  parties  in relation to the  agreements  dated 9.3.94, 9.3.94 and 29.6.1994, they should be referred to one out  of the three retired Judges whose names were  suggested by  the  respondents.   As  the appellant  failed  to  reply agreeing  for arbitration, one of the respondents moved  the Court on 9.8.96 seeking interim protection before the filing of a regular petition under the Arbitration and Conciliation Act, 1996.  Thereafter a regular petition for appointment of arbitrator  was moved under section 11 of the Act on  3.6.97 and  an order dated 13.6.97 was passed by the learned  Chief Justice appointing a sole arbitrator on 7.7.97.  The learned Arbitrator  fixed a preliminary meeting on 14.7.97.  On that day  the arbitrator issued certain directions.  On  29.7.97, the  respondents  filed their claim before  the  arbitrator. The  appellant took several adjournments on 19.8.97, 23.9.97 and 3.10.97 and raised an objection on 9.10.97 regarding the continuance  of the arbitrator which objection was dismissed on 16.10.97.  On 16.10.97 the appellant’s new counsel sought time to challenge the order of the arbitrator dated 9.10.97. Adjournment  was refused.  The arbitrator took up the matter for evidence.  On 16.10.97, the respondents (i.e.  claimants before arbitrator) examined their witnesses in chief and the appellant’s  counsel  partly cross-examined them and  sought time  and the matter was adjourned for 21.10.97.  There were some  winding  up  proceedings against the appellant  and  a provisional  liquidator  was  appointed on 30.4.97.   On  an application  by  the  respondents,   the  arbitrator,  after hearing  the  counsel  for the parties, passed an  order  on 22.10.97  that no leave of the company court was required at the  stage of appointment of a provisional liquidator.   The appellant’s  advocate  sought further time and the same  was refused.   The appellant’s advocate then filed three IAs for

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condoning  delay  in  filing  the  written  statement  dated 22.10.97 in all three matters.  Delay was condoned.  Further adjournment  sought  by appellant was refused.  On  27.10.97 evidence  was recorded but there was no cross examination by the  appellants’  counsel and the evidence was  closed.   On 13.11.97,  the award was passed granting relief of  specific performance in respect of the three main agreements and also in respect of the three Interior Design Agreements.

         The  appellant  challenged the three awards  under Section 34 by filing three applications in December 1997 and these  were  dismissed by a learned Single Judge on  12.1.98 and  by  the Division Bench on 2.4.98.  It is against  these judgments that the present appeals have been filed.

         Learned  counsel  for the appellant  Sri  H.L.Tiku raised various contentions.  He contended that the reference to  arbitration  was  based upon the three  main  agreements dated   9.3.94,  9.3.94  and   29.6.94  and  therefore   the arbitrator could not have decided the disputes regarding the three  other Interior Design agreements dated 9.3.94, 9.3.94 and  29.6.94 and there was neither a prayer nor a  reference of  the  disputes  under the three  latter  Interior  Design agreements.  It was pointed out that the arbitration clauses in  the  main  agreements could not supersede  the  separate arbitration  clauses  under the Interior  Design  Agreements which  provided for named arbitrators.  Merely, because  the appellant  remained  ex parte before the arbitrator after  a stage,  the  arbitrator could not assume the correctness  of the  pleas of the respondents and he ought to have  insisted on  proof  of the pleas raised by the respondents.  A  point was  raised in the grounds in this Court that an  arbitrator could  not  grant specific performance of an  agreement  and hence  section 34(2)(b)(i) of the Act was attracted.  It was also  contended that in respect of the main agreements,  the respondents had committed default, that respondents were not ready  and  willing,  that  the   termination  of  the  main agreement  by the appellant was valid and that, on facts, an award  for specific performance could not have been granted. In any event, as provided in the agreements, the respondents should  have been directed to pay interest on the balance at consideration 21%.

         On  the other hand, the learned senior counsel for the  respondents  Sri  D.R.Dhanuka   and  Sri  K.K.Venugopal pointed  out that under the arbitration clause contained  in the  main  agreements,  it  was   permissible  to  refer  to arbitrator  not only disputes and differences under the main agreements  but also in respect of "connected" matters, that the   appellant   never  raised   any  point   relating   to jurisdiction  under  Section  16  of   the  Act,  that   the arbitrator  could  not  decide the  dispute  concerning  the Interior  Design Agreements and that the point was not  also raised  before the learned Single Judge.  For the first time the  point  was raised before the Division Bench.  The  same could  not  be permitted to be raised after the  award.   An arbitrator  could grant specific performance of an agreement of sale.  So far as the other points raised on the merits of the  award  were  concerned, the same could  not  have  been raised  in view of the narrow scope of objections  permitted by  sub-clause (2)(b) of Section 34 of the new Act.  It  was contended  that  the  challenge  to the  award  was  rightly rejected  by the High Court.  It was prayed that the appeals be  dismissed.   On these contentions, the following  points

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arise for consideration:

         (1)  Whether the appellant is right in  contending that the arbitration clause 39 in the main agreement did not permit  the arbitrator to deal with the disputes relating to the  Interior  Design Agreement which contained a  different arbitration  clause and whether the award, in respect of the Interior Design Agreement was void?

         (2)  Whether  the appellant who did not raise  any question  of  jurisdiction  under Section 16 of the  Act  in relation   to  the  disputes   under  the  Interior   Design Agreements,  could have raised a question of jurisdiction of the  arbitrator or of his power to deal with issues  arising under the said Agreements at the stage of section 34?

         (3)  Whether an arbitrator is not entitled to pass an  award directing specific performance of an agreement  of sale and the subject matter of the dispute is not capable of arbitration under section 34(2)(b)(i) of the Act?

         (4)  Whether the appellant could question  factual findings  relating to default, time being essence, readiness and willingness etc.  before the arbitrator under Section 34 of the Act?

        Points 1 and 2:

         From the facts mentioned, it would be noticed that there  were  two sets of agreements, namely the main set  of three  agreements  dated 9.3.94, 9.3.94 and 29.6.94 and  the three  other  agreements  of  the same  dates  dealing  with Interior  Designing.   Each of main agreements contained  an arbitration clause (clause 39) of a general nature which did not  specify  any  particular arbitrator’s  name  while  the Interior Design Agreements in each case contained a separate arbitration  clause  (clause  5)   mentioning  the  name  of specified  arbitrators.   It was the case of  the  appellant that  the notice given on 8.7.96, the petition under Section 11  of  the  Act for appointment of an  arbitrator  and  the reference  covered  only  disputes and  differences  arising under  the  main  agreements and there was no  reference  in respect  of  the  disputes and differences  arising  out  of Interior  Design  Agreements.   It  is  contended  for   the appellant  that  the order appointing the  arbitrator  dated 13.6.97  specifically  dealt with disputes  and  differences under  the  main  agreements only and not  those  under  the Interior Design Agreements.

         Before  we  go  into  the  interpretation  of  the arbitration  clauses, we have to refer to the conduct of the appellant  which  is  very  much relevant  for  purposes  of section  16  of  the Act.  The respondents had  referred  in their claim statement before the arbitrator dated 29.7.97 to the   disputes  and  differences   arising  under  the  Main agreements   as   well  as   under  the  Interior   Designer Agreements.  The appellant filed its written statement dated 22.10.97  but no objection was raised that the disputes  and differences   contained  in  the   three   Interior   Design Agreements  were  not  intended  to   be  referred  to   the arbitrator  or  that  the same could not be decided  by  the arbitrator   appointed  under  the   main  agreement.    The appellants’  counsel  had  cross-examined  the  respondents’ witnesses upto a stage and even then no such objection as to

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scope  of reference was raised.  The arbitrator referred  in his award to the sole contention of the appellant before him so  far as the Interior Design Agreements were concerned and that  was that the said agreements were void inasmuch as  no amount  was paid at the time of the agreements (though Rs.10 lakhs  each  was  agreed  to be paid).  That  was  the  only contention   concerning   these    three   Interior   Design agreements.  No dispute as to the power of the arbitrator to deal  with disputes under these three agreements was raised. That  means that the appellant accepted that disputes  under these agreements were also covered by the reference.  In the objections  to the award filed in the Court under section 34 no  such  point was raised except a general ground (j)  that the  entire proceedings of arbitration were illegal and  bad in  law,  null and void and that the award was liable to  be set aside.  In the order of the learned Single Judge in para 5  it was stated that only 3 points were raised and we  find that  this  was  not one of those points argued  before  the learned  Single  Judge.   For  the  first  time  this  point relating  to  the scope of the reference  was  raised/argued before the Division Bench and the same was rejected.

         In  our  view,  learned  senior  counsel  for  the respondents  are right in contending that if parties  before the  arbitrator  had  any  objections  to  the  arbitrator’s Jurisdiction,  the same must be raised before the arbitrator as  provided in sub-clauses (2) and (3) of section 16.   (We are,  however, not deciding the consequences of not  raising the  said  question at that stage).  Section 16 of  the  Act reads as follows:

         "16.   Competence of arbitral tribunal to rule  on its jurisdiction - (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 the 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 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 defence;  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.

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         (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."

         Section  16 is based on Article 16 of the UNCITRAL model  law.   Sub-clause  (1) of section 16  corresponds  to sub-clause  (1)  of Article 16.  Sub-clauses (2) and (3)  of section 16 of the Act correspond substantially to sub-clause (2)  of Article 16.  The words ‘not later than’ and ‘as soon as  may be’ in sub-clause (2) of Article 16 of the Model Law occur  in sub- clauses (2) and (3) of section 16 of the Act. It  will be noticed that under the Act of 1996 the  arbitral tribunal  is now invested with power under sub-clause (1) of section  16 to rule on its own Jurisdiction including ruling on  any objection with respect to the existence or  validity of  the  arbitration  agreement and for  that  purpose,  the arbitration clause which forms part of the contract shall be treated  as  an agreement independent of other terms of  the contract  and any decision by the arbitral tribunal that the contract  is null and void shall not entail ipso Jure affect the  validity of the arbitration clause.  This is clear from sub-  clause  (b)  of  Section 16(1)  which  states  that  a decision  by the arbitral tribunal that the main contract is null  and void shall not entail ipso Jure the invalidity  of the arbitration clause.

         In  the present context sub-clauses (2) and (3) of Section  16 are relevant.  They refer to two types of  pleas and  the  stages  at  which   they  can  be  raised.   Under sub-clause  (2)  a plea that the arbitral tribunal does  not have  Jurisdiction  shall  be  raised  not  later  than  the submissions  of the statement of defence:  however, a  party shall  not  be  precluded from raising such  a  plea  merely because  he has appointed or participated in the appointment of,  an  arbitrator.  Under sub- clause (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.   These limitations in sub-clauses (2) and  (3) are  subject  to  the power given to  the  arbitrator  under sub-clause  (4)  of  Section 16 that the  tribunal  may,  in either  of  the  cases  referred to in  sub-section  (2)  or sub-section  (3)  - admit a later plea if it considered  the delay  justified.   Sub-section  (5) requires  the  arbitral tribunal  to decide on the pleas referred to sub-section (2) or  sub-section  (3)  at that stage itself.  It  is  further provided  that  if either of the pleas is rejected  and  the arbitral  tribunal holds in favour of its own  Jurisdiction, the tribunal will continue with the arbitral proceedings and proceed  to make the arbitral award.  Then comes sub- clause (6)  which  states  that  the party  aggrieved  by  such  an arbitral  award  may make an application for  setting  aside such an arbitral award in accordance with Section 34.

         Section  34 of the Act deals with the filing of an application  for  setting  aside  the  award  and  reads  as follows.   Sub-clause  (1)  and  (2) are  relevant  for  our

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purpose and they read as follows:

         "34.  Application for setting aside arbitral award -  (1) Recourse to a court against an arbitral award may  be made  only by an application for setting aside such award in accordance with sub-section (2) and sub-section (3).

         (2)  An  arbitral  award may be set aside  by  the court only if -

         (a)  the  party making the  application  furnishes proof that -

         (i) a party was under some incapacity, or

         (ii)  the arbitration agreement is not valid under the  law  to which the parties have subjected it or  failing any  indication thereon, under the law for the time being in force;  or

         (iii)  the  party making the application  was  not given  proper notice of the appointment of an arbitrator  or of  the  arbitral  proceedings or was  otherwise  unable  to present his case;  or

         (iv)  the arbitral award deals with a dispute  not contemplated  by  or  not falling within the  terms  of  the submission  to  arbitration,  or it  contains  decisions  on matters beyond the scope of the submission to arbitration:

         Provided  that,  if  the   decisions  on   matters submitted  to arbitration can be separated from those not so submitted,  only  that  part  of the  arbitral  award  which contains  decisions on matters not submitted to  arbitration may be set aside;  or

         (v)  the  composition of the arbitral tribunal  or the  arbitral  procedure  was  not in  accordance  with  the agreement  of  the  parties, unless such  agreement  was  in conflict  with  a  provision  of this Part  from  which  the parties cannot derogate, or, failing such agreement, was not in accordance with this Part;  or

         (b) the court finds that -

         (i)  the  subject-matter  of the  dispute  is  not capable  of settlement by arbitration under the law for  the time being in force;  or

         (ii)  the  arbitral award is in conflict with  the public policy of India.

         Explanation.-  Without prejudice to the generality of sub-clause (ii) of clause (b), it is hereby declared, for the  avoidance  of any doubt, that an award is  in  conflict

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with  the public policy of India if the making of the  award was  induced  or affected by fraud or corruption or  was  in violation of section 75 or section 81."

         Section  34  of the Act is based on Article 34  of the UNCITRAL Model Law and it will be noticed that under the 1996  Act the scope of the provisions for setting aside  the award is far less the same under Section 30 or Section 33 of the Arbitration Act of 1940.

         It will be noticed that under sub-clause 2(a) (iv) of  Section  34, the arbitral award may be set aside by  the Court  if the award deals with a dispute not contemplated by or  not  falling  within  the terms  of  the  submission  to arbitrator  or  if it contains a decision on matters  beyond the  scope of the submission to arbitration.  The proviso to clause (iv) deals with severability.

         The  word ‘terms of the submission to arbitration’ in  Section 34 (2)(a)(iv) in our view, refer to the terms of the  arbitration clause.  This appears to be the meaning  of the  word  if  one refer to Section 28 which uses  the  word ‘dispute  submitted  to arbitration’ and to Section  43  (3) which uses the word ‘submit’future dispute to arbitration.

         A   question  arises  whether  in  view   of   the provisions  of Section 16(2) which uses the word ‘not  later than’,  any such objection as contained in Section 16(2) not raised  before the arbitrator can be permitted to be  raised for  the first time under Section 34.  Similarly a  question arises whether in view of the proviso of Section 16(3) which uses  sthe  word ‘as soon as’ any objection as contained  in Section  16(3),  cannot be raised for the first  time  under Section 34.

         It  may be argued on one side that the time limits set  in  Arbitration  Clause (2) and (3) of Section  16  are mandatory  and do not permit the said question to be  raised at a later point of time even under Section 34.  An opposite view  could  be that these being Juridictional  issues,  the fact  that  they were not raised earlier could not  preclude the  questions  being  raised under Section 34  inasmuch  as consent, express or implied could not confer jurisdiction.

         We  do  not  think  it necessary  to  decide  this question  in  view  of the fact that though Section  16  was referred  to  during the course of the hearing, the  learned senior counsel for respondents had argued on merits that the arbitrator     had    Jurisdiction      to    decide     the disputes/differences   concerning   the    Interior   Design agreements  also  and  that even if the appellant  could  be permitted  to raise these issues at the stage of Section 34, there was no substance in the said contentions.

         We  shall,  therefore,  proceed   to  decide   the question   of  jurisdiction  on   the  assumption  that  the appellant  is not precluded from raising these questions  at the  stage  of Section 34 though these issues have not  been raised  before the arbitration as per sub-clause (2) and (3) Section  16.   Before we do so, we shall advert to a  recent decision of this Court in Rajinder Krishan Khanna vs.  Union

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of  India [1998 (7) SCC 129] wherein this Court referred  to Section  16  and Section 34 (2)(a)(iv) of the Act.  In  that case a reference was made to arbitrators when the appeal was being  heard by this Court.  The appellant was the claimant. The  opposite  party  raised  a  specific  plea  before  the arbitrators  that  they had no Jurisdiction to decide  about the value of the potentiality of the land and that the claim petition  before the arbitrator could not have included  the above claim, which was outside the reference and outside the writ  petition and the Civil Appeal from which the reference arose  by consent.  It was argued for the appellant in reply that the respondents did not have a specific issue framed by the  arbitrators in regard to the scope of the reference and the  respondents  were  estopped from  contending  that  the arbitrators  could  not have dealt with the question.   This Court  held that this case was not a case where no objection was  raised  by the respondent before the arbitrators as  to the scope of the reference.  A specific objection was raised in  the  written  statement  of  the  respondents  that  the potentiality  of  the  land  was not one  of  the  questions referred  to the arbitrators.  This Court held that the fact that  an  issue was not framed by the arbitrtators that  the item  was  not  covered by the reference did not  raise  any estoppel.   The  said  question  as  to  the  scope  of  the reference  could  therefore be permitted to be raised  under Section  34(2)(a)(iv) in the objections to the award.  It is true  that on the facts of the case before us, the objection as  to  the  scope of the reference was not  raised  in  the written  statement of the appellant.  But as already stated, we  are  not deciding the question whether the appellant  is precluded  at  the  stage  of section 34  from  raising  the question  relating to the scope of the reference.  We  shall assume,  for  the  purpose  of  this  case,  that  the  said contention  can still be raised under Section  34(2)(a)(iv). We shall accordingly deal with the merits of the question of Jurisdiction of the arbitrator.

         It  is true that there are two agreements in  each of  the three appeals before us.  One is the main  agreement relating to construction of flats and the arbitration clause 39  there  is  general  and  does not  refer  to  any  named arbitrator.   It  is  also  true that there  is  a  separate arbitration  clause 5 in the Interior Design Agreement which gives  the  names of specific arbitrators.  But it  must  be noticed  that clause 39 permits reference to arbitration not only  of  issues arising under the main agreement  but  also those  disputes  or differences which are  "connected"  with disputes  arising  under the main agreement.  The  following words in the main agreement are important.

         "Otherwise  as  to  any other method  in  any  way connected with, arising out of or in relation to the subject matter of this agreement."

         In  other words, clause 39 refers to the  ‘subject matter’  of  the  main  agreement and  also  to  ‘any  other matters’  and  these  ‘any  other   matters’  if  they   are "connected"  with or arise out of or are in relation to  the subject  matter  of  the main agreement,  the  disputes  and differences  concerning  those ‘other matters’ can  also  be referred  to  arbitration  under  clause   39  of  the  main agreement.   In other words, parties intended arbitration in

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respect  of the main disputes and connected disputes  before one arbitral tribunal.

         As  to  the meaning of the words "connected  with, arising  out  of  or in relation thereto", we may  refer  to Renusagar  Power  Co.Ltd.  vs.  General Electric Co.   [1984 (4)  SCC  679].   It was held that these words "are  of  the widest  amplitude and content and include even questions  as to  the  existence  and effect (scope)  of  the  arbitration agreement.

         Question  is whether the disputes and  differences arising  under the Interior Design Agreement are  integrally "connected  with" the disputes and differences arising  from the  main  contract?   In  our view,  they  are.   The  main agreement  refers  to the payment of the last instalment  of Rs.17  lakhs  against ‘taking of possession’ of  the  flats. Therefore  the  main  agreements extended upto the  time  of taking  of possession by the purchasers.  Para 8 of the main agreement  states that the fixtures, fittings and  ameneties to  be  provided by the Developers in the said building  and the  flat/unit  are  those that are set out  in  Annexure  E annexed  to  the main agreement.  Now annexure E refers  not only  to  the building but to the type of doors,  corridors, fixtures, the nature of the flooring, the bathroom tiles and fittings,  the  Kitchen,  the W.C.  and the  nature  of  the Electric  Wiring.   When  we  come to  the  Interior  Design Agreement,  Annexure  A  itself  refers to  the  element  of designs,  Interior finishes/fittings/services and deals with the  Walls,  Balcony, type of Main Door and Internal  Doors, External  Doors.  It also deals with the type of  staircase, the  flooring (Italian marbles for Hall room, Bed rooms  and passages),  Toilet (Italian Marbles, Designed Basin  Ceiling Valve  plassstering, Bath tub/Ja cuzzi all hardware  fitting inclusively  Germany  range),  Marble   skirting,  Lobby   & Entrance  (Italian Marble Flooring), Plumbering, Gas system, Electrical  (Heavy Duty ISI quality concealed copper wiring) etc.

         Thus  it  will be noticed that there  are  several items  in Schedule E of the main agreement which overlap the items  in  Schedule A of the Interior Design Agreement.   In view  of  the overlapping, in our opinion it has to be  said that  several items in the Schedule A of the Interior Design Agreement  are in modification/substitution of the items  in the  Main  Agreement.   Therefore the coverage  of  the  two agreements makes it clear that the execution of the Interior Design  Agreement  is ‘connected with’ the execution of  the main  Agreement.  It may also be noted that the date of  the main agreement and the Interior Design Agreement is the same in  each  of  the three cases and clause 3 of  the  Interior Design  Agreement states specifically that ‘the work of  the said  renovation, designing and installation shall  commence from  the execution thereof’ which means that the  execution of  the Interior Design agreement and the main agreement  is to be simultaneous.

         But  then,  we have to explain the purpose of  the arbitration  agreement contained in clause 5 of the Interior Design Agreement?  Is it wholly superfluous?

         If  there is a situation where there are  disputes and  differences in connection with the main agreement,  and also  disputes in regard to "other matters" "connected" with subject  matter  of  the  main  agreement  then  in  such  a

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situation,  in  our  view, we are governed  by  the  general arbitration  clause  39  of the main agreement  under  which disputes  under  the main agreement and  disputes  connected therewith  can  be referred to the same  arbitral  tribunal. This  clause  39  no  doubt  does not  refer  to  any  named arbitrtators.   So far as Clause 5 of the Interior Decorator Agreement   is   concerned,  it   refers  to  disputes   and differences  arising  from  that   agreement  which  can  be referred  to  named  arbitrators and said clause 5,  in  our opinion, comes into play only in a situation where there are no  disputes  and  differences  in   relation  to  the  main agreement  and  the  disputes  and  differences  are  solely confined  to  the Interior Design Agreement.  That,  in  our view,  is the true intention of parties and that is the only way  by which the general arbitration provision in clause 39 of  the  main  agreement and the arbitration  provision  for named  arbitrator  contained  in clause 5  of  the  Interior Design   Agreement   can  be   harmonised   or   reconciled. Therefore, in a case like the present where the disputes and differences cover the main agreement as well as the Interior Design  Agreement, - (that there are disputes arising  under the  main agreement and the Interior Design Agreement is not in dispute) - it is the general arbitration clause 39 in the main agreement that governs because the questions arise also in  regard to disputes relating to the overlapping items  in the  Schedule to the main agreement and the Interior  Design Agreement, as detailed earlier.  There cannot be conflicting awards  in  regard  to  items  which,  overlap  in  the  two agreements.   Such a situation was never contemplated by the parties.    The   intention  of   the  parties   when   they incorporated clause 39 in the main agreement and clause 5 in the Interior Design agreement was that the former clause was to  apply  to  situations when there were  disputes  arising under  both  agreements  and the latter was to  apply  to  a situation  where  there  were  no  disputes  or  differences arising  under  the  main  contract  but  the  disputes  and differences  were  confined  only  to  the  Interior  Design Agreement.    A   case  containing   two   agreements   with arbitration  clauses  arose  before this Court  in  Aggarwal Engineering  Co.   vs.  T.H.  Machine Industries  [AIR  1977 S.C.    2122].   There  were   arbitration  clauses  in  two contracts  one for sale of two machines to the appellant and the  other appointing the appellant as sales-representative. On  the facts of the case, it was held that both the clauses operated  separately  and this conclusion was based  on  the specific  clause in the sale contract that it was the  "sole repository"  of  the sale transaction of the  two  machines. Krishna  Iyer,J.  held that if that were so, then there  was no  jurisdiction  for travelling beyond the  sale  contract. The language of the other agreement appointing the appellant as  sales  representative was prospective and related  to  a sales agency and ‘later purchases’, other than the purchases of  these two machines.  There was therefore no overlapping. The  case  before us and the above case  exemplify  contrary situations.   In one case the disputes are connected and  in the other they are distinct and not connected.  Thus, in the present  case,  clause  39 of the  main  agreement  applies. Points  1  and  2 are decided accordingly in favour  of  the respondents.

         Point  3:  This point becomes relevant because  if the  arbitrators cannot grant specific performance, a  point can  be  raised under Section 34(2)(b)(i) that  the  subject matter of the dispute is not capable of arbitration.

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         One  of  the points raised in the grounds in  this Court  is  that  the  grant   of  specific  performance   is discretionary  and  the discretion to grant or not to  grant specific  performance  has  been conferred by  the  Specific Relief Act, 1963 on the Civil Court and hence the arbitrator cannot  be  deemed  to have been empowered to grant  such  a relief.

         We  may  point out that the Punjab High  Court  in Laxmi  Narayan vs.  Raghubir Singh [AIR 1956 Punjab 249] the Bombay  High  Court in Fertiliser Corporation of  India  vs. Chemical  Construction Corporation [ILR 1974 Bombay  856/858 (DB)] and the Calcutta High Court in Keventer Agro Ltd.  vs. Seegram  Comp.   Ltd.  [Apo 498 of 1997 & Apo 449 of  (401)] (dated  27.1.98) have taken the view that an arbitrator  can grant  specific  performance  of  a  contract  relating   to immovable property under an award.  No doubt, the Delhi High Court  in M/s PNB Finance Limited vs.  Shital Prasad Jain  & Others  [AIR  1991  Del.   13] has  however  held  that  the arbitrator  cannot grant specific performance.  The question arises as to which view is correct.

         In  our  opinion,  the view taken by  the  Punjab, Bombay  and Calcutta High Courts is the correct one and  the view  taken by the Delhi High Court is not correct.  We  are of  the  view that the right to specific performance  of  an agreement  of  sale deals with contractual rights and it  is certainly  open  to the partiess to agree - with a  view  to shorten  litigation in regular courts - to refer the  issues relating  to specific performance to arbitration.  There  is no  prohibition in the Specific Relief Act, 1963 that issues relating  to  specific performance of contract  relating  to immovable  property cannot be referred to arbitration.   Nor is there such a prohibition contained in the Arbitration and Conciliation  Act, 1996 as contrasted with Section 15 of the English  Arbitration  Act, 1950 or section 48(5)(b)  of  the English  Arbitration Act, 1996 which contained a prohibition relating  to  specific performance of  contracts  concerning immoveable property.

         It  is  stated in Halsburys’ Laws of  England  4th Ed., (Arbitration Vol.2 para 503) as follows:

         "Nature of the dispute or difference:  The dispute or  difference which the parties to an arbitration agreement agree  to refer must consist of a justiciable issue  triable civilly.  A fair test of this is whether the differences can be  compromised  lawfully by way of accord and  satisfaction (Cf.  Bacon’s Abidgement and Award A)."

         Reference  is made there to certain disputes  like criminal  offences of a public nature, disputes arising  out of  illegal agreements and disputes relating to status, such as  divorce,  which cannot be referred to  arbitration.   It has, however, been held that if in respect of facts relating to  a criminal matter, (say) physical injury, if there is  a right  to  damages for personal injury, then such a  dispute can  be referred to arbitration (Keir vs.  Leeman) (1846)  9 Q.B.   371.  Similarly, it has been held that a husband  and wife may, refer to arbitration the terms on which they shall separate,  because  they can make a valid agreement  between themselves  on  that matter (Soilleux vs.  Herbst) (1801)  2

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Bos  &  p.   444;  Wilson vs.  Wilson (1848) 1 HL  Cas  538; (Cahill vs.  Cahill) (1883) 8 App Cas 420(HL).

         Further,  as pointed in the Calcutta case,  merely because  there is need for exercise of discretion in case of specific  performance, it cannot be said that only the civil court  can  exercise such a discretion.  In the above  case, Ms.Ruma Pal,J.  observed:

         ".....merely  because the sections of the Specific Relief  Act  confer discretion on courts to  grant  specific performance of a contract does nto means that parties cannot agree  that  the discretion will be exercised by a forum  of their  choice.   If the converse were true, then whenever  a relief  is  dependent upon the exercise of discretion  of  a court  by  statute  e.g.  the grant of  interest  or  costs, parties  chould  be precluded from referring the dispute  to arbitration."

         We  agree with this reasoning.  We hold on Point 3 that disputes relating to specific performance of a contract can  be  referred to arbitration and Section 34(2)(b)(i)  is not  attracted.   We  overrule the view of  the  Delhi  High Court.  Point 3 is decided in favour of respondents.

         Point  4:  This point concerns the issues  between the  parties on the merits of the award relating to deafult, time  being exercise, readiness and willingness etc.   These are  all issues of fact.  If we examine section 34(2) of the Act,  the  relevant  provisions of which have  already  been extracted  under  Point 1 and 2, it will be seen that  under sub-clause (b) of section 34(2), interference is permissible by the Court only if

         (i)  the  subject  matter of the  dispute  is  non capable  of settlement by arbitration under the law for  the time being in force, or

         (ii)  the arbitral amount is in conflict with  the public policy in India.

         The  Explanation  to  the   provisions  says  that without  prejudice  to the generality of sub-clause (ii)  of clause  (b), it is declared for the avoidance of any  doubt, that  an  award  is to be treated as in  conflict  with  the public  policy  of  India  if the making of  the  award  was induced  or  affected  by  fraud, or corruption  or  was  in violation  of  sections  75 or 81.  Section  75  deals  with confidentiality while section 81 deals with admissibility of evidence  in  other  proceedings.  We do not have  any  such situation  before  us falling within  section  34(2)(b)(ii). The factual points raised in the case before us, to which we have  referred  to  earlier,  do  not  fall  within  Section 34(2)(b)(ii).  Coming to Section 34(2)(b)(i) we have already held that the subject matter of the dispute is not incapable of  settlement  by  arbitration under the law for  the  time being  in force.  Nor is any point raised that the  arbitral award  is  in conflict with the public policy of India.   We

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are, therefore, of the view that the merits of the award, on the  facts of the case do not fall under Section 34(2)(b) of the Act.  Point 4 is held accordingly against the appellant.

         For  the  aforesaid reasons, the appeals fail  and are dismissed but in the circumstances without costs.