An arbitral proceeding can be initiated when an agreement to that effect exists. An arbitral tribunal derives its jurisdiction from the arbitration agreement. In the absence of such an agreement, the proceedings initiated are void and the award rendered thereafter, cannot be enforced. This was held in the matter of Scraft Products Private Limited v. Ashwani Kumar & Anr.
Respondent No. 1 submitted their dispute arising out of the contract to arbitration, via the Respondent No. 2. The alleged arbitration agreement merely used the phrase – ‘in case of any dispute.… the matter may be referred to an arbitrator’. However, no application was made under Section 11 of the Arbitration and Conciliation Act, 1996 for the appointment of the arbitrator.
It has been contended by the Petitioner that the Respondent did not prefer an application under Section 11 of the Act. Hence, the arbitration is void ab-initio and nullity. The Respondent conceded that no application was made under Section 11. However, requested the Court to reserve the right of the Respondent to make an application before the Hon’ble High Court.
The Court considered that the application under Section 11 of the Act to be significant for initiating proceedings before an arbitrator. Hence, reserved the right of the Respondent to file the necessary application before the Court. Further, the arbitration agreement does not tantamount to an arbitration agreement under the Act and no reference to arbitration can be made.
The Petition was allowed, and all rights and contentions of the parties were reserved.
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