Supreme Court: Section 20 Arbitration Act applies to Delhi court. Overturns Punjab High Court decision.

The Supreme Court allowed the appeal, holding that the application under section 20 of the Arbitration Act was maintainable in the Court of the Subordinate Judge, First Class, Delhi. The Court set aside the order of the Punjab High Court, affirming the jurisdiction of the Delhi court to entertain the application and make a reference to the arbitrator specified in the agreement.

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Issues:
Jurisdiction of the court to entertain an application under the Arbitration Act.
Interpretation of the phrase "in any reference" under section 31(4) of the Arbitration Act.
Determining if an application for stay of suit under section 34 of the Act constitutes an application "in a reference."

Analysis:
The case involved an appeal brought by special leave from the judgment of the Punjab High Court regarding the jurisdiction of the court to entertain an application under the Arbitration Act. The dispute arose from a contract between the Union of India and a contractor, which contained an arbitration clause for settlement of disputes. The contractor filed a suit in the Calcutta High Court, and the Union of India applied for a stay under section 34 of the Act. The matter was referred to arbitration, and subsequently, the Union of India filed an application under section 20 of the Act in the Court of the Subordinate Judge, First Class, Delhi, for making a reference of the disputes to the arbitrator mentioned in the agreement.

The main issue revolved around the interpretation of the phrase "in any reference" under section 31(4) of the Arbitration Act. The Court analyzed previous judgments and held that an application for stay of suit under section 34 is not considered an application "in a reference." The Court emphasized that different sections of the Act require applications to be made even before a reference is initiated, such as section 8 and section 20. However, an application under section 34 is distinct as it aims to enforce the arbitration agreement and prevent parties from resorting to court contrary to the agreement.

Moreover, the Court clarified that for a Court to have exclusive jurisdiction under section 31(4) of the Act, the application must be made to a Court competent to entertain it. The Court highlighted that the term "judicial authority" used in section 34 does not necessarily refer to a court with jurisdiction to decide the subject matter of the reference. The Court cited decisions of the Calcutta High Court to support this interpretation.

Ultimately, the Supreme Court held that the application under section 20 of the Act was maintainable in the Court of the Subordinate Judge, First Class, Delhi, and set aside the order of the Punjab High Court. The appeal was allowed with costs, affirming the jurisdiction of the Delhi court to entertain the application and make a reference to the arbitrator specified in the agreement.

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