Court allows appeal, sets aside Tribunal's order, directs claims review. Objections on arbitrability are jurisdictional. Time limits void.

The court allowed the appeal, set aside the Arbitral Tribunal's order, and directed the tribunal to entertain the petitioner's claims and decide them on their merits. The court held that the appeal was maintainable under Section 37(2)(a) of the Arbitration and Conciliation Act, finding that objections to arbitrability constitute jurisdictional issues. The court deemed the time limit in the contract void as it restricted the right to arbitrate, emphasizing that procedural laws should promote justice.

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Issues Involved:
1. Maintainability of the appeal under Section 37(2) of the Arbitration and Conciliation Act, 1996.
2. Validity of the time limit prescribed in clause 24.1 of the contract for challenging the DRB recommendations.
3. Jurisdiction of the Arbitral Tribunal to entertain the claims of the petitioner.

Detailed Analysis:

1. Maintainability of the Appeal under Section 37(2) of the Arbitration and Conciliation Act, 1996:

The court first addressed whether the appeal under Section 37(2) of the Act is maintainable. The respondent argued that the appeal was not maintainable as the Arbitral Tribunal's order did not pertain to jurisdiction under Section 16 of the Act. The court examined the provisions of Sections 16 and 37 of the Act and concluded that the plea that the Arbitral Tribunal "does not have jurisdiction" includes objections regarding the arbitrability of the dispute. The court found that the objection raised by the respondent, claiming that the petitioner was barred from raising disputes before the tribunal due to the finality of the DRB recommendations, was indeed a jurisdictional objection. Consequently, the court held that the appeal was maintainable under Section 37(2)(a) of the Act.

2. Validity of the Time Limit Prescribed in Clause 24.1 of the Contract:

The petitioner argued that the time limit prescribed in clause 24.1 of the contract, which required a notice to arbitrate within 14 days of receiving the DRB recommendations, was unreasonably harsh and against public policy. The court referred to previous judgments, including Hindustan Construction Corporation vs. Delhi Development Authority and National Highways Authority of India vs. Backbone Projects Limited, which held that such clauses are directory and not mandatory. The court noted that Section 28 of the Contract Act, 1872, as amended in 1997, voids agreements that either limit the time within which rights may be enforced or extinguish the rights if not exercised within a specified period. The court concluded that clause 24.1 was void to the extent that it restricted the right to arbitrate and should be read down.

3. Jurisdiction of the Arbitral Tribunal to Entertain the Claims of the Petitioner:

The court examined whether the Arbitral Tribunal had jurisdiction to entertain the claims of the petitioner. The Arbitral Tribunal had ruled that the recommendations of the DRB had attained finality and, therefore, the petitioner was not entitled to challenge them before the tribunal. The court found that this ruling effectively took away the jurisdiction of the tribunal to adjudicate the disputes, as it was based on the invalid clause 24.1. The court held that the Arbitral Tribunal should have entertained the claims of the petitioner and decided them on merits.

Conclusion:

The court allowed the appeal, set aside the impugned order of the Arbitral Tribunal, and directed the tribunal to entertain the claims of the petitioner and decide them on merits in accordance with the law. The court emphasized that procedural laws should facilitate justice rather than obstruct it, and the restrictive clause in the contract was against public policy and the provisions of the Contract Act.

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