Karnataka High Court: Order terminating the arbitration not challenged; can’t file Section 8 application later

Th e K a r n a t a k a High Court in the case BEML Ltd. v. Prakash Parcel Services Ltd observed and has held that a subsequent Section 8 application would be nonmaintainable when the order of the arbitrator accepting objection to its jurisdiction was not challenged. The Division bench comprising of Justice Alok Aradhe and the Justice J.M. Khazi observed and held that it would not be open for a party who did not lay any challenge to the order to contend that the dispute once again be referred to arbitration, once the order of the arbitrator terminating the arbitral proceedings has attained finality. Facts of the Case: On 25.06.2008, the parties entered into an agreement. The agreement had an arbitration clause and a dispute arose between the parties which was referred to a sole arbitrator. under Section 16 of the Arbitration & Conciliation Act, an application was filled by the respondent. The arbitrator vide order dated 07.11.2016, accepted the respondent’s objection to its jurisdiction and permitted the respondent to take recourse to appropriate legal remedy and the order of the arbitrator was not challenged by the appellant. Thereafter, the respondent filed a Civil Suit for recovery of the amount in question and an application under Section 8 of the A&C Act, was filled by the appellant to refer the parties to arbitration. The application was rejected by the trial court on the ground that the appellant did not challenge the order of the arbitrator and however, the parties cannot be referred to arbitration. An appeal against the order of the Trial Court was filled by the appellant. The Grounds of Appeal, the appellant changed the order of the trial court on the following grounds: It was stated that the parties have admittedly have an arbitration clause between themselves. The provisions under Section 8 of the Arbitration & Conciliation Act are mandatory and when there exists an arbitration agreement between them, the parties must be referred to arbitration. Observation of the Court: The Court observed the provisions of Section 8 of the A&C Act are mandatory and the provision make it obligatory for the Court to refer the parties to arbitration in terms of the arbitration agreement. However, it was stated that the appellant not having challenged the order of the arbitrator by which it has held that it has no jurisdiction to adjudicate the dispute has waived its right to contend that the dispute should be referred to arbitration. The Court in its order stated that once the order of the arbitrator terminating the arbitral proceedings has attained finality. It further added that it would not be open for a party and who did not lay any challenge to the order to contend that the dispute once again be referred to arbitration. The Court dismissed the appeal.