Swiss Timing Ltd. v. Commonwealth Games 2010 Organising Committee, (2014) 6
SCC 677
Arbitration and Conciliation Act, 1996
Ss. 8, 5, 11, 16 and 45 - Reference to arbitration - Appointment of arbitrator - Simultaneous arbitral and criminal
proceedings - Permissibility and warrantedness - Matters to be considered - Prejudice to accused, if any - Balance of
convenience in permitting simultaneous proceedings - Determination of - Use of word shall in S. 8 - Significance - Held, it
is mandatory for courts to refer disputes to arbitration, if agreement between parties provides for reference to arbitration -
Thus, registering of criminal case in relation to agreement concerned on grounds of fraud, corruption and collusion
against certain members of both parties, held, is not an absolute bar to refer disputes to arbitration - Stalling of arbitration
proceedings till disposal of criminal proceedings, not warranted in present case - Furthermore, arbitrator can decide
allegations of fraud in obtaining of the contract - Objection against reference of disputes, as to non-payment of
contractual amounts for service rendered, to arbitration raised by respondent on ground that agreement had been
rendered void as per terms of contract since criminal proceedings had been initiated on charges of indulgence in corrupt
practices to induce execution of agreement - On the basis of registration of criminal case by CBI against Chairman of
respondent Commonwealth Games Organising Committee and some officials of petitioner, respondent sought to invoke
non-liability clause in Cls. 29 and 34 of agreement that empowered respondent to terminate contract in case of corrupt,
fraudulent, collusive or coercive practices in connection with agreement - Contention raised was that since said
allegations could not be properly gone into by arbitrator, decision of criminal proceedings should be awaited instead of
constitution of Arbitral Tribunal, as respondent would not be liable to petitioner if officials who manipulated grant of
contract in favour of petitioner were found guilty in criminal trial - Held, it is mandatory for courts to refer disputes to
arbitration, if agreement between parties provides for reference to arbitration - Thus, registering of criminal case as to
execution of said contract is not an absolute bar to refer disputes to arbitration - Further held, there is no inherent risk of
prejudice to any party in permitting arbitration to proceed simultaneously with criminal proceedings since findings
recorded by Arbitral Tribunal are not binding in criminal proceedings - In an eventuality where ultimately award is
rendered by Arbitral Tribunal, and criminal proceedings result in conviction rendering underlying contract void as
provided for in the contract, necessary plea can be taken on the basis of such conviction to resist execution/enforcement
of award - If matter is not referred to arbitration and criminal proceedings result in acquittal leaving no ground for claiming
that underlying contract is void or voidable, it would result in undesirable delay in arbitration - Further held, allegations of
impropriety in grant of contract in favour of petitioner and alleged charging of exorbitant rates can be duly considered by
Arbitral Tribunal - Also, in instant case, ground that contract had been rendered void in view of initiation of criminal
proceedings was never taken till filing of present petition before Chief Justice - Thus, balance of convenience is tilted
more in favour of permitting arbitration proceedings to continue,
Arbitration and Conciliation Act, 1996
Ss. 8, 5, 11, 16 and 45 - Reference to arbitration - Appointment of arbitrator - Allegations that underlying contract is
patently void - Survival of arbitration clause independent of main agreement - Power of court when contract is found to
be patently void without requirement of further proof - Defects which render contract void and those that render contract
voidable, distinguished - Reiterated, since arbitration clause in a contract is treated as an agreement independent of the
other terms of the contract, mere adjudication that underlying contract is null and void does not render arbitration clause
invalid - Thus, courts are empowered to refer disputes to arbitration even if underlying contract is found to be void ab
initio - In view of Ss. 5 and 16, all matters including the issue as to whether main contract was void/ voidable can be
referred to arbitration - However, while exercising jurisdiction under S. 11, court can decline to refer disputes to
arbitration if contract is patently void or where it reaches a conclusion that contract is void on a meaningful reading of
contract document without requirement of any further proof - Mere claim that contract is void however will not suffice -
Further held, court cannot decline reference to arbitration on allegations of fraud, coercion, unsoundness of mind, undue
influence, and misrepresentation, since all of the above defects result in voidable, not void, contracts,
Arbitration and Conciliation Act, 1996
Ss. 8, 5, 11, 16 and 45 - Reference to arbitration - Appointment of arbitrator - Statutory inclination towards arbitration -
Held, policy of least interference in arbitration proceedings, recognises general principle that function of courts in matters
relating to arbitration is to support arbitration process,
Arbitration and Conciliation Act, 1996
Arbitration and Conciliation Act, 1996
Ss. 34 and 24 - Arbitral award - Binding nature of arbitration award in criminal proceedings arising out of the same
contract - Held, findings of Arbitral Tribunal in its award are not binding in criminal proceedings,
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