Holding

A designated Judge under Section 11(6) is not authorized to decide the merits of an excepted matter or to determine that a dispute is not a billing dispute; such determinations must be left to the arbitral tribunal, and the part of the order expressing that opinion is set aside.

Summary

The appellants, Arasmeta Captive Power Co. and another, entered into power purchase agreements with the respondent, Lafarge India, which contained a clause (9.3) defining "billing disputes" as excepted matters to be resolved by an expert committee, and a dispute resolution clause (16.2) prescribing arbitration only if the expert mechanism failed. A billing dispute arose, and the respondent moved the High Court under Section 11(5) and (6) of the Arbitration and Conciliation Act, 1996 for appointment of an arbitrator. The designated Judge held the dispute was not a "billing dispute" and appointed an arbitrator, thereby expressing an opinion on the merits of the excepted matter. The appellants appealed, arguing that a designated Judge cannot decide whether a matter falls within the excepted category and must leave such determination to the arbitral tribunal. The Supreme Court held that the designated Judge erred in addressing the merits of the excepted matter and in opining that the dispute was not a billing dispute. Consequently, the portion of the order expressing such opinion was set aside. The appeal was allowed in part, with the order appointing the arbitrator on that basis vacated.

Issues considered

The scope of powers of a designated Judge under Section 11(6) of the Arbitration and Conciliation Act, 1996 with respect to deciding whether a dispute is an "excepted matter" under the parties' agreement.
Whether the designated Judge may express an opinion on the merits of a dispute that is alleged to be a billing dispute and thus non‑arbitrable.
Whether the High Court's appointment of an arbitrator was valid despite the alleged existence of an excepted matter.

Legislation cited

Arbitration and Conciliation Act, 1996s. 11(5), s. 11(6), s. 11(8), s. 16, s. 7, s. 8, s. 9

Subjects

ArbitrationExcepted mattersBilling disputeSection 11(6)Designated JudgeArbitrabilityExpert committeeNon‑arbitrable claim

Judgment

(2013] 17 S.C.R. 496

A ARASMETA CAPTIVE POWER COMPANY PRIVATE
LIMITED AND ANOTHER
v.
LAFARGE INDIA PRIVATE LIMITED
(Civil Appeal No.11003 of 2013)
B
DECEMBER 12, 2013
[ANIL R. DAVE AND DIPAK MISRA, JJ.]

Arbitration and Conciliation Act, 1996- ss.11 (5) and (6)
C - Dispute falling in the realm of "excepted" matter - Role of
Designated Judge, while dealing with an application u/ss.11(5)
and (6) - Held: On facts, the Designated Judge while dealing
with an application uls.11(6), on an issue raised with regard
to the excepted matters, was not justified in addressing the
D same on merits whether it was a dispute relating to excepted
matters under the agreement in question or not - The
Designated Judge fell into error by opining that the disputes
raised were not "billing disputes", for the same should have
been left to be adjudicated by the Arbitrator - Part of the
E impugned order reflecting expression of opinion by the
Designated Judge on the merits of the disputes, being
pregnable, set aside.

Precedent - Ratio decidendi - Held: The ratio of any
decision must be understood in the background of the facts
F of that case - Ratio decidendi of a judgment is not to be
discerned from a stray word or phrase read in isolation - The
case is only an authority for what it actually decides, and not
what logically follows from it - Further, the judgments
rendered by a court are not to be read as statutes.
G
The Judge designated by the Chief Justice of the
High Court, while dealing with an application preferred
under Section 11 (5) and (6) of the Arbitration and
Conciliation Act, 1996, repelled the submission of the
H 496
ARASMETA CAPTIVE POWER COMPANY PRIVATE LIMITED 497
v. LAFARGE INDIA PRIVATE LIMITED

appellant that the disputes in question, being excepted A
matters, were squarely covered within the ambit of clause
9.3 of the agreement between the parties and hence, it
was only to be referred to an expert for resolution and not
to an arbitrator and, further addressing the issue on
merits, opined that as the disputes were not covered B
under the subject-matter of billing disputesin clause 9.3
of the agreement, the parties were not under obligation
to refer the matter to the expert, and, accordingly, called
for the names from both the parties and taking note of the
inability expressed by the appellant, appointed an c
arbitrator to adjudicate the disputes between the parties.

In the instant appeal, the appellants, criticizing the
view expressed by the designated Judge, submitted that
the dispute raised by the respondent being a "billing
dispute", which was an excepted matter, it was obligatory D
on the contracting parties to resolve the dispute through
an expert cemmittee by the mechanism provided in the
agreement itself and the same could not have been
referred to an arbitrator to be arbitrated upon. It was
submitted that once a dispute falls in the realm of an E
excepted matter, as stipulated in the agreement, it is a
non-arbitrable claim and hence, the court alone has the
jurisdiction to decide the issue of arbitrability and it
cannot be left to be adjudicated by an arbitrator and as
in the present case the Judge erroneously decided that F
it was not a "billing dispute" and thereby not an excepted
matter, the same warranted interference.

Partly allowing the appeal, the Court

HELD: 1. Regard being had to the anatomy of the G
Arbitration and Conciliation Act, 1996 and the contours of
its provisions, namely, Sections 8, 9, 11 and 16, a Bench
of seven Judges in SBP & Co. by majority has stated about
the functions to be performed by the Chief Justice or his
H
498 SUPREME COURT REPORTS [2013) 17 S.C.R.

A designate to do. Or, to put it differently, what'are required
to be determined by the Chief Justice or his designate,
have been exposited in paragraph 39 of the said judgment.
In paragraph 47, the majority has summed up the
conclusions in seriatim. On a careful reading of the
B paragraph 39 and conclusion No. (iv), as set out in
paragraph 47, of the said case, it is limpid that for the
purpose of setting into motion the arbitral procedure the
Chief Justice or his designate is required to decide the
issues, namely, (i) territorial jurisdiction, (ii) existence of an
c arbitration agreement between the parties, (iii) existence
or otherwise of a live claim, and (iv) existence of the
conditions for exercise of power and further satisfaction
as regards the qualification of the arbitrator. That apart,
under certain circumstances the Chief Justice or his
designate is also required to see whether a long-barred
0
claim is soughtto be restricted and whether the parties had
concluded the transaction by recording satisfaction of the
mutual rights and obligations or by receiving the final
payment without objection. [Paras 13, 14 and 15) [510-B;
E 511-8, F-H; 512-A]
SBP & Company v. Patel Engineering Ltd. and another
(2005) 8 SCC 618: 2005 (4) Suppl. SCR 688 - followed.

2.1. The ratio of any decision must be understood in
F the. background of the facts of that case. The case is only
an authority for what it actually decides, and not what
logically follows from it. [Paras 29, 30) [520-F; 521-C]
2.2. Further, the judgments rendered by a court are
not to be read as statutes. The observations of courts are
G neither to be read as Euclid's theorems nor as provisions
of the statute and that too taken out of their context. The
observations must be red in the context in which they
appear to have been stated. To interpret words, phrases
and provisions of a statute, it may become necessary for
H judges to embark into lengthy discussions but the
ARASMETA CAPTIVE POWER COMPANY PRIVATE LIMITED 499.
v. LAFARGE INDIA PRIVATE LIMITED

discussion is meant to explain and not to define. Judges· A
interpret statutes, they do not interpret judgments. They
interpret words of statutes; their words are not to be
interpreted as statutes. [Para 35] [523-E-F]

2.3. The judgments are not to be construed as
8
statutes. Nor words or phrases in judgments to be
interpreted like provisions of a statute. Some words· used
in a judgment should be read and understood
contextually and are not intended to be taken literally.
Many a time a judge uses a phrase or expression with the C
intention of emphasizing a point or accentuating a
principle or even by way of a flourish of writing style.
Ratio decidendi of a judgment is not to be discerned from
a stray word or phrase read in isolation. [Para 36] [523-
G; 524-A-B]
D
Ambica Quarry Works v. State of Gujarat and others
(1987) 1 SCC 213: 1987 (1) SCR 562; Krishena Kumar v.
Union of India and others (1990) 4 SCC 207: 1990 (3) SCR
352; State of Orissa v. Mohd. llliyas (2006) 1 SCC 275: 2005
(5) Suppl. SCR 395; Islamic Academy of Education v. State E
of Kamataka (2003) 6 SCC 697: 2003 (2) Suppl. SCR 474;
Natural Resources Allocation, In Re, Special Reference
No. 1 of 2012; (2012) 10 SCC 1: 2012 (9) SCR 311; Union
of India v. Amrit Lal Manchanda and another (2004) 3 SCC
75: 2004 (2) SCR 422 and Som Mittal v. Government of F
Karnataka (2008) 3 SCC 574: 2008 (3) SCR 130 - relied on.

Quinn v. Leath em (1901) AC 495 and Caledonian
Railway Co. v. Walker's Trustees (1882) 7 App Cas 259 -
referred to.
G
3.1. It is luculent that the larger Bench in SBP & Co.,
after deliberating at length with regard to the role of the
Chief Justice or his designate, while dealing with an
application un~er Section 11 (6) of the Act, thought it
appropriate to define what it precisely meant in paragraph H
500 SUPREME COURT REPORTS [2013] 17 S.C.R.

A 39 of the judgment. The majority was absolutely
conscious that it required to be so stated and hence, it
did so. The deliberation was required to be made as the
decision in Konkan Railway Corporation Ltd. where the
Constitution Bench had held that an order passed by ·the
s Chief Justice under Section 11 (6) is an administrative
order and not a judicial one and, in that context, the
Bench in many a paragraph proceeded to state about the
role of the Chief Justice or his designate. When the
learned Judges themselves have culled out the ratio
c decidendi in paragraph 39, it is extremely difficult to state
that the principle stated in SBP & Co. requires the Chief
Justice or his designate to decide the controversy when
raised pertaining to arbitrability of the disputes. Or to
express an opinion on excepted matters. Such an
inference by syllogistic process is likely to usher in
0
catastrophe in jurisprudence developed in this field. It is
not apposite to pick up a line from here and there from
the judgment or to choose one observation from here or
there for raising it to the status of "the ratio decidendi".
That is most likely to pave one on the path of danger and
E it is to be scrupulously avoided. The propositions set out
in SBP & Co. have been correctly understood by the two-
Judge Bench in Boghara Polyfab Private Limited and the
same have been appositely approved by the three-Judge
Bench in Chiaro Controls India Private Limited and the
F same is respectfully concurred with. [Para 37] [524-C-H;
525-A-C]

3.2. In Booz Allen and Hamilton Inc. case, the Court has
dealt with the meaning of the term "arbitrability" and stated
G that arbitrability has different meanings in different
contexts. The Court enumerated three facets which relate
to the jurisdiction of the Arbitral Tribunal. In sub-para (ii)
of t11e said paragraph it has been stated that one facet of
arbitrability is whether the disputes are enumerated or
H described in the arbitration agreement as matters to be
ARASMETA CAPTIVE POWER COMPANY PRIVATE LIMITED 501
v. LAFARGE INDIA PRIVATE LIMITED

decided by arbitration or whether the disputes fall under A
the "excepted matters" excluded from the purview of the
arbitration agreement. In the said judgment, the learned
Judges have referred to paragraph 19 of SBP & Co. and
thereafter referred to Section 8 of the Act and opined what
the judicial authority should decide. Thereafter the Court B
proceeded to deal with nature and scope of the issues
arising for consideration in an application under Section
11 of the Act for appointment of the arbitrator. The said
ruling is absolutely in consonance with the principle laid
down in SBP & Co. The meaning given to arbitrability c
thereafter has been restricted to the adjudication under
Section 8 and not under Section 11 of the Act. Thus, the
said decision further reflects how the court has
consistently understood the principles laid down in SBP
& Co.. [Paras 4~, 41) [525-G-H; 526-A-C, F-G] D

National Insurance Company Limited v. Boghara Polyfab
Private Limited (2009) 1 SCC 267: 2008 (13) SCR 638 and
Chiaro Controls India Private Limited v. Seven Trent Water
Purification Inc. and others (2013) 1 SCC 641 and Booz Allen
and Hamilton Inc. v. SB/ Home Finance Limited and others E
(2011) 5 SCC 532: 2011 (7) SCR 310 - affirmed.

Government of Andra Pradesh and others v. A. P. Jaiswal
and other, AIR 2001 SC 499: 2001 (1) SCC 748; APS
Kushwaha (SS/ Unit) v. Municipal Corporation, Gwalior and F
others (2011) 13 SCC 258; Shree Ram Mills Ltd. v. Utility
Premises (P) Ltd. (2007) 4 SCC 599: 2007 (4) SCR 279 and
Konkan Rr3ilway Corporation Ltd. v. Rani Construction (P) Ltd.
(2002) 2 SCC 388: 2002 (1) SCR 728 - referred to.

4. In conclusion, it is held as follows: - G

(i) The decisions rendered in Boghara Polyfab
Private Limited and Chloro Controls India
Private Limited are in accord with the
principles of law stated in SBP & Co.. H
502 SUPREME COURT REPORTS (2013] 17 S.C.R.

A (ii) The designated Judge, as perceived from the
impugned order, while dealing with an
application under Section 11(6) of the Act, on
an issue raised with regard to the excepted
matters, was not justified in addressing the
B same on merits whether it is a dispute relating
to excepted matters under the agreement in
question or not.

(iii) The designated Judge has fallen into error by
opining that the disputes raised are not
c "billing disputes':, for the same should have
been left to be adjudicated by the learned
Arbitrator.

(iv) The part of the order impugned that reflects the
D expression of opinion by the designate of the
Chief Justice on the merits of the disputes,
being pregnable, deserves to be set aside and
is hereby set aside. [Para 42) [526-G; 527-A-E;J
Case Law Reference:
E
2001 (1) sec 748 referred to Para 2
(2013) 1 sec 641 affirmed Para 3
2005 (4) Suppl. SCR 688 followed Para 3
F
(2011) 13 sec 258 referred to Para 9
2008 (13) SCR 638 affirmed Para 10
•
2007 (4) SCR 279 referred to Para 16
G 1987 (1) SCR 562 relied on Para 29
(1901) AC 495 referred to Para 29
1990 (3) SCR 352 relied on Para 31

H (1882) 7 App Cas 259 referred to Para 31
ARASMETA CAPTIVE POWER COMPANY PRIVATE LIMITED 503
v. LAFARGE INDIA PRIVATE LIMITED

2005 (5) Suppl. SCR 395 relied on Para 32 A
2003 (2) Suppl. SCR 474 relied on Para 33
2012 (9) SCR 311 relied on Para 34
2004 (2) SCR 422 relied on Para 35
B
2008 (3) SCR 130 relied on Para 36
2002 (1) SCR 728 referred to · Para 37
2011 (7) SCR 310 affirmed Para 40
c
CIVIL APPELLATE JURISDICTION : Civil Appeal No.
11003 of 2013

From the Judgment and Order dated 22.07.2013 of the
High Court of Chhattisgarh at Bilaspur in Arbitration Application
No. 24 of 2012. D

Ranjit Kumar, Ramesh Singh, Bina Gupta, Ranjit Raut, for
_, the Appellant.

Harish N. Salve, A.M. Singhvi, Manu Nair, Abhijeet Sinha, E
Anuj Berry, Tanuj Bhushan (for Suresh A. Shroff & Co.) for the
Respondent.

The Judgment of the Court was delivered by

DIPAK MISRA, J. 1. Leave granted. F
2. In Government of Andra Pradesh and others v. A P.
Jaiswal and others' a three-Judge Bench has observed thus:-

"Consistency is the cornerstone of the administration of
justice. It is consistency which creates confidence in the G
system and this consistency can never be achieved
without respect to the rule of finality. It is with a view to
achieve consistency in judicial pronouncements, the

1. AIR 2001 SC 499. H
504 SUPREME COURT REPORTS (2013] 17 S.C.R

A Courts have evolved the rule of precedents, principle of
stare decisis etc. These rules and principle are based on
public policy... "

3. We have commenced our opinion with the aforesaid
exposition of law as arguments have been canvassed by Mr.
B Ranjit Kumar, learned senior counsel for the appellants, with
innovative intellectual animation how a three-Judge Bench in
Chloro Controls India Private Limited v. Seven Trent Water
Purification Inc. and others2 has inappositely and incorrectly
understood the principles stated in the major part of the
C decision rendered by a larger Bench in SBP & Company v.
Patel Engineering Ltd. and another3 and, in resistance, Mr.
Harish Salve and Dr. A.M. Singhvi, learned senior counsel for
the respondent, while defending the view expressed later by
the three-Judge Bench, have laid immense emphasis on
D consistency and certainty of law that garner public confidence,
especially in the field of arbitration, regard being had to the
globalization of economy and stability of the jurisprudential
concepts and pragmatic process of arbitration that sparkles the
soul of commercial progress. We make it clear that we are not
·E writing the grammar of arbitration but indubitably we intend, and
we shall, in course of our delineation, endeavour to clear the
maze, so that certainty remains "A Definite" and finality is 'Final'.

4. The present appeal, by special leave, is directed
F against the judgment and order dated 22.7.2013 passed by the
learned Judge, the designate of the Chief Justice of the High
Court of Chhattisgarh at Bilaspur, in Arbitration Application No.
24 of .2012 whereby and whereunder, while dealing with an
application preferred under Section 11 (5) and (6) of the
Arbitration and· Conciliation Act, 1996 (for brevity "the Act"), has
G repelled the submission of the appellant herein, the respondent
in the original proceedings, that the disputes raised by the
applicant, being excepted matters, were squarely covered
2. (2013) 1 sec 641.
H 3 (2005) a sec 618.
ARASMETA CAPTIVE POWER COMPANY PRIVATE LIMITED 505
v. LAFARGE INDIA PRIVATE LIMITED [DIPAK MISRA, J.]
within the ambit of clause 9.3 of the agreement and hence, it A
was only to be referred to an expert for resolution and not to
an arbitrator and, further addressing the issue on merits, opined.
that as the disputes are not covered under the subject-matter
of billing disputes that find place in clause 9.3 of the agreement,
the parties are not under obligation to refer the matter to the B
expert, and, accordingly, called for the names from both the
parties and taking note of the inability expressed by the counsel
for the .respondents therein, appointed an arbitrator to
adjudicate the disputes that have arisen between the parties.

5. Regard being had to the narrow compass of the
c
controversy that has emanated for consideration before this
Court, we need not dwell upon the factual matrix in extenso.
Suffice it to state that the appellant No. 1 is a company carrying
on business in generation of power. The re~pondent owns 49%
equity of the appellant No. 1 company and \he appellant No. 2 D
owns 51% equity of the appellant No. 1 company. The
appellant-company had entered into two agreements with the
respondent for supply of power to the respondent. The first
agreement, namely, a Power Purchase Agreement (PPA) was
entered into on 10.2.2005 and the second agreement of similar E
nature was entered into on 1.11.2007 for supply of power. In
course of subS'istence of the agreements dispute arose
between the parties relating to amounts that is due and
payable. The appellants treated the dispute raised to be a
"billing dispute" and sought to appoint an expert in accordance F
with clause 16.2 of the agreements and, accordingly,
communicated with the respondent vide letter dated 4.5.2012
proposing for apppintment of one of the three persons of
expertise and repute for appointment as an expert in respect
of both the PPAs. The appellant No.1 requested the G
Confederation of Indian Industry vide letter dated 30.5.2012 to
appoint a suitable expert. As put forth by the appellant, the
respondent did not accede to resolve the dispute by way of
appointing an expert instead, it moved the High Court for
appointment of an arbitrator. H
506 SUPREME COURT REPORTS [2013] 17 S.C.R.

A
6. In support of the application for appointment of
arbitrator, it was contended before the learned designated
Judge that as the claims for recovery of arrears had not been
settled and the respondents therein had communicated that the
claims came within the ambit of sub-clause (a) of clause 9.3
B of the agreement and required the matter to be dealt with by
an expert and an expert should be appointed in terms of clause
16.2 and 16.4 of the agreement and declined to take recourse
to arbitration, it had become incumbent to move the court for
appointment of an arbitrator.
c
7. The said stand and stance put forth by the respondent
before the High Court was resisted by the present appellants
that disputes would come within clause 16.2 of the agreement
that deals with "Dispute Resolution" which provides a specific
0 mechanism and not arbitration, for it has been clearly
postulated therein that where any dispute is not resolved as
pro• · jed for in clause 16.2 then only the matter shall be
submitted to arbitration at the request of either of the parties
by written notice in accordance with the provisions contained
E in the Act.

8. The High Court adverted to the meanings of "billing
date", "billing period", "billing year, "clarification notice" and
various terms used in the agreement, scanned the anatomy of
clause 9.3 of the agreement that deals with "billing disputes"
F and arrived at the conclusion that disputes raised do not come
within the purview of sub-clause (a) of clause 9.3 and,
accordingly, appointed an arbitrator, as has been stated
hereinbefore.

G 9. Mr. Ranjit Kumar, learned senior counsel appearing for
the appellants, criticizing the view expressed by the designated
Judge, has submitted that the dispute raised by the respondent
being a "billing dispute" which is an excepted matter, it was
obligatory on the contracting parties to resolve the dispute
H through an expert committee by the mechanism provided in the
ARASMETA CAPTIVE POWER COMPANY PRIVATE LIMITED 507
v. LAFARGE INDIA PRIVATE LIMITED [DIPAK MISR~, J.]
agreement itself and the same could not have been referred A
to an arbitrator to be arbitrated upon. Pyramiding the said
proponement, learned senior counsel would submit that once
a dispute falls in the realm of an excepted matter, as stipulated
in the agreement, it is a non-arbitrable claim and hence, the
court alone has the jurisdiction to decide the issue of B
arbitrability and it cannot be left to be adjudicated by an
arbitrator and as in the present case the learned Judge has
erroneously decided that it is not a "billing dispute" and thereby
not an excepted matter, the same warrants interference. In
essence, the submission is that advertence to the spectrum of c
arbitrability or to the sphere of excepted matter to decide the
issue of jurisdiction as contemplated under Section 11 (6) of the
Act is justified but the analysis and the conclusion as regards
the nature of dispute is indefensible .. To buttress his submissions
he has commended us to the decisions in SBP & Co. (supra)
D
and APS Kushwaha (SS/ Unit) v. Municipal Corporation,
Gwalior and others• .

10. Mr. Harish N. Salve and Dr.. A.M. Singhvi, learned
senior counsel appearing for the respondent, in oppugnation,
have submitted that the principles stated in SBP's case have E
been appositely understood by a two-Judge Bench in the
decision in National Insurance Company Limited v. Boghara
Polyfab Private Limited; and the analysis therein has been
accepted and approved by a three-Judge Bench in Chiaro
Controls India Private Limited (supra) and, therefore, whether F
it is an excepted matter or not, despite strenuous urging of the
same by the appellants, is required to be left to be adjudicated
in the arbitral proceedings. The learned senior counsel would
further submit that what has been opined in the SBP's case has
already been reflected upon and that being the settled position G
of law, certainty in the realm of adjudication should be allowed
to stay. That apart, it is urged by Mr. Salve and Dr. Singhvi that

4. (2011 l 13 sec 2ss.
s. (2009) 1 sec 2s1. H
508 SUPREME COURT REPORTS [2013] 17 S.C.R.

A the designated Judge has fallen into error by delving into the
merits of the matter, i.e., whether the disputes are "billing
disputes" or not, for it should have been left to be adjudicated
upon by the learned arbitrator. It is submitted that if any
interference is warranted the said findings should be set aside
B and the matter should be allowed to be arbitrated upon by the
learned arbitrator as other conditions precedent for invocation
of the arbitration clause have been accepted and are not under
assail.

11. In reply to the submissions of learned senior counsel
C for the respondent, Mr. Ranjit Kumar, learned senior counsel
for the appellants, would contend that the analysis made in the
case of Boghara Polyfab Private Limited (supra) by the two-
Judge Bench is contrary to what has been stated in SBP's case
and similarly the seal of concurrence given by the three-Judge
D Bench in Chloro Controls India Private Limited (supra) is
neither justified nor correct, and in fact, on a studied scrutiny,
the lis deserves to be referred to a larger Bench. The learned
senior counsel would further submit that certainty of law in its
fundamental conceptuality has to be in consonance with the
E principles stated in larger Bench decisions and not to be
allowed to exist despite striking a note of discordance.

12. To appreciate the controversy it is pertinent to refer to
certain provisions, namely, Sections 8, 9, 11 and 16 of the Act.
F Section 8 deals with power to refer parties to arbitration where
there is an arbitration agreement. The said power is conferred
on a judicial authority before which an action is brought in a
matter which is the subject-matter of agreement. Certain
conditions precedent have been incorporated in sub-sections
G (1) and (2) of the said provision. Section 9 provides for grant
of interim measures by court. Section 11 deals with
appointment of arbitrators. Section 11 (2) stipulates that subject
to sub-section (6), the parties are free to agree on a propedure
for appointing the arbitrator or arbitrators. Sub-sections (3) to
(5) deal with requisite procedure to be followed in certain
H
ARASMETA CAPTIVE POWER COMPANY PRIVATE LIMITED 509
v. LAFARGE INDIA PRIVATE LIMITED [DIPAK MISRA, J.]

circumstances for appointment of arbitrator. Sub-sections (6) A
and (8) of the said provision, which are relevant for the present
purpose, read as follows: -

"(6) Where, under an appointment procedure agreed
upon by the parties, - B

a. a party fails to act as required under that procedure;
or

b. the parties, or the two appointer arbitrators, fail to
reach an agreement expected of them under that C
procedure; or

c. a person, including an institution, fails to perform
any function entrusted to him or it under that
procedure,
D
· a party may request the Chief Justice or any person or
institµtion designated by him to take the necessary
measures, unless the agreement on the appointment
procedure provides other means for securing the
appointment. E

xxx xxx xxx
(8) The Chief .Justice or the person or institution designated
by him, in appointing an arbitrator, shall have due regard
~- F

(a) any qualifications required of the arbitrator by the
I
agreement of the parties; and
I
I
I (b) other considerations as are likely to secure the G
I
I
appointment of ao independent and impartial
I arbitrator."
I
I

I
Section 16 provides for competence oJ arbitral tribunal to
I rule on its own jurisdiction. It stipulates that the arbitral tribunal
I
I may rule on its own jurisdiction, including ruling on' any objections H
510 SUPREME COURT REPORTS [2013] 17 S.C.R.

A with respect to the existence or validity of the arbitration
agreement.

13. Regard being had to the anatomy of the Act and the
contours of the aforesaid provisions, a Bench of seven Judges
8 in SBP & Co. (supra) by majority has stated about the functions
to be performed by the Chief Justice or his designate to do.
Or, to put it differently, what are required to be determined by
the Chief Justice ·or his designate, have been exposited thus:

c "39. It is necessary to define what exactly the Chief
Justice, approached-with an application under Section 11
of the Act, is to decide at that stage. Obviously, he has
to decide his own jurisdiction in the sense whether the
party making the motion has approached the right High
D Court. He has to decide whether there is an arbitration
agreement, as defined in the Act and whether the person
who has made the request before him, is a party to such
an agreement. It is necessary to indicate that he can also
decide the question whether the claim was a dead one;
E or a long-barred claim that was sought to be resurrected
and whether the parties have concluded the transaction
by recordiog satisfaction of their mutual rights and
obligations or by receiving the final payment without
objection. It may not be possible at that stage, to decide
F whether a live claim made, is one which comes within the
purview of the arbitration clause. It will be appropriate to
leave that question to be decided by the Arbitral Tribunal
on taking evidence, along with the merits of the claims
involved in the arbitration. The Chief Justice has to decide
whether the applicant has satisfied the conditions for
G
appointing an arbitrator under Section 11 (6) of the Act.
For the purpose of taking a decision on these aspects,
the Chief Justice can either proceed on the basis of
affidavits and the documents produced or take such
evidence or get such evidence recorded, as may be
H
ARASMETA CAPTIVE POWER COMPANY PRIVATE LIMITED 511
v. LAFARGE INDIA PRIVATE LIMITED [DIPAK MISRA, J.]
necessary. We think that adoption of this proced'!re in the A
context of the Act would best serve the purpose sought
to be achieved by the Act of expediting the process of
arbitration, without too many approaches to the court at
various stages of the proceedings before the Arbitral
Tribunal." B

14. In the said case, in paragraph 47 the majority has
summed up the conclusions in seriatim. Conclusion (iv), as
summed in the said paragraph, reads as follows: -

"(iv) The Chief Justice or the designated Judge will have C
the right to decide the preliminary aspects as ·indicate in
the earlier part of this judgment. These will be his own
jurisdiction to entertain the request, the existence of a valid
arbitration agreement, the existence or otherwise of a live
claim, the existence of the condition for the exercise of his D
power and on the qualifications of the arbitrator or
arbitrators. The Chief Justice or the designated Judge
would be entitled to seek the opinion of an institution in the
matter of nominating an arbitrator qualified in terms of
Section 11 (8) of the Act if the need arises but the order E
appointing the arbitrator could only be that of the Chief
Justice or the designated Judge."

15. On a careful reading of the paragraph 39 and
conclusion No. (iv), as set out in paragraph 47, it is limpid that
for the purpose of setting into motion the arbitral procedure the F
Chief Justice or his designate is required to decide the issues,
namely, (i) territorial jurisdiction, (ii) existence of an arbitration
agreement between the parties, (iii) existence or otherwise of
a live claim, and (iv) ex~tence of the conditions for exercise of
power and further sqtisfaction as regards the qualification of G
the arbitrator. That apart, under certain circumstances the Chief
Justice or his designate is'also required to see whether a long-
barred claim is sought to be restricted and whether the parties
-Rad concluded the transaction by recording satisfaction of the
H
512 SUPREME COURT REPORTS (2013] 17 S.C.R.

A mutual rights and obligations or by receiving the final payment
without objection.

16. At this stage we may notice the opinion expressed by
a two-Judge Bench in Shree Ram Mills Ltd. v. Utility Premises
B (P) Ltd. 6 , pertaining to the issues which are to be dealt with by
the Chief Justice or his designate. The two-Judge Bench, after
referring to paragraph 39 in SBP & Co. (supra), opined that
the Chief Justice has to decide about the territorial jurisdiction
and also whether there exists an arbitration agreement between
the parties and whether such party has approached the court
C for appointment of the arbitrator. The Chief Justice has to
examine as to whether the claim is a dead one or in the sense
whether the parties have already concluded the transaction and
have recorded satisfaction of their mutual rights and obligations
or whether the parties concerned have recorded their
D satisfaction regarding the financial claims. In examining the
said aspect if the parties have recorded their satisfaction
regarding the financial claims, there will be no question <l.f any
issue remaining. It is further observed therein that in the'said
context the Chief Justice has to examine as to whether there
E remains anything to be decided between the parties in respect
of the agreement and whether the parties are still at issue on
any such matter. If the Chief Justice does not, in the strict sense,
decide the issue, in that event it is for him to locate such issue
·and record his satisfaction that such issue exists between the
F parties. It is only in that sense that the finding on a live issue is
given. That apart, as observed, it is only for the purpose of
finding out whether the arbitral procedure has to be started that
the Chief Justice has to record satisfaction that there remains
a live issue in between the parties. The same thing is about
G the limitation which is always a mixed question of law and fact.
The Chief Justice only has to record his satisfaction that prima
facie the issue had not become dead by the lapse of time or
that any party to the agreement has not slept over its· right

H 6. (2007) 4 sec 599.
- ARASMETA CAPTIVE POWER COMPANY PRIVATE LIMITED 5~ 3
v. LAFARGE INDIA PRIVATE LIMITED [DIPAK MISRA, J.]
beyond the time permitted by law to agitate those issues A
covered by the agreement. The Chief Justice or his designate
is required to record his satisfaction that the parties have not
closed their rights and the matter has not been barred by
limitation. Thus, whether the Chief Justice comes to a finding
that there exists a live issue, then naturally this finding would B
include a finding that the respective claims of the parties have
not become barred by limitation.

17. In Boghara Polyfab Private Limited (supra) a two-
Judge Bench, wliile understanding and explaining the duty of
the Chief Justice or his designate, as defined in SBP & Co. C
(supra), has ruled thus: -

"22. Where the intervention of the court is sought for
appointment of an Arbitral Tribunal u.nder Section 11, the
d4ty of the Chief Justice or his designate is defined in SBP D
.& Co. This Court identified and segregated the preliminary
issues that may arise for consideration in an appfication
under Section 11 of the Act into three categories, that is,
(i) issues which the Chief Justice or his designate is bpund
to decide; (ii) issues which he can also decide, that is, E
issues which he may choose to decide; and (iii) issues
which should be left to the Arbitral Tribunal to decide.

22.1. The issues (first category) which the Chief Justice/
his designate will have to decide are: I
F
(a) Whether the. party making the application has
approached the appropriate High Court.

(b) Whether there is an arbitration agreement and
whether the party who has.applied under Section G
11 of the Act, is a party to such an agreement.

22.2. The issues (second category) which the Chief
Justice/his designate may choose to decide (or leave
them to the decision of the Arbitral Tribunal) are:
H
514 SUPREME COURT REPORTS [2013] 17 S.C.R.

A (a) Whether claim is a dead (long-barred) claim or
a live claim.

(b) Whether the parties have concluded the contract/
transaction by recording satisfaction of their mutual
rights and obligation or by receiving the final
B
payment without objection.

22.3. The issues (third category) which the Chief Justice/
his designate should leave exclusively to the Arbitral
Tribunal are:
c
(i) Whether a claim made falls within the arbitration
clause (as for example, a matter which is reserved
for final decision of a departmental authority and
excepted or excluded from arbitration).
D (ii) Merits or any claim involved in the arbitration."

18. In the said case, it has been further held that in regard
to the issues falling in second category, if raised in an
application under Section 11 of the Act, the Chief Justice/his
E designate may decide them, if necessary, by taking evidence.
Alternatively, he may leave those issues open with a direction
to the Arbitral Tribunal to decide the same. In case the Chief
Justice or his designate chooses to examine the issue and
decides it, the Arbitral Tribunal cannot re-examine the same
F issue. The learned Judges have observed by placing reliance
on SBP & Co. (supra) that Chief Justice/his designate would,
in choosing whether he would decide such issue or leave it to
the Arbitral Tribunal, be guided by the object of the Act, i.e.,
expediting the arbitration process with minimum judicial
G intervention.

19. Recently in Chiaro Controls India Private Limited
(supra) a three-Judge Bench considered the issue whether
there is any variance between the Shree Ram Mills Ltd. (supra)
and Boghara Polyfab Private Limited (supra) and observed
H
ARASMETA CAPTIVE POWER COMPANY PRIVATE LIMITED 515
v. LAFARGE INDIA PRIVATE LIMITED [DIPAK MISRA, J.]

that both the judgments are free from contradiction and capable A
of being read in harmony in order to bring them in line with the
statutory law declared by the larger Bench in SBP & Co.
(supra). The Court observed that where the Chief Justice or his
designate actually decides the issue, then it can no longer be
. prima facie, but would be a decision binding in law and on such B
an issue the Arbitral Tribunal will have no jurisdiction to re-
determine the issue. The three-Judge Bench reproduced
paragraph 27 of Shree Ram Mms Ltd. (supra) and we think
that we should quote the relevant part on which an opinion has
been expressed:- c
"If the Chief Justice does not, in the strict sense, decide
the issue, in that event it is for him to locate such issue
and record his satisfaction that such issue exists between
the parties. It is only in that sense that the finding on a
Jive issue is given. Even at the cost of repetition we mush D
state that it is only for the purpose of finding out whether
the arbitral procedure has to be started that the Chief
/Justice has to record satisfaction that there remains a live
issue in between the parties. The same thing is about the
limitation which is always a mixed question of law and fact. E
The Chief Justice only has to record his satisfaction that
prima facie the issue has not become dead by the lapse
of time or that any party to the agreement has not slept
over its rigfits beyond the time permitted by law to agitate
those issues covered by the agreement. It is for this F
reason that it was pointed out in the above paragraph that
it would be appropriate sometimes to leave the question
regarding the live claim to be decided by the Arbitral
Tribunal. All that he has to do is to record his satisfaction
that the parties have not closed their rights and the matter G·
has not been barred by limitation. Thus, where the Chief
Justice comes to a finding that there exists a live issue,
then naturally this finding would include a finding that the
. respective claims of the parties have not become barred
by limitation." H
516 SUPREME COURT REPORTS [2013] 17 S.C.R.

A Thereafter, the three-Judge Bench explained the decision
in following terms:-

"Thus, the Bench while explaining the judgment of this
Court in SBP & Co. has state that the Chief Justice may
not decide certain issues finally and upon recording
~B
satisfaction that prima facie the issue has not become
dead even leave it for the Arbitral Tribunal to decide."

20. Thereafter, the three-Judge Bench referred to
paragraph 20 of SBP & Co. (supra) and stated that in Shree
C Ram Mills Ltd. (supra) clearly the Bench did not intend to lay
down any law in direct conflict with seven-Judge Bench in SBP
& Co. (supra).
21. At that juncture, dealing with the classification carved J
0 : out by the Court in Boghara Polyfab Private Limited (supra),
the three-Judge Bench observed that it draws its origin from
para 39 of the judgment in SBP & Co. (supra) and thereafter
proceeded to state thus: -

"124. The foundation for Category (2) in para 22.2 of -
E National Insurance Co. Ltd. is directly relatable to para
39 of the judgment of this Court in SBP & Co. and
matters falling in that category are those which,
depending on the facts and circumstances of a given
case, could be decided by the Chief Justice or his
F designate or even may be left for the decision of the
arbitrator, provided there exists a binding arbitration
agreement between the parties. Similar is the approach
of the Bench in Shree Ram Mills and that is why in para
27 thereof, the Court has recorded that it would be
G appropriate sometimes to leave the question regarding
the claim being alive to be decided by the Arbitral
Tribunal and the Chief Justice may record his
satisfaction that parties have not closed their rights and
the matter has not been barred by limitation.
H
ARASMETACAPTIVE POWER COMPANY PRIVATE LIMITED 517
v. LAFARGE INDIA PRIVATE LIMITED [DIPAK MISRA, J.]

125. As already notice, the observations made by the A
Court have to be construed and read to support the ratio
decidendi of the judgment. Observations in a judgment
which are stared upon by the judgment of a larger Bench
would not constitute valid precedent as it will be hit by the
1
doctrine of stare decisis. In Shree Ram Mills surely the B
bench did not intend to lay down the law or state a
proposition which is directly in conflict with the judgment
of the Constitution Bench of this Court in SBP & Co..

126. We have no reason to differ with the classification C
carved out in National Insurance Co. as it is very much
in conformitv with the judgment of the Constitution Bench
in SBP."

[Emphasis added)
D
22. Mr. Ranjit Kumar, learned senior counsel appearing for
t.Ke appellants, has drawn our attention to various paragraphs
of the decision in SBP & Co. (supra) to highlight that excepted
matters as per the agreement have to be decided by the Chief
Justice or his designate. Drawing our attention to paragraph 9
E
of the said judgment learned senior counsel has submitted that
the larger Bench has clearly observed that while functioning
a
under Section 11 (6) of the Act, Chief Justice or the person
or the institution designated by him, is bound to decide whether
he has jurisdiction, whether there is an arbitration agreement,
F
whether the applicant before him is a party, whether the
conditions for exercise of the power have been fulfilled, and if
an arbitrator is to be appointed, who is the fit person, in terms
of the provisions and the condition for exercise of power is
dependent upon the nature of the agreement and the arbitration
clause and in its sweep it commands that there should be an G
adjudication in respect of excepted matters and once it is found
that they are excepted matters, an arbitrator should not be
appointed in respect of such matters or the disputes should not
be referred to arbitration.
H
518 SUPREME COURT REPORTS [2013] 17 S.C.. R.

A 23. The learned senior counsel has also drawn immense
inspiration from paragraph 25 of the judgment of the. said case
wherein, while discussing about the jurisdiction of the Chief
Justice, it has been stated that he has to enquire whether the
conditions for exercise of his power under Section 11 (6) of the
B Act exist in the case and only being satisfied in that behalf could
he appoint an arbitrator or an Arbitral Tribunal on the basis of
the request. It further observe~ that it is difficult to say that when
one of the parties raises an objection that there is no arbitration
agreement, raises an objection that the person who has come
c forward with a request is not a party to the agreement, the Chief
Justice can come to a conclusion on those objections without
following. an adjudicatory process. Thereafter the seven-Judge
Bench stated thus: -

"Can he constitute an Arbitral Tribunal, without
D.,. considering these questions? If he can do so, why should ·
such a function be entrusted to a high judicial authority
like the Chief Justice. Similarly, when the party raises an
objection that the conditions for exercise of power under
Section 11 (6) of the Act are not fulfilled and the Chief ,
E Justice comes to the conclusion that they have been
fulfilled, it is difficult to say that he was not adjudicating
on a dispute between the parties and was merely passing
an administrative order. It is also not correct to say that
by the mere constitution of an Arbitral Tribunal the rights
F of the parties are not affected. Dragging a party to an
arbitration when there existed no arbitration agreement
or when there existed no arbitrable dispute, can certainly
affect the right of that party, and, even on monetary terms,
impose on him a serious liability for meeting the
G expenses of the arbitration, even if it be the preliminary
expenses and his objection is upheld by the Arbitral
Tribunal. Therefore, it is not possible to accept the
position that no adjudication is involved in the constitution
of an Arbitral Tribunal."
H
ARASMETA CAPTIVE POWER COMPANY PRIVATE LIMITED 519
v. LAFARGE INDIA PRIVATE LIMITED [DIPAK MISRA, J.)

2~. Mr. Ranjit Kumar, learned senior counsel, has placed A
heavy emphasis on the words "when there existed no arbitral
dispute" to spiral the submission that the Chief Justice or his
designate is under the legal obligation to decide the said facet
when the issue is raised and it cannot be left to the arbitrator
or an Arbitral Tribunal for adjudication. B

25. Before we comment ori this, we may also refer to
observations made in paragraph 38 of the judgment in SBP &
Co. (supra) as the same has also been repeatedly commended
to us by Mr. Ranjit Kumar. For understanding of the ratio
decidendi we think it apt to reproduce the relevant portion which C
has intellectually stimulated the learned senior counsel for the
appellants: -

"... the basic requirement for exercising his power under
Sectidn 11 (6), is the existence of an arbitration D
agreement in terms of Section 7 of the Act and the
.application before the Chief Justice being shown to be a
/ party to such an agreement. It would also include the
question of the existence of jurisdiction in him to entertain
the request and an enquiry whether at least a part of the E
cause of action has arisen within the State concerned.
Therefore, a decision on jurisdiction and on the existence
of the arbitration agreement and of the person making
the request being ,a party to that agreement and the
subsistence of an arbitral dispute require to be decided F
and the decision on these aspects is a prelude to the
Chief Justice considering whether the requirements of
sub-section (4), sub-section (5) or sub-section(6) of
. Section 11 are satisfied when approached with the
request for appointment of an arbitrator."
G
26. The aforesaid passage is pressed into service for the
Simon pure reason that the seven-Judge Bench has used the
phraseology "subsistence of an arbitral dispute required to be
decided". It is emphatically submitted that it has to be read in
harmony with the words used in paragraph 25, namely, "when H
520 SUPREME COURT REPORTS [2013) 17 S.C.R.

A there existed no arbitral dispute". In t~is backdrop it is
propounded that the decisions in Boghara Polyfab Private
Limited (supra) and Chiaro CoQtrols India Private Limited
(supra) require reconsideration.

27. Mr. Salve and Dr. Singhvi, learned counsel for the
8
respondent, in their turn, have submitted that paragraph 39 in
SBP & Co. (supra) speaks about the role of the Chief Justice
in definitive exactitude and the same has been emphatically
stated in sub-para (iv) of para 47 where there is summation of
C the conclui>ions. Quite apart from the above, it is contended that
in Chiaro Controls India Private Limited (supra) the three-
Judge Bench has correctly understood the decision in SBP &
Co. (supra) and, accordingly, did not differ with the
classification carved out in Boghara Polyfab Private Limited
'(supra).
D
; ' 28. At this juncture, we·think it condign to refer to certain
authorities which lay down the principle for understanding the .
·fatio decidendi of a judgment. Such a deliberation, we are
disposed to think, is necessary as we notice that contentions
E are raised that certain observations in some paragraphs in SPB
& Co. (supra) have been relied upon to build the edifice that
latter judgments have not referred to them.

29. In Ambica Quarry Works v. State of Gujarat and
others', it ·has been,stated that the ratio of any decision must
F be understood in the background of the facts of that case.
Relying on Quinn v. Leathern" it has been held that the case
is only an authority for what it actually decides, and not what
logically follows from it.
G 30. Lord Halsbury in the case of Quinn (supra) has ruled
thus: -

7. (1987) .1 sec 213.
H 8. (1901) AC 495.
ARASMETA CAPTIVE POWER COMPANY PRIVATE LIMITED 521
v. LAFARGE INDIA PRIVATE LIMITED [DIPAK MISRA, J.]
' . .. there are two observations of a general character which A
I wish to make, and one is to repeat what I have very often
said before, that every judgment must be read as
applicable to the particular facts proved, or assumed to
be proved, since the generality of the expressions which
may be found there are not intended to be expositions B
of the whole law, but governed and qualified by the
particular facts of the case in which such expressions are
to be found. The other is that a case is onlv an authoritv
for what it actually decides. I entirely deny that it can be
quoted for a proposition that may seem to follow logically c
from it. Such a mode of reasoning assumes that the law
is necessarily a logical code, whereas everv lawyer must
acknowledge that the lav:/is not always logical at all."

[Emphasis supplied]
D
31. In Krishena Kumar v. Union of India and others•, the
Constitution Bench, while dealing with the concept of ratio
decidendi, has referred to Caledonian Railway Co. v. Walker's
Trustees 10 and Quinn (supra) and the observations made by
Sir Frederick Pollock and thereafter proceeded to state as E
follows: -

"The ratio decidendi is the underlying principle, namely,
the general reasons or the general grounds upon which.·
the decision is based on the test or abstract from the
F
specific peculiarities of the particular case which gives
rise to the decision. The ratio decidendi has to be
ascertained by an analvsis of the facts of the case and
the process of reasoning involving the major premise
consisting of a pre-existing rule of law, either statutorv or
judge-made, and a minor premise consisting of the G
material facts of the case u:1der immediate
consideration. If it is not clear, it is not the duty of the court

9. (199DJ 4 sec 20?.
10. (1882) 7 App Cas 259 : 46 LT 826 (HL). H-
522 SUPREME COURT REPORTS [2013] 17 S.C.R.

A to spell it out with difficulty in order to be bound by it. In
the words of Halsbury (4th edn., Vol. 26, para 573)

"The concrete decision alone is binding between the
parties to it but it is the abstract ratio decidendi, as
ascertained on a consideration of the judgment in relation
B
to the subject matter of the decision, whYch alone has the
force of law and which when it is clear it is not part of a
tribunal's duty to spell out with difficulty a ratio decidendi
in order to bound by it, and it is alwavs dangerous to take
one or two observations out of a long judgment and treat
c them as if they gave the ratio decidendi of the case. If
more reasons than one are given by a tribunal for its
judgment. all are taken as forming the raiio decidendi."

[Emphasis added]
D
, 32. In State of Orissa v. Mohd. 11/iyas',., it has been stated
thus: -
I
"12. . .. According to the well-settled theory of precedents,
every decision contains three basic postulates: (i)
E findings of material facts, direct and inferential. An
inferential finding of facts is the inference which the Judge
draws from the direct, or perceptible facts; (ii) statements ·
of the principles of law applicable to the legal problems
disclosed by the facts; and (iii) judgment based on the
F combined effect of the above. A decision is an authority
for what it actually decides. What is of the essence in a
decision is its ratio and not every observation found
therein nor what logically flows from the various
observations made in the judgment."
G
33. In Islamic Academy of Education v. State of
Kamataka 12 , the Court has made the following observations: -

11. (2006) 1 sec 275.
H 12. (2003) 6 sec 697.
ARASMETA CAPTIVE POWER COMPANY PRIVATE LIMITED 523
v. lAFARGE INDIA PRIVATE LIMITED [DIPAK MISRA, J.]

"2. .. . The ratio decidendi of a judgment has to be found A
out only on reading the entire judgment. In fact, the ratio
of the judgment is what is set out in the judgment itself.
The answer to the question would necessarily have to be
read in the context of what is set out in the judgment and .
not in isolation. In case of anv doubt as regards anv B
observations, reasons and principles. the other part of the
judgment has to be looked into. Bv reading a line here
and there from the judgment, one cannot find out the
entire ratio decidendi of the judgment."

[Underlining is by us] C

34. The said authorities have been relied upon in Natural
Resources Allocation, In Re, Special Reference No. 1 of
w12 1• . ·

D
35. At this stage, we rnay also profitably refer to another
principle which is of assistance to understand and appreciate
a
the ratio decidendi of judgment. The judgments· rendered by
a court are not to be read as statutes. In Union of India v. Amrit
Lal Manchanda .and another14 , it has been stated that
E
observations of courts are neither to be read as Euclid's
theorems nor as provisions of the statute and that too taken out
of their context. The observations must be red in the context in
which they appear to have been stated. To interpret words,
phrases and provisions of a statute, it may become necessary
for judges to embark into lengthy discussions but the discussion F
is meant to explain and not to define. Judges interpret statutes,
they do not interpret judgments. They interpret words of
statutes; their words are not to be interpreted as statutes.

36. In Som Mittal v. Govemment"of Kamataka 15 , it has G
been observed that judgments are not to be construed as

13. (2012) 10 sec 1.
14. (2004) 3 sec 75.
15. (200S) 3 sec 574. H
524 SUPREME COURT REPORTS [2013] 17 S.C.R.

, A statutes. Nor words or phrases in judgments to be interpreted
like provisions of a statute. Some words used in a judgment
should be read and understood contextually and are not
intended to be taken literally. Many a time a judge uses a phrase
or expression with the intention of emphasizing a point or
B accentuating a principle or even by way of a flourish of writing
!>tyle. Ratio decidendi of a judgment is not to be discerned from
a stray word or phrase read in isolation.

37. From the aforesaid authorities it is luculent that the
C larger Bench in SBP & Co. (supra), after deliberating at length
with regard to the role of the Chief Justice or his designate,
while dealing with an application under Section 11 (6) of the Act,
has thought it appropriate to define what it precisely meant in
paragraph 39 of the judgment. The majority, if we allow
ourselves to say so, was absolutely conscious that it required
D to be so stated and hence, it did so. The deliberation was
required to be made as the decision in Konkan Railway
. Corporation Ltd. v. Rani Construction'" (P) Ltd. where the
Constitution Bench had held that an order passed-,by the Chief
Justice under Section 11 (6) is an administrative order and not
E a judicial one and, in that context, the Bench in many a
paragraph proceeded to state about the role of the Chief
Justice or his designate. The phrases which have been
emphasized by Mr. Ranjit Kumar, it can be irrefragably stated,
they cannot be brought to the eminence of ratio decidendi of
F the judgment. The stress laid thereon may be innovative but
when the learned Judges themselves have culled out the ratio
decidendi in paragraph 39, it is extremely difficult to state that
the principle stated in SBP & Co. (supra) requires the Chief
Justice or his designate to decide the controversy when raised
G pertaining to arbitrability of the disputes. Or to express an
opinion on excepted matters. Such an inference by syllogistic
process is likely to usher in catastrophe in jurisprudence
developed in this field. We are disposed to think so as it is not

H 1e. c2002) 2 sec 3RB.
ARASMETA CAPTIVE POWER COMPANY PRIVATE LIMITED 525
v. LAFARGE INDIA PRIVATE LIMITED [DIPAK MISRA, J.]

apposite to pick up a line from here and there from the judgment A
or to choose one observation from here or there for raising it
to the status of "the ratio decidendi". That is most likely to pave
one on the path of danger and it is to be scrupulously avoided.
The propositions set out in SBP & Co. (supra), in our opinion,
have been correctly understood by the two-Judge Bench in B
Boghara Polyfab Private Limited (supra) and the same have
been appositely approved by the three-Judge Bench in Chiaro
Controls India Private Limited (supra) and we respectfully
concur with the same. We find no substance in the submission
that the said decisions require reconsideration, for certain c
observations made in SBP & Co. (supra), were not noticed.
We may hasten to add that the three-Judge Bench has been
satisfied that the ratio decidendi of the judgment in SBP & Co.
(supra) is really inhered in paragraph 39 of the judgment.

38. Before parting with this part of our ratiocination we may D
profitably reproduce the following words of Lord Denning which
have become locus classicus: -

"Precedent should be followed only so far as it marks the
path of justice, but you must cut the dead wood and trim E
off the side branches else you will find yourself lost in
thickets and branches. My plea is to keep the path to
justice clear of obstructions which could impede it. "

39. The aforesaid passage has been referred to in Amrit
Lal Machanda and another (supra). F

40. We will be failing in our duty if we do not take note of
another decision in Boaz Allen and Hamilton Inc. v. SB/ Home
Finance Limited and others 17 on which Mr. Ranjit Kumar has
heavily relied upon. He has drawn our attention to paragraph G
34 where the Court has dealt with the meaning of the term
"arbitrability" and stated that arbitrability has different meanings
in different contexts. The Court enumerated three facets which
relate to the jurisdiction of the Arbitral Tribunal. In sub-para (ii)
of the said paragraph it has been stated that one facet of H
526 SUPREME COURT REPORTS [2013] 17 S.C.R.

A arbitrability is whether the disputes are enumerated or
described in the arbitration agreement as matters to be
decided by arbitration or whether the disputes fall under the
"excepted matters" excluded from the purview of the arbitration
agreement. On a careful reading of the said judgment we find
B that the learned Judges have referred to paragraph 19 of SBP
& Co. (supra) and thereafter referred to Section 8 of the Act
and opined what the judicial authority should decide. Thereafter
the Court proceeded to deal with nature and scope of the
issues arising for consideration in an application under Section
c 11 of the Act for appointment of the arbitrator and, in that
context, it opined thus: -

'While considering an application under Section 11 of the
Act, the Chief Justice or his designate would not embark
upon an examination of the issue of "arbitrability" or
D appropriateness of adjudication by a private forum, once
he finds that there was an arbitration agreement between
or among the parties, and would leave the issue of
arbitrabHity for the decision of the Arbitral Tribunal. If the
arbitrator wrongly holds that the dispute is arbitrable, the
E aggrieved party will have to challenge the award by Ming
an application under Section 34 of the Act, relying upon
sub-section (2)(b)(i) of that section."

41. The said ruling is absolutely in consonance with the
F principle laid down in SBP & Co. (supra). The meaning given
to arbitrability thereafter has been restricted to the adjudication
under Section 8 and not under Section 11 of the Act. Thus, the
reliance on the said decision further reflects how the court has
consistently understood the principles laid down in SBP & Co.
G (supra).
42. In view of our foregoing analysis we sum yp our
conclusions as follows: -

H 11. (2011) 5 sec 532.
ARASMETA CAPTIVE POWER COMPANY PRIVATE LIMITED 527
v. LAFARGE INDIA PRIVATE LIMITED [DIPAK MISRA, J.]
(i) The decisions rendered in Boghara Polyfab A
Private Limited (supra) and Chloro Controls India
Private Limited (supra) are in accord with the
principles of law stated in SBP & Co. (supra).

(ii) The designated Judge, as perceived from the B
impugned order, while dealing with an application
under Section 11 (6) of the Act, on an issue raised
with regard to the excepted matters, was not
justified in addressing the same on merits whether
it is a dispute relating to excepted matters under
the agreement in question or not.
c
(iii) The designated Judge has fallen into error by
opining that the disputes raised are not "billing
disputes", for the. same should have been left to be
·adjudicated by the learned Arbitrator. D

(iv) The part of the order impugned that reflects the
expression of opinion by the designate of the Chief
Justice on the merits of the disputes, being
pregnable, deserves to be set aside and is hereby
E
set aside.

43. In course of hearing we have been apprised that the
learned Arbitrator has adjourned the matter to 13.12.2013 for
filing counter affidavit/claim by the appellants and it has been
submitted by Mr. Ranjit Kumar that it would not be possible for F
the appellants to file the counter affidavit/claim or objections to
the claim by that date. Mr. Harish Salve. learned senior counsel
appearing for the respondent, fairly stated that this Court may
take note of the concession given by him that the learned
Arbitrator should grant six weeks' time commencing G
13 .12 .2013 for filing the counter affidavit/counter claim/
objections. In view of the concession given, the time stands
extended. We have also been told that the learned Arbitrator
has fixed the schedule for adjudication of the disputes. We
would request the learned Arbitrator to re-schedule the dates
528 SUPREME COURT REPORTS [2013] 17 S.C.R.

A as we have extended the time for filing of counter affidavit/claim
by the appellants.

44. Ex consequenti, the appeal is allowed in part to the
extent as has been stated in our conclusions. There shall be
no order as to costs.
8
Bibhuti Bhushan Bose Appeal partly allowed.