M/S EMINENT COLONIZERS PRIVATE LIMITEDversusRAJASTHAN HOUSING BOARD AND ORS.

                  [2026] 3 S.C.R. 1 : 2026 INSC 116

              M/s Eminent Colonizers Private Limited
                               v.
                Rajasthan Housing Board and Ors.
                       (Civil Appeal No. 753 of 2026)
                             04 February 2026
            [J.B. Pardiwala and K.V. Viswanathan,* JJ.]


                          Issue for Consideration
       Issue arose for consideration whether dispute with regard to the
       existence and validity of Clause 23 of the Contract Agreement
       clause could have been raised before the arbitrator; that the
       appointment of the arbitrator was during SBP & Co’s case regime
       and before the legislative amendments which came into effect
       from 23.10.2015, were the courts below justified in setting aside
       the award by holding that the clause 23 of the contract was not
       an arbitration agreement.

                                 Headnotes†
       Arbitration and Conciliation Act, 1996 – s.11 – Appointment of
       arbitrator – Validity of arbitration clause – Contract agreement
       containing dispute resolution clause – Dispute between the
       parties regarding non-payment of escalation cost – Application
       u/s.11 by the appellant-contractor – Allowed by the Single
       judge and arbitrator was appointed – Respondent-Housing
       Board accepted the order and it attained finality – Single
       Judge order was before the introduction of s.11(6A) of the
       1996 Act – Arbitrator allowed the claim of the appellant and
       objection as to validity of the arbitration clause, was held to
       be unsustainable – Respondents then filed s. 34 application
       to set aside the award on the ground of non-existence of an
       arbitration clause, the Clause 23 of the Agreement did not
       have the character of an arbitration clause – Commercial Court
       held that the order of s.11 Court did not have precedential
       value and the order appointing arbitrator was not binding
       in nature, also the arbitrator faulted for not deciding on the
       existence of the arbitration agreement – In appeal, the High
       Court upheld the order of Commercial Court that clause 23
       was not an arbitration clause – Correctness:

* Author
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                          Supreme Court Reports


     Held: Single Judge, when he entertained s.11 application and
     interpreted a contractual document had jurisdiction to do so
     u/s.11 – Right or wrong, that decision should bind – Respondents
     did not carry the order appointing an arbitrator in appeal – In
     view thereof, the holding in SBP’s case squarely applies and the
     respondents could not have challenged the existence and validity
     of the arbitration clause before the arbitrator – Order appointing the
     Arbitrator read with the law laid down in SBP’s case that not only
     will the parties be bound before the Arbitrator with regard to the
     finding on existence and validity of the arbitration agreement they
     will also be bound during the subsequent stages of the proceedings
     which would include the s.34 application stage, the s.37 appeal
     stage and before this Court, clearly operates as a res judicata, as
     regards the existence of and validity of the arbitration agreement
     between the parties – Commercial Court missed the conceptual
     distinction between “Precedent” and “Res judicata” and thus, fell
     into an error – Commercial Court and the High Court erred in going
     into the existence and validity of clause 23 and pronouncing that
     the said clause was not an arbitration clause – Judgment of the
     High Court set aside – Matter remitted to the Commercial Court.
     [Paras 29-32]

     Jurisprudence – Precedent and Res Judiciata – Distinction:
     Held: Decision between two parties which sets out a principle of
     law will operate as a precedent for disputes between two other
     parties too – Precedent operates in rem – In contrast, res judicata
     operates in personam between the same parties either in the later
     stage of the same litigation between them or in a different litigation
     between them. [Para 24]

                              Case Law Cited
     SBP & Co. v. Patel Engineering Limited & Anr. [2005] Supp. 4
     SCR 688 : (2005) 8 SCC 618 – followed.
     State of West Bengal v. Sarkar & Sarkar (2018) 12 SCC 736; In
     re Interplay Between Arbitration Agreements under Arbitration and
     Conciliation Act, 1996 & Stamp Act, 1899 [2023] 15 SCR 1081 :
     (2024) 6 SCC 1; State of Rajasthan v. Nemi Chand Mahela and
     Others [2019] 18 SCR 995 : (2019) 14 SCC 179; Canara Bank v.
     N.G. Subbaraya Setty and Another [2018] 3 SCR 884 : (2018) 16
     SCC 228 – referred to.
[2026] 3 S.C.R.                                                                        3

                 M/s Eminent Colonizers Private Limited v.
                    Rajasthan Housing Board and Ors.

     Mohammed Arif Contractor v. State of Rajasthan & Ors., S.B.
     Arbitration No.90/2012; M/s Marudhar Construction v. Rajasthan
     Housing Board & Ors., S.B. Arbitration Application No.132/2014 –
     referred to.

                          Books and Periodicals Cited
     Salmond on Jurisprudence P.J. Fitzgerald (12th Edition) page
     141 – referred to.

                                     List of Acts
     Arbitration and Conciliation Act, 1996; Arbitration and Conciliation
     (Amendment) Act, 2015.

                                 List of Keywords
     Appointment of arbitrator; Arbitration agreement; Arbitration
     clause; Res judicata; Precedent; Construction business; Non-
     payment of escalation cost; Validity of arbitration clause; Precedent
     operates in rem; Res judicata operates in personam; Contract
     Agreement clause; SBP & Co. vs. Patel Engineering Limited &
     Anr’s case.

                                Case Arising From
     C I V I L A P P E L L AT E J U R I S D I C T I O N : C i v i l A p p e a l N o .
     753 of 2026
     From the Judgment and Order dated 20.02.2020 of the High
     Court of Judicature for Rajasthan at Jaipur in DBCMA No. 2435
     of 2019
     With
     Civil Appeal No. 754 of 2026

                            Appearances for Parties
     Advs. for the Appellant(s):
     Akshat Gupta, Prakhar Saunakiya, Pranav Jain, Ms. Sakshi
     Tikmany, Ms. Yoothica Pallavi.
     Advs. for the Respondent(s):
     K. L. Janjani, Kailash J. Kashyap, Pankaj Kumar Singh, Ms. Archla.
4                                                         [2026] 3 S.C.R.

                        Supreme Court Reports


               Judgment / Order of the Supreme Court

                               Judgment

     K.V. Viswanathan, J.

1.   Leave granted.
2.   The issues that arise in both the appeals are common and they revolve
     around the interpretation of Clause 23 of the Contract Agreement
     and, more particularly, the question as to whether a dispute with
     regard to the existence and validity of the said clause could have
     been raised before the arbitrator?
3.   The Arbitration and Conciliation (Amendment) Act, 2015 did not apply
     to the arbitral proceedings concerned in these matters. This aspect
     of the matter has been dealt with in detail hereinbelow.

     FACTS IN CIVIL APPEAL ARISING OUT OF SLP(C) NO.8299 OF
     2021: -
4.   The present appeal calls in question the correctness of the judgment
     and order dated 20.02.2020 of the High Court of Judicature for
     Rajasthan, Bench at Jaipur in D.B. Civil Miscellaneous Application
     No. 2435 of 2019.
5.   On 08.07.2009, the appellant, a sole proprietorship concern,
     engaged in the supply and construction business was awarded the
     construction work for the structure of 40 HIG-1 houses (High-Income
     Group) and 10 HIG-2 Flats (Stilt + 10 Storey) at Sector-29, Pratap
     Nagar, Jaipur, Rajasthan by the respondent. A contract agreement
     bearing No.11/2009-10 for a total value of Rs. 5,27,00,070/- on a
     lump sum basis was entered into and the work was to be completed
     in 12 months’ time. It is the claim of the appellant that the work was
     completed before the stipulated 12 months’ deadline for a lower
     cost of Rs.4,67,72,922/-. The dispute pertained to non-payment
     of Rs.18,95,123/- towards escalation cost under Clause 45 of the
     agreement with regard to prices, of labour and material.
6.   According to the appellant, since the respondents failed to pay the
     disputed amount or to alternatively constitute an empowered Standing
     Committee to adjudicate the dispute in accordance with Clause 23
[2026] 3 S.C.R.                                                           5

                  M/s Eminent Colonizers Private Limited v.
                     Rajasthan Housing Board and Ors.

     of the agreement, despite the appellant’s application and payment
     of fee, a Section 11 Application came to be filed in the High Court.
7.   Clause 23 reads as under: -
           “Clause-23. Standing Committee for settlement of disputes:
           If any question, difference or objection, whatsoever shall
           arise in any way, in connection with or arising out of this
           instrument, or the meaning of operation of any part thereof,
           or the right duties or liabilities of either party then, save
           in so far as the decision of any such matter, as herein
           before provided has been otherwise provided for and
           whether it has been finally decided accordingly, or whether
           the contract should be terminated, or has been rightly
           terminated and as regards the rights or obligations of the
           parties as the result of such termination, shall be referred
           for decision to the empowered Standing Committee, which
           would consist of the followings:
           i)     Administrative Secretary concerned
           ii)    Finance Secretary or his nominee, not below the
                  rank of Dy.Secretary and/or Chief Accounts Officer.
           iii)   Law Secretary or his nominee, not below the rank
                  of Joint Legal Remembrancer.
           iv)    Chief Engineer-cum-Additional Secretary of the
                  concerned department.
           v)     Chief Engineer concerned (Member Secretary)
           The Engineer-in-Charge on receipt of application alongwith
           non refundable prescribed fee, (the fee would be two
           percent of the amount in dispute, not exceeding Rs.One
           Lac) from the Contractor shall refer the disputes to the
           Committee within a period of one month from the date of
           receipt of application.
           Procedure and Application for referring cases or settlement
           by the Standing Committee shall be as given in Form
           RPWA 90.”
8.   A learned Single Judge allowed the Section 11 Application and
     appointed a retired High Court Judge, Hon’ble Mr. Justice J.R. Goyal,
     as the sole arbitrator on the following reasoning:-
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          “Counsel for applicant submits that although the non-
          applicants have constituted the Standing Committee but the
          same being not in terms of Cl.23 of the contract agreement,
          the applicant raised objections regarding constitution of
          the committee and that makes the applicant entitled to get
          the matter referred to the independent Arbitrator.
          Reply to the application has been filed and counsel for
          non-applicants submits that for resolving the dispute
          between the Contractor and Rajasthan Housing Board, a
          committee of five officers of Rajasthan Housing Board has
          been constituted in terms of Cl.23 of the contract agreement
          and, therefore, the application is not maintainable and
          deserves to be dismissed.
          Indisputably, the Committee constituted by Rajasthan
          Housing Boad, was not in terms of Cl.23 of the contract
          agreement executed between the parties and it is also not in
          dispute that this court has territorial jurisdiction to entertain
          the present application and that certainly seizes the power
          of the non-applicants and it is within the jurisdiction of this
          court and the Chief Justice or the Designated Judge to
          hold jurisdiction to consider the application for appointment
          of Arbitrator u/S.11(6) of the Act, 1996.
          Consequently, the instant application succeeds & is
          hereby allowed and this court considers it appropriate to
          appoint Hon’ble Mr. Justice J.R. Goyal (Retd.), T-1-10,
          Paliwal Park, New Sanghi Farm, Tonk Road, Jaipur as
          sole Arbitrator to resolve the arbitral dispute. The cost of
          arbitration & fee of Arbitrator shall be determined in terms
          of the arbitration manual.”
     This order was accepted by the respondents and it attained finality.
     It is crucial to note that the order of the learned Single Judge was
     dated 23.05.2014 which is before the introduction of Section 11(6A)
     in the Arbitration and Conciliation Act, 1996.
9.   Section 11(6) which governed the appointment procedure before the
     23.10.2025 amendments and Section 11(6A) which was brought in
     by the 2015 amendment are both extracted hereinbelow:-
[2026] 3 S.C.R.                                                              7

                  M/s Eminent Colonizers Private Limited v.
                     Rajasthan Housing Board and Ors.

            “11 (6): Where, under an appointment procedure agreed
            upon by the parties.–
                   (a) A party fails to act as required under that
                   procedure; or
                   (b) the parties, or the two appointed arbitrators, fail
                   to reach an agreement expected of them under that
                   procedure; or
                   (c) a person, including an institution, fails to perform
                   any function entrusted to him or it under that
                   procedure.
            a party may request the Chief Justice or any person
            or institution designated by him to take the necessary
            measure, unless the agreement on the appointment
            procedure provides other means for securing the
            appointment.”
            w.e.f. 23.10.2015
            11(6A): The Supreme Court or, as the case may be, the
            High Court, while considering any application under sub-
            section (4) or sub-section (5) or sub-section (6), shall,
            notwithstanding any judgment, decree or order of any
            Court, confine to the examination of the existence of
            an arbitration agreement.”
                                                    (Emphasis supplied)

     AWARD: -
10. The learned Arbitrator entered upon the reference and, on 15.09.2015,
    allowed the claim of the appellant to the tune of Rs. 17,10,624.70/-
    along with interest @ 9% per annum from 13.09.2014 till the date of
    realization. Dealing with the objection with regard to the validity of the
    arbitration clause, the learned Arbitrator held that, since no appeal
    was filed against the order appointing the arbitrator, the objection
    was not sustainable. The Arbitrator relied upon the judgment of this
    Court in SBP & Co. vs. Patel Engineering Limited & Anr.1.


1   (2005) 8 SCC 618
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                                   Supreme Court Reports


      ORDER OF THE SECTION 34 COURT: -
11. The respondents filed a Section 34-Application before the Commercial
    Court No.3, Jaipur seeking to set aside the award. The challenge was
    pivoted on the point of the non-existence of an arbitration clause, the
    argument being that Clause 23 of the Agreement did not have the
    character of an arbitration clause. The Commercial Court accepted
    the submission and on the finding that the order of the Section 11
    Court does not have precedential value, held that the order appointing
    arbitrator was not binding in nature. The Court further held that the
    order appointing the arbitrator did not pronounce any opinion on
    the availability or otherwise of the arbitration agreement in Clause
    23 and as such it proceeded on the basis that the point had been
    kept open to be decided by the Arbitrator. It faulted the Arbitrator for
    not deciding the point of the existence of the arbitration agreement.
12. The Court relied on two judgments of the Rajasthan High Court in
    Mohammed Arif Contractor Vs. State of Rajasthan & Ors.2 and
    M/s Marudhar Construction Vs. Rajasthan Housing Board &
    Ors.3 to hold that Clause 23 of the agreement was not an arbitration
    clause. So holding, the Commercial Court set aside the award.

      APPEAL BEFORE THE HIGH COURT: -
13. The appellant carried the matter in appeal to the High Court. The
    High Court, while upholding the order of the Commercial Court,
    maintained that Clause 23 was not an arbitration clause. Aggrieved,
    the appellant is before us.

      CONTENTIONS OF THE PARTIES: -
14. We have heard Mr. Akshat Gupta, learned Counsel for the appellant
    and Mr. Kailash J. Kashyap, learned Counsel for the respondents, who
    ably presented their respective points of view. The learned counsel
    for the appellant contends that the arbitrator was appointed during
    the SBP and Co. (supra) regime and before the incorporation of
    the legislative amendments which came into effect from 23.10.2015.
    Learned counsel submitted that the execution of the contract was



2    S.B. Arbitration No.90/2012
3    S.B. Arbitration Application No.132/2014
[2026] 3 S.C.R.                                                          9

                M/s Eminent Colonizers Private Limited v.
                   Rajasthan Housing Board and Ors.

     on 08.07.2009 and the Section 11 order was dated 23.05.2014 and
     the arbitral award was passed on 15.09.2015. Learned counsel, by
     relying on SBP and Co. (supra), submits that under the said regime,
     the Section 11 court was obliged to determine the “existence” as
     well as “validity” of an arbitration agreement before passing an order
     appointing the arbitrator. Learned counsel contrasted the situation
     with the introduction of Section 11(6A) w.e.f. 23.10.2015 where
     only the Section 11 court is obliged to determine the existence of
     arbitration agreement [Section 11(6A) though deleted, the deletion
     has not yet been notified].
15. Learned counsel submitted that when the Section 11 court appointed
    the arbitrator, proceeding on the basis that Clause 23 is an arbitration
    clause and when the said order was accepted by the respondents,
    the respondents have waived their right to object to the validity of
    the arbitration clause. Reliance was placed on Section 4 of the A&C
    Act, 1996.
16. In response, the learned counsel for the respondents contended
    by referring to the decision of the Commercial Court that an order
    under Section 11 could not have precedential value and in any event
    there is no decision on the existence and validity of the arbitration
    agreement in the order appointing the arbitrator and, hence, the
    said question was available to be decided by the arbitral tribunal.
17. We have carefully considered the submissions of the learned counsels
    for the parties and perused the written submissions.

     QUESTION FOR CONSIDERATION:-
18. The question that arises for consideration is considering that the
    appointment of the arbitrator in this case was in SBP & Co. (supra)
    regime and before the legislative amendments which came into
    effect from 23.10.2015, were the courts below justified in setting
    aside the award by holding that the Clause 23 of the contract was
    not an arbitration agreement?

     ANALYSIS AND CONCLUSION:-
19. In view of the categoric holding by the Seven-Judge Bench in SBP
    (supra), we have no hesitation in holding that the Section 34 court
    erred in going into the existence and validity of Clause 23. The
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                          Supreme Court Reports


      appointment of the Arbitrator happened prior to the amendments
      to the Arbitration Act which came into effect from 23.10.2015. The
      introduction of Section 11(6A) brought a paradigm shift in the scope
      of jurisdiction of the Section 11 court. Post the amendment, the only
      enquiry is about the existence of the arbitration clause. That is very
      well settled.
20. However, the present case arose during the SBP (supra) regime.
    It will be useful to extract relevant passages from SBP (supra) to
    understand the scope of the Section 11 court.
           “8. We will first consider the question, as we see it. On
           a plain understanding of the relevant provisions of the
           Act, it is seen that in a case where there is an arbitration
           agreement, a dispute has arisen and one of the parties
           had invoked the agreed procedure for appointment of an
           arbitrator and the other party has not cooperated, the
           party seeking an arbitration, could approach the Chief
           Justice of the High Court if it is an internal arbitration or
           of the Supreme Court if it is an international arbitration
           to have an arbitrator or Arbitral Tribunal appointed. The
           Chief Justice, when so requested, could appoint
           an arbitrator or Arbitral Tribunal depending on the
           nature of the agreement between the parties and after
           satisfying himself that the conditions for appointment
           of an arbitrator under sub-section (6) of Section 11
           do exist. The Chief Justice could designate another
           person or institution to take the necessary measures.
           The Chief Justice has also to have the qualification of
           the arbitrators in mind before choosing the arbitrator.
           An Arbitral Tribunal so constituted, in terms of Section
           16 of the Act, has the right to decide whether it has
           jurisdiction to proceed with the arbitration, whether
           there was any agreement between the parties and the
           other matters referred to therein.
           9. Normally, any tribunal or authority conferred with a power
           to act under a statute, has the jurisdiction to satisfy itself
           that the conditions for the exercise of that power existed
           and that the case calls for the exercise of that power. Such
           an adjudication relating to its own jurisdiction which could
           be called a decision on jurisdictional facts, is not generally
[2026] 3 S.C.R.                                                               11

                M/s Eminent Colonizers Private Limited v.
                   Rajasthan Housing Board and Ors.

           final, unless it is made so by the Act constituting the tribunal.
           Here, sub-section (7) of Section 11 has given a finality to
           the decisions taken by the Chief Justice or any person or
           institution designated by him in respect of matters falling
           under sub-sections (4), (5) and (6) of Section 11. Once
           a statute creates an authority, confers on it power to
           adjudicate and makes its decision final on matters to
           be decided by it, normally, that decision cannot be
           said to be a purely administrative decision. It is really
           a decision on its own jurisdiction for the exercise of
           the power conferred by the statute or to perform the
           duties imposed by the statute. Unless the authority
           satisfies itself that the conditions for exercise of its
           power exist, it could not accede to a request made
           to it for the exercise of the conferred power. While
           exercising the power or performing the duty under Section
           11(6) of the Act, the Chief Justice has to consider whether
           the conditions laid down by the section for the exercise
           of that power or the performance of that duty exist.
           Therefore, unaided by authorities and going by general
           principles, it appears to us that while functioning
           under Section 11(6) of the Act, a Chief Justice or the
           person or institution designated by him, is bound to
           decide whether he has jurisdiction, whether there is
           an arbitration agreement, 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
           provision. Section 11(7) makes his decision on the
           matters entrusted to him, final.
           12. …… We are inclined to the view that the decision
           of the Chief Justice on the issue of jurisdiction and
           the existence of a valid arbitration agreement would
           be binding on the parties when the matter goes to
           the Arbitral Tribunal and at subsequent stages of the
           proceeding except in an appeal in the Supreme Court
           in the case of the decision being by the Chief Justice
           of the High Court or by a Judge of the High Court
           designated by him.
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                    Supreme Court Reports


      20. …… But where the jurisdictional issues are decided
      under these sections, before a reference is made, Section
      16 cannot be held to empower the Arbitral Tribunal to
      ignore the decision given by the judicial authority or the
      Chief Justice before the reference to it was made. The
      competence to decide does not enable the Arbitral Tribunal
      to get over the finality conferred on an order passed prior
      to its entering upon the reference by the very statute that
      creates it. That is the position arising out of Section 11(7)
      of the Act read with Section 16 thereof. The finality given
      to the order of the Chief Justice on the matters within his
      competence under Section 11 of the Act are incapable of
      being reopened before the Arbitral Tribunal. In Konkan
      Rly. what is considered is only the fact that under Section
      16, the Arbitral Tribunal has the right to rule on its own
      jurisdiction and any objection, with respect to the existence
      or validity of the arbitration agreement. What is the impact
      of Section 11(7) of the Act on the Arbitral Tribunal
      constituted by an order under Section 11(6) of the Act,
      was not considered. Obviously, this was because of
      the view taken in that decision that the Chief Justice
      is not expected to decide anything while entertaining
      a request under Section 11(6) of the Act and is only
      performing an administrative function in appointing
      an Arbitral Tribunal. Once it is held that there is an
      adjudicatory function entrusted to the Chief Justice
      by the Act, obviously, the right of the Arbitral Tribunal
      to go behind the order passed by the Chief Justice
      would take another hue and would be controlled by
      Section 11(7) of the Act.
      25. … … While constituting an Arbitral Tribunal, on the
      scheme of the Act, the Chief Justice has to consider
      whether he as the Chief Justice has jurisdiction
      in relation to the contract, whether there was an
      arbitration agreement in terms of Section 7 of the Act
      and whether the person before him with the request,
      is a party to the arbitration agreement. On coming
      to a conclusion on these aspects, he has to enquire
      whether the conditions for exercise of his power under
[2026] 3 S.C.R.                                                          13

                M/s Eminent Colonizers Private Limited v.
                   Rajasthan Housing Board and Ors.

           Section 11(6) of the Act exist in the case and only
           on being satisfied in that behalf, could he appoint
           an arbitrator or an Arbitral Tribunal on the basis of
           the request. 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 forward with a request is not a party to the
           arbitration agreement, the Chief Justice can come to
           a conclusion on those objections without following
           an adjudicatory process. Can he constitute an Arbitral
           Tribunal, without 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 the power under Section
           11(6) of the Act are not fulfilled and the Chief 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
           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 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.
           30. … … We also feel that adequate attention was not
           paid to the requirement of the Chief Justice having to
           decide that there is an arbitration agreement in terms of
           Section 7 of the Act before he could exercise his power
           under Section 11(6) of the Act and its implication. The
           aspect, whether there was an arbitration agreement,
           was not merely a jurisdictional fact for commencing
           the arbitration itself, but it was also a jurisdictional
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                     Supreme Court Reports


      fact for appointing an arbitrator on a motion under
      Section 11(6) of the Act, was not kept in view. A Chief
      Justice could appoint an arbitrator in exercise of his
      power only if there existed an arbitration agreement
      and without holding that there was an agreement, it
      would not be open to him to appoint an arbitrator
      saying that he was appointing an arbitrator since he
      has been moved in that behalf and the applicant before
      him asserts that there is an arbitration agreement.
      Acceptance of such an argument, with great respect,
      would reduce the high judicial authority entrusted with
      the power to appoint an arbitrator, an automaton and
      subservient to the Arbitral Tribunal which he himself
      brings into existence. ……
      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 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; or a long-barred claim
      that was sought to be resurrected and whether the
      parties have concluded the transaction by recording
      satisfaction of their mutual rights and obligations or
      by receiving the final payment without objection……
      47 (i) The power exercised by the Chief Justice of the High
      Court or the Chief Justice of India under Section 11(6) of
      the Act is not an administrative power. It is a judicial power.
      (iv) The Chief Justice or the designated Judge will have
      the right to decide the preliminary aspects as indicated
      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
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                  M/s Eminent Colonizers Private Limited v.
                     Rajasthan Housing Board and Ors.

            of his 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
            appointing the arbitrator could only be that of the Chief
            Justice or the designated Judge.
            (vii) Since an order passed by the Chief Justice of the
            High Court or by the designated Judge of that Court is
            a judicial order, an appeal will lie against that order only
            under Article 136 of the Constitution to the Supreme Court.”
                                                   (Emphasis supplied)

21. This principle was reiterated in State of West Bengal vs. Sarkar
    & Sarkar4.
            “8. It was the vehement contention of the learned counsel
            for the appellant based on a series of judgments rendered
            by this Court that Clause 12 (extracted above) was not an
            arbitral clause and that the arbitrator as well as the High
            Court had erred in determining the same.
            9. The learned counsel for the respondent Sarkar & Sarkar
            contested the claim of the appellant. It was submitted that
            the appellant could not be permitted even to raise the
            instant plea so as to assail the order passed either by the
            arbitrator (on 15-1-2004) or by the High Court (on 16-5-
            2006). The instant submission of the learned counsel for
            the respondent was premised on the judgment rendered
            by this Court in SBP & Co. v. Patel Engg. Ltd. Our pointed
            attention was drawn to the conclusions drawn by the
            Constitution Bench in the above judgment in para 20. Para
            20 is reproduced below: (SCC pp. 649-50)
            “20. Section 16 is said to be the recognition of the principle
            of Kompetenz-Kompetenz. The fact that the Arbitral
            Tribunal has the competence to rule on its own jurisdiction
            and to define the contours of its jurisdiction, only means


4   (2018) 12 SCC 736
16                                                       [2026] 3 S.C.R.

                     Supreme Court Reports


      that when such issues arise before it, the Tribunal can, and
      possibly, ought to decide them. This can happen when the
      parties have gone to the Arbitral Tribunal without recourse
      to Section 8 or 11 of the Act. But where the jurisdictional
      issues are decided under these sections, before a reference
      is made, Section 16 cannot be held to empower the Arbitral
      Tribunal to ignore the decision given by the judicial authority
      or the Chief Justice before the reference to it was made.
      The competence to decide does not enable the Arbitral
      Tribunal to get over the finality conferred on an order
      passed prior to its entering upon the reference by the very
      statute that creates it. That is the position arising out of
      Section 11(7) of the Act read with Section 16 thereof.
      The finality given to the order of the Chief Justice on
      the matters within his competence under Section 11
      of the Act are incapable of being reopened before the
      Arbitral Tribunal. In Konkan Railway what is considered is
      only the fact that under Section 16, the Arbitral Tribunal has
      the right to rule on its own jurisdiction and any objection,
      with respect to the existence or validity of the arbitration
      agreement. What is the impact of Section 11(7) of the
      Act on the Arbitral Tribunal constituted by an order under
      Section 11(6) of the Act, was not considered. Obviously,
      this was because of the view taken in that decision that
      the Chief Justice is not expected to decide anything while
      entertaining a request under Section 11(6) of the Act and
      is only performing an administrative function in appointing
      an Arbitral Tribunal. Once it is held that there is an
      adjudicatory function entrusted to the Chief Justice
      by the Act, obviously, the right of the Arbitral Tribunal
      to go behind the order passed by the Chief Justice
      would take another hue and would be controlled by
      Section 11(7) of the Act.”
      10. It was the submission of the learned counsel for
      the respondent that proceedings could not have been
      entertained by the arbitrator under Section 16 of the
      Arbitration Act in the present controversy because by
      the orders of the High Court dated 24-5-2002 and 26-9-
      2002 (extracted above), the appointment of the arbitrator
[2026] 3 S.C.R.                                                            17

                M/s Eminent Colonizers Private Limited v.
                   Rajasthan Housing Board and Ors.

           was made in exercise of the powers vested in the High
           Court under Section 11 of the Arbitration Act. The factual
           position depicted hereinabove as also the orders referred to
           hereinabove, leave no room for doubt that Justice (Retired)
           S.S. Ganguly was actually appointed as an arbitrator by
           the High Court in exercise of the powers vested in the
           High Court under Section 11 of the Arbitration Act. That
           being the position, the learned counsel for the respondent
           is fully justified in her submission that the said order could
           not be tested by the arbitrator while considering the claim
           raised by the appellant State of West Bengal under Section
           16 of the Arbitration Act. Thus viewed, irrespective of
           whether Clause 12 extracted hereinabove postulated
           the adjudication of dispute between the parties through
           an arbitrator, it is now not open to the appellant before
           this Court to raise a challenge to the order passed by
           the High Court appointing an arbitrator.”
                                                  (emphasis supplied)

22. As held in SBP (supra), a Section 11 court was bound to decide
    whether there was an arbitration agreement and further that such a
    finding on the existence of a valid arbitration agreement would be
    binding on the parties when the matter goes to the Arbitral Tribunal
    and at subsequent stages of the proceedings. The only exception
    being when the order appointing the Arbitrator is challenged before
    this Court. The highlighted portion of SBP (supra), as extracted above,
    puts this matter beyond any controversy. In the present case, the
    order appointing the Arbitrator attained finality with no challenge being
    thrown. The respondents accepted the order and did not challenge
    the appointment in this Court. We have extracted the findings of the
    order appointing the Arbitrator. The parties proceeded on the basis
    that Clause 23 was an arbitration clause and in this scenario, the
    only conclusion possible is that though not very categoric there is
    an implied holding in the order appointing the Arbitrator about the
    existence and validity of the arbitration agreement. For if it were not
    so, the appointment could not have been and would not have been
    made. The fact that the respondents accepted the order and did not
    challenge it only puts the matter beyond any pale of controversy. The
    further finding of the Commercial Court in the Section 34 application
18                                                         [2026] 3 S.C.R.

                           Supreme Court Reports


       that the order of the Section 11 court did not have any precedential
       value and hence the order will not be binding is in the teeth of the
       judgment in SBP (supra).

       LEGAL POSITION FROM 23.10.2015: -
23. The scenario would have been totally different if the 2015
    (Amendment) Act had applied to the arbitral proceedings. The
    scope of the inquiry has been clarified in In re Interplay Between
    Arbitration Agreements under Arbitration and Conciliation Act,
    1996 & Stamp Act, 18995, in the following terms : -
              “164. The 2015 Amendment Act has laid down different
              parameters for judicial review under Section 8 and
              Section 11. Where Section 8 requires the Referral
              Court to look into the prima facie existence of a valid
              arbitration agreement, Section 11 confines the Court’s
              jurisdiction to the examination of the existence of
              an arbitration agreement. Although the object and
              purpose behind both Sections 8 and 11 is to compel
              parties to abide by their contractual understanding, the
              scope of power of the Referral Courts under the said
              provisions is intended to be different. The same is also
              evident from the fact that Section 37 of the Arbitration
              Act allows an appeal from the order of an Arbitral
              Tribunal refusing to refer the parties to arbitration
              under Section 8, but not from Section 11. Thus, the
              2015 Amendment Act has legislatively overruled the
              dictum of Patel Engg. [SBP & Co. v. Patel Engg. Ltd.,
              (2005) 8 SCC 618] where it was held that Section 8 and
              Section 11 are complementary in nature. Accordingly,
              the two provisions cannot be read as laying down a
              similar standard.
              165. The legislature confined the scope of reference
              under Section 11(6-A) to the examination of the
              existence of an arbitration agreement. The use of the
              term “examination” in itself connotes that the scope
              of the power is limited to a prima facie determination.


5     (2024) 6 SCC 1
[2026] 3 S.C.R.                                                         19

                M/s Eminent Colonizers Private Limited v.
                   Rajasthan Housing Board and Ors.

           Since the Arbitration Act is a self-contained code, the
           requirement of “existence” of an arbitration agreement
           draws effect from Section 7 of the Arbitration Act. In
           Duro Felguera [Duro Felguera, S.A. v. Gangavaram
           Port Ltd., (2017) 9 SCC 729, this Court held that the
           Referral Courts only need to consider one aspect to
           determine the existence of an arbitration agreement —
           whether the underlying contract contains an arbitration
           agreement which provides for arbitration pertaining to
           the disputes which have arisen between the parties to
           the agreement. Therefore, the scope of examination
           under Section 11(6-A) should be confined to the
           existence of an arbitration agreement on the basis
           of Section 7. Similarly, the validity of an arbitration
           agreement, in view of Section 7, should be restricted
           to the requirement of formal validity such as the
           requirement that the agreement be in writing. This
           interpretation also gives true effect to the doctrine
           of competence-competence by leaving the issue of
           substantive existence and validity of an arbitration
           agreement to be decided by Arbitral Tribunal under
           Section 16. We accordingly clarify the position of law
           laid down in Vidya Drolia [Vidya Drolia v. Durga Trading
           Corpn., (2021) 2 SCC 1 in the context of Section 8 and
           Section 11 of the Arbitration Act.
           167. Section 11(6-A) uses the expression “examination
           of the existence of an arbitration agreement”. The
           purport of using the word “examination” connotes
           that the legislature intends that the Referral Court
           has to inspect or scrutinise the dealings between the
           parties for the existence of an arbitration agreement.
           Moreover, the expression “examination” does not
           connote or imply a laborious or contested inquiry. [ P.
           Ramanatha Aiyar, The Law Lexicon (2nd Edn., 1997)
           666.] On the other hand, Section 16 provides that the
           Arbitral Tribunal can “rule” on its jurisdiction, including
           the existence and validity of an arbitration agreement.
           A “ruling” connotes adjudication of disputes after
           admitting evidence from the parties. Therefore, it
20                                                         [2026] 3 S.C.R.

                         Supreme Court Reports


           is evident that the Referral Court is only required
           to examine the existence of arbitration agreements,
           whereas the Arbitral Tribunal ought to rule on its
           jurisdiction, including the issues pertaining to the
           existence and validity of an arbitration agreement. A
           similar view was adopted by this Court in Shin-Etsu
           Chemical Co. Ltd. v. Aksh Optifibre Ltd., (2005) 7 SCC
           234].
           169. When the Referral Court renders a prima facie opinion,
           neither the Arbitral Tribunal, nor the Court enforcing the
           arbitral award will be bound by such a prima facie view.
           If a prima facie view as to the existence of an arbitration
           agreement is taken by the Referral Court, it still allows
           the Arbitral Tribunal to examine the issue in depth. Such
           a legal approach will help the Referral Court in weeding
           out prima facie non-existent arbitration agreements. It will
           also protect the jurisdictional competence of the Arbitral
           Tribunals to decide on issues pertaining to the existence
           and validity of an arbitration agreement.”
                                               [Emphasis supplied]

      The above is set out only to bring out the contrast. Section 26 of the
      2015 Amendment Act also made this very explicit.
           “26. Act not to apply to pending arbitral proceedings.–
           Nothing contained in this Act shall apply to the arbitral
           proceedings commenced, in accordance with the provisions
           of Section 21 of the principal Act, before the commencement
           of this Act unless the parties otherwise agree but this Act
           shall apply in relation to arbitral proceedings commenced
           on or after the date of commencement of this Act”

      PRECEDENT AND RES JUDICATA – DISTINCTION: -
24. There is a clear conceptual distinction between precedent and res
    judicata. Salmond on Jurisprudence P.J. Fitzgerald (12th Edition) page
    141 states “a judicial precedent speaks in England with authority; it is
    not merely evidence of the law but a source of it, and the courts are
    bound to follow the law that is so established”. A decision between two
    parties which sets out a principle of law will operate as a precedent
[2026] 3 S.C.R.                                                             21

                  M/s Eminent Colonizers Private Limited v.
                     Rajasthan Housing Board and Ors.

     for disputes between two other parties too. A precedent operates in
     rem. In contrast, a res judicata operates in personam between the
     same parties either in the later stage of the same litigation between
     them or in a different litigation between them. That is the essential
     distinction between the two.
25. This Court in State of Rajasthan vs. Nemi Chand Mahela and
    Others6, held as under:-
            “11. The learned counsel for the petitioners had drawn
            our attention to para 22 of the decision in Manmohan
            Sharma case [Manmohan Sharma v. State of Rajasthan,
            (2014) 5 SCC 782 which refers to the case of one Danveer
            Singh whose writ petition had been allowed [Danveer
            Singh v. Rural Development & Panchyati Raj Deptt.,
            WP (C) No. 2200 of 2000 sub nom Jayanti Sharma v. Rural
            Development & Panchyati Raj Deptt., WP (C) No. 1646
            of 2000, order dated 26-2-2001 (Raj)] and the order
            had attained finality as it was not challenged before the
            Division Bench or before the Supreme Court. Termination of
            services in the case of Danveer Singh, it was accordingly
            held, was not justified and in accordance with law. The
            reasoning given in paras 22 and 23 in Manmohan Sharma
            case [Manmohan Sharma v. State of Rajasthan, (2014)
            5 SCC 782 relating to the case of Danveer Singh would
            reflect the difference between the doctrine of res judicata
            and law of precedent. Res judicata operates in personam
            i.e. the matter in issue between the same parties in the
            former litigation, while law of precedent operates in rem i.e.
            the law once settled is binding on all under the jurisdiction
            of the High Court and the Supreme Court. Res judicata
            binds the parties to the proceedings for the reason that
            there should be an end to the litigation and therefore,
            subsequent proceeding inter se parties to the litigation is
            barred. Therefore, law of res judicata concerns the same
            matter, while law of precedent concerns application of
            law in a similar issue. In res judicata, the correctness of
            the decision is normally immaterial and it does not matter


6   (2019) 14 SCC 179
22                                                             [2026] 3 S.C.R.

                            Supreme Court Reports


              whether the previous decision was right or wrong, unless
              the erroneous determination relates to the jurisdictional
              matter of that body. [See Makhija Construction & Engg. (P)
              Ltd. v. Indore Development Authority, (2005) 6 SCC 304] ]”
26. The Commercial Court to hold against the appellant relied on two
    judgments of the Rajasthan High Court, namely, Mohammed Arif
    Contractor (supra) and M/s Marudhar Construction (supra).
    The finding of the Commercial Court was that in Mohammed Arif
    (supra) (judgment dated 08.04.2015) a learned single judge, while
    adjudicating a Section 11 Application, held an identical Clause 23 to
    be not an arbitration clause. M/s Marudhar Construction (supra)
    was a short order dated 06.05.2016 in a Section 11 Application which
    followed Mohammed Arif (supra).
27. The said judgments will not enure to the support of the respondents.
    In the present case, while adjudicating a Section 11 Application a
    learned single judge, who had jurisdiction, interpreted the contractual
    document and appointed an arbitrator. We have already held
    hereinabove that in the said order though the finding is not categoric,
    there is an implied holding about the existence and validity of the
    arbitration agreement. As held in Nemi Chand (supra) the correctness
    of the decision is immaterial and it did not matter whether the previous
    decision was right or wrong unless their erroneous determination
    relates to the jurisdiction of the body.
28. In an erudite judgment, speaking for this Court Rohinton Fali Nariman,
    J. in Canara Bank vs. N.G. Subbaraya Setty and Another7,
    summarised the principles thus:-
              “34. Given the conspectus of authorities that have been
              referred to by us hereinabove, the law on the subject may
              be stated as follows:
              34.1. The general rule is that all issues that arise directly
              and substantially in a former suit or proceeding between
              the same parties are res judicata in a subsequent suit
              or proceeding between the same parties. These would
              include issues of fact, mixed questions of fact and law,
              and issues of law.


7     (2018) 16 SCC 228
[2026] 3 S.C.R.                                                            23

                M/s Eminent Colonizers Private Limited v.
                   Rajasthan Housing Board and Ors.

           34.2. To this general proposition of law, there are certain
           exceptions when it comes to issues of law:
           34.2.1. Where an issue of law decided between the
           same parties in a former suit or proceeding relates to the
           jurisdiction of the court, an erroneous decision in the former
           suit or proceeding is not res judicata in a subsequent suit
           or proceeding between the same parties, even where the
           issue raised in the second suit or proceeding is directly and
           substantially the same as that raised in the former suit or
           proceeding. This follows from a reading of Section 11 of the
           Code of Civil Procedure itself, for the Court which decides
           the suit has to be a court competent to try such suit. When
           read with Explanation I to Section 11, it is obvious that
           both the former as well as the subsequent suit need to be
           decided in courts competent to try such suits, for the “former
           suit” can be a suit instituted after the first suit, but which
           has been decided prior to the suit which was instituted
           earlier. An erroneous decision as to the jurisdiction of a
           court cannot clothe that court with jurisdiction where it has
           none. Obviously, a civil court cannot send a person to jail
           for an offence committed under the Penal Code. If it does
           so, such a judgment would not bind a Magistrate and/or
           Sessions Court in a subsequent proceeding between the
           same parties, where the Magistrate sentences the same
           person for the same offence under the Penal Code. Equally,
           a civil court cannot decide a suit between a landlord and a
           tenant arising out of the rights claimed under a Rent Act,
           where the Rent Act clothes a special court with jurisdiction
           to decide such suits. As an example, under Section 28
           of the Bombay Rent Act, 1947, the Small Cause Court
           has exclusive jurisdiction to hear and decide proceedings
           between a landlord and a tenant in respect of rights which
           arise out of the Bombay Rent Act, and no other court has
           jurisdiction to embark upon the same. In this case, even
           though the civil court, in the absence of the statutory bar
           created by the Rent Act, would have jurisdiction to decide
           such suits, it is the statutory bar created by the Rent Act
           that must be given effect to as a matter of public policy.
           [See, Natraj Studios (P) Ltd. v. Navrang Studios at SCR
           p. 482]. An erroneous decision clothing the civil court with
24                                                         [2026] 3 S.C.R.

                     Supreme Court Reports


      jurisdiction to embark upon a suit filed by a landlord against
      a tenant, in respect of rights claimed under the Bombay
      Rent Act, would, therefore, not operate as res judicata
      in a subsequent suit filed before the Small Cause Court
      between the same parties in respect of the same matter
      directly and substantially in issue in the former suit.
      34.2.2. An issue of law which arises between the same
      parties in a subsequent suit or proceeding is not res
      judicata if, by an erroneous decision given on a statutory
      prohibition in the former suit or proceeding, the statutory
      prohibition is not given effect to. This is despite the fact that
      the matter in issue between the parties may be the same
      as that directly and substantially in issue in the previous
      suit or proceeding. This is for the reason that in such
      cases, the rights of the parties are not the only matter for
      consideration (as is the case of an erroneous interpretation
      of a statute inter partes), as the public policy contained in
      the statutory prohibition cannot be set at naught. This is
      for the same reason as that contained in matters which
      pertain to issues of law that raise jurisdictional questions.
      We have seen how, in Natraj Studios, it is the public policy
      of the statutory prohibition contained in Section 28 of the
      Bombay Rent Act that has to be given effect to. Likewise,
      the public policy contained in other statutory prohibitions,
      which need not necessarily go to jurisdiction of a court,
      must equally be given effect to, as otherwise special
      principles of law are fastened upon parties when special
      considerations relating to public policy mandate that this
      cannot be done.
      34.3. Another exception to this general rule follows from
      the matter in issue being an issue of law different from
      that in the previous suit or proceeding. This can happen
      when the issue of law in the second suit or proceeding
      is based on different facts from the matter directly and
      substantially in issue in the first suit or proceeding. Equally,
      where the law is altered by a competent authority since the
      earlier decision, the matter in issue in the subsequent suit
      or proceeding is not the same as in the previous suit or
      proceeding, because the law to be interpreted is different.”
[2026] 3 S.C.R.                                                        25

                M/s Eminent Colonizers Private Limited v.
                   Rajasthan Housing Board and Ors.

29. The learned single judge, in the present case, when he entertained
    a Section 11 Application and interpreted a contractual document had
    jurisdiction to do so under Section 11. Right or wrong, that decision
    should bind. The respondents did not carry the order appointing an
    arbitrator in appeal. In view of the same, the holding in SBP (supra),
    squarely applies and on the present facts the respondents could not
    have challenged the existence and validity of the arbitration clause
    before the arbitrator. For the very same reason, the judgments
    in Mohammed Arif Contractor (supra) and M/s Marudhar
    Construction (supra) can have no application to the present facts.
30. In the present case, the order appointing the Arbitrator read with the
    law laid down in SBP (supra), clearly operates as a res judicata,
    insofar as the existence of and validity of the arbitration agreement
    between the parties is concerned. In the SBP (supra) regime, this
    was the legal position.
31. SBP (supra) also puts the matter beyond any controversy by
    holding that not only will the parties be bound before the Arbitrator
    with regard to the finding on existence and validity of the arbitration
    agreement they will also be bound during the subsequent stages of
    the proceedings which will include the Section 34 application stage,
    the Section 37 appeal stage and before this Court. The Commercial
    Court had missed the conceptual distinction between “Precedent”
    and “Res judicata” and consequently fell into an error.

     CONCLUSION AND DIRECTIONS: -
32. In view of what we have held hereinabove, the Commercial Court
    and the High Court clearly erred in going into the existence and
    validity of Clause 23 and pronouncing that the said clause was not
    an arbitration clause. We, accordingly, set aside the judgment of the
    High Court dated 20.02.2020 in D.B. Civil Miscellaneous Appeal No.
    2435 of 2019. The appeal stands allowed. The result will be that the
    proceedings before the Commercial Court in Arbitration Case No.
    221 of 2018 will stand set aside and the matter is remitted to the
    Commercial Court, Judge No.3, Jaipur for hearing Arbitration Case
    No. 221 of 2018 on grounds other than what has been concluded
    hereinabove. We say so for the reason that while allowing the Section
    34 application on the ground that Section 23 was not an arbitration
    clause, the Commercial Court recorded that the other objections
26                                                          [2026] 3 S.C.R.

                          Supreme Court Reports


      were not considered. It is only fair that the matter should be remitted
      for consideration of the other objections. Considering the fact that
      the Award is of the year 2015, we direct the Commercial Court No.
      3 to dispose of Arbitration Case No. 221 of 2018 within a period of
      three months from the date of receipt of this judgment. Parties to
      bear their own costs.

      FACTS IN CIVIL APPEAL ARISING OUT OF SPECIAL LEAVE
      PETITION (CIVIL) NO. 8331 of 2021:-
33. Leave granted.
34. On 11.10.2007, the appellant was awarded work by the respondents
    for construction of the structure of 180 LIG skeleton flats (stilt + 10
    storey) at Sector 29, Pratap Nagar, Sanganer, Jaipur, Rajasthan and
    entered into a contract agreement bearing No. 207/2007-08. The
    contract was for a lump sum value of Rs.4,58,05,217.45. The date
    of commencement was agreed to be 20.10.2007 and completion
    was 19.07.2008. Additional work to the tune of Rs. 64,01,689/- was
    awarded. The appellant raised an Escalation Bill amounting to
    Rs.55,77,080/- under Clause 45 of the Agreement in order to recover
    the prices of labour and material which had arisen during the period
    of completion of the construction work. Since the Escalation Bill was
    not paid and also penalty levied of Rs.2.5 lakhs was not refunded
    and claiming that the respondents failed to constitute an empowered
    Standing Committee under Clause 23 of the Agreement, a Section
    11 application came to be filed. By an order of 23.05.2014, a learned
    Single Judge held that since indisputably the Committee constituted
    was not in terms of Clause 23, appointed Mr. Justice Anoop Chand
    Goyal (Retd.) as the sole Arbitrator. The sole Arbitrator entered upon
    the reference and passed an Award on 25.02.2016 directing refund
    of Rs. 2.50 lakhs as penalty and awarding escalation charge to
    the tune of Rs.5,09,468/-. Further interest @ 10% from 13.08.2010
    was awarded. Even though the Award was passed on 25.02.2016,
    the arbitral proceedings commenced before the commencement of
    the Amendment Act of 2015. Before the Arbitrator, the respondents
    contended that Clause 23 of the Agreement was not an arbitration
    clause. The arbitrator held that since the Section 11 application
    stood allowed, the Arbitral Tribunal cannot sit over the order of the
    High Court.
[2026] 3 S.C.R.                                                         27

                   M/s Eminent Colonizers Private Limited v.
                      Rajasthan Housing Board and Ors.

35. The respondents filed a Section 34 application challenging the
    award. The Commercial Court, by relying on the judgments of
    the Rajasthan High Court in Mohd. Arif Contractor (Supra) and
    Marudhar Construction (Supra) held that Clause 23 was not an
    arbitration clause. In appeal before the High Court, the findings of
    the Commercial Court were confirmed.
36. Our reasoning and conclusion in Civil Appeal arising out of Special
    Leave Petition (C) No. 8299 of 2021 fully applies to the present
    set of facts. Appling the same reasoning, the appeal would stand
    allowed. The order of the High Court dated 20.02.2020 in D.B.
    Civil Miscellaneous Appeal No. 796 of 2019 stands set aside.
    The consequence will be that the matter will stand remitted to the
    Commercial Court, Judge No.3, Jaipur in hearing Arbitration Case
    No. 114 of 2018 on grounds other than what has been concluded
    hereinabove. We say so for the reason that while allowing the Section
    34 application on the ground that Section 23 was not an arbitration
    clause, the Commercial Court recorded that the other objections are
    not considered. In view of our holding hereinabove, it is only fair that
    the matter should be remitted for consideration of other objections.
    Considering the fact that the Award is of the year 2016, we direct
    the Commercial Court No.3 to dispose of Arbitration Case No. 114
    of 2018 within a period of three months from the date of receipt of
    this judgment. Parties to bear their own costs.
37. Both the appeals are disposed of in the above terms.

     Result of the case: Appeals disposed of.




     †
         Headnotes prepared by: Nidhi Jain