- (1.) The meaningful question that falls for consideration in the instant revision is whether a void condition of agreement is severable from the main agreement or it renders entire agreement as void ?
(2.) This question arises in circumstances set out below.
(3.) The petitioner filed an application under Section 33 of the Arbitration Act, 1940 (in short the Act of 1940) inter alia questioning the validity of Article 14 of the Memorandum of Understanding dated 18-8-1989 (in short the MOU) initiated by Shri Shiv Prakash, respondent No. 2, at the instance of the Engineering Projects (India) Ltd., New Delhi (respondent No. 1). The case of the petitioner before the learned Court below was that the offers given by the respondent No. 1 on June 27, 1989 and July 29, 1989 for construction of houses at Jaipur for and on behalf of the petitioner were accepted by the petitioner and accordingly a MOU which was to remain in force for three years came to be executed on 16-8-1989. Article 14 of the said MOU is as under : "14. In the event of any dispute or difference relating to the interpretation and application of the provisions of the contract, such dispute or difference shall be referred by either party to the arbitration of one of the Arbitrators in the Department of Public Enterprises to be nominated by the Secretary to the Govt. of India in charge of the Bureau of Public Enterprises. The Arbitration Act, 1940 shall not be applicable to the arbitration under this clause. The award of the Arbitrator shall be binding upon the parties to the dispute provided however, any party aggrieved by such award may make a further reference for setting aside or revision of the award to the Law Secretary, Department of Legal Affairs, Ministry of Law and Justice, Govt. of India. Upon such reference the dispute shall be decided by the Law Secretary or the Special Secretary/Additional Secretary when so authorised by the Law Secretary, whose decision shall bind the parties finally and conclusively. The parties to the dispute will share equally the cost of arbitration as intimated by the Arbitrator.";