Section 7 Arbitration Act 1996 establishes the SEPARABILITY DOCTRINE (also embedded in Section 16):
Answer & Solution
Correct answer: B.
1. The DOCTRINE OF SEPARABILITY (also called severability) in arbitration:
2. (i) The arbitration clause is treated as a SEPARATE AND INDEPENDENT agreement from the main contract.
3. (ii) Even if the main contract is determined to be VOID or VOIDABLE, the arbitration clause MAY SURVIVE and remain operative.
4. (iii) The arbitrator has POWER TO RULE on validity of the main contract (Kompetenz-Kompetenz, Section 16(1)).
5. ESTABLISHED in: Heyman v. Darwins Ltd [1942] AC 356 (UK); Prima Paint Corp. v. Flood & Conklin Mfg. Co. 388 US 395 (1967) (US); applied in Indian context by Reva Electric Car Co. v. Green Mobil (2012) 2 SCC 93.
6. CODIFIED in: Section 16(1)(b) Arbitration and Conciliation Act 1996 — 'a decision by the arbitral tribunal that the contract is null and void shall not entail ipso jure the invalidity of the arbitration clause'.
7. Hence option B is correct.
_Source: Arbitration and Conciliation Act 1996 (Bare Act) + Mediation Act 2023 — Arbitration and Conciliation Act 1996, Sections 7 and 16; Heyman v. Darwins Ltd [1942] AC 356; Prima Paint v. Flood & Conklin (1967)_
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