Union of India, in both Appeals v. Manipur Builders Association. , Imphal through Its Managing Agent, Y. Kunjabihari Singh, in both Appeals
1976-05-14
B.N.SARMA
body1976
DigiLaw.ai
Judgement JUDGMENT:- By this common judgment. I propose to dispose of two appeals, namely, M. A. (F) No. 3 and M. A. (F) No. 5 of 1970, which have arisen out of a common judgment and order dated 3-6-1970 passed by the Second Subordinate Judge, Manipur in O. S. No.21 of 1968 and O. S. No.38 (A) of 1969. The relevant facts, leading to the appeals may be stated, in brief, as below: 2. The respondent, the Manipur Builders Association Imphal, was given a contract work for providing compound fencing to the D. M. College, with barbed wires under agreement No. 37/58-59. Imphal Building Division, P.W.D. Manipur at the estimated cost of Rs.12,967/-. In course of the execution of the contract work a dispute arose between the respondent and P.W.D. as to the quality of materials used in the fencing. The Assistant Engineer, incharge of the work, gave direction to the respondent to use materials of quality as per specification and directed him to complete the work. The respondent having failed to carry out such direction, the Executive Engineer, Imphal, rescinded the contract of the respondent and asked him to return all the materials supplied to him by the Department, but the respondent did not return such materials. The work done by the contractor was finally measured and after necessary adjustments, it was found that a sum of Rs. 9,501.41 P. was recoverable from the respondent by the Department. 3. There was a stipulation in Clause 25 of the Agreement made between the parties that in all disputes arising between the parties in connection with the contract work would be "referred to the sole arbitration of the person to be appointed by the Additional Chief Engineer, Central Public Works Department, incharge of the work at the time of dispute or if there be no Additional Chief Engineer, the Administrative Head of the said Central Public Works Department at the time of such appointment." At the instance of the P.W.D., Manipur, the Additional Chief Engineer, C.P.W.D., Zone No. III, Calcutta accordingly appointed one Mr. Subrahmanyam as Arbitrator and referred the dispute to him. On receipt of notice from the Arbitrator, the respondent submitted his statement of facts on 29-5-1963 before the Arbitrator preferring a claim for Rs.7,313.42 on various counts. The Executive Engineer, Imphal Building Division, P.W.D., Manipur also submitted a counter statement of facts with counter claim for Rs.
Subrahmanyam as Arbitrator and referred the dispute to him. On receipt of notice from the Arbitrator, the respondent submitted his statement of facts on 29-5-1963 before the Arbitrator preferring a claim for Rs.7,313.42 on various counts. The Executive Engineer, Imphal Building Division, P.W.D., Manipur also submitted a counter statement of facts with counter claim for Rs. 14,872.01 on various counts. 4. As the Arbitration proceeding could not be concluded by Mr. Subrahmanyam, another Arbitrator namely, Shri P.K. Sabherwal, Superintending Engineer, Ministry of Work, Housing and Supply, Government of India, New Delhi was appointed in his place to decide the disputes between the parties. This new Arbitrator, after due notice to the parties, gave a hearing to them on 14-11-1967 after formulating some new points for determination at the instance of the parties and signed his award on 11-12-1967. The notice of making and signing the award was received by the Office of the Executive Engineer, Imphal Buildings Division on 18-12-1967. The Arbitrator, in his award awarded a sum of Rupees 4,464.00 P. in favour of the respondent and a sum of Rs. 8,924/- in favour of the appellant. 5. After the award was made, the Arbitrator filed the award with all papers in the Court of the Second Subordinate Judge, as required by the Appellant. Thereafter, on receipt of notice from the Court, the appellant filed an application purported to be under Section 17 of the Arbitration Act, 1940 (hereinafter called the Act) before the Second Subordinate Judge, Manipur, for passing a decree in terms of the award. This petition was registered as Judicial Misc. Case No. 298 of 1968 and later re-numbered as O. S. 38 (A) of 1969. The respondent on receipt of the notice in the said case filed an application under Section 16 read with Section 30 of the Act for setting aside the award which was registered as O. S. No. 21 of 1968. It was alleged in this petition that the Arbitrator misconducted himself by not taking into consideration a further statement of claim submitted by the respondent to him on 23-11-1967, in modification of the earlier claim. It was also contended that the Arbitrator had no jurisdiction to give the award as the Additional Chief Engineer, Zone III, Calcutta, who appointed him was not incharge of the work at any time.
It was also contended that the Arbitrator had no jurisdiction to give the award as the Additional Chief Engineer, Zone III, Calcutta, who appointed him was not incharge of the work at any time. According to the respondent, in the absence of any such Additional Chief Engineer, the Arbitrator should have been appointed by the Administrative head of the C. P. W. D. at the time of the appointment. 6. The appellant, Union of India, denied the allegations of the respondent and averred that the award could not be challenged on the ground stated therein. It was stated in its counter that the points for determination were formulated by the Arbitrator on the basis of the claim and counter claim submitted by the parties, the parties were given full opportunity to lead evidence in support of their respective claims and after that the Arbitrator decided the dispute and that at no stage of the proceeding the respondent raised any objection on the score that the Arbitrator had no jurisdiction to decide the dispute. On the contrary, the respondent allowed the Arbitrator to proceed with the case submitting to his jurisdiction to decide the dispute. Under the circumstances, it was contended, the respondent is estopped from challenging the jurisdiction of the Arbitrator. The allegation that the Arbitrator misconducted himself was also denied. 7. The learned Subordinate Judge, after hearing both the parties accepted both the aforementioned contentions of the respondent and accordingly he dismissed the application purported to be under Section 17 of the Act filed by the appellant for passing a decree in terms of the award and allowed the application filed by the respondent for setting aside the award. In the result he set aside the Award and directed that the dispute would be referred to a new Arbitrator to be appointed by the Administrative head of the C. P. W. D. 8. Being aggrieved by this order, the Union of India has preferred the aforementioned two appeals-one against the order dismissing the application under Section 17 and the other against the order allowing the application under Section 16/30 of the Act and setting aside the award. 9. Mr. Th. Munindrakumar Singh, the learned Govt.
Being aggrieved by this order, the Union of India has preferred the aforementioned two appeals-one against the order dismissing the application under Section 17 and the other against the order allowing the application under Section 16/30 of the Act and setting aside the award. 9. Mr. Th. Munindrakumar Singh, the learned Govt. Advocate appearing on behalf of the appellant, submitted that both the findings of the learned Subordinate Judge II, namely, that the Arbitrator appointed by the Additional Chief Engineer, C.P.W.D., Zone No. III Calcutta had no jurisdiction to arbitrate in the dispute and that the Arbitrator misconducted himself in conducting the proceedings were arrived at on a misconception of the laws and facts and, therefore, his order is liable to be set aside. Mr. A. Nilamani Singh, the learned counsel appearing for the respondent, besides supporting the order of the learned Subordinate Judge II, urged before me that the appeals are misconceived and not maintainable under Section 39 of the Act and that at any rate the appeals lay before District Judge and not before this Court. 10. In my opinion, the appeal against the order rejecting the application purported to be under Section 17 of the Act is misconceived. In fact no application is necessary under Section 17 of the Act. After an award is filed in Court, if no application under Section 16 or 30 is made by any party on receipt of notice about filing of the Award or when such an application, if filed, is dismissed, a decree in terms of the award will automatically follow. An appeal is provided under Section 17 only against the decree if it is in excess of or otherwise not in accordance with the award. No separate appeal is provided for under Section 17 against the refusal to pass a decree under that section. The reason is if the award is set aside the aggrieved party can file an appeal against the order setting aside the award under Section 39 of the Act and if such appeal is allowed, a decree in terms of the award will automatically follow. M. A. (F) No. 5 of 1970 arising out of O. S. No. 38 (A) of 1969 is accordingly rejected as misconceived. 11.
M. A. (F) No. 5 of 1970 arising out of O. S. No. 38 (A) of 1969 is accordingly rejected as misconceived. 11. Before I go to the merits of the other appeal viz., M. A. (F) No. 3 of 1970 let me first deal with the preliminary objection raised on behalf of the respondent. 12. As regards the maintainability of this appeal under Section 39 of the Act, the contention of Mr. Nilamani Singh is that the impugned order is not an order setting aside the award within the meaning of Section 30 and clause (VI) of Section 39 of the Act. It is, in substance, an order remitting the award to the Arbitrator under Section 16 and, therefore, no appeal lies against the impugned order under Section 39. In support of his contention he relied on a decision of the Supreme Court in Iftikhar Ahmed v. Syed Meharban Ali, AIR 1974 SC 749 . In that case the Civil Judge set aside an award and remitted the case to the Arbitrator for passing a fresh award under Section 16 of the Act. The Supreme Court held that as no appeal under Section 39 of the Act, lay from an order remitting an award to an Arbitrator under Section 16, the appellant could not be allowed to challenge the order. 13. The above contention of Mr. Nilamani Singh is evidently unfounded and not maintainable. The impugned order cannot be said to be an order under S.16. Section 16 contemplates remittance of an award to an Arbitrator or Umpire for reconsideration. That means, when such an order is made the case goes back to the same Arbitrator or Umpire for reconsideration. In the instant case, the learned Subordinate Judge held that the Arbitrator in question had no jurisdiction to arbitrate in the matter. He set aside the award on that ground with a direction to appoint a new Arbitrator in terms of clause 25 of the agreement and to refer the case to him. There is, therefore, no scope for reconsideration by the Arbitrator. It is substantially an order setting aside the award and not an order of remittance under Section 16. The aforementioned decision of the Supreme Court relied on by Mr. A. Nilamani Singh has got no-bearing on the present case.
There is, therefore, no scope for reconsideration by the Arbitrator. It is substantially an order setting aside the award and not an order of remittance under Section 16. The aforementioned decision of the Supreme Court relied on by Mr. A. Nilamani Singh has got no-bearing on the present case. The appeal against the order passed on the application under Section 30 is clearly maintainable under clause (VI) of Section 39 as one against setting aside of the award. 14. The second contention of Mr. Nilamani Singh, namely, that the appeal lay before the District Judge and not before this Court is equally untenable. 15. Section 39 of the Act provides that appeal under this section would lie to the Court authorised by law to hear appeals from original decrees of the Court passing the order. In Manipur, appeals from the decrees of the Subordinate Judge in suits valued upto Rs. 5,000/- lie before the District Judge and from the decrees passed in the suits valued above Rs. 50.00.00 lie to the High Court. In the instant case, the Arbitrator awarded a sum of Rs. 8,924/- to the appellant and the appellant prayed for a decree for that amount on the basis of the award. The fact that the Arbitrator awarded a sum of Rs. 4,464/- only in favour of the respondent is of no consequence in deciding the forum of the appeal. To ascertain the Court in which such an application or appeal is to be filed, the whole of the subject-matter of the dispute has got to be taken into consideration. 16. Having disposed of the preliminary objection, let me now come to the merits of the appeal. The first ground on which the award was set aside by the learned Subordinate Judge is that the Additional Chief Engineer, C. P. W. D., Zone No. III, Calcutta, had no jurisdiction to appoint the Arbitrator in terms of clause 25 of the agreement and therefore the Arbitrator had no jurisdiction to arbitrate in the dispute. Clause 25 of the agreement provides, inter alia, that all disputes arising between the parties "shall be referred to the sole arbitration of the person appointed by the Additional Chief Engineer.
Clause 25 of the agreement provides, inter alia, that all disputes arising between the parties "shall be referred to the sole arbitration of the person appointed by the Additional Chief Engineer. Central Public Works Department, in-charge of the work at the time of dispute or if there be no Additional Chief Engineer, the Administrative Head of the said Central Public Works Department at the time of such appointment." According to the respondent, as no Additional Chief Engineer was incharge of the work at the relevant time, it was the Administrative Head of the C. P. W. D. at the time of appointment, who was competent to appoint the Arbitrator. 17. Though the learned Government Advocate now challenges the fact that the Additional Chief Engineer, who appointed the Arbitrator was not incharge of the work, it appears, this was neither challenged in the written statement filed by the appellant before the Subordinate Judge, though specifically averred in the application under Sections 16 and 30 of the Act, filed by the respondent; nor it was canvassed at the time of hearing before the Subordinate Judge. That being the position, I will assume that the Additional Chief Engineer in question was not in-charge of the work at the relevant time and on this footing I propose to decide the question. 18. I have already pointed out, one Subrahmanyam was first appointed as the Arbitrator. The exact date of his appointment is not known. But, it is seen that the respondent submitted his statement of facts before this Arbitrator on 29-5-63 preferring a claim for Rs. 7313.42 on various counts. As this Arbitrator could not complete his work, the present Arbitrator Mr. Sabherwal was appointed on 24-8-1966. It is also seen from the award that on 14-11-1967, this Arbitrator formulated some new points for determination at the instance of the parties. The case was then heard by him on that very day in presence of the respondent and his counsel Mr. Nilamani Singh as well as the representative of the P.W.D. The hearing in the case was closed on that very day with the consent of the parties. The minutes of the proceeding of the hearing were forwarded to the parties by the Arbitrator on 18-11-1967 and the award was made and signed on 8-12-1967, as can be seen from the award.
The minutes of the proceeding of the hearing were forwarded to the parties by the Arbitrator on 18-11-1967 and the award was made and signed on 8-12-1967, as can be seen from the award. At no stage, the respondent raised any objection as to the jurisdiction of the Arbitrator. All the time he took a chance to get an award in his favour. It is not the case of the respondent itself that at any time it took such objection. The contention of the respondent before the learned Subordinate Judge was that its waiver could not give jurisdiction to the Arbitrator if initially he had no jurisdiction. This contention was accepted by the learned Subordinate Judge II. 19. In my opinion, the learned Subordinate Judge was wrong in setting aside the award on the above ground. A reference may be invalid if there is some defect in the contract containing the arbitration clause or in the arbitration agreement itself. In such a case, the defect cannot be cured by waiver. But, when there is no such defect in the contract or in the arbitration clause, but there is some irregularity in exercise of jurisdiction a party cannot be allowed to turn round and to take an objection afterwards as to the jurisdiction of the Arbitrator if he once submitted to the Arbitration Proceeding, filed his claims and took part in the proceeding without any objection. This is a settled law. I would refer only to a few decisions on the point. 20. In Donald Campbell and Co. v. Jeshraj Giridharilal, AIR 1920 P. C. 123, a question arose as to defective appointment of a sole arbitrator. The Judicial Committee was of opinion that the defect (absence of notice under Section 9 (b) ) would have been fatal to the authority of the person appointed as sole arbitrator but for the fact that any objection on this head was waived by the party concerned, namely, the appellants. They had rested their case on their contentions as to the invalidity of any arbitration in the place in which it was held and they could not, according to their Lordships of the Judicial Committee be permitted to rely on a defect in procedure which could have been remedied at once if they had raised the point. 21.
They had rested their case on their contentions as to the invalidity of any arbitration in the place in which it was held and they could not, according to their Lordships of the Judicial Committee be permitted to rely on a defect in procedure which could have been remedied at once if they had raised the point. 21. The facts of the case in Union of India v. K. P. Mandal, AIR 1958 Cal 415 , are on all fours with those of the present case. In that case the arbitration clause in a contract for execution of certain work by A with the Government of India prescribed that except as otherwise provided in the, contract, all questions and disputes arising out of or relating to the contract would be referred to the arbitration of the "Superintending Engineer of the Circle for the time being." Disputes arose between the parties and the Government appointed one M as an arbitrator to adjudicate on the claim made by it against A and informed A about the appointment. Both the parties knew that M was not competent to act as arbitrator according to the qualification laid down by the arbitration clause A not only submitted to the arbitration of M on the Government claim but also put forward a counter-claim against the Government for adjudication by the same arbitrator; he took part in the proceedings from the beginning to the end; he agreed to extensions of time for filing the award; and when the award went against him sought to set aside the award on the ground that M was not competent to act as arbitrator. A Division Bench of the Calcutta High Court, presided over by the Chief Justice held that the rule of estoppel binds A and prevents him from contending that M was not qualified under the terms of the agreement to arbitrate in the dispute. 22. A similar view was taken by the Calcutta High Court in the case of New India Assurance Co., Ltd. v. Dalmia Iron and Steel Ltd., AIR 1965 Cal 42 . 23. All these cases establish the principle that if a party allowed an Arbitrator to proceed with the reference without objecting to his jurisdiction or competence it would not be subsequently heard to say that the award should be set aside on the ground that the Arbitrator cannot decide the dispute in question.
23. All these cases establish the principle that if a party allowed an Arbitrator to proceed with the reference without objecting to his jurisdiction or competence it would not be subsequently heard to say that the award should be set aside on the ground that the Arbitrator cannot decide the dispute in question. 24. In support of his contention that the waiver on the Part of a party cannot give jurisdiction to the Arbitrator or Umpire it he had no initial jurisdiction, Mr. Nilamani Singh, the learned counsel for the respondent, relied on the decisions of the Supreme Court in Waverly Jute Mills Co., Ltd. v. Raymon and Co (India) Pvt. Ltd., AIR 1963 SC 90 ; Khardah Co. Ltd. v. Raymon and Co. (India) Private Ltd., AIR 1962 SC 1810 and Haji Hafiz Tanwar Ahmed v. Union of India, AIR 1971 SC 512 . I have carefully gone through these cases and I find that none of these cases has got any bearing on the present case. In the first two cases, the arbitration agreements concerned were found to be illegal. In the third case, the arbitrator was to be appointed under Section 19 of the Defence of India Act, but he was appointed under Section 20 (4) of the Arbitration Act. The award given by the arbitrator appointed under Section 20 (4) was therefore held to be without jurisdiction. In these circumstances, it was laid down in these cases that waiver on the part of the parties as to jurisdiction could not validate the award. 25. In the instant case, it is not the case of any party that the contract or the arbitration clause is invalid. I have already pointed out that the respondent at no time objected to the jurisdiction of the arbitrator; on the other hand, he submitted to his jurisdiction, filed his claim, led evidence, engaged his counsel and took a chance to get an award in his favour. In these circumstances, he is estopped from challenging the jurisdiction of the arbitrator after the award went against him. The learned Subordinate Judge II, was clearly wrong in setting aside the award on ground of want of jurisdiction of the arbitrator. 26. There is also no force at all in the contention of the respondent that the Arbitrator misconducted himself.
In these circumstances, he is estopped from challenging the jurisdiction of the arbitrator after the award went against him. The learned Subordinate Judge II, was clearly wrong in setting aside the award on ground of want of jurisdiction of the arbitrator. 26. There is also no force at all in the contention of the respondent that the Arbitrator misconducted himself. As I have already pointed out, the Arbitrator was appointed in the early part of 1963, it not earlier and the respondent submitted his claim before him as back as 29-5-1963. Although the previous Arbitrator formulated some points for determination, the new Arbitrator, after assuming charge, formulated a few more points for determination at the instance of the parties. He gave a hearing to both the parties on 14-11-1967, on which date the respondent was represented by a counsel. The hearing was closed on that day with the consent of the parties. After this on 23-11-1967, the respondent was said to have sent a modified claim to the Arbitrator and his grievance is that this modified claim was not taken into consideration and thus the Arbitrator misconducted himself. I do not find any substance in this contention. After the hearing was closed with the consent of the parties and the matter was pending for making and signing the award only, the Arbitrator was not under any obligation to take into consideration any revised claim submitted by the respondent behind the back of the appellant. The learned Subordinate Judge was clearly wrong in his finding that the Arbitrator misconducted himself by not taking into consideration his revised claim which was said to have been sent on 23-11-1967. 27. In the result, the order of the learned Subordinate Judge II, dated 3-6-1970, which has been appealed against is set aside. The application filed by the respondent under Section 16 read with Section 30 of the Act is dismissed. The application of the appellant for passing a decree in terms of the award is allowed. A decree will be prepared and signed in terms of the award. M. A. (F) No. 3 of 1970 is allowed with costs. Order accordingly.