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1994 DIGILAW 223 (CAL)

West Bengal State Electricity Board v. Vinnay Engineering Enterprise (P) Ltd.

1994-07-25

Ajoy Nath Ray

body1994
JUDGMENT Ajoy Nath Ray, J. : Mr. Banerjee has argued a point of demurrer and has pressed for the dismissal of the application in limine. 2. The facts giving rise to the application are as follows. The West Bengal State Electricity Board entered into agreements in regard to its Thermal Power Station at Santaldihi. For the raw water treatment plant the respondent was the contracting party. Although the initiation was for a compendious order for the whole plant ultimately two agreements were signed one for supply of component parts, machinery etc. and another for erection and commissioning. It is possible that the question of sales tax was present in the minds of the parties. 3. The two signed agreements contained an arbitration clause each. Disputes arose in regard to both the agreements. Joint arbitrators were appointed as contemplated in the two agreements but the reference was not expeditiously proceeded with. The present respondents approached this Court and obtained Court’s appointee arbitrators in both the said references. Both the said arbitrators are members of the Bar and the order of appointment has not been challenged in any manner. 4. One or two sittings have been held by the said two arbitrators also. 5. The petition today contains the principal prayers of (i) consolidation of the two references and (ii) reference of the said consolidated proceeding to the arbitrators already appointed as co-arbitrators. 6. Appearing in support of the application Mr. Ray placed before me four different decisions of the Indian Courts two of which are binding upon me, for support of the proposition that a consolidation of reference is neither unknown in law nor vitiated by any inherent lack of jurisdiction. The said cases are reported at 59 CWN 715 (J. Agarwalla & Sons Ltd. vs. Kanoria (General Dealers Ltd.), 74 CWN 511 (R.N. Jhunjhunwalla vs. Alliance Jute Mill Co. Ltd; 1988 Vol II Arbitration Law Reports 380 (Tikam Chand Jain vs. Steel Authority of India Ltd.) and AIR 1986 Jammu & Kashmir P. 53 (M/S. Lalchand Roshanlal vs. M/s. Ghylam Md. Nazir Ahmed). 7. The first of the above cases was decided by Bachawat J. when his Lord-ship was Sitting singly on the Original Side of this Court. His Lordship's experience and expertise in arbitration matters is well known and undisputed. The case came before his Lordship after the award had been made. Nazir Ahmed). 7. The first of the above cases was decided by Bachawat J. when his Lord-ship was Sitting singly on the Original Side of this Court. His Lordship's experience and expertise in arbitration matters is well known and undisputed. The case came before his Lordship after the award had been made. In the Judgment Bachawat J. said that an arbitration reference is commenced upon the arbitration clause contained in a particular agreement and also said at the end, to the effect, that, if there has been a consolidation of two references commenced on the basis of two different agreements, the same, even if it assumed to be a procedural irregularity, cannot be challenged by a party who has unreservedly participated in the consolidated reference. It is specifically not decided in that case whether such a consolidation is or is not an irregularity. 8. The Division Bench judgment reported in 74 CWN 51 also had before it a single pronounced award passed in regard to different delivery orders. The award was not set aside. Again the question of participation in the reference played an important role in determining how the case was decided. 9. Mr. Debal Banerjee, in answering Mr. Ray, referred me to the decision of U.C. Law J. reported in AIR 1963 Cal. P. 137 and showed me paragraph 12 and other paragraphs where the aforesaid judgment of Bachwat J. and the Division Bench judgment in appeal therefrom are dealt with. In the passage of Chakrabarty C.J. hearing the appeal from the order of Bachawat J., the appellants being concluded by their own conduct, from pressing the defect in the award, is mentioned. At paragraph 17 a quotation appears from another Calcutta decision holding to the effect that constitution of a Single Court for adjudication of two disputes arising out of separate contracts would be a fundamental defect. In paragraph 18, U.C. Law J. said that his Lordship also would be inclined to follow that view. 10. Mr. Banerjee referred to me the decision of Legatt J. in 1984(3) All E.R. p. 835. The Commercial Court of the Queen's Bench Division was concerned in that case with a commonly recurring problem. The problem arose out of a tripartite situation involving a shipowner, a charterer and a sub-charterer ; it can also arise out of an employer, a building contractor and a sub-contractor. The Commercial Court of the Queen's Bench Division was concerned in that case with a commonly recurring problem. The problem arose out of a tripartite situation involving a shipowner, a charterer and a sub-charterer ; it can also arise out of an employer, a building contractor and a sub-contractor. They are involved in the same work or in the same voyage. The same events give rise to disputes between the employer (shipowner) and building contractor (Charterer) as well as between the latter and the sub-contractor (sub-charterer). The two different sets of parties have two different agreements namely the chartering agreement or the main building contract and the sub charterparty or the sub contract. Two agreements gave rise to two different references. Thus arises a possibility of conflict of decisions. This conflict is to be avoided but as was held by Legatt J. the machinery of the English Arbitration Law contains• no fool proof method of avoiding such a conflict (although in Hong Kong, apparently, there is). That is because it is impossible to compel parties to have one consolidated reference before one and the same arbitral tribunal. There being two agreements there necessarily arises two distinct arbitrations, two distinct references and two distinct awards. English Law and Indian Law know only the method of staying one reference in appropriate cases. 11. Mr. Banerjee also said that the present application is unknown to the Indian Arbitration Law, since I am really called upon to appoint each of the arbitrators, namely Mr. Sarkar and Mr. Banerjee, as an additional arbitrator in the reference pending before the other. Such an appointment of an additional arbitrator is yet unheard of, and so far as I am concerned, I would not like to be the first Judge to cause such a thing to be heard amongst the lawyers practising in the Indian Courts. 12. I am also of the view that if a party to an arbitration agreement takes objection at the first opportunity, as has been done here, it is not possible to compel that party to have his reference attached to another reference arising out of another contract altogether. It does not matter whether the objecting party is a stronger to the other contract or not. Various practical difficulties might arise. If here I direct the two references to be consolidated maintaining the autonomy both of Mr. Sarkar and Mr. It does not matter whether the objecting party is a stronger to the other contract or not. Various practical difficulties might arise. If here I direct the two references to be consolidated maintaining the autonomy both of Mr. Sarkar and Mr. Banerjee the reference would get stuck at every stage. One arbitrator might like to hear witnesses whereas another might like to proceed on papers alone. One might disallow a question whereas another might like to hear the answer subject to objection. The possibilities of conflict amongst judges are too numerous to be listed here. 13. Under these circumstances I am of opinion that Mr. Banerjee's objection succeeds in regard to both parts of the prayer mentioned above. Neither can the two references be consolidated nor can I appoint an additional arbitrator to function along with the one who is already in seisin of the matter and proceeding in accordance with law. 14. Since the preliminary point succeeds Mr. Banerjee is not given an opportunity to file any affidavit on behalf of his clients. They however should not be taken as having admitted any of the allegations in the petition or conceded any submission therein. The application will stand dismissed with costs. At, this stage it is prayed on behalf of the West Bengal State Electricity Board that the time to file their counter statement be extended in both the references. In view of this prayer, they are permitted to file their counter statement within three weeks from date hereof both before Mr. Sarkar and before Mr. Banerjee. The rejoinder thereto may be filed by Mr. Banerjee's clients within a fortnight thereafter. 15, The Learned Arbitrators will make and publish their awards within six months from date hereof. 16. The Learned Arbitrators and all others concerned to act on a signed copy of the dictated order on the usual undertaking. Application dismissed.