BIDHAN CHANDRA KRISHI VISWA VIDYALAYA v. GROUP PRIVATE LTD.
1999-02-04
AMITAVA LALA
body1999
DigiLaw.ai
AMITAVA LALA, J. ( 1 ) THE Court: This is an application under sections 30 and 33 of the Arbitration Act, 1940 challenging the validity of the award dated 25th March 1996. ( 2 ) I have perused the award and I find the award is non-speaking award giving a financial benefit for a sum of Rs. 77,00,000/- in favour of the claimant/respondent herein together with interest pendent light at the rate of 6% per annum on the said awarded amount from the date of entering into reference till the date of making the award and cost assessed at Rs. 50,000/ -. The award also speaks about interest at the rate of 8% per annum from the date of the award until payment is made by the respondent/petitioner herein to the claimant/respondent herein or the date of the decree whichever is earlier. In addition thereto nil award is given in favour of the respondent/petitioner herein. ( 3 ) BY challenging the award Mr. Gopal Chakraborty, learned senior counsel appearing with Mr. Ajay Dutta, learned Advocate raised various points which are specified hereunder: (A) The Arbitrator has acted without jurisdiction; (b) The subsequent claim as added by the Arbitrator is not arising out of an existing dispute (c) Lump sum non-speaking award given by the Arbitrator when question of jurisdiction exists, therefore such award has to be set aside; (d) The Arbitrator misconducted the proceeding; (e) Changing of rates of work as prescribed by the Arbitrator is not permissible; (f) Principle of natural justice has been violated by the Arbitrator; (g) No communication has been made by the Arbitrator by serving copy of the award alongwith the notice which is an example of misconduct; (h) There is a clear case of non-application of mind; (i) Claim is barred by law of limitation. ( 4 ) ON the other hand, Mr. H. M. Dutt, learned senior counsel appearing with Mr.
( 4 ) ON the other hand, Mr. H. M. Dutt, learned senior counsel appearing with Mr. Asim Banerjee, learned counsel summarally contended that: (A) If the Arbitrator is in excess of jurisdiction award can be set aside but if within the jurisdiction cannot be set aside; (b) Issues in the 9th sitting are old issues but new claim was lodged in 32nd sitting on which further issues were settled at the time of cross-examination in 41st sitting, therefore the same is an accepted position; (c) Since the project was completed in course of arbitration proceedings and the entire claim was incorporated therein before the Arbitrator as a final claim on account of final bill the same cannot be treated as an additional claim; (d) When the claim was lodged, witness was examined, an opportunity of cross-examination was given, and therefore there is no question of violation of principle of natural justice. ( 5 ) ALTHOUGH several points and counter points are agitated by the parties herein but I find basically the dispute is whether the Arbitrator has exceeded his jurisdiction by incorporating further claim of Rs. 80,04,103. 76 p. over and above the original claim of Rs. 3,65,844. 07p. Ignoring the scope and ambit of the reference or not. ( 6 ) THEREFORE, to come to a right conclusion a cursory look into the scope of reference is required. In this context, I have come to know that by an order dated 6th March, 1991, in disposing an application being Matter No. 3120 of 1990 (Associated Design Planning Group (P) Ltd. v. Bidhan Chandra Krishi Viswa Vidyalaya), the Arbitrator was appointed as sole Arbitrator by the court to adjudicate the disputes between the parties in terms of the agreement. ( 7 ) IT appears there from that cause of action for the purpose of referring the dispute accrued sometimes in 1995 when the two fold objections were raised by the petitioner being respondent therein on account of jurisdiction as well as limitation.
( 7 ) IT appears there from that cause of action for the purpose of referring the dispute accrued sometimes in 1995 when the two fold objections were raised by the petitioner being respondent therein on account of jurisdiction as well as limitation. The court answered affirmatively in favour of the respondent/petitioner therein by holding that this court has jurisdiction in referring the dispute since cause of action partially arose within the jurisdiction and claim is not barred by limitation because of the reason that the petitioner being respondent therein categorically refused to conquer the appointment of the sole-Arbitrator and was communicated by the letter dated 29th October, 1990 which was within the prescribed period of limitation. ( 8 ) THEREFORE, the cause of action for the purpose of invocation of the Arbitration clause arose sometime in 1985 and the sole Arbitrator was appointed for the purpose of adjudicating such disputes in between the parties. ( 9 ) IT is an admitted position that an Arbitrator cannot be appointed unless and until referable disputes exists in between the parties. Therefore, as and when the Arbitrator was appointed, the same appointment was obviously made on the basis of the existing disputes in between the parties in terms of the agreement. The court cannot appoint an Arbitrator in respect of the disputes yet to born even if it is arising out of the agreement. Agreement has its enormous scope and ambit but the Arbitrator has to go by the scope of reference in respect of the existing dispute by or between the parties out of such agreement. Therefore, unless and until authority is given to an Arbitrator, an Arbitrator cannot assume his jurisdiction in respect of the future disputes born, if any, in respect of the final bill out of the same contract in between the parties in the course of the arbitration proceedings. Court will at first decide, being called upon, a question of referability in such case and if situation arises may send such dispute even to the same Arbitrator for the purpose of adjudication by way of extending the scope. The Arbitrator, suo motu, has no power to extend the scope and ambit of the jurisdiction of his reference.
Court will at first decide, being called upon, a question of referability in such case and if situation arises may send such dispute even to the same Arbitrator for the purpose of adjudication by way of extending the scope. The Arbitrator, suo motu, has no power to extend the scope and ambit of the jurisdiction of his reference. As and when the order was passed appointing an Arbitrator as far back as on 6th March, 1991 in respect of existing dispute with regard to non-payment of any amount the then subsisting, even by the liberal construction as to the scope and ambit of reference as to whether the Arbitrator has power to adjudicate the disputes in between the parties in terms of the arbitration agreement does not necessarily mean all time any disputes during the tenure of the Arbitrator even existing at the material point of time or will exist in the future occasions will be decided by such Arbitrator. Hence the element of misconduct of the Arbitrator in exceeding jurisdiction is present. ( 10 ) IN support of the contentions point wise as above Mr. Chakraborty has relied upon several judgments at the time of opening the case and even in reply. Since all such judgments are well-known in respect of principles of setting aside or not setting aside the award for some reason or other now becoming academic unless referable to the fact situation. ( 11 ) HOWEVER, referred judgments are incorporated hereunder: AIR 1989 SC 890 : (1989) 2 SCC 38 (M/s. Sudarsan Trading Co. v. Govt. of Kerala and Anr.), (1990) 4 SCC 647 (S. Harcharan Singh v. Union of India), AIR 1992 SC 232 (Associated Engineering Company v. Government of Andhra Pradesh and Anr.), (1992) 4 SCC 217 (Hindustan Construction Co. Ltd. v. State of Jammu and Kashmir), 53 CWN 873 (Madhuradas Goverdhandass v. Khusiram Benarshilal), AIR 1954 Cal 245 (Nandram Hanutram v. Raghunath and Sons. Ltd.), AIR 1996 SC 2965 (Union of India v. M/s. G. S. Atwal and Co. (Asansol), AIR 1954 SC 340 (Kiran Singh and Ors. v. Chaman Paswan and Ors.) AIR 1997 SC 1376 (Tamilnadu Electricity Board v. M/s. Bridge Tunnel Constructions and Ors.), (1994) 3 SCC 521 (Taraporel Co.
Ltd.), AIR 1996 SC 2965 (Union of India v. M/s. G. S. Atwal and Co. (Asansol), AIR 1954 SC 340 (Kiran Singh and Ors. v. Chaman Paswan and Ors.) AIR 1997 SC 1376 (Tamilnadu Electricity Board v. M/s. Bridge Tunnel Constructions and Ors.), (1994) 3 SCC 521 (Taraporel Co. v. State of M. P.), (1996) 1 SCC 18 (State of U. P. v. Ramnath International Construction (P) Ltd.), (1991) 1 SCC 498 (Prabartak Commercial Ltd. v. Chief Administrator, Dandakaranya Project and Anr.), AIR 1981 Cal 95 (Union of India v. D. Bose and Ors.) (1990) 1 SCC 214 (Dandasi Sahu v. State of Orissa) and in reply (1976) 4 SCC 32 (Union of India v. Shri Om Prakash), (1988) 2 SCC 338 (Major (Retd.) Inder Singh Rakhi v. Delhi Development Authority), 1961 3 Writlr 1405 (Benjamin Leonard Macfoy v. United Africa Co. Ltd.) and AIR 1974 Cal 309 (Jabbalpore Electric Supply Co. Ltd. v. Madhya Pradesh Electricity Board and Ors. ). ( 12 ) IN effect, Mr. Chakraborty wanted to establish the contentions of the petitioner and observations of different courts with the support of those judgments, leaving aside very few in dealing with separately in case of any negative assessment others are not necessary to deal with separately since this court has no conflict of opinion with regard to established principles. ( 13 ) ON the other hand, Mr. H. M. Dutt, learned senior counsel cited only four decisions out of which he also relied upon the self-same decision being AIR 1989 SC 890 (M/s. Sudarsan Trading Company v. The Govt. of Kerala and Anr.) (1989) 2 SCC 38 , (1995) 3 SCC 8 (Hindustan Construction Co. Ltd. v. Governor of Orissa and Ors.), AIR 1993 SC 1355 (Punjab State Electricity Board and Ors. v. Ludhiana Steels Pvt. Ltd.) and also AIR 1988 SC 205 (Prasun Roy v. The Calcutta Metropolitan Development Authority and Anr. ). Even going through such judgments as cited by the respondent/award holder it is apparent that the respondent mainly wanted to distinguish the factor of the situation that Arbitrator has not exceeded the jurisdiction but travelled within the jurisdiction and for the same there is no scope of judicial review.
). Even going through such judgments as cited by the respondent/award holder it is apparent that the respondent mainly wanted to distinguish the factor of the situation that Arbitrator has not exceeded the jurisdiction but travelled within the jurisdiction and for the same there is no scope of judicial review. Interestingly the respondent also made a defence of acquiescence since the issues in respect of new claim were settled at the time of cross-examination before the Arbitrator for the purpose of his perusal and consideration. By not taking steps thereto before the Arbitrator objecting such incorporation of new claim now cannot agitate at the stage as being prevented by the law of acquiescence. ( 14 ) THEREFORE, in order to appreciate the position and since the award is non-speaking award, this court has no other alternative but to go through the records which have been produced before this court along with the award to come to an appropriate conclusion. ( 15 ) SINCE question of acquiescence has to be put before any other question I have no other alternative but to peruse the records time for the purpose of ascertaining the scope of the submission of the petitioner in respect thereof as to whether the same has been properly objected by the petitioner being respondent therein or not. ( 16 ) IN the premises, I found that on being pressed for additional claim by the claimant/respondent herein, the petitioner wanted to add certain additional issues as to the question of entitlement of the award in respect of or in connection with the additional claim and specifically in 94th sitting lodged a protest in the following manner:"before going into the material allegations I would submit that the claimant never made any claim to the respondent-University demanding the allege amount of Rs. 1,14,95,900. 17 p. or Rs. 80,03,103/- as claimed in the Additional Statement of Claims. I would respectfully submit that there is not an iota of evidence that any dispute arose over the additional claims between the parties and so, the additional claims of Rs. 80,03,103/- cannot be considered in this proceedings as because there is no dispute existing on the said amount between the parties at any point of time. So, the alleged additional claims are not "arbitral dispute" and thereafter without waiving such contention made several submissions.
80,03,103/- cannot be considered in this proceedings as because there is no dispute existing on the said amount between the parties at any point of time. So, the alleged additional claims are not "arbitral dispute" and thereafter without waiving such contention made several submissions. " ( 17 ) IN this context, scope and ambit of the judgment reported in AIR 1988 SC 205 is playing a very vital role. The observation of the Supreme Court in AIR 1988 SC 205 is that where though a party is aware from the beginning that by reason of some disability the matter is legally incapable of being submitted to arbitration, participates in arbitration proceedings without protest and fully avails of the entire arbitration proceedings and then seeing that the award is going against him comes forward challenging the validity of the arbitration proceedings as without jurisdiction on the ground of a known disability, the same cannot be allowed. Therefore, the cardinal principle of consideration is whether protest was lodged before the Arbitrator or on protest was lodged before the Arbitrator. I find that the protest was lodged before the Arbitrator. Therefore, it is duly incumbent upon the Arbitrator to give answer to such protest being a preliminary point attracting the jurisdiction. But I found, even thereafter, the submissions were heard and heard again which ultimately resulted to a non-speaking award without giving a reason or making a whisper as to the question of lodging of protest with regard to such valuable question of additional claim being unfounded at the time of reference of the matter pursuant to the order of the court on which he was appointed. The observation of the Supreme Court in AIR 1998 SC 1355 is also similarly placed. There the court found that at no stage before the Arbitrator an objection raised by the authority that the Arbitrator had no authority to go into the dispute which tantamount to a consent before the Arbitrator. Similarly in (1995) 3 SCC 8 as cited by the respondent the objection as to the jurisdiction was first raised before the appeal court.
There the court found that at no stage before the Arbitrator an objection raised by the authority that the Arbitrator had no authority to go into the dispute which tantamount to a consent before the Arbitrator. Similarly in (1995) 3 SCC 8 as cited by the respondent the objection as to the jurisdiction was first raised before the appeal court. Therefore, in all the cited decisions on behalf of the respondent as above are restricted only in respect of the cases where no objection was put forward before the Arbitrator unlike the present case wherefrom it is evident that such objection was put but in spite of having such objection the Arbitrator remains silent and ultimately without giving a finding passed a non-speaking award which, according to me, resulted the award had from the face of it. ( 18 ) HAD it been the position that Arbitrator only made an explanation with regard to such protest as to question of jurisdiction and give a reason and thereafter came to an ultimate finding in merit making such part as non-speaking, the position would have been altogether different meaning thereby the Arbitrator has given reason in respect of the question of jurisdiction but not in respect of the claim. Definitely the Arbitrator cannot be forced to give reason but where the dispute is with regard to jurisdiction and reason is unfounded thereon court has no other alternative but to draw an adverse inference that the Arbitrator acted without jurisdiction. ( 19 ) IT is true that it is not open to the Court to probe the mental process of the arbitrator and speculate where no reasons are given by the Arbitrator as to what impelled the Arbitrator to arrive at his conclusion and that is in respect of Arbitrator's power within the periphery of the reference being made out of the agreement but where the Arbitrator exceeded the jurisdiction and passed a lump sum non-speaking award without assigning any reason thereto the same has to be set aside. Jurisdiction of the Arbitrator herein is fixed by the court on the basis of the cause of action the then prevailing but not with regard to subject matter, which was subsequent to the appointment, arose in between the parties.
Jurisdiction of the Arbitrator herein is fixed by the court on the basis of the cause of action the then prevailing but not with regard to subject matter, which was subsequent to the appointment, arose in between the parties. Moreover the statement from the respondent is that no dispute arose till such time when such huge amount was brought under the domain of the Arbitrator. Therefore, court will obviously become curious to know what was the occasion to lead the Arbitrator to adjudicate the question of 80 lakhs and 1 crore of an additional claim when the reference was made only about meagre claim of Rs. 3 lakhs and odd. ( 20 ) SINCE this question being a prima facie attractive question to this court and court feels that the respondent failed to cross the handle by the conduct of the Arbitrator there is no necessity to go into any other question or questions. ( 21 ) THEREFORE the award is set aside taking into consideration that in between remittance and setting aside the award, the second one is much more acceptable to this court on the given situation. ( 22 ) AS a consequential effect of setting aside the award, I appoint Mr. Justice Ganendra Narayan Ray, a retired Judge of the Hon'ble Supreme Court of India to act as an Arbitrator in respect of the disputes in between the parties as regards the claim and additional claim, if any. ( 23 ) THE Arbitrator will, however, enter upon the reference within a period of 2 weeks from the date of communication of the order and make and publish the award within a period of 4 months thereafter. For the purpose of expeditious adjudication the Arbitrator will have summery power. If necessary Arbitrator will be entitled to take into account the documentary and oral evidences already adduced by the parties before the outgoing Arbitrator. ( 24 ) THE Arbitrator will be entitled for remuneration of 300 G. Ms. per sitting which will be shared equally by the parties. ( 25 ) ARBITRATOR will be entitled to engage one stenographer and one clerk and fix their remunerations accordingly. Remunerations of such persons, so fixed by the learned Arbitrator, will also be shared equally by the parties.
per sitting which will be shared equally by the parties. ( 25 ) ARBITRATOR will be entitled to engage one stenographer and one clerk and fix their remunerations accordingly. Remunerations of such persons, so fixed by the learned Arbitrator, will also be shared equally by the parties. ( 26 ) THE petitioner, having carriage of proceedings, will be entitled to collect all the necessary papers and documents from the registry of this court and procedure before the incoming Arbitrator immediately after entering upon reference. Outgoing Arbitrator, incoming Arbitrator and all parties are to act on a signed copy minute of the operative part of the order. Order according by.