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2007 DIGILAW 359 (UTT)

STATE OF U. P. SUPERINTENDING ENGINEER v. JAI DURGA

2007-07-03

B.C.KANDPAL, DHARAM VEER

body2007
JUDGMENT Hon’ble B.C. Kandpal, J. Hon’ble Dharam Veer, J. This appeal, preferred by the State u/s 39 of the Indian Arbitration Act, 1940, is directed against the judgment and order dated 20.02.1999 passed by Civil Judge (S.D.), Haridwar, in Misc. Case No. 6/97, State of U.P. Vs. M/s Jai Durge & in Original Suit No. 5/97, M/s Jai Durge Vs. State of U.P. & Others, where by the learned Civil Judge has rejected the objection filed by the appellant u/s 30/33 of the Indian Arbitration Act, 1940 (hereinafter to be referred as the Act) and made the award as Rule of the Court. 2. Briefly stated, facts of the case are that appellant and respondent entered into an agreement dated 22.11.1985 for manufacturing and supplying of C.C. Tiles to the appellant and the period of contract was from 22.11.1985 to 21.11.1987. It was alleged that respondent had done only 40% of the work and had left the remaining work due to which the appellant had to suffer huge loss. Hence, the dispute arose between the parties and as per Clause 35 of the Agreement, the matter was referred to Arbitrator. The Arbitrator issued notices to the parties and after hearing learned counsel for the parties, the arbitrator decided the dispute on 02.01.1997 and ordered that the appellant/State will make payment to the respondent within 30 days. Against the said award dated 02.01.1997, the appellant filed a Misc. Suit before Civil Judge (S.D.) Haridwar. The Civil Judge (S.D.) Haridwar vide his judgment and order dated 20.02.1999 rejected the objections made by the State and by excluding Claim No. 4, he has made the award rule of the court. Against the said judgment and order dated 20.02.1999, the State has preferred the present appeal before this Court. 3. We have heard Ms. Beena Pandey, learned standing counsel for the appellant and Sri Alok Singh, Sr. Advocate assisted by Sri D. Barthwal, learned counsel for the respondent and perused the entire material available on record. 4. Learned standing counsel for the appellant firstly argued that since the Arbitrator Sri Raj Pal Singh, Chief Engineer, Irrigation Department was retired on 31.7.1996, hence he was not authorized to work as Arbitrator and to give the award. 5. We do not find any substance in this submission advanced by learned standing counsel for the appellant. 4. Learned standing counsel for the appellant firstly argued that since the Arbitrator Sri Raj Pal Singh, Chief Engineer, Irrigation Department was retired on 31.7.1996, hence he was not authorized to work as Arbitrator and to give the award. 5. We do not find any substance in this submission advanced by learned standing counsel for the appellant. It is pertinent to mention here that Sri Raj Pal Singh was not an Arbitrator to whom the matter was originally referred. In fact, the matter was originally referred to Sri B.S. Asthana on 23.11.1995. However, on 14.12.1995, Sri B.S. Asthana informed that he was already appointed as Arbitrator in three other cases, hence he refused to work as Arbitrator. Therafter, on 02.01.1996, Sri Raj Pal Singh was appointed as Arbitrator. Sri Raj Pal Singh was retired from his service on 31.7.1996 and 03.09.1996 was date fixed for hearing. On 03.09.1996, the contractor himself moved an application before the Arbitrator for extension of time till 02.01.1997. On this application, “No Objection” was recorded by the Department giving consent for extension of time and consequently the time was extended up to 02.01.1997. The appellant participated in arbitration proceedings before the Arbitrator on 03.09.1996. On 07.09.1996, although the appellant moved an application saying that after retirement, arbitrator cannot proceed, however on 08.09.1996, against Department participated in hearing and sought 15 Days time to file documents and with the consent of both the parties, time prayed for was granted. Hence, it amounts to withdrawal of the application dated 07.09.1996 moved by the appellant. Thereafter, the award was passed on 02.01.1997. Hence, it is clear that after having participated in hearing after the retirement of Sri Rajpal Singh and more particularly having given consent for extension of time and thereafter having participated on 03.09.1996 and 08.09.1996, the appellant has no right to challenge the proceedings. This view is fortified by the judgment of Hon’ble Apex Court in the case of Himalayan Construction Co. Vs. Executive Engineer, Irrigation Division, J&K & Another reported in (2001) 9 S.C.C. 359. In Para 7 of the said judgment, it has been held that:- 7. Once this conclusion is reached it becomes obvious that the objection by the respondent authorities to the award that it was passed by a person who had, on retirement, ceased to hold office which he earlier held at the time of reference cannot survive as Mr. In Para 7 of the said judgment, it has been held that:- 7. Once this conclusion is reached it becomes obvious that the objection by the respondent authorities to the award that it was passed by a person who had, on retirement, ceased to hold office which he earlier held at the time of reference cannot survive as Mr. D.K. Nargotra himself passed the award. Not only that but after his retirement and before he completed the proceedings he applied to the Court for extension of time and that extension was granted after hearing the parties and no such objection was raised at that time by the respondents. Consequently, it must be held that the Division Bench had erroneously set aside the award decrees only on this ground. Reliance placed by learned counsel for the respondents on a decision of this Court in the case of Union of India v. Prabhat Kumar & Bros., cannot be of any avail as that judgment proceeded on its own facts. Therein the terms of the reference order and the terms of the arbitration clause clearly showed that appointment was by designation and not by name. On the contrary, this case is squarely covered by a latter decision of this Court in the case of Construction India v. Secy., Works Deptt., Govt. of Orissa. Following the said decision, therefore, these civil appeals are allowed the impugned common judgment of the Division Bench of the High Court are set aside. Our view further finds support from the judgment of Hon’ble Apex Court in case of M/s Construction India Vs. Secretary, Works Department, Govt. of Orissa & Others reported in (1998) 2 S.C.C. 89. In Para 12 and 13 of the said judgment, it has been held that: - 12. The jurisdiction which is conferred on an arbitrator is on account of the consent of the parties to the arbitration agreement. Before the arbitrator, the objection as to jurisdiction of the arbitrator was withdrawn by the respondents. It shows acquiescence on the part of the respondents in the continued jurisdiction of the arbitrator to decide the dispute. The minutes recorded show that after raising the objection, the respondents have withdrawn the same. This would indicate a conscious acquiescence on the part of the respondents in the continued jurisdiction of the arbitrator. It shows acquiescence on the part of the respondents in the continued jurisdiction of the arbitrator to decide the dispute. The minutes recorded show that after raising the objection, the respondents have withdrawn the same. This would indicate a conscious acquiescence on the part of the respondents in the continued jurisdiction of the arbitrator. In the case of N. Chellappan v. Secy., Kerala SEB this Court on similar grounds held that the State Electricity Board precluded from challenging the jurisdiction of the umpire. A passage from Russell on Arbitration, 17th Edn. At p.215 was relied upon. It is to the following effect: “If the parties to the reference either agree beforehand to the method of appointment, or afterwards acquiesce in the appointment made, with full knowledge of all the circumstances, they will be precluded from objecting to such appointment as invalidating subsequent proceedings. Attending and taking part in the proceedings with full knowledge of the relevant fact will amount to such acquiescence.” It has also relied upon a decision of Privy Council in the case of Murtaza Hossein v. Bibi Bechunnissa. 13 The same passages have been quoted by this Court in a later judgment in the case of Prasun Roy v. Calcutta Metropolitan Development Authority where this Court said that long participation and acquiescence in the arbitration proceedings preclude a party from contending that the proceedings were without jurisdiction. Therefore, on this ground also the appellant is entitled to succeed. 6. In view of the aforesaid dictums of the Hon’ble Apex Court, the appellant has no right to challenge the proceedings on the principle of waiver, acquiescence and estoppel. Hence, the argument advanced by learned standing counsel is not acceptable. 7. Learned standing counsel for the State secondly argued that the Arbitrator as well as Civil Judge (S.D.) have committed misconduct in allowing Claim No.1 for delayed supply of electricity, while under G.S. Clause 27.02 (i), of the agreement, the contractor/claimant was duty bound to make his own arrangement by installing generators at his own cost and no claim was to be entertained for non-supply or disruption of supply. 8. We again do not find any substance in this argument. The Civil Judge (S.D.) in his judgment has categorically recorded a finding that in Clause 27.02 (i), it has specifically been provided that the appellant has to provide power to the claimant for operating the tile manufacturing plant. 8. We again do not find any substance in this argument. The Civil Judge (S.D.) in his judgment has categorically recorded a finding that in Clause 27.02 (i), it has specifically been provided that the appellant has to provide power to the claimant for operating the tile manufacturing plant. The period of contract was from 22.11.1985 to 21.11.1987. The primary requirement for operation of plant was the power and that too was to be arranged from State Electricity Board, and for successful implementation of supply schedule, the power should have been made available right on the day of start of agreement. Provision of clause 27.02 (i) place the responsibility of arranging power from State Electricity Board by the Department and the cost was also to be borne by the Department for arranging power at singly point. The energy charges were also to be borne by the contractor as per the bills raised by State Electricity Board. It was also rightly held that the State should have made serious efforts were made. This caused a major set back in proper execution of the agreement from the very start. The respondent could have get the power connection only in the case of proper supply of electricity from Transformer Poll. Hence, it was rightly held that the respondent could have only been responsible in case he would have not taken the connection from the transformer poll or would not have made some alternative arrangement. It was also rightly held that the respondent had also made arrangement of power supply by generator, but by a generator, a factory cannot be run. Hence, it was rightly held that the conditions of agreement have to be followed by both the parties and in case of failure of one party, the benefit must be given to the other party. Hence, the Arbitrator also rightly decided this issue and this issue was also rightly been confirmed by learned Civil Judge (S.D.) Haridwar. 9. For the reasons recorded above, we do not find any illegality or any misconduct in the arbitral award. The court below has rightly confirmed the award and made it a Rule of the Court. We do not find any ground to interfere in the impugned judgment and order passed by the court below. 9. For the reasons recorded above, we do not find any illegality or any misconduct in the arbitral award. The court below has rightly confirmed the award and made it a Rule of the Court. We do not find any ground to interfere in the impugned judgment and order passed by the court below. The court below has also recorded its finding which is based on the legal preposition of law and the finding recorded by the court below is not liable to be disturbed. We do not find any material available on the record which may suggest that the impugned judgment and order passed by the court below may be set aside. The court below has rightly observed that the arbitral award cannot be set aside unless there is an error of law or the misconduct committed by the arbitrator in passing the award. 10. The appeal lacks merit and are liable to be dismissed. The impugned judgment and order passed by the court below deserves to be confirmed. 11. Accordingly the appeal is dismissed. The impugned judgment and order dated 20.02.1999 passed by the court below, by which the award passed by the arbitrator has been made Rule of the Court, is hereby confirmed. No order as to costs.