TAMIL NADU WATER SUPPLY AND DRAINAGE BOARD v. V. N. V. CONSTRUCTIONS
2008-04-09
CHITRA VENKATARAMAN
body2008
DigiLaw.ai
JUDGMENT CHITRA VENKATARAMAN, J. : These two OPs are preferred as against the award passed by the arbitrators dated 07.11.2000, one at the instance of the Tamil Nadu Water Supply and Drainage Board in Transfer OP No. 450 of 2006 under Sections 30 and 33 read with Section 31 of the Arbitration Act, 1940 and Order 43 Rules 1, 2, 6 and 7 of the O.S. Rules to set aside the said award dated 07.11.2000 made by the second and third respondents - arbitrators in respect of the claims made by the first respondent and Transfer OP No. 467 of 2006 is filed under Sections 14(2) and 17 of the Arbitration Act, 1940, by the contractor to direct the arbitrators, namely, respondent Nos. 3 and 4 therein, to file the original award dated 07.11.2000 into court along with all the connected papers and pass a decree in terms of the award. The status of the parties in OP No. 450 of 2006 is referred to for the purpose of considering the rival contentions. The TWAD Board challenges the award passed by the arbitrators on the ground of limitation that on the date the first respondent filed the claim before the arbitrators, the claim was barred by limitation and hence, the arbitrators had no authority or jurisdiction to adjudicate upon the claim. The petitioners also challenge the award on the ground that the award was passed beyond the statutory time. The petitioners also question the award passed on the ground that there was no statutory delegation of the powers and functions of the Board or the Managing Director of the Board on the employees, consequently, the award passed without impleading the Board represented by its Managing Director as a party and without hearing the Board is illegal and a nullity as far as the Board is concerned. It is seen that the first respondent, a civil contractor, submitted its tender to the petitioners herein for construction of 30 lakhs litres capacity clear water reservoir at the treatment work site at Pannaipatti, including supply of all pipes, special valies, etc. Accepting the tender submitted by the first respondent, an agreement was entered into between the TWAD Board and the first respondent under agreement dated 06.11.1991 for a contract value of Rs. 23,01,651. It was stated that the contract should be completed within 12 months from the taking over of the site.
Accepting the tender submitted by the first respondent, an agreement was entered into between the TWAD Board and the first respondent under agreement dated 06.11.1991 for a contract value of Rs. 23,01,651. It was stated that the contract should be completed within 12 months from the taking over of the site. It is admitted that the first respondent herein completed the work as per the conditions. However, no payment was made within the stipulated contractual period of 24 months. As per Clause 32, upon the certificate issued by the Executive Engineer on completion of the entire work, the contractor would receive the final payment of all the amounts due and payable to him under or by virtue of the contract except security deposit and a sum equal to 2 1/2% of the total value of the work done, provided there is no recovery or forfeiture. The amount withheld from the final bill would be paid to the contractor after a period of 24 months of the satisfactory performance of the entire civil work or soon after the expiry of such period of 24 months and on production of an indemnity bond for the said amount for a further period of three years beyond the above said two years. It is admitted that the first respondent sent a letter dated 07.09.1994 to the Executive Engineer, Maintenance Division, Madurai and called upon him to pay the amount as per the final bill. He also addressed a letter dated 03.10.1994 to the Superintending Engineer for taking further action. Since there was no response, he sent yet another letter dated 22.11.1994. It is the case of the petitioners that on 11.10.1994, the second petitioner sent a reply that as per the Annexure I the first respondent was not entitled to any amount. On 19.10.1994, the Superintending Engineer (first petitioner) sent a letter to the first respondent stating that the matter of payment was receiving consideration. Since no reply came after that from the petitioners herein, the first respondent sent a lawyer's notice on 25.12.1994 calling upon the petitioners to make the payment due and payable to the first respondent as per the agreement. It is also stated that the first respondent invoked the arbitration clause and raised the dispute as to the non-payment, for arbitration.
Since no reply came after that from the petitioners herein, the first respondent sent a lawyer's notice on 25.12.1994 calling upon the petitioners to make the payment due and payable to the first respondent as per the agreement. It is also stated that the first respondent invoked the arbitration clause and raised the dispute as to the non-payment, for arbitration. It is stated that on 17.01.1995 the petitioners herein sent a reply through their lawyer stating that the matter need not be referred for arbitration. The first respondent, however, sent a notice on 13.02.1995 invoking the arbitration clause, since, according to the first respondent, there was no action from the petitioners. On 13.02.1995, the first respondent herein issued a notice appointing Thiru K. Natarajan as its nominee arbitrator. It is stated by the first respondent that the petitioners sent a letter on 06.03.1995 regarding the settlement of final bill and called upon the first respondent for discussion Since nothing fruitful was coming thereafter, the first respondent herein requested the petitioners to appoint their arbitrator. It is stated that on the petitioners appointing their arbitrator on 27.04.1999, the arbitrators entered reference. The arbitrators passed an award on the claims of the first respondent herein on 07.11.2000. Learned counsel appearing for the petitioners herein made his submission on legal grounds on the question of limitation as well as non-joinder of the necessary party, viz. the Managing Director of the Board. He also made an issue as regards the arbitrators not passing the award within a period of four months after entering reference; consequently, the arbitrators had become functus officio, since any award passed after the expiry of four months would be invalid. Learned counsel appearing for the petitioner/TWAD Board submitted that although the first respondent made its claim invoking the arbitration clause, as early as 25.12.1994, the claim itself was made through the claim statement filed on 26.07.1999. Hence, applying the decision in Panchu Gopal Bose vs. Board of Trustees for Port of Calcutta, AIR 1994 SC 1615 = 1993 (2) Arb. LR 97 (SC), there could be no valid award in respect of a time barred claim. He also made a submission that although on 13.02.1995, the first respondent appointed its arbitrator and the arbitrators entered reference on 27.04.1999, they sat together only on 05.07.1999. As such the award passed is ab initio void, it being beyond four months period.
LR 97 (SC), there could be no valid award in respect of a time barred claim. He also made a submission that although on 13.02.1995, the first respondent appointed its arbitrator and the arbitrators entered reference on 27.04.1999, they sat together only on 05.07.1999. As such the award passed is ab initio void, it being beyond four months period. In this connection, placing reliance on the decision in State of Punjab vs. Hardyal, AIR 1985 SC 920 = 1985 Arb. LR 297 (SC) he submitted that mere participation in the award proceedings would not confer a valid jurisdiction on the arbitrators to pass an award against the petitioners. Finally, he pointed out that the claim was made as against the Superintending Engineer of the TWAD Board. Being a statutory body, the Board is represented only through its Managing Director. He pointed out that TWAD Board is a corporation created under the Tamil Nadu Water Supply and Drainage Board Act, 1970 (4 of 1971). The contract was entered into under Section 17 of the said Act between the TWAD Board and the first respondent. The signatory to the document on behalf of the Board was the Superintending Engineer who had signed for the Board as per the directions given to him. Since the proper person to represent the Board was only the Managing Director as per Section 56 of the Act, the Superintending Engineer could not represent the Board in the arbitral proceedings. The only contracting party, hence, is the Managing Director representing the TWAD Board. Without impleading the proper party, the award passed is totally illegal and unsustainable. In this connection, learned counsel referred to the decision in Doraisamy N. vs. Tamil Nadu Water Supply & Drainage Board and others, 1999-1-LW 708 and pointed out that the Superintending Engineer was discharging only a ministerial act of signing the contract; as such, the award is not a legally enforceable one. OP No. 467 of 2006 filed under Sections 14(2) and 17 of the Arbitration Act, 1940 is only to direct the arbitrators to file the original award dated 07.11.2000 and pass a decree in terms of the award. Learned counsel appearing for the first respondent, however, placed reliance on the decision in Jatinder Nath vs. Chopra Land Developers Pvt. Ltd., 2007 AIR SCW 1760 = 2007 (1) Arb.
Learned counsel appearing for the first respondent, however, placed reliance on the decision in Jatinder Nath vs. Chopra Land Developers Pvt. Ltd., 2007 AIR SCW 1760 = 2007 (1) Arb. LR 490 (SC) that since the final bill was not settled and the petitioners still retain the security deposit apart from the 5% retention money, the claim on limitation was totally unsustainable. He placed reliance on the said decision to submit that the court can still ratify an award passed beyond the period of four months. Consequently, there are no errors as alleged by the petitioners. He pointed out that the claimant - first respondent filed this petition before the arbitrators against the Board as represented by the Superintending Engineer and hence, prayed for a decree in terms of the award. The first respondent has also filed their counter-affidavit denying the allegations made in OP No. 450 of 2006 preferred by the TWAD Board. It needs to be recorded herein that neither party filed any paper/book on the documents file as regards their respective claim on limitation on the premise that the award contains the dates which are not controverted by either of the parties. The original contract alone was produced before me for perusal. Hence, the order passed by this court is based on the submissions of the learned counsel for both sides as well as on the facts as stated in the award and admitted to be correct by both the counsel. Learned arbitrators raised the issue as to whether the first respondent was entitled to payment of Rs. 2,96,800 with interest as claimed in the petition. In this connection, the admitted fact is that the first respondent raised a dispute on 07.09.1994. The arbitrators entered reference on 27.04.1999 and they sat together on 05.07.1999. Referring to the contention of the petitioners that the arbitral tribunal had no jurisdiction to decide on the claims of the first respondent, learned arbitrators held that the first respondent had invoked the arbitration clause in time and the question of limitation would arise only if the arbitration clause was not invoked. They further held that the conduct of the petitioners appointing their arbitrator, not pursuing their objection under Section 33 of the Act, amounted to acquiescence and was a waiver; that the petitioners committed breach of their agreement in not making the payment as per the terms of the agreement.
They further held that the conduct of the petitioners appointing their arbitrator, not pursuing their objection under Section 33 of the Act, amounted to acquiescence and was a waiver; that the petitioners committed breach of their agreement in not making the payment as per the terms of the agreement. The arbitrators also pointed out that the claim of the first respondent was limited to Rs. 1.40 lakh as per Exhibit C-1, letter dated 07.09.1994. Apart from the claim for return of security deposit, 5% retention money claimed by first respondent were held to be valid claims. The arbitrators accepted the first respondent's case that they had executed excess work for which they should be paid at the rate on unit basis for running meter and not on lump sum basis. The arbitrators also awarded interest at 18% per annum and the award was made totalling to a sum of Rs. 2,96,800. As to the contention of the learned counsel appearing for the petitioners that the award was passed beyond the period prescribed under Schedule I to the Act, namely, four months from the date of entering into the reference, as rightly contended by the learned counsel for the first respondent, it is no doubt true that the award passed by the arbitrators after four months is not binding on the parties. However, the defect or illegality is not an incurable one. As rightly contended by the learned counsel appearing for the first respondent, placing reliance on the decision in Jatinder Nath vs. Chopra Land Developers Pvt. Ltd. (supra), a mere failure of an arbitrator to make an award within the time allowed by law will not make the award being set aside only on that account. The Supreme Court held that the court has ample power in a given case to extend the time and to give life to the vitiated award by exercising judicial discretion under Section 28 of the Act. An application to have the award set aside on the ground that it was made beyond the time prescribed has to be moved under the Act. The Supreme Court further held that the power given to the court under Section 28 is so wide that it could extend the time even if the award is made beyond four months from the date of the arbitrator entering upon reference.
The Supreme Court further held that the power given to the court under Section 28 is so wide that it could extend the time even if the award is made beyond four months from the date of the arbitrator entering upon reference. The only restriction is that it must be exercised with judicial discretion. I do agree with the submission of the learned counsel for the petitioners that in the light of the said decision of the Apex Court, ample power is there for the court to extend the time under Section 28 and hence, the award is saved by extended time. The second question that arises for consideration is as to whether the claim is barred by limitation. As per the list of dates and events given by the first respondent and on the admitted case of the parties herein as recorded by the learned arbitrators, the first respondent sent a letter dated 07.09.1994 to the second petitioner herein claiming the final bill. It may be noted that the petitioner - Board sent a reply on 11.10.1994 that the first respondent was not entitled for the amount claimed for the alleged extra work done. Thereafter, on 25.12.1994, the first respondent sent a letter invoking the arbitration clause. The arbitrator was nominated by the first respondent on 13.02.1995. On 05.07.1999, the arbitrators sat together and the claim petition along with the claim statement was filed only on 26.07.1999. Under Section 20 of the Arbitration Act, 1940, where persons have entered into an arbitration agreement before the institution of a suit, and where a difference has arisen between the parties to which the agreement applies, they may apply to the court having jurisdiction in the matter. On such application being made, the court shall order notice and make an order of reference to the arbitrator appointed by the parties. Under Section 37 of the Arbitration Act, 1940, law of limitation applies to proceedings before the arbitrators as it applies to proceedings before the court.
On such application being made, the court shall order notice and make an order of reference to the arbitrator appointed by the parties. Under Section 37 of the Arbitration Act, 1940, law of limitation applies to proceedings before the arbitrators as it applies to proceedings before the court. According to sub-section (3) of Section 37 of the 1940 Act, for the purposes of Section 37 and of Indian Limitation Act, 1908, "an arbitration shall be deemed to be commenced when one party to the arbitration agreement serves on the other parties thereto a notice requiring the appointment of an arbitrator, or where the arbitration agreement provides that the reference shall be to a person named or designated in the agreement, requiring that the difference be submitted to the person so named or designated". As per sub-clause (2), notwithstanding any condition in the arbitration agreement, limitation for a suit is deemed to have arisen on the date when it would have arisen but for that condition in the agreement. The commencement of arbitration, hence, has to be understood in terms of sub-section (3). As already noted, arbitration commences when one party serves the notice on the other requiring the appointment of an arbitrator or if the arbitrator was named or designated in the arbitration agreement, requiring a party to submit the difference to the arbitrator named or designated. Thus, the date on which a party takes a definite step to obtain relief would have to be seen in the light of what has been given under the agreement between the parties. In J. C. Budhraja vs. Chairman, Orissa Mining Corporation Ltd. and another, (2008) 2 SCC 444 = 2008 (1) Arb. LR 238 (SC) the Apex Court had an occasion to consider the issue of limitation. In that case, the contractor sent a notice on 04.06.1980 to the contractee - Orissa Mining Corporation Ltd., invoking the arbitration clause in the agreement. He suggested the panel of names and requested the other party to appoint one of them as arbitrator. He also filed a petition before the sub-court under Section 8(2) of the Arbitration Act, 1940 for appointment of an arbitrator. The same was allowed by consent order. The contractor filed claim statement on 27.06.1986 seeking an award with interest from 01.06.1986. The arbitrator passed an award in favour of the contractor.
He also filed a petition before the sub-court under Section 8(2) of the Arbitration Act, 1940 for appointment of an arbitrator. The same was allowed by consent order. The contractor filed claim statement on 27.06.1986 seeking an award with interest from 01.06.1986. The arbitrator passed an award in favour of the contractor. The petition filed to set aside the award was, however, dismissed. One of the questions raised by the Corporation before the High Court was whether the claim of the contractor was barred by limitation. The High Court agreed with the contention that the claim was hit by limitation and hence the award was liable to be set aside. On further appeal before the Supreme Court by the contractor, the Supreme Court found that the Orissa Mining Corporation Ltd. wrote a letter on 28.10.1978 informing the contractor that it had decided to constitute a committee to go into the claims so that the dues could be ascertained. This constituted acknowledgement in writing that in respect of pending claims, the limitation stood extended by three years from 04.03.1980 when the committee passed the order on the claims and at all events, by three years from 28.10.1978. The Apex Court pointed out that the contractor issued a notice invoking arbitration clause on 04.06.1980 and thereafter filed a petition under Section 8(2) for appointment of an arbitrator which was allowed on 06.10.1980. Hence, the claims were within time made within three years from 28.10.1978 and 04.06.1980. However, as regards the claims made in the claim statement filed before the arbitrator, the Apex Court pointed out that they were fresh claims and hence barred by limitation. Referring to the provisions of Section 37(3), the Apex Court held - "In the case of arbitration, limitation for the claim is to be calculated on the date on which the arbitration is deemed to have commenced. Section 37(3) of the Act provides that for the purpose of Limitation Act, an arbitration is deemed to have commenced when one party to the arbitration agreement serves on the other party thereto, a notice requiring the appointment of an arbitrator". The Apex Court pointed out that if the claims were barred on 04.06.1980, i.e. on the day when the notice was served invoking the arbitration clause, then the claim has to be rejected on the ground that the claims were barred by limitation.
The Apex Court pointed out that if the claims were barred on 04.06.1980, i.e. on the day when the notice was served invoking the arbitration clause, then the claim has to be rejected on the ground that the claims were barred by limitation. The Apex Court pointed out that the period of limitation for the purpose of Section 37(3) has nothing to do with the period of limitation for filing a petition under Section 8(2) of the Act. As far as the present case is concerned, Clause 52 of the agreement is the relevant clause on arbitration. Under sub-clause (4), disputes between the parties, other than questions relating to specifications, designs or instructions, shall be referred to two arbitrators one to be nominated by the contractor and one by the employer, i.e. the petitioner herein. When the arbitrators differ, then an umpire to be appointed by the said arbitrators in writing shall pass the order which shall be binding on the parties. Admittedly, in this case, the arbitrators were appointed by the parties. In that event, as per Section 37, the commencement of the proceedings as per sub-section (3) of Section 37 of the Arbitration Act, 1940, the arbitration is deemed to commence if one party to the agreement serves on the other party, a notice requiring the appointment of an arbitrator. Admittedly, the first respondent invoked the arbitration clause on 25.12.1994 when they intimated the intention to have the dispute referred to arbitration. The arbitrators held that since the claimant - first respondent had already invoked the arbitration clause and appointed its arbitrator, they were not at fault of inordinate delay caused by the petitioners in appointing an arbitrator and that the question of limitation would be attracted only if the arbitration clause was not invoked. The first respondent nominated their arbitrator on 13.02.1995. In terms of Section 18 of the Limitation Act, 1963, the cause of action arose when the petitioners failed to comply with the notice invoking the arbitration clause. On the very face of the dates available, in the light of the decision of the Supreme Court referred to above in J. C. Budhraja vs. Chairman, Orissa Mining Corporation Ltd. and another (supra), the arbitrators' view merits acceptance.
On the very face of the dates available, in the light of the decision of the Supreme Court referred to above in J. C. Budhraja vs. Chairman, Orissa Mining Corporation Ltd. and another (supra), the arbitrators' view merits acceptance. It may be noted that the decision relied on by the petitioners in Panchu Gopal Bose vs. Board of Trustees for Port of Calcutta (supra) was considered by the Apex Court in J. C. Budhraja vs. Chairman, Orissa Mining Corporation Ltd. and another (supra). Hence, I hold that there is no illegality in the view of the arbitrators that the claim was within time. Hence, even though the decision in Jatinder Nath vs. Chopra Land Developers Pvt. Ltd. (supra) enables this court to extend the time under Section 28, yet, having regard to the limitation starring on the claim, I have no hesitation in setting aside the award. The issue as regards the award passed beyond four months was considered by the arbitrators in paragraph 34 of the award. It is seen that the petitioners appointed one M. S. Kandasamy, retired District Judge, as a nominee arbitrator after a long interval. However, the said arbitrator could not participate. Hence, another arbitrator, M. Gopalasamy, retired District Judge, was appointed and immediately thereafterwards, the proceedings were conducted. Learned arbitrators further pointed out that the petitioners participated fully by filing counter statement, examining witnesses as well as filing written arguments. Considering the fact that the first respondent had nominated their arbitrator promptly and having regard to the statement in paragraph 34 of the award and in the light of the decision in Jatinder Nath vs. Chopra Land Developers Pvt. Ltd. (supra), I do not find any ground to accept the plea of the petitioners herein and hence, the time, under Section 28, stands extended to confer legality on the award passed. Hence, on this ground and on the plea of limitation, I do not agree with the submission of the petitioners herein. Learned counsel however submitted that the discretion to be exercised to confer validity on the award needs to be exercised judiciously. He referred to the decisions in National Insurance Company Ltd. vs. Keshav Bahadur and others, AIR 2004 SC 1581 ; Union of India vs. Kuldeep Singh, AIR 2004 SC 827 ; and Aero Traders (P.) Ltd. vs. Ravinder Kumar Suri, AIR 2005 SC 15 .
He referred to the decisions in National Insurance Company Ltd. vs. Keshav Bahadur and others, AIR 2004 SC 1581 ; Union of India vs. Kuldeep Singh, AIR 2004 SC 827 ; and Aero Traders (P.) Ltd. vs. Ravinder Kumar Suri, AIR 2005 SC 15 . The Apex Court in National Insurance Company Ltd. vs. Keshav Bahadur and others (supra) held that "discretion is usually given on matters of procedure or punishment, or costs of administration rather than with reference to vested substantive rights. ... When a statute gives a judge a discretion, what is meant is a judicial discretion, regulated according to the known rules of law and not the mere whim or caprice of the person to whom it is given on the assumption that he is discreet". The Apex Court in Union of India vs. Kuldeep Singh (supra) pointed out "discretion is to know through law what is just". It further held that the discretion to be exercised must be something done according to the rules of reason and justice, according to law and not humour. The reasons given for the delayed passing of an award given in paragraph 34 is self-explanatory for this court to exercise discretion to confirm the view of the arbitrators to confer legality on the award. Learned counsel appearing for the petitioners raised another issue as regards the Managing Director not impleaded to represent the TWAD Board as per the decision of this court in Doraisamy N. vs. T.N. Water Supply & Drainage Board (supra) which related to a case of the TWAD Board. In the reported case, the suit in respect of a contract of civil works was laid by impleading the staff and the officers as defendants. The Managing Director representing the Board sought for impleading himself on the ground that the Managing Director was the proper person to represent the Board. The court below allowed the said application of the TWAD Board to implead them as an additional defendant. The said order was challenged by the contractor by way of revision before this court. Learned Single Judge of this court rejected the revision petition holding that the Board is a statutory body as per Section 56 of the Tamil Nadu Water Supply and Drainage Board Act, 1970, the officers were not competent to represent the Board and that only the Managing Director could legally represent the Board.
Learned Single Judge of this court rejected the revision petition holding that the Board is a statutory body as per Section 56 of the Tamil Nadu Water Supply and Drainage Board Act, 1970, the officers were not competent to represent the Board and that only the Managing Director could legally represent the Board. This court further held that even if the plaintiff company was entitled to any relief, that could only be against the Board and not against the officers individually. Referring to the decisions of the Apex Court in Aliji Momonji vs. Lalji Mavji and others, AIR 1997 SC 64 and Union of India vs. District Judge, Udhampur, (1994) 4 SCC 737 , dealing with the expression "person interested", this court confirmed the order impleading the Managing Director as the defendant in the suit. It may be noted that the Executive Engineer or Superintending Engineer discharge their functions only as ministerial officers. The participation of these officers are only as persons representing the Board as governed by the provisions of the Act and that the presence of the proper person to represent the Board is necessary for an effective adjudication of the dispute and for implementation of the relief granted. Learned counsel appearing for the petitioners also made a reference to the decision of the Supreme Court in Mohanlal Jain vs. His Highness Maharaja Shri Sawai Man Singhji, Ex-Ruler of Jaipur, AIR 1962 SC 73 , holding that a person merely signing the letters on behalf of the Military Secretary was not acting as an agent of the Ex Ruler, but was merely performing the ministerial act of signing the letters on behalf of the Military Secretary. The Supreme Court held that the position of a Military Secretary was on a different footing. However, the agent signing for the Military Secretary could not be taken to be acting as agent of the Ex-Ruler to constitute him an agent and hence, the suit against him for recovery of money for the goods supplied and for the damages suffered was misconceived and hence, the dismissal of the suit was justified. The decision relied on by the petitioners only emphasizes the fact that the officer discharging ministerial functions could not be said to be an officer to represent a statutory corporation.
The decision relied on by the petitioners only emphasizes the fact that the officer discharging ministerial functions could not be said to be an officer to represent a statutory corporation. More so, when the provisions of the Act clearly state that Managing Director alone was competent to represent the Board in any proceedings, the failure to implead the Managing Director in the arbitral proceedings is clearly an issue to be taken note of to reject the award. It may be seen that the Supreme Court in J. C. Budhraja vs. Chairman, Orissa Mining Corporation Ltd. (supra) referring to the decisions in Hindustan Construction Company Ltd. vs. Governor of Orissa, (1995) 3 SCC 8 = 1995 (2) Arb. LR 1 (SC) and Hindustan Tea Co. vs. K. Sashikant & Co., AIR 1987 SC 81 = 1987 (1) Arb. LR 29 (SC), held that while exercising the jurisdiction to consider whether the award should be set aside, the court cannot reappreciate the materials on record to arrive at a finding as to whether the award could have been made under the particular circumstances. An award could be set aside on any of the grounds specified under Section 30. It is no doubt true that Section 30 of the Arbitration Act, 1940 providing for setting aside of an award is restrictive in its operation. However, in O.N.G.C. Ltd. vs. Garware Shipping Corporation Ltd., AIR 2008 SC 456 = 2007 (4) Arb. LR 179 (SC) the Apex Court held that "there is no proposition that the courts could be slow to interfere with the arbitrator's award, even if the conclusions were perverse, and even when the very basis of the arbitrator's award was wrong". In Bharat Coking Coal Ltd. vs. Annapurna Construction, AIR 2003 SC 3660 = 2003 (3) Arb. LR 119 (SC) the Apex Court observed "there lies a clear distinction between an error within the jurisdiction and error in excess of jurisdiction". In Dresser Rand S.A. vs. Bindal Agro Chem Ltd. and another, AIR 2006 SC 871 = 2006 (1) Arb. LR 171 (SC) the Supreme Court held - "mere acceptance or acquiescing to the jurisdiction of the arbitrators for adjudication of the disputes does not disentitle an aggrieved party to have the remedy under Section 33 of the Arbitration Act, 1940 through the court, .... the remedy under Section 33 is the only right royal way for deciding the controversy".
LR 171 (SC) the Supreme Court held - "mere acceptance or acquiescing to the jurisdiction of the arbitrators for adjudication of the disputes does not disentitle an aggrieved party to have the remedy under Section 33 of the Arbitration Act, 1940 through the court, .... the remedy under Section 33 is the only right royal way for deciding the controversy". Insofar as the present case is concerned, the petitioners herein took an objection that the respondents should have impleaded the TWAD Board represented by the Managing Director who was the only contracting party. In paragraph 39, the arbitral tribunal held that even assuming the issue was not arbitrable, the conduct of the petitioners in agreeing to the appointment of the arbitrator and not pursuing the objections under Section 33 of the Arbitration Act, 1940 amounted to waiver on their part. Admittedly, the Board is a statutory body governed by the Tamil Nadu Water Supply and Drainage Board Act, 1970. The only person empowered under the Act is the Managing Director. Other officials including the Superintending Engineer and Executive Engineer perform ministerial acts under the directions of the Managing Director. Consequently, unless the Board is properly represented by the person empowered to do so under the provisions of the Tamil Nadu Water Supply and Drainage Board Act, 1970, it is difficult to accept the view of the arbitrators on this front. Hence, even though I uphold the award on the question of limitation, the enforceability of the award is vitiated on account of the TWAD Board not properly represented by the Managing Director. Hence, the award suffers an illegality by reason of the proper party not impleaded in terms of the Tamil Nadu Water Supply and Drainage Board Act, 1970. In the circumstances, I declare the award to be of no effect as far as the petitioner is concerned. Consequently, OP No. 450 of 2006 is allowed in part. In view of the order passed in Transfer OP No. 450 of 2006, the OP filed by the first respondent, namely, OP No. 467 of 2006 stands rejected by reason of the TWAD Board not properly represented. There will be no order as to costs.