CHHATTISGARH STATE WAREHOUSING CORPORATION, RAIPUR (C. G. ) THROUGH ITS MANAGING DIRECTOR. v. SHYAM LAL AGRAWAL ENGINEERS & BUILDERS, "ANAND" STATION ROAD, RAIGARH
2009-11-18
DHIRENDRA MISHRA, R.N.CHANDRAKAR
body2009
DigiLaw.ai
ORDER As per Hon'ble Shri Dhirendra Mishra, J.:- 1. The appellant -Corporation has preferred this arbitration appeal under Section 37 (1) (b) of the Arbitration A Conciliation Act, 1996 (for brevity 'Act, 1996') against the impugned judgment dated 13th August, 2009 (Annexure A-1) passed in Civil Suit No. 12-N07 whereby the learned District Judge. Raigarh has rejected the application preferred by the appellant-Corporation under Section 34 of the Act 1996 for setting aside the award dated 13.10.2006 (Annexure A-2) passed by the Sole Arbitrator. 2. Briefly stated, facts of the case are that the appellant had awarded contract of construction of go-down to the respondent firm. An agreement was executed between the parties on 12.1.2002 for the construction of aforesaid work and the respondent executed the work. A dispute arose between the parties with respect to payment of bills and the appellant objected the quality of construction. Ultimately, the respondent moved an application under Section 11 (6) of the Act 1996 before the High Court for appointment of Sole Arbitrator and referring the dispute arising out of the arbitration agreement to the Sole Arbitrator so appointed. The application was allowed on 16.9.2005 and Shri Justice S.K. Tiwari (Retd.) was appointed 'Sole Arbitrator' and the dispute was referred to him for adjudication. Learned Sole Arbitrator passed the award in favour of the respondent on 13.10.2006. The appellant filed an application under Section 34 of the Act, 1996 for setting aside the award dated 13.10.2006, however, the same has been dismissed by the impugned order with a finding that none of the grounds mentioned in Section 34 of the Act 1996 is available to the appellant for setting aside the award. 3. The appellant has preferred this appeal on the ground that as per condition of tender document, the contractor was required to undertake the construction by the use of Chimni bricks, however, bricks used by the contractors were manufactured in the hand kiln, contrary to the specifications in the contract agreement.
3. The appellant has preferred this appeal on the ground that as per condition of tender document, the contractor was required to undertake the construction by the use of Chimni bricks, however, bricks used by the contractors were manufactured in the hand kiln, contrary to the specifications in the contract agreement. The award has also been impugned on the ground that the petition has been filed by an unauthorized person as partner of the respondent firm, though no evidence has been adduced that the firm in question is a registered partnership firm and Shri J.P. Agarwal is a partner of the said firm and therefore, claim petition was barred by Section 69 (2) of the Indian Partnership Act, 1932 (for short' Act, 1932'). Various other grounds have been taken in the memo of appeal, however, the learned counsel for the appellant-Corporation pressed the above two grounds only. 4. Mr. Tiwari, learned counsel appearing for the appellant Corporation submits that the respondent firm has filed the claim petition through its partner Shri J.P. Agarwal, but no registered partnership deed showing the said J.P. Agarwal as partner of the respondent firm has been filed and therefore, in view of Section 69(2) of the Act, 1936, arbitral proceedings would not be maintainable at the instance of an unregistered firm. Reliance is placed on the judgment of the Hon'ble Supreme Court in the matter of U.P State Sugar Corporation Ltd. Vs. Jain Construction Co. and Another-1. 1. (2004) 7 SCC 332 It was further argued that indisputably the respondent used the bricks manufactured in hand kiln, whereas, as per provisions in the contract agreement" the respondent was required to use the bricks manufactured in Chimni kiln. Both the above objections were taken in the reply to the statement of claim before the learned Arbitrator, however, the same were not considered by the learned Arbitrator on extraneous grounds. The learned District Judge has also rejected the aforesaid objections without any valid reason and without considering the settled law in this regard. 5. On the other hand, Mr. Chouhan, learned counsel for the respondent argued that none of the grounds enumerated in Section 34 of the Act, 1996 is available to the appellant. Objections taken by the appellant have been rejected by the learned Arbitrator with an observation that said Mr.
5. On the other hand, Mr. Chouhan, learned counsel for the respondent argued that none of the grounds enumerated in Section 34 of the Act, 1996 is available to the appellant. Objections taken by the appellant have been rejected by the learned Arbitrator with an observation that said Mr. J.P. Agarwal in his affidavit has affirmed that he is partner of the partnership firm and he signed the agreement as Partner. Filing of certified copy of registered partnership deed under Section 69 (2) of the Act. 1932 is not necessary in the arbitration proceedings and the same is required later on. Other objection that the quality of the bricks used in the construction of go-down was sub-standard and not in accordance with the provisions of the agreement is also belied from the evidence of the then Divisional Engineer Shri Sabir, who has admitted in Para-4 of his cross-examination that quality of bricks used in the construction of go-down was proper, and keeping in view this evidence the learned Arbitrator and subsequently, the learned District Judge rejected the aforesaid objection. Finding of the above fact recorded by the arbitral tribunal cannot be challenged in a petition under Section 34 of the Act, 1996 and the same cannot be raised as ground in an appeal under Section 37(1)(b) of the Act, 1996. 6. We have heard learned counsel for the respective parties. 7. Indisputably, application filed by the contractor under Section 11 (6) of the Act, 1996 was allowed by the High Court and it was held that case for appointment of Sole Arbitrator is made out and accordingly, the Sole Arbitrator was appointed and the dispute was referred to the Sole Arbitrator for adjudication. 8. Now the question for our consideration is whether the Sale Arbitrator can entertain any objection regarding appointment of Arbitrator under Section 11 (6) of the Act, 1996 by the High Court on the ground that appointment of Arbitrator has been made at the instance of a partner of an unregistered firm in view of provisions of Section 69 (2) of the Act, 1932? 9.
9. Admittedly, the dispute has been referred to the Sole Arbitrator appointed by the High Court under Section 11 (6) of the Act 1996 and no objection was taken by the appellant-Corporation before the High Court on the ground that the partner of the firm approaching the High Court for appointment of Sole Arbitrator has not produced the registered partnership deed showing himself to be a partner of the said firm and accepted the appointment of the Arbitrator and did not challenge the same by way of appeal under Article 136 of the Constitution of India before the Hon'ble Supreme Court. Therefore, it is now not open to the appellant to take such objection before the Arbitrator as the Arbitrator has no jurisdiction to entertain such objection because the appointment of the Arbitrator has been made by a judicial order and in such circumstances the appellant has to participate in the arbitration proceeding before the tribunal only on the merits of claim. Please see Para Nos. 39,44 & 47 of the SBP & Co. Vs. Patel Engineering Ltd. & another-2. 2. (2005) 8 SCC 618 10. In the matter of UP. State Sugar Corp. Ltd.-1 (supra) the Hon'ble Supreme Court in Para-7 of the judgment has observed that it is true that the arbitral proceedings would not be maintainable at the instance of an unregistered firm having regard to the mandatory provisions contained in Section 69 of the Act, 1932 as held in Jagdish Chandra Gupta Vs. Kajaria Traders (India) Ltd. -3. 3. AIR 1964 SC 1882 4. AIR 2000 SC 2676 11. In the matter of Kamal Puspha Enterprises Vs. D.R. Construction Company-4 it has been observed that "the prohibition contained in Section 69 is in respect of instituting a proceeding to enforce a right arising from a contract in any Court by an unregistered firm, and it had no application to the proceedings before an Arbitrator and that too when the reference to the Arbitrator was at the instance of the appellant itself.
If the said bar engrafted in Section 69 is absolute in its terms and is destructive of any and every right arising under the contract itself and not confined merely to enforcement of a right arising from a contract by an unregistered firm by instituting a suit or other proceedings in Court only, it would become a jurisdictional issue in respect of the Arbitrator's power, authority and competency itself, undermining thereby the legal efficacy of the very award, and consequently furnish a ground by itself to challenge the award when it is sought to be made a rule of Court. 12. In any case, we are of the opinion that in view of the law laid down in the matter of SBP & Co.2 (supra) where the appointment of the Arbitrator is made by the High Court in exercise of powers under Section 11 (6) of the Act. 1996, it is not open to the Arbitrator to entertain any objection that arbitration proceedings at the instance of the partner of an unregistered firm is not maintainable. The only remedy in such situation would be filing of an appeal against the appointment I before the Hon'ble Supreme Court. 13. Other objection that the sub-standard bricks manufactured in hand kiln were used contrary to the terms of the agreement which provided for bricks manufactured in Chimni kiln, the arbitral tribunal on the basis of admission of the In-charge Engineer examined by the appellant-corporation has rejected the above objection and the same has been again rejected by the learned District Judge and therefore, the finding of fact recorded by the arbitral tribunal in the award cannot be assailed on this ground in an appeal under Section 37(1)(b) of the Act 1996. 14. In the result, the appeal preferred by the appellant is without any merit, the same deserves to be dismissed and it is hereby dismissed. Appeal Dismissed.