Sew Engineering Works Pvt. Ltd. v. Power Grid Corporation Of India Ltd.
2017-12-28
ALOK ARADHE
body2017
DigiLaw.ai
JUDGMENT : Alok Aradhe, J. By way of Arbitration Application No. 51/2001, the petitioner, namely, M/s Power Grid Corporation of India Ltd. has filed the objection under Section 34 of the J&K Arbitration and Conciliation Act, 1997 for setting aside the award dated 22.02.2001, whereas in Arbitration Application No. 61/2001, the respondent, namely, M/s Sew Engineering Works Pvt. Ltd. has filed an application for making the aforesaid award the rule of the Court. Therefore, both the applications were heard analogously and are being decided by this common order. 2. Facts giving rise to the filing of these applications briefly stated are that Power Grid Corporation of India (hereinafter referred to as ‘Company’) is a company registered under the Companies Act, 1956. The Company awarded a contract for supply of five Nos. of 250 KVA Diesel Generator sets with 855 G Cummins engine and AMP panel (Auto on and manual off) with alternator of Jyoti/Kirloskar make (for site basis) @ Rs. 10,46,730/- for erection, testing and commissioning at site and for supply of mandatory spares, 2 lot of 4 sets at Hissar and Moga Sub-stations. The contract value was Rs.25,04,650/-. As per the original contract schedule, the supply of first three sets at site shall be completed within two months and balance two sets after another two months from the date of (letter of award). The period of completion of the contract was essence of the contract. The respondent No. 1 failed to discharge the contractual obligations of supplying the requisite number of Diesel Generator sets, spares at the locations and to erect and commission the diesel generator sets. The Company acting under the terms and conditions of the contract ordered recovery from the contractor to the tune of Rs. 7,06,164/-. Thereupon, the dispute was raised between the parties and the same was referred to a Board of Arbitrators. In the aforesaid Board, one Arbitrator each was appointed by the Company as well as the Contractor and the respondent No. 2 was the Umpire. The arbitration proceedings closed on 10.09.2000. It is the case of the petitioner-Company in arbitration application No. 51/2001 that neither there was any meeting nor the arbitrators exchanged their view before passing the award. It is further the case of the petitioner-Company that respondent No. 2 passed the award unilaterally on 05.01.2001.
The arbitration proceedings closed on 10.09.2000. It is the case of the petitioner-Company in arbitration application No. 51/2001 that neither there was any meeting nor the arbitrators exchanged their view before passing the award. It is further the case of the petitioner-Company that respondent No. 2 passed the award unilaterally on 05.01.2001. A copy of the award allegedly received by respondent No. 2 on 22.02.2001 containing the endorsement of respondent No. 3 having signed his award dated 05.01.2001. A copy of the award was delivered to the petitioner Company by Speed Post on 27.02.2001. By the impugned award, claims of the Contractor as well as petitioner-Company in Arbitration Application No. 51/2001 were partly decreed. The petitioner in AA No. 51/2001 filed an application under Section 34 of the J&K Arbitration and Conciliation Act for setting aside the award. 3. Learned Senior counsel for the petitioner Company submitted that the arbitrator grossly erred in holding that the provisions of Arbitration and Conciliation Act, 1996 applied to the dispute between the parties. It is further submitted that provisions of J&K Arbitration and Conciliation Act, 1997 were applicable to the dispute between the parties. Therefore, the impugned award is per se without jurisdiction and is liable to be quashed on this ground alone. While referring to the pleadings of the parties, it is submitted that it is an admitted position before the Court that the provisions of J&K Arbitration and Conciliation Act, 1997 were applicable to the dispute between the parties. 4. Learned Senior Counsel has also invited the attention of this Court to the affidavit filed on behalf of respondent No. 4, who was an arbitrator appointed by the Company, and has submitted that on conclusion of the proceeding on 10.09.2000, no date was fixed by the Chairman of Board of Arbitrators for deliberations or passing and publishing of the award which was incumbent on them. It is further submitted that respondent No. 4 in his affidavit has stated that respondent No. 4 was in constant touch with the Chairman of the Board of Arbitrators. However, no joint meeting was ever held for deliberations. Therefore, the award is violative of Section 29 of the J&K Arbitration and Conciliation Act, 1997.
It is further submitted that respondent No. 4 in his affidavit has stated that respondent No. 4 was in constant touch with the Chairman of the Board of Arbitrators. However, no joint meeting was ever held for deliberations. Therefore, the award is violative of Section 29 of the J&K Arbitration and Conciliation Act, 1997. It is also submitted that the award was passed beyond the time limit prescribed under Section 21 of the J&K Arbitration and Conciliation Act, 1997 and the parties were not agreed to extension of time, therefore, no sanctity can be attached to the award. In support of his submissions, learned Senior Counsel has placed reliance on decision rendered by the High Court of Madhya Pradesh in the case of Maganlal Gangaram Rathor and Anr. vs. Ramaji Bondarji and Ors., AIR 1966 MP 177 , decision of Madras High Court in the case of J. Kuppuswami Chetty vs. B.V. Anantharamier and Anr., AIR 1948 Mad 40 and decision of Punjab and Haryana High Court in the case of Subash Chugh and Co. vs. Girnar Fibres Ltd., 2000 (4) RCR (Civil) 480. 5. On the other hand, learned counsel for respondent No. 1 has invited the attention of this Court to Clause 26.6.2, 26.7 and 30.3 as well as 7.2 of the agreement executed between the parties and has submitted that from conjoint reading of aforesaid clauses, it is evident that the arbitration shall be conducted between the parties in accordance with Arbitration Act, 1940 and the parties by mutual consent could extend the time for making of the award. It is further submitted that the dispute was to be governed by the Indian Laws. It has further been submitted that in view of aforesaid Clauses, it is evident that the provisions of Arbitration and Conciliation Act, 1996 applied to the dispute in question between the parties. It is urged that the objection preferred by the petitioner-Company under Section 34 of the J&K Arbitration and Conciliation Act, 1997 is not maintainable and the award has been signed by the majority and is valid award which has been passed in accordance with law and same does not suffer from any infirmity. It is also submitted that the Arbitration has been concluded within time limit as prescribed under section 29 of the Arbitration and Conciliation Act, 1996 as the time was extended by the parties.
It is also submitted that the Arbitration has been concluded within time limit as prescribed under section 29 of the Arbitration and Conciliation Act, 1996 as the time was extended by the parties. It is also submitted that several communications dated 09.10.2000, 06.11.2000, 01.01.2001 and 02.01.2001 were sent by respondent No. 3 to respondent No. 4 who did not respond and, therefore, the award was rightly passed by the majority. It has further been submitted that no objection has been raised by the petitioner-Company that in the proceeding before the arbitrator that the provisions of Arbitration and Conciliation Act, 1996 do not apply to the dispute in question between the parties. On the other hand, learned Senior Counsel for respondent No. 4 has supported the case of the Company. Learned counsel for the respondents has relied upon the decisions of Supreme Court in the cases of Harshad Chiman Lal Modi vs. DLF Universal and Anr., 2005 AIR (SC) 4446; M/s. GJ Engineers Pvt. Ltd. vs. Union of India and Anr., AIR 2011 SC 2477 ; Associate Builders vs. Delhi Development Authority, 2015 (3) SCC 49 ; State of J&K vs. Dev Dutt Pandit, 1999 (7) SCC 339 , decisions rendered by this Court in the case of M/s. National Hydro Electric Power Corporation Ltd. vs. M/s Karam Chand Thapar and Bros., 2001 SLJ 255; B M Bakshi vs. Union of India and Ors., 2001 SLJ 258; Aspire Human Capital Management Pvt. Ltd. vs. Baba University Shah Badshah (BGSH), University of Rajouri and Anr., and decision rendered by Delhi High Court in the case of Pacific Greens lnfracon Pvt. Ltd. vs. Senior Builders Ltd., 2009 (2) ArbiLR 214. 6. I have considered the submissions made by learned counsel for the parties. The pivotal question which arises for consideration in the instant case is whether the dispute between the parties is governed by the provisions of the Arbitration and Conciliation Act, 1996 or J&K Arbitration and Conciliation Act, 1997. In this connection, I deem it appropriate to refer to paragraph 5 of the Application filed under Section 34 of the Act by the Company which reads as under: “5. That the contract agreement was executed at Jammu and cause of action too accrued to both the parties to the agreement in respect of their claims and counterclaims, at Jammu. The parties had further agreed that the arbitration proceedings be conducted at Jammu.
That the contract agreement was executed at Jammu and cause of action too accrued to both the parties to the agreement in respect of their claims and counterclaims, at Jammu. The parties had further agreed that the arbitration proceedings be conducted at Jammu. The Jammu and Kashmir Arbitration Act, 1997, therefore, applied to the arbitration between the parties and proceedings in this Hon'ble Court. Had there been no arbitration proceedings between the parties, the disputes raised in the arbitration were cognizable in civil proceedings by Hon'ble Courts in Jammu. Hon'ble High Court at Jammu thus has jurisdiction to entertain the present petition under the Arbitration and Conciliation Act, 1997. The present petition is being made within the period prescribed under Section 34 of the Jammu and Kashmir Arbitration and Conciliation Act, 1997.” 7. Reply to paragraph 5 of the aforesaid objection filed on behalf of respondent No. 1 reads as under: In reply to para 5, it is submitted that in terms of arbitration clause 26.6.2 all proceeding have to be taken under the provisions of J&K Arbitration Act of 1940, or any other statutory modification, which shall govern the contract in question. The arbitration proceedings in the present case were started from the year 1998. The Indian Arbitration and Conciliation Act of 1996 was made applicable to the State of Jammu and Kashmir, and was called J&K Arbitration and Conciliation Act of 1997. Hence, the plea raised is legally mis-conceived. 8. Thus, it is evident that it is unequivocally admitted by respondent No. 1 that the provisions of J&K Arbitration Act, 1940 are applicable to the dispute in question. The J&K Arbitration Act, 1940 was repealed and new Act namely J&K Arbitration and Conciliation Act, 1997 was enacted. Paragraph 5 of the objection raised by the Company under Section 34 of the Act as well as reply to the same has to be read in conjunction with Clause 26.6.2 which reads as under: “26.6.2. The arbitration shall be conducted in accordance with the provisions of the Indian Arbitration Act, 1940 or any statutory modification thereof. The venue of arbitration shall be Jammu, India.” 9.
The arbitration shall be conducted in accordance with the provisions of the Indian Arbitration Act, 1940 or any statutory modification thereof. The venue of arbitration shall be Jammu, India.” 9. Thus, on conjoint reading of paragraph 5 of the objections as well as reply filed by respondent No. 1 and Clause 26.6.2 of the agreement, it is evident that J&K Arbitration and Conciliation Act, 1997 applies to the dispute in question, therefore, the impugned award is non-est and has no sanctity in the eye of law. In the case of J. Kuppuswami Chetty, it has been held that it is well established principle that all the arbitrators must give their united consideration to all the matters arising in the arbitration which has been referred to them and the arbitrators must act together, can properly be applied when the reference is not to individuals but to a body, such as a Committee or a Board, whose corporate powers are regulated by its constitution. The aforesaid decision was quoted with approval in the case of Maganlal Gangaram Rathor supra by Division Bench of Madhya Pradesh High Court. Similar view has been taken by Punjab and Haryana High Court in the case of Subash Chugh and Co. supra. 10. In the instant case, there is no material on record to show that any communication was sent to respondent No. 4 for deliberations. From the affidavit filed by respondent No. 4, it is evident that he neither received any communication for deliberations nor was given opportunity to publish the award. It has further been stated in the affidavit sworn in by respondent No. 4 that the co-arbitrator has sent his unilateral and independent award to the Chairman who without holding any consultation with respondent No. 4 endorses the same and sent it to this Court. Therefore, the procedure of deliberations has not been followed, therefore, the impugned award is bad in view of aforesaid enunciation of law as well. 11. It is also pertinent here to mention that Section 21 of the J&K Arbitration and Conciliation Act, 1997 provides time limit for completion of the award within a period of four months. Section 21 of the Act was amended by State Legislature by an Amending Act No. 12 of 2004, dated 23.03.2005.
11. It is also pertinent here to mention that Section 21 of the J&K Arbitration and Conciliation Act, 1997 provides time limit for completion of the award within a period of four months. Section 21 of the Act was amended by State Legislature by an Amending Act No. 12 of 2004, dated 23.03.2005. In the instant case, award has been passed on 22.02.2001, that is, prior to amendment, therefore, the award was required to be passed within a period of four months. Admittedly, the impugned award has not been passed within a period of four months and there is no material on record that the parties had agreed to extension of time for passing the award. On this ground also, the impugned order cannot be sustained in the eye of law. 12. So far as the contention on behalf of respondent No. 4 is concerned that no objection was raised by the Company in the proceeding before arbitrator that the provisions of Arbitration and Conciliation Act, 1996 would apply, suffice it to say that it is pure question of law which can be raised at any stage of the proceeding and if the firm inherently lacks jurisdiction, the consent cannot confer jurisdiction. Reference in this connection may be made to decision of the Supreme Court in the case of Sabitri Dei and Ors. vs. Sarat Chandra Rout and Ors., (1996) 3 SCC 301 . It is equally well settled legal proposition that the pure questions of law can be raised at any stage of litigation. In this connection, reference may be made to the decision of the Supreme Court in the case of M/s. Ariane Orgachem Pvt. Ltd. vs. Wyeth Employees Union and Ors., AIR 2016 SC 1761 and there is no estoppel against the law. Therefore, the Company cannot be stopped from raising the plea that the provisions of the Arbitration and Conciliation Act, 1996 do not apply to the arbitration in question. 13. In view of preceding analysis, the award impugned dated 22.02.2001 cannot be sustained in the eye of law. It is accordingly, quashed. In the result, objections under Section 34 of the J&K Arbitration and Conciliation Act, 1997 are allowed and the application for making it the rule of the Court is dismissed. Accordingly, AA No. 51/2001 is allowed, whereas AA No. 61/2001 is hereby dismissed. 14. However, there shall be no order as to costs.