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2003(8) Supreme 73
SUPREME COURT OF INDIA
(From Andhra Pradesh High Court)
V.N. Khare, CJI., S.B. Sinha, J.
State Bank of India -Appellant
versus
M/s. Ram Das and Anr. -Respondents
Civil Appeal Nos. 4542-4544 of 1998
With
C.A. Nos. 4545-4547 of 1998
Decided on 29-10-2003
Counsel for the Parties :
For the Appellant in C.A. Nos 4542-44/98 : Dr. Rajeev Dhawan, Sr. Advocate, Sanjay Kapur and Rajiv Kapur, Advocates.
For Appellant in C.A. Nos. 4545-4547/98 : M.L. Verma, Sr. Advocate, S.V. Deshpande, Mrs. Anuradha Rastogi, Advocates.
For the Respondents C.A. No. 4542-44/98 : R.F. Nariman, Sr. Advocate, S.V. Deshpande, Mrs. Anuradha Rastogi, Advocates.
Held : It is one thing to say that the Umpire has misconducted himself but it is another thing to say that under certain misconception of law he filed a suit through a lawyer at the first instance or filed the award in the court at the behest of the respondent. So long the award is not vitiated by reason of any act of misconduct on the part of the Umpire, the same cannot be set aside. As would appear from the discussions made a little later, it would appear that the said fact was known to the appellant. The respondent was entitled to request the Umpire to file the award in court. In what manner he would do it, was a matter which was left to the Umpire. If he was advised to file such a award by filing a suit by appointing a lawyer, he did commit a mistake wherefor the adverse comments were made by the High Court, but the same cannot be said to be an act of bias. No such act would amount to a misconduct under the meaning of Section 30 of the Act. (Para 18)
We in this case are not concerned with any act of malice on the part of the Umpire. Malice has to be specifically pleaded and proved. Neither there exists any pleading in that behalf nor would it appear from the discussions made hereinafter that at any stage such a contention has been raised. (Para 24)
(ii) Arbitration Act, 1940-Sections 30 and 33-Arbitration Award-Objections, allegation of bias-Appellant had four opportunities to raise question of bias on part of Umpire in filing award in Court himself, for being made rule of Court-It was only after the High Court adversely commented upon conduct of Arbitrator that appellant raised the objection-Whether appellant can be permitted to raise question of bias for the first time before this Court-(No).
Held : It is an established view of law that where a party despite knowledge of the defect in the jurisdiction or bias or malice of an Arbitrator participated in the proceedings without any kind of objection by his conduct it disentitles itself to raise such a question in the subsequent proceedings. What we find is that the appellant despite numerous opportunities made available to it although it was aware of the defect in the award of the Umpire at no stage made out any case of bias against the Umpire. We, therefore, find that the appellant cannot be permitted to raise question of bias for the first time before this Court. (Para 27)
ORDER
Before us there are two sets of appeals, one, C.A. Nos. 4542-4544/1998 at the instance of State Bank of India and other, C.A. Nos. 4545-4547/1998 at the instance of the respondent-Contractor.
2. On 6th of October, 1978, the State Bank of India entered into an agreement with the respondent herein (Contractor) for constructing Local Head Office building at Hyderabad. Clause 36 of the agreement provided for resolution of disputes by arbitration. It is not disputed that in the year 1982 the Contractor completed the constructions in terms of the contract. However, certain disputes arose between the parties as a result whereof the matter was referred to arbitration. Mr. MU Hattikuddur was chosen by the Arbitrators as an Umpire. on 8.8.1984 the Umpire gave an award wherein four claims of the Contractor were allowed in full, seven claims were allowed in part and 15 claims were rejected. A total sum of Rs. 15.85 lacs were found to be payable by the appellant to the Contractor under the said award. The Umpire, however, also rejected the counter-claim of the appellant.
3. It is not disputed that the umpire in the year 1985 himself filed the award in the City Civil Court, Hyderabad for making the award the rule of Court. It is also not disputed that the Umpire appointed a lawyer for prosecuting the proceedings. The said suit was numbered as Original Suit No. 191/1985. The appellant herein filed an objection before the City Civil Court for setting aside the award under Sections 30 & 33 of the Arbitration Act. The respondent filed his counter affidavit to the objections of the appellant herein. The Umpire also filed an affidavit to the objection filed by the appellant. It is furthermore not disputed that the appellant did not raise any plea in its objection as regards bias against the Umpire.
4. The State Legislature of Andhra Pradesh, however, by Amending Act 1 of 1990 inserted provisos to both Sections 14(1) and 17 of the Arbitration Act, 1940 (hereinafter referred to as "the Act") which are in the following terms :
Section 14(1) :
"provided that the arbitrators or Umpire shall give reasons for any award made under this section and no award shall be valid unless the reasons therefor are given as aforesaid."
Section 17:
"provided that where an award pending in the court at the commencement of the Arbitration (Andhra Pradesh Amendment) Act, 1990, or an award filed in the court, thereafter does not contain reasons therefor as required by the proviso to sub-section (1) of section 14 the Court shall not proceed to pronounce the Judgment according to the Award, but shall remit the award to the Arbitrators....."
The aforesaid provisos were inserted with retrospective effect providing for giving the reasons by the Arbitrator or the umpire in the award. By reason of the said Amending Act, thus, assignment of reasons by the arbitrators or umpire while making an award, not only was made imperative but by reason thereof provisions were made for remitting the unreasoned awards back to the arbitrators. In terms of the provisions of the Arbitration Act, 1940, the question as to whether the arbitrators or the umpires are required to pass a reasoned award depends upon the nature of the arbitration agreement. In terms of the said Amending Act, therefore, the arbitrators became liable to assign reasons in support of their awards irrespective of any agreement to the contrary by the parties to the arbitration agreement.
5. It appears that in pursuance of the said legislative development the appellant herein moved an I.A. in the year 1990 for setting aside the award on the ground that it did not contain the reasons. In this I.A. also the appellant did not raise any objection as regards bias of the Umpire. The City Civil Court, in view of the said amendment in Sections 14 and 17 of the Act, set aside the award and remitted back the matter to the Umpire for giving reasons in the award. The umpire, thereafter, passed a purported reasoned award. Thereafter, the Cont
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