1996 Supreme(SC) 1084

SUPREME COURT OF INDIA
M.K.Mukherjee : M.M.Punchhi : N.P.Singh : S.Saghir Ahmad
Dodsal Private Limited
Versus
Delhi Electric Supply Undertaking Of The Municipal Corporation Of Delhi
Date of Decision : 7/19/96

Headnote:

Delhi Municipal Corporation Act, 1957 - Sections 201-203 - challenge - The two arbitrators gave the award dated 9-8-1975 in favour of the appellant and awarded a sum of rupees ten lakhs. Before the court the Delhi Electric Supply Undertaking (DESU), respondent in the appeal herein, filed objections and challenged the award on several grounds including that the contract was void being in violation of Sections 201-203 of the Delhi Municipal Corporation Act, 1957 (the Act) read with the bye-laws made under the Act inasmuch as it was not signed by the appropriate statutory authority on behalf of DESU. The learned Single Judge of the High Court accepted the objection based on Sections 201-203 of the Act and allowed the objection petition filed by DESU. The appeal filed by the appellant before the Division Bench of the High Court was dismissed. – Held, . We have opened with this observation inasmuch as the respondent has challenged the award of the arbitrators made in favour of the appellant on the ground that the contract, which contained arbitration agreement, is void, because of which there is no agreement to refer the dispute to arbitration; and so, the arbitrators had nojurisdiction to pass the impugned award. Such a stand flies on the face of the respondent inasmuch as of the two arbitrators, one, namely Shri K.L.Vijh, had been appointed by the respondent itself. But as the award ultimately went in favour of the appellant, it raised the question of jurisdiction. We have no doubt in our mind that such a stand is inequitable, indeed highly inequitable. Question, however, is whether the law permits such a question to be raised. 2.The High Court accepted the contention that the contract was void inasmuch as Sections 201 and 203 of the Delhi Municipal Corporation Act read with Bye-law 3(1)(a) were violated. Dr Singhvi, appearing for the respondent has urged that the contract being void, along with it fell the arbitration agreement contained in the contract, because of which the arbitrators had no jurisdiction to pass the award in question. 3.It is further submitted that in such a case appearance of the respondents in the proceeding, i.e., its acquiescence, would not alter the situation in view of what has been held by a Constitution Bench of this Court in Waverly Jute Mills Co. Ltd. v. Raymon & Co. (India) (P) Ltd. in para 21 of which it was stated that: ... an agreement for arbitration is the very foundation on which the jurisdiction of the arbitrators to act rests, and where that is not in existence, at the time when they enter on their duties, the proceedings must be held to be wholly without jurisdiction. And this defect is not cured by the appearance of the parties in those proceedings, even if that is without protest, because it is well settled that consent cannot confer jurisdiction. 4.The aforesaid stand brings to the fore the following fundamental questions of law: (1) Whether the present was a case of contract being void or voidable? (2) Whether a mandatory provision cannot at all be waived? 5.As we are proposing to refer the matter to a Constitution Bench, we may not dilate on the questions, except stating that a perusal of Administrative Law by Wade and Forsyth (7th Edn., pp. 339 to 344) would show that in Ridge v. Baldwin some of the dissenting Judges of the House of Lords suggested that even ultra vires action might be merely voidable. Reference has also been made to what was held in Anisminic Ltd. v.Foreign Compensation Commission which has dealt with the question whether there are degrees of nullity. As to the question of waiver of a mandatory provision, we may refer to a recent decision of this Court in Krishan Lal v. State of J&K in which this aspect has been dealt with in paras 16 to 25. It has been pointed out that even a mandatory provision can be waived, if the provision be intended for the benefit of the person concerned, as distinguished from one which serves an important purpose in which case there would be no waiver. 6.In this connection we may also refer to the provision contained in Section 4 of the Arbitration and Conciliation Ordinance, 1996, which is on the subject of waiver of right to object. It has laid down that a party who knows (a) any provision of this part from which the parties may derogate, or (b) any requirement under the arbitration agreement, has not been complied with and yet proceeds with the arbitration without stating his objection to such non-compliance without undue delay shall be deemed to have waived his right to so object - appeals are disposed of