IMPORTANT POINT
Where Counsels representing parties consented to appointment of an arbitrator as appointed by High Court in a petition u/s 11 of Arbitration and Conciliation Act and arbitrator entered into reference and proceeded in the matter, one such party could not be allowed to agitate that as per terms of arbitration clause in agreement only a particular arbitrator could be appointed.

Headnote:Arbitration and Conciliation Act, 1996—Section 11—Application for appointment of arbitrator—Contract between parties contained an arbitration clause in terms whereof Chief Engineer, Telecommunication/Postal Dept. in charge of the work at the time of dispute was to be appointed as an arbitrator—Term envisaged that no person other than one appointed by such Chief Engineer or administrative head of Telecommunication/Postal shall act as arbitrator—Respondent issued notice dt. 7-1-2002 in terms of arbitration agreement—Letter dt 4-2-2002 appointing Principal Chief Engineer as sole arbitrator was drafted by appellant and dispatched on 7-2-2002—On same day respondent filed application for appointment of arbitrator and provided six names to appoint one of them as arbitrator—High Court by its order dt. 20-1-2006 appointed Chartered Engineer, Former Chief Engineer, W.B. P.W.D. Kolkata as Arbitrator on consent given by counsel for appellant—Arbitrator so appointed entered into reference and parties participated in the proceedings—Respondent filed statement of claim—Application u/s 151 CPC filed by appellant for modification of order appointing arbitrator—Application dismissed by High Court—Appeal—Contention that High Court had no jurisdiction to appoint any person other than one nominated by Chief Engineer—Letter appointing arbitrator was communicated to Respondent on 7-2-2002—Term “Communicate”—Appellant must be held to have waived their right as they consented to the appointment of arbitrator appointed by High Court—It was not open to Appellant to contend that no such concession was made—Concession made by Advocate was binding on party whom he represented in term of Order III Rule 1 CPC —It was not a case where Court should exercise its discretionary jurisdiction.
       Held : Evidently, the Managing Director of the Appellant was served with a notice on 7th January, 2002. The letter appointing the arbitrator was communicated to Respondent on 7th February, 2002. By that time, 30-days period contemplated under the Act lapsed. The Managing Director of the Appellant was required to communicate his decision in terms of Clause 25 of the contract. What would be the meaning of the term communicate came up for consideration before this Court in State of Punjab v. Amar Singh Harika [AIR 1966 SC 1313], wherein it was held:
       "....It is plain that the mere passing of an order of dismissal would not be effective unless it is published and communicated to the officer concerned. If the appointing authority passed an order of dismissal, but does not communicate it to the officer concerned, theoretically it is possible that unlike in the case of a judicial order pronounced in Court, the authority may change its mind and decide to modify its order..."
       [See also Sultan Sadik v. Sanjay Raj Subba and Others, (2004) 2 SCC 377]
       The contract entered into by and between the parties was subject to the provisions contained in the 1996 Act. Although in terms of the arbitration agreement contained in Clause 25 of the contract, ordinarily the arbitrator appointed by the Managing Director should act as arbitral tribunal in respect of the disputes and differences between the parties to the contract; in this case, the Appellants must be held to have waived their right as they consented to the appointment of Shri Bhattacharya as an arbitral tribunal. The High Court having appointed the arbitral tribunal on consent, it is, in our opinion, not open to the Appellants now to contend that no such concession was made.(Paras 11 to 14)
       In terms of Order III, Rule 1 of the Code of Civil Procedure, a litigant is represented by an advocate. A concession made by such an advocate is binding on the party whom he represents. If it is binding on the parties, again subject to just exceptions, they cannot at a later stage resile therefrom. The matter may, however, be different if a concession is made on a question of law. A wrong concession on legal question may not be binding upon his client. Here, however, despite the stand taken by the Appellant in its written statement before the High Court the learned Advocate consented to appointment of a person as an arbitrator by the High Court in exercise of its jurisdiction under Section 11 of the 1996 Act, in our considered view, the same should not be permitted to be resiled from. A person may have a legal right but if the same is waived, enforcement thereof cannot be insisted.(Para 19)
       Prima facie also it does not appear that the allegations contained in the said application were supported by an affidavit. In that view of the matter, no credence to the averments contained therein cannot be given. Furthermore, it is not a case where this Court should exercise its discretionary jurisdiction. For the reasons aforementioned, this appeal is dismissed.(Paras 21 and 22)

JUDGMENT

S.B. Sinha, J.—Leave granted.

2. The parties herein entered into a contract pursuant to a notice inviting tender by Appellant No. 1 for the work of construction of 9 Nos. Type-V quarters at Jayadev Vihar, Bhubaneshwar. The said contract contained an arbitration clause in terms whereof the Chief Engineer, Telecommunication/Postal Department in charge of the work at the time of dispute or if there be no Chief Engineer the administrative head of the said Telecommunication/Postal Department was to be appointed as an arbitrator. The said provision envisaged that in terms thereof no person other than the one appointed by such Chief Engineer or administrative head of the Telecommunication/Postal as aforesaid should act as arbitrator.

3. A notice in terms of arbitration agreement contained in clause 25 of the contract was issued by the Respondents on 7.1.2002. A letter appointing one Shri Gurbax Singh, Principal Chief Engineer (Arb.), New Delhi as the sole arbitrator was said to have been drafted on 4.2.2002. It, however, was dispatched on 7.02.2002. On the same day, having regard to the fact that allegedly the Managing Director of the Appellant did not respond to the notice issued to him, an application was filed by Respondent herein before the High Court of Orissa purported to be under Section 11 of the Arbitration and Conciliation Act, 1996 (for short "the 1996 Act").

4. It is stated that the said Shri Gurbax Singh submitted his resignation whereupon the Chief Engineer appointed one Shri A.K. Naik as the sole arbitrator on 7.07.2002. He is also said to have resigned and in his place Shri Gurbax Singh was again appointed as arbitrator on 17.03.2003. The appointments were made during pendency of the said proceedings before the High Court under the 1996 Act. When the matter came up for hearing before a Division Bench of the High Court, in its order dated 20th January, 2006, it was recorded:

"Learned counsel for the petitioners placed before me a list of names of six persons to appoint one of them as Arbitrator and to refer to him the dispute between the parties for adjudication in terms of the arbitration clause. On being asked, learned counsel for the opposite parties submits that he has no objection if Shri B.C. Bhattacharya, Chartered Engineer, Former Chief Engineer, W.B. P.W.D., FD-216/4, Salt Lake City, Kolkata – 700 091 is appointed as Arbitrator and the dispute between the parties in terms of arbitration clause is referred to him for adjudication. In view of the aforesaid, said Shri B.C. Bhattacharya is appointed as Arbitrator and the dispute between the parties in terms of the arbitration clause is referred to him for adjudication."

5. The learned arbitrator appointed by the High Court thereafter entered into reference. The parties hereto appeared before him on 18.03.2006 and participated in the proceedings. Respondent also filed his statement of claim. The learned arbitrator has called upon the Appellants to file their written statement.

6. However, on 27th January, 2006, an application was filed by Appellant herein purported to be under Section 151 of the Code of Civil Procedure for modification of the said order dated 20.1.2006 contending:

"2. That after dictation of orders when the counsel of the opp. party went out, a Junior Lawyer informed him that Your Lordship had dictated that the counsel for the opp. Party has no objection if Shri B.C. Bhattacharya, Chartered Engineer, and former C.E.W.B. PWD Kolkata is appointed as the Arbitrator, which due to inadvertence, had escaped notice/audibility of the opp. Party counsel.

3. That then the counsel for the opposite party promptly rushed to the court and with due permission of your Lordship, apprised about such dictation with a rest for omission of the "No Objection" portion which occurred due to some communication lapses. And Your Lordship was considerable and gracious enough to ask the Stenographer on duty at that time to take down the sought for change after confirmin

Click Here to Read the rest of this document

2006 Supreme(SC) 846

Cases Referred (4)