IN THE HIGH COURT OF BOMBAY
Dr. Chandrachud D.Y., J.
Union of India through Dy. Controller of Stores .... Petitioner.
Versus
MAA Agency another.... Respondents.
Arbitration Petition No. 255 of 2002, decided on 24-10-2002.
Advocates appeared :
Suresh Kumar, for petitioner.
Anil Singh, for respondents.
raise the plea that the Tribunal was exceeding the scope of its authority. No such objection was raised before the Arbitral Tribunal. On the contrary, the petitioner proceeded with a defence to the claim on merits. The Arbitral Award was passed thereupon. That being the position, the petitioner clearly waived under Section 4 its right to object on the ground that any requirement of the arbitration agreement had not been complied with. The defence that the third claim could not have been arbitrated upon without a formal reference by the Competent Authority to the arbitrator was within the knowledge of the petitioner. The defence not having been raised, before the arbitrator, the principle of waiver embodied in Section 4 of the Act must necessarily apply.
Arbitration and Conciliation Act, 1996 - Section 34(2)(a)(iv) - Dispute alleged as not coming in purview of terms of submission to arbitration - No objection raised - Contention that it was only arbitrator who could consider refund of amount against unsold copies returned by venders - Such a claim was not within jurisdiction - Held - It was still open to raise plea that Tribunal was exceeding its jurisdiction - Arbitral award was passed thereupon - Third claim was not worth arbitration clause - There is no merit in petition. - The Arbitration and Conciliation Act, 1996 makes a material change from the earlier Act of 1940, in that, it requires an objection as regards the jurisdiction of the arbitrator or on the ground that the arbitrator is acting beyond the scope of his authority to be raised at the earliest possible opportunity. The period by which such an objection has to be raised is specified in Section 16. Section 4 incorporates the principle of waiver where an objection that a requirement of the arbitration agreement has not been complied with is not raised by a party who knows of the objection yet proceeds with the arbitration without stating his objection. That being the position, it is not open to the petitioner to raise the objection which is sought to be raised in these proceedings. The petitioner chose not to raise the objection in the arbitral proceedings and chose to defend all claims on merits. Finally, it would be necessary to emphasise that this is not a case where there is a patent lack of jurisdiction within the meaning of that expression as it occurs in the judgment of the Supreme Court in the Tarapore and Company case.
2. In these proceedings under section 34 of the Arbitration and Conciliation Act, 1996, an Award of a sole arbitrator, dated 18th December, 2001 is called into question. The sole arbitrator in the present case was the Chief Commercial Manager of the Western Railway. The dispute between the parties related to a contract which had been entered into for the printing and distribution of the All India Railway Time Table---August 1998, in pursuance of a purchase order dated 13th July, 1998. Disputes arose between the parties and these were referred to arbitration. On 7th July, 2000 and on 9th August, 2000, the first respondent sought a reference to arbitration of two claims. The petitioners referred these two claims to arbitration on 8th August, 2001. Before the Arbitral Tribunal, the first respondent raised three claims, two of them being claims in respect of which a reference had been made and an additional claim. The petitioners filed their written statement and at this stage, it would be material to note that no objection was raised before the arbitrator either as regards his jurisdiction to entertain the third claim or in regard to the arbitrability of the claim. By the Arbitral Award, an amount of Rs. 10,21,050/- has been awarded to the first respondent under three heads of claim: (i) illegal deduction of payment as commission payable---Rs. 4,06,575/-; (ii) payment against copies of vendors---Rs. 4,20,000/-; and (iii) refund of amount against unsold copies returned by vendors---Rs. 3,14,475/-. The Arbitral Award notes that the first respondent was to print and distribute 6,08,000 copies of the time table, out of which 8000 copies were to be given free of cost to the petitioner, 4,19,300 were to be distributed to vendors, a list of which was to be provided by the petitioner and 1,80,700 copies were to be purchased by the petitioner at the rate of Rs. 15/- per copy. There was a counter claim by the petitioner to the claim in arbitration. The Arbitral Award notes that the petitioner had settled the entire claim by imposing a penalty on the first respondent in accordance with the penalty Clause contained in the purchase order. The first respondent, it has been noted, has paid the penalty of Rs. 22,784/- on 21st January, 2000. The Union of India had in fact, released the performance guarantee of the first respondent which also suggested that the inspecting authority and the consignee had accepted the quality, quantity and delivery of the said time table to be satisfactory and in accordance with the terms of the purchase order. In these circumstances, the three claims as aforesaid have been granted. The counter claim has also been allowed to the extent of Rs. 1,20,000/-.
3. At the outset, it has been urged on behalf of the first respondent that the arbitration petition is barred by limitation. Now, the admitted fact is that the Arbitral Award was received by the petitioner on 18th December, 2001. Under section 34(3), an application for setting aside may not be made after three months have elapsed from the date on which the party making that application had received the Arbitral Award. Section 9 of the General Clauses Act provides that in any Central Act or Regulation it shall be sufficient, for the purpose of excluding the first in a series of days or any other period of time, to use the word "from", and, for the purpose of including the last in a series of days or any other period of time, to use the word "to". Since the Arbitral Award in the present case was received on 18th December, 2001, having regard to the provisions of section 9 of the General Clauses Act, that day would have to be excluded. The period of three months would thus commence on and from 19th December, 2001 and expire on 19th March, 2002. The arbitration petition has been filed within a period of 30 days thereafter, in fact on th
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