2007 Supreme(Bom) 403
Bombay High Court
R. M. S. Khandeparkar and D. G. Karnik
SURENDRA KAPOOR -Appeallant
Versus
PRABIR KUMAR -RESPONDENTS
Execution Appln 417 Of 2005
Decided On: 03/21/2007
LAXMI MENON, NARAYAN SAHU, S.K.Shrivastava, SUBHASH JHA
Headnote:Arbitration and Conciliation Act, 1996 - Sections 4 and 16(2) - Arbitral award - Validity of - Parties not entered into any agreement to refer dispute to Arbitral Tribunal - Party participated in arbitration proceedings without raising point of absence of arbitration agreement - Party deemed to have waived right to raise such objection - Point of jurisdiction can be raised at a stage provided in Act.
Arbitration and Conciliation Act, 1996 - Sections 4 and 16(2) - Plea about lack of jurisdiction of Tribunal. - Point of lack of jurisdiction of arbitral Tribunal can be raised before submission of statement of defence and not later than that.
The provisions of law comprised under Section 16(2) of the said Act clearly provides that the plea that the arbitral Tribunal does not have jurisdiction shall be raised not later than the submission of the statement of defence; however, a party shall not be precluded from raising such a plea merely because he has appointed, or participated in the appointment of, an arbitrator. Further, Section 4 of the said Act provides that a party who knows that any provision of Part-I from which the parties may derogate, or 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 or, if a time is provided for stating that objection, within that period of time, shall be deemed to have waived his right to so object.
Arbitration and Conciliation Act, 1996 - Section 16 - Plea about lack of jurisdiction. - Where appellant had not raised issue about absence of agreement to refer matter to arbitrator and participated in proceedings before Tribunal therefore appellant cannot raise said issue at this stage.
A conjoint reading of both the provisions would reveal that the party having failed to raise the point of lack of jurisdiction or absence of any agreement between the parties to refer the matter to arbitration, proceeds to participate in the arbitration proceedings before the arbitral Tribunal, and the arbitral Tribunal declared the award on conclusion of arbitration proceedings then such a party would be deemed to have waived his/her right to raise objection either to the jurisdiction or to the plea about the absence of agreement to refer the matter to arbitration. In the case in hand, once it is not in dispute that the appellant had not raised the issue about the absence of agreement between the parties to refer the matter to arbitration when the appellant appeared before the arbitral Tribunal and participated in the proceedings before the arbitral Tribunal, it is not open to the appellant to raise the said issue or to contend that the award on that count to be a nullity at this stage. Added to this, it is also a matter of record that the appellant had preferred an arbitration petition in terms of Section 34 of the said Act which was subsequently withdrawn. Obviously, the challenge to the award was abandoned by the appellant. In such circumstances, it is not permissible for the appellant to contend that the award is a nullity and that too by taking out chamber summons in the execution proceedings filed by the party in whose favour the award was declared.
( 1 ) HEARD. This appeal arises from the order dated 6-3-2007 passed in Chamber Summons No. 148 of 2007. By the impugned order, the Chamber Summons No. 148 of 2007 taken out by the appellant has been dismissed. The said chamber summons was taken out by the appellant raising the point that the award passed by the learned arbitrator was a nullity on the ground that the arbitrator could not have assumed powers of arbitrating the case in the absence of agreement between the parties to refer the dispute to arbitral Tribunal and that there was no such agreement between the parties.
( 2 ) RELIANCE was sought to be placed in the decisions of the Apex Court in the matters of Bihar State Mineral Development Corporation and another vs. Encon Builders (I) (P) Ltd. , reported in (2003) 7 SCC 418, Kiran Singh and others vs. Chaman Paswan and others, reported in AIR 1954 SC 340 and K. K. Modi vs. K. N. Modi and others, reported in (1998) 3 SCC 573. Attention was also sought to be drawn to the decision of the Apex Court in the matter of Srimathi Kaushalya Devi and others vs. Shri K. L. Bansal, reported in 1969 (1) SCC 59 and of the learned single Judge in the matter of Pride of Asia films vs. Essel Vision, reported in 2003 (5) Mh. L. J. 769 = 2004 (5) Bom. C. R. 870. On the other hand, the learned Advocate appearing for the respondent, placing reliance in the decision of the Apex Court in the matter of krishna Bhagya Jala Nigam Ltd. vs. G. Harishchandra Reddy and anr. , reported in JT 2007 (2) SC 447, submitted that in the absence of plea about absence of jurisdiction being raised before the learned arbitrator, in view of section 16 (2) read with section 4 of the Arbitration and Conciliation Act, 1996, hereinafter called as "the said Act", the point of absence of such an agreement should be deemed to have been waived by the appellant and, therefore, the appellant is not entitled to raise such objection at this stage.
( 3 ) IT is not in dispute that the appellant was a party to the proceedings before the arbitral Tribunal. It is also not in dispute that the appellant did not raise the point of absence of arbitration clause or absence of agreement between the parties to refer the dispute for arbitration either in the written statement filed by the appellant before the arbitrator or at any time in the course of the proceedings before the arbitrator. It is also undisputed fact that the award on being declared, same was sought to be challenged by the appellant by filing arbitration Petition No. 130 of 2006. The award was passed on 25-6-2004. The said arbitration petition was withdrawn by the appellant. It was only after issuance of the warrant of attachment of the property in the execution proceedings that the present chamber summons was sought to be taken out raising the point of nullity of the award on the ground stated above. The learned single Judge has rejected the said challenge and dismissed the chamber summons.
( 4 ) THE provisions of law comprised under section 16 (2) of the said Act clearly provides that the plea that the arbitral Tribunal does not have jurisdiction shall be raised not later than the submission of the statement of defence; however, a party shall not be precluded from raising such a plea merely because he has appointed, or participated in the appointment of, an arbitrator. Further, section 4 of the said Act provides that a party who knows that any provision of part-I from which the parties may derogate, or 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 or, if a time limit is provided for stating that objection, within that period of time, shall be deemed to have waived his right to so object.
( 5 ) THE Apex Court in Krishna Bhagya Jala Nigam 's case (supra), dealing with the facts of the case where the plea of no agreement clause was not raised in the written