2008 Supreme(Bom) 434
IN THE HIGH COURT OF JUDICATUTRE AT BOMBAY, NAGPUR BENCH NAGPUR.
C.L.PANGARKAR, J
M/s Jimmy Construction Pvt. Ltd., NAGPUR - Appellant
vs.
Union of India and others - Respondents
FIRST APPEAL NO. 24 OF 2008.
Decided on: 19-03-2008
Advocate appeared:
Mr. A.S.Jaiswal, Advocate for the appellant.
None for the respondents.
Headnote:Arbitration and Conciliation Act, 1996 - Section 34-Award-Setting aside of.-The order clearly shows that there was a challenge to the composition of the arbitral as well as the delay in taking up of the arbitration. It further shows that the Court had expressed that in view of this, Shri Guru, one of the arbitrators, should not proceed to take the final decision until the matter is considered by the Court. Thus, in fact the Court had expressed that the arbitrators should not proceed further, since a decision with regard to appointment of arbitrators is to be taken and yet the arbitrators informed the appellant falsely that the matter is to be taken up on day-to-day basis on the direction of the Court and even concluded the hearing and delivered the award. The haste on the part of the arbitrators, in fact, amounts to a misconduct. Result of this was that an ex parte award came to be passed, when there was no fault on the part of the appellant. As the award was passed behind the back of the appellant, there was no proper composition, the award could be said to be falling in Clause (ii) (b) of sub-section (2) of Section 34 of 1996 Act and is, therefore, liable to be set aside. The District Judge did not consider all these aspects in a proper perspective. The order, therefore, suffers from illegality and it is set aside.
1. This appeal is preferred by the original applicant to the application under Section 34 of the Arbitration and Conciliation Act, 1996, which came to be rejected by the District Judge.
2. The facts giving rise to this appeal are as under –
The appellant/applicant is a Contractor while respondent/N.A.1 is Indian Railway. Non-applicants no.2 to 4 are the Arbitrators. Non-applicant no.1 invited tenders for Gauge Conversion of Railway Line running between Gondia and Jabalpur. The tender cost was Rs.33,87,212/-. The tender of the applicant was accepted. The work was to be completed within period of twelve months from 31/12/1999 and the agreement was executed on 1/4/1999. The agreement provides that if a dispute arises between the parties, it will be referred to the Arbitrators. It is the allegation of the applicant/appellant that due to the hindrance caused by the officials of non-applicant no.1, there was a delay in completion of the work. However, the time was extended up to 31/12/2001. The applicant could complete the work worth Rs.8,76,631/-. Thereafter, it is alleged that non-applicant no.1 refused permission to applicant no.1 to commence the work of the second phase. Due to the stiff hike in the diesel prices and royalty charges, the applicant had made a request to revise the rates. The said request was rejected. The final bills were not prepared by nonapplicant no.1. The matter, therefore, was referred to the Arbitrators and non-applicant no.1 appointed Arbitrators in the matter. The Arbitrators did not commence the work for a period of twenty months. As a result, the applicant was required to move the High Court for appointment of other Arbitrators. While the application was pending before the High Court, non-applicants no.2 to 4 resumed hearing of the Arbitration. The applicant, however, informed them that the matter is pending before the High Court and therefore, the proceedings should be kept in abeyance. It is contended that in haste the proceedings were completed and the award has been passed. The applicant contends that the constitution of the arbitral itself was not in accordance with the law and the applicant has not been given any opportunity to participate in the arbitration proceedings. It is contended that false statements were made before the High Court by the Railways authorities and therefore, the award was liable to be set aside.
3. Non-applicant no.1 filed reply to the application and denied all allegations made against it. It denies that any haste was made by the Arbitrators in concluding the proceedings. It is contention of the non-applicant that the applicant had left the place of meeting stating that he would come within ten minutes but did not turn up and intentionally remained absent.
4. The learned District Judge found that the objections to the award as raised by the applicant were not correct and he therefore dismissed the application. Being aggrieved by that, this appeal has been preferred.
5. The learned District Judge has refused to set aside the award. Section 34 of the Arbitration Act, 1996 gives out the grounds on which an award came to be challenged and set aside. Section 34 of the Arbitration Act reads thus -
34. Application for setting aside arbitral award. - (1) Recourse to a Court against an arbitral award may be made only by an application for setting aside such award in accordance with sub-section (2) and sub-section (3).
(2) An arbitral award may be set aside by the Court only if -
(a) the party making the application furnishes proof that -
(i) a party was under some incapacity, or
(ii) the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law for the time being in force; or
(iii) the party making the application was not given proper notice of the appointment of an Arbitrators or of the arbitral proceedings nor was other