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PATNA HIGH COURT
M.Y.Eqbal, J.
State Of Bihar
Versus
Bhartiya Ispat Udyog Private Limited
Appeal from Original Order No. 459 of 1993 ;
Decided On : JULY 26, 1996
ARBITRATION - Setting Aside Award - Consent of Parties - Validity of Concession - Appealability of Consent Order - Interpretation of Arbitration Act, 1940.
Fact of the Case:
The appellant State of Bihar challenged an order setting aside an arbitration award based on the concession made by the parties' counsel. The respondent firm had filed a claim against the State for price variation, leading to arbitration. The sole arbitrator gave an award, which was challenged by the respondent firm. During the hearing, the Government Pleader representing the State allegedly consented to setting aside the award and referring the dispute for fresh arbitration. The court accepted this concession and passed an order accordingly.
Finding of the Court:
The court held that the impugned order was illegal and without jurisdiction. The court found that the concession made by the Government Pleader was not binding on the State, as it was not made on the basis of any written instruction from the State Government. The court also held that the court below erred in setting aside the award merely on the statement of the respective counsel for the parties without examining the objection filed by the parties to the award on merit.
Issues: 1. Whether the Subordinate Judge has jurisdiction to set aside the award on the concession made by the parties and to refer the dispute to arbitration afresh without applying his mind on the validity of the award? 2. Whether the concession made by the Government pleader verbally without any written instruction is binding on the State? 3. Whether an appeal lies against a consent order passed under Sec. 30 of the Arbitration Act?
Ratio Decidendi: 1. The court held that the Subordinate Judge did not have jurisdiction to set aside the award merely on the concession made by the parties. The court observed that Sec. 30 of the Arbitration Act provides the grounds for setting aside an award, and the court can only set aside an award on those grounds. 2. The court held that the concession made by the Government Pleader was not binding on the State, as it was not made on the basis of any written instruction from the State Government. The court relied on the Supreme Court decision in Periyar and Pareekanni Rubbers Ltd. V/s. State of Kerala, which held that any concession made by the Government Pleader in the trial Court cannot bind the Government unless it is in writing on instructions from the responsible officer. 3. The court held that an appeal lies against a consent order passed under Sec. 30 of the Arbitration Act. The court observed that the Arbitration Act does not debar a party from challenging a consent order setting aside an award by filing an appeal.
Final Decision: The court allowed the appeal, set aside the impugned order, and remanded the case back to the lower court for consideration of the objections filed by the parties under Sec. 30 of the Arbitration Act and to decide the suit in accordance with law.
M.Y.Eqbal, J.
1. This appeal has been tiled by the defendant-appellants State of Bihar challenging the impugned order passed by the subordinate Judge I, Patna, setting aside an award of the arbitrator on the concession made by the counsel of the parties and referring lite dispute again for fresh arbitration.
2. The brief facts of the case is that the appellant State of Bihar published notices inviting tenders for supply of different types of 3100 M.T. of steel rods in the Public Works Department vide notice bearing No. 2952 (E) dated 1.10.1980. In response to the said notice, various tenderers, including the respondent, submitted their tenders and the tender of the respondent being the lowest was accepted and the supply order was issued to it vide Engineer-in-Chief-cum Special Secretary, Public Works Department, Government of Bihar, letter No. 549 (E) dated 21.2.1981. Before the respondent could resume the supply, it raised a grievance for enhancement of rates which dispute, however, was settled by the Engineer-in-Chief-cum-Special Secretary vide letter bearing No. 914 (E) dated 13.3.1981 and 1122 (E). dated 30.3.1981. It is relevant to state that the Chief Engineer, Communication, North Bihar Wing, Darbhanga, also placed orders with the respondent firm for supply of steel rods after making reference firm for supply of steel rods after making reference to the aforementioned two letters of the Engineer-in-Chief, vide his letter No. 173 dated 6th April, 1981. The respondent firm, however, in spite of the direction contained in the supply order to execute the agreement, failed to execute the same but commenced the supply of iron rods on approved rates for which payments were duly made.
3. It appears that, in the year 1985, the respondent firm moved the Court of Subordinate Judge, Patna, with a prayer to appoint an Arbitrator to settle the claim against the State of Bihar, Building and Road Construction Department, relating to price variation clause. The application so filed by the respondent firm were registered as Miscellaneous Case Nos. 123, 124 and 125 of 1985 which were subsequently converted into Title Suit Nos. 201, 202, and 203 of 1987. It further appears that the learned Subordinate Judge disposed of the abovementioned suits in terms of the judgment dated 25.6.1987 by appointing Chief Engineer, building and Road Construction Department, State of Bihar, as the sole Arbitrator to arbitrate the dispute between the appellants and the respondent firm and to submit a reasoned award, In compliance with the said judgment, the, sole Arbitrator, namely, the Chief Engineer, issued notices to the parties, in response whereto, the respondent firm submitted three claims of Rs. 14,79,127.43; Rs. 54,74,928.05; and Rs. 1,17,05,024.70. The appellant State of Bihar also submitted its counter claim denying the claim made by the respondent firm. The State of Bihar in its counter-claim demanded recovery of certain amounts from the respondent firm. The Chief Engineer, being the sole Arbitrator, after hearing the parties and after considering the claim and counter-claim, gave a reasoned award dated 19.5.1988 in which he held that the total amount claimed but he respondent firm and the counter claim of the State of Bihar comes to nil.
4. The sole Arbitrator, after signing and publishing the said award, remitted it to the learned Subordinate Judge I, Patna, by registered post with a request to make the same rule of the court.
5. The appellant State of Bihar, after receiving a copy of the said award, filed Miscellaneous Case Nos. 54, 55 and 56 of 1988, praying, interalia, that the aforesaid award submitted by the sole Arbitrator be made rule of the Court and a decree be prepared in terms thereof, the aforementioned Miscellaneous Cases were converted into Titles Suit Nos. 88, 89 and 90 of 1990.
6. The respondent firm, on the other hand, filed objection under Sec. 30 read with Sec. 33 of the Arbitration Act for setting aside the award and for
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