2001 Supreme(Pat) 393
PATNA HIGH COURT
S.N.Pathak, J.
Executive Engineer, Don Canal Division, Ramnagar, West champaran
Versus
Dulal Poddar
Appeal From Original Order No. 260 of 1997 ;
Decided On : APRIL 27, 2001
The appointment of an Arbitrator without notice to the opposite parties, in violation of the provisions of the Arbitration Act, renders the entire arbitration proceeding legally defective.
Headnote:
Arbitration - Appointment of Arbitrator without Notice - Sections 5 and 8 of the Arbitration Act - The court's appointment of the Arbitrator without notice to the opposite parties was found to be legally defective, rendering the entire arbitration proceeding invalid. The judgment of the lower court was set aside, and the case was remitted back to proceed from the initial stage in accordance with the provisions of the Arbitration Act.
Fact of the Case:
The respondent, a contractor, sought payment for completed work from the State of Bihar. After the appointed Arbitrator failed to decide the claims, the respondent filed a miscellaneous case before the Sub Judge, praying for the appointment of an Arbitrator by the court. The court appointed an Arbitrator without notice to the appellants, and the award given by the Arbitrator was challenged by the appellants.
Finding of the Court:
The court found that the appointment of the Arbitrator by the court without notice to the opposite parties was legally defective, rendering the entire arbitration proceeding invalid. The judgment of the lower court was deemed legally bad and set aside.
Issues: The issues revolved around the appointment of the Arbitrator without notice, the validity of the arbitration proceeding, and the challenge to the award by the appellants.
Ratio Decidendi: The court's decision was based on the legal infirmities in the appointment of the Arbitrator without notice, which violated the provisions of Sections 5 and 8 of the Arbitration Act, rendering the entire arbitration proceeding legally defective.
Final Decision: The appeal was allowed, the impugned judgment was set aside, and the case was remitted back to the lower court to proceed from the initial stage in accordance with the provisions of the Arbitration Act.
S.N.Pathak, J.
1. This Miscellaneous Appeal is directed against the judgment passed by the Sub Judge, I, Bettiah {West Champaran), in Miscellaneous case no. 36 of 1993. The defendants of that case are the appellants here (including the State of Bihar).
2. The facts relevant for this appeal are that respondent Dulal Poddar had admittedly taken certain contracts from the employees of the State of Bihar to execute certain schemes in the Don Canal Division as also in the Triveni Canal Division. The contractor-respondent entered into an agreement and he completed his work by the due time. But he was not paid his dues inspite of completion of his work and inspite of submission of bills in this connection by him. So, the Superintending Engineer of the concerned department was appointed as Arbitrator, but this Superintending Engineer inspite of several requests by the respondent as also inspite of direction by the Chief Engineer failed finally to decide the claims of respondent and to give a final award, although he had given an interim award. Then having failed to seek redressal of his grievances from the department concerned the respondent filed the aforementioned miscellaneous case before the Sub Judge, He prayed for appointment of an Arbitrator. Then Sri P.C.N. Shahi, retired tngineer, was appointed as Arbitrator by the court, who submitted his award dated 15.5.94. The appellants failed to appear before the Artibrator inspite of several notices and, so, the award handed down the Arbitrator was, of course, ex parte.
3. In this appeal both sides were heard and it was submitted by the appellants lawyer that the claim of the respondent was time-barred in the first place, and the judgment passed by the learned Sub-Judge was bad because it was passed on some concessions by the Government Pleader conducting the appellants case in the lower court. Moreover, the Arbitrator appointed by the court was also appointed without notice to the appellants. The respondents lawyer replied that the award given by the Arbitrator was perfectly justified because the appellants before this Court failed to appear before him inspite of several notices in this connection. The amount of award cannot be challenged in the civil court unless the Arbitrator gives his reasons for basing his award. Moreover, the respondent-applicant had doubted the integrity of the Arbitrator appointed by the appellants and as there was inordinate delay by the named Arbitrator, the respondent had no alternative but to rush to the court for seeking his relief. In the case of misconduct by the named Arbitrator also, the aggrieved party was entitled to seek relief from the civil court. The appointment of the Arbitrator by the court was challenged in a revision before this High Court and since stay was not granted by the High Court it was to be presumed that revision had no merit and that the order of the lower court appointing the Arbitrate remained unchallenged and final Moreover, the objection to the awar rendered by the Arbitrator was filed after 30 days of its filing in court. So, also objection was not sustainable.
4. On the above major grounds of defence taken by the respondent before this Court, the impugned judgment of the learned Sub Judge had been sought to be justified.
5. However, certain order sheets of the lower court in the concerned miscellaneous case are relevant to decide whether the court exercised its jurisdiction as enjoined by law. I find that miscellaneous case no. 36/93 was filed on 18.f2.93. Then it was registered and it was adjourned to 20.12.93. On 20.12.93 the applicant (respondent here) was directed to remove certain defects in his application. Next date was 23.12.93. On 23.12.93 the alleged defects were removed. On this very date under the heading "later on" an order was passed appointing Sri P.C.N. Shahi, retired Chief Engineer, as the Arbitrator of the case and then notices were ordered to be issued to the opposite parties (appellants here). The