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1968 Supreme(Pat) 13

HIGH COURT OF PATNA
U. N. Sinha, J.
THE TISCO ORIYA CO-OPERATIVE CREDIT SOCIETY LTD. –Petitioner
VERSUS
BIABUN CHARAN MAHANTY -Opp. Party
C. R. No. 264 of 1967
Decided On : 11th January, 1968

Advocates:
Advocate Appeared:
Messrs L. K. Choudhri & Nagendra Nath Mukherji for the Petitioner; Messrs J. C. Sinha & N. N. Roy for the Opposite Party.

A party may waive its right to object to an irregularity in arbitration proceedings by its conduct, such as appearing before the arbitrators and arguing its case.

Headnote:

ARBITRATION - AWARD - SETTING ASIDE - WAIVER AND ACQUIESCENCE - ARBITRATION ACT, 1940, SECTIONS 14, 39 - LIMITATION ACT, 1963, ARTICLE 119(B).

Fact of the Case:

The petitioner challenged an arbitration award on the ground that two of the seven arbitrators appointed did not participate in the proceedings, in violation of the arbitration agreement. The petitioner had appeared before the five arbitrators who signed the award and produced evidence before them.

Finding of the Court:

The court held that the petitioner had waived its right to object to the participation of only five arbitrators by appearing before them and arguing its case. The court also held that the petitioner's application to set aside the award was not barred by limitation since no notice of the filing of the award had been given to the petitioner.

Issues: 1. Whether the petitioner had waived its right to object to the participation of only five arbitrators by appearing before them and arguing its case. 2. Whether the petitioner's application to set aside the award was barred by limitation.

Ratio Decidendi: 1. The court relied on the principle of waiver and acquiescence, holding that the petitioner had agreed to the arbitration proceeding being conducted by five out of the seven arbitrators only. 2. The court held that Article 119(b) of the Limitation Act could not be utilized against the petitioner since no notice of the filing of the award had been given to the petitioner.

Final Decision: The court dismissed the petitioner's application to set aside the arbitration award.

JUDGMENT

This application has been filed by the defendant and it is directed against the appellate order of the Subordinate Judge, Jamshedpur, by which he has affirmed the order passed by the Munsif Of Jamshedpur, by which he had rejected the petitioner's application for setting aside an award filed in Court on the 17th November, 1965, in Title Suit No. 1125 of 1964. The learned Munsif by his order rejected the defendant's application and ordered that a decree be prepared in accordance with the award, with certain modifications.

2. The relevant facts are these: By petition dated the 8th February, 1965, the parties to the title suit had agreed to refer their disputes to arbitration of seven arbitrators, mentioned in that petition. Paragraph 4 of that petition stated thus :

"That the parties hereby declare and undertake that they will abide by the decision of the aforesaid arbitrators and in case of any difference of opinion among the arbitrators, the parties will abide by the decision of the majority of the arbitrators."

The arbitrators had been asked to submit their award by the 7th April, 1965. But, it appears that several extensions of time had to be given by the Court until the 22nd September, 1965. On that day, the learned Munsif passed an order to the effect that the award had still not been received from the arbitrators and a reminder may be sent to them. In these circumstances, the a ward was filed on the 17th November, 1965, signed by five of the seven arbitrators on the 16th November, 1965. On the 6th January, 1966 a petition was filed by the petitioner defendant and a rejoinder to this had been filed soon after by the plaintiff. No evidence was adduced by any of the parties before the learned Munsif and he held, amongst others, that both the parties had appeared before five of the arbitrators and that no party had raised objection that two of the arbitrators had not taken part in the arbitration. The learned Munsif has stated that it appears that since the decision of the arbitrators did not go in favour of the defendant that it has, for the first time, come to Court to get the award set aside on the plea that two members of the arbitrators had not participated in the proceeding. On this point the learned Subordinate Judge has also concurred. He had also stated that the defendant had taken part before the five arbitrators, knowing full well that all the seven arbitrators were not participating in the proceeding. According to the learned Judge, the conduct of the defendant showed that it was fully prepared to an arbitration being done by these five arbitrators.

3. Learned counsel for the petitioner has argued that according to the arbitration agreement, all the seven arbitrators had to take part in the proceeding and as all of them had not deliberated and arbitrated, the award was illegal. It is argued that the very fact that five out of seven arbitrators have signed the award in question shows that Paragraph 4 of the arbitration agreement was not complied with. My attention has been drawn to the letter of the Chairman of the arbitration committee sent to the Court enclosing the award and it is argued that this very document shows that at least two of the: arbitrators had not participated in the deliberations. Learned counsel for the opposite party has contended, on the other hand, that the petitioner is estopped from arguing the point mentioned above, because he had taken part in the proceedings before at least five arbitrators and, therefore, it is (stopped by conduct from challenging the award as given by them. reliance is placed on a decision of this Court in the case of (1) Baikunth Misser V. Gaurishankar Tewari and others, reported in 1967 B. L. J. R 132. Having heard learned counsel for the parties, I am of the opinion that the petitioner has not made out any case for interference by this Court under Section 115 of the Code of Civil Procedure. Whatever had been urged on its behalf be fore the Court of appeal below


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