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1958 Supreme(Cal) 101

HIGH COURT OF CALCUTTA
P. B. CHAKRAVARTTI, S. C. LAHIRI
UNION OF INDIA - Appellant
Versus
K. P. MANDAL - Respondent
A. F. O. O.  122  Of  1954
Decided On : APRIL 3, 1958

A party who has knowledge of an arbitrator's incompetence and subsequently submits to arbitration without objection is estopped from contending that the arbitrator was not qualified to arbitrate.

Headnote:

ARBITRATION - COMPETENCE OF ARBITRATOR - ESTOPPEL - WAIVER - RESPONDENT'S KNOWLEDGE OF ARBITRATOR'S INCOMPETENCE - SUBMISSION TO ARBITRATION - REPRESENTATION OF CONSENT - INDUCEMENT TO GOVERNMENT TO PROCEED WITH ARBITRATION - CHANGE OF POSITION - ESTOPPEL BY CONDUCT - WAIVER OF RIGHT TO INSIST ON PROPERLY QUALIFIED ARBITRATOR.

Fact of the Case:

The respondent, against whom an arbitrator had made an award on a claim submitted by the Union of India and also on a counter-claim submitted by himself, challenged it before Sarkar J. , on several grounds, all of which, except one, failed. The one ground which succeeded was that the arbitrator who had made the award was not competent to act as arbitrator under the provisions of the arbitration agreement.

Finding of the Court:

The Court found that the respondent had knowledge of the arbitrator's incompetence before he accepted him as the arbitrator, but held that such knowledge could not ground a plea of estoppel on the facts of the case before him, since the arbitrator's incompetence was equally known to Government who were setting up the plea.

Issues: 1. Whether the respondent was estopped from contending that the arbitrator was not qualified to arbitrate due to his knowledge of the arbitrator's incompetence and subsequent submission to arbitration? 2. Whether the respondent's conduct amounted to a waiver of his right to insist on a properly qualified arbitrator?

Ratio Decidendi: 1. The Court held that the respondent's knowledge of the arbitrator's incompetence and his subsequent submission to arbitration without objection estopped him from contending that the arbitrator was not qualified to arbitrate. 2. The Court also held that the respondent's conduct amounted to a waiver of his right to insist on a properly qualified arbitrator, as he had acted throughout as if the arbitrator was valid and qualified to act.

Final Decision: The appeal was allowed, the order of Sarkar J. , dated 16/7/1954, was set aside, and the respondent's application for setting aside the award was dismissed.

P. CHAKRAVARTTI, C. J.

( 1 ) A great many points were canvassed in this case in the Court below, but of them only one was canvassed in the appeal. The respondent, against whom an arbitrator had made an award on a claim submitted by the Union of India and also on a counter-claim submitted by himself, challenged it before Sarkar J. , on several grounds, all of which, except one, failed. The one ground which succeeded was that the arbitrator who had made the award was not competent to act as arbitrator under the provisions of the arbitration agreement. The Union of India sought to resist that ground by contending that the respondent was estopped from taking it, but the learned Judge overruled the contention and declared the award to be void. Dissatisfied with that decision, the Union of India has preferred the present appeal.

( 2 ) THE facts of the case are somewhat extraordinary. On 25-6-1943, the respondent entered into a contract with the then Government of India, as represented by the Superintending Engineer, Eastern Aviation Circle II, for the execution of thirteen pieces of work. The contract contained an arbitration clause which said that except where otherwise provided in the contract, all questions and disputes arising out of or relating to the contract would be referred to the arbitration of the "superintending Engineer of the Circle for the time being. " The respondent did some work, but disputes soon arose between him and Government as regards the amounts payable to him. According to Government, the respondent had been over-paid, whereas the respondent's case was that a large amount was due to him from Government. On some date in 1949, which It does not appear, the respondent served a notice on Government under Section 80 of the Code of Civil Procedure by which he Informed them, of a claim of Rs. 1,60,000/ -. On 19-10-1948, ft pleader, acting on his behalf, wrote to the executive Engineer, Aviation Division, O. P. W. D. and called attention to the fact that his notice under Section 80 had not been attended to and he also made a request that the dispute should be settled, if possible, before the 25th of October, next. Thereafter on 17-10-1950, one Sri C. P. Malik wrote to the respondent that the Chief Engineer, Civil Aviation Wing, Central P. W. D. , had appointed him to act as arbitrator in the dispute between him and Government regarding the work of construction of Gopali Benapur Road and, along with that letter, Sri Malik enclosed a copy of the statement of facts which he had received from Government. The letter ended with a request that the respondent should submit his reply or a counterstatement of facts within a fortnight of the receipt of the letter.

( 3 ) THE respondent replied on 31-8-1950, in the form of a petition addressed to Sri C. P. Malik. He called himself "this humble petitioner" and, in language brimming over with politeness and humility, submitted that while Government had laid a claim against him and full opportunity to reply to the claim had been offered, he too had a claim against Government which could be decided by arbitration. Clause 25 of the contract, he recalled, provided for arbitration regarding "all questions and disputes" between the parties. He, therefore, asked Mr. Malik's intervention for including his case also in the arbitration and wanted to know if he was right in thinking that the claim would be admissible for arbitration under Clause 25 of the contract. He did not file his reply to Government's statement of facts at once, because he said that the form and contents of his reply would depend upon whether his counter-claim also was going to be adjudicated on. "so far as this second party is concerned," he added, "this humble petitioner believes and agrees to arbitration of dispute relating to claim and counter-claim between 1st and 2nd parties. "

( 4 ) THE respondent's request as to his own counter-claim was apparently passed on by Sri Malik to Government. On 12-12-1950, Sri Mal












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