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2010 Supreme(Cal) 1257
High Court of Judicature at Calcutta
PINAKI CHANDRA GHOSE & HARISH TANDON
Union of India
Versus
Pam Developments (P) Ltd
A.P.O. No. 423 of 2007, A.P.O.T No. 526 of 2007, G.A. No. 3194 of 2007, A.P. No. 196 of 2003
Decided On : 05-10-2010
For the Appellant:R.N. Das, Senior Advocate, D.N. Sharma, D.K.
Singh Advocates.
For the Respondent:Promit Roy, Yasser Md. Araffat, Advocates.
A party cannot challenge the jurisdiction of an arbitrator after participating in the arbitration proceedings without any protest and after the award has been made.
Headnote:
ARBITRATION - JURISDICTION - CORAM NON JUDICE - WAIVER - INTEREST - EXCEPTED MATTERS - GENERAL CONDITIONS OF CONTRACT - CLAUSE 17(3), 16(2), 64(3)(A)(III).
Fact of the Case:
A dispute arose between the appellant (Railways) and the respondent (contractor) over the construction of a gymnasium at the Garden Reach Office of the appellant. The respondent filed a claim for Rs.31,18,369/- and requested the petitioner to refer the disputes to arbitration in terms of clause 64 of the General Conditions of Contracts 1974. The appellant denied such request of the respondent by its letter dated 17th January, 1994. The respondent filed an application for appointment of an Arbitrator before the learned First Assistant District Judge at Howrah whereby an order was passed on 29th November, 1994 directing the appellant to appoint an Arbitrator to decide the disputes within one month. Subsequently, on 13th March, 2000 a Retired Judge of this Court Mr. Justice Samir Kumar Mukherjee was appointed as an Umpire.
Finding of the Court:
The Court held that the appellant had waived its right to challenge the jurisdiction of the learned Arbitrator in the facts and circumstances of this case and has estopped from raising any challenge with regard to the jurisdiction to the learned Umpire. The Court further held that the interest exclusion clause should be held in the present case to be an embargo on the power of the appellant or its officers to award interest, but the Arbitrator’s power to award interest has not been curbed in the agreement.
Issues: 1. Whether the award is void ab initio and is a nullity since the said Arbitrator had no jurisdiction to deal with the said matter? 2. Whether the impugned award is a nullity and passed by the learned Arbitrator without jurisdiction? 3. Whether the impugned award is also bad as the claims are not maintainable in view of clauses 17(3) and 16(2) of the General Conditions of Contract?
Ratio Decidendi: 1. The principle of coram non judice would not apply to the facts of this case as the appellant had waived its right to challenge the jurisdiction of the learned Arbitrator by participating in the arbitration proceedings without any protest. 2. The interest exclusion clause in the General Conditions of Contract did not denude the power of the Arbitrator to award interest as it was not included in the list of excepted matters.
Final Decision: The appeal was dismissed and the order passed by the Hon'ble First Court was affirmed.
PINAKI CHANDRA GHOSE, J
This appeal is directed against a judgment and order dated 11th September, 2007 passed by the Honble First Court dismissing the application filed by the appellant herein under Sections 30 and 33 of the Arbitration Act 1940 (hereinafter referred to as the said Act) for setting aside of an award published by the learned Arbitrator dated 20th May, 2003 with costs.
The facts of the case briefly are as follows:-
On December 9, 1991 the appellant issued a Notice inviting Tender for construction of a Gymnasium at the Garden Reach Office of the appellant. The proposed tender value of the said tender was Rs.61.40 lakhs. The respondent duly filed a tender bid which was opened on 19th December, 1991 along with other tenders and on 17th August, 1992 the letter of acceptance was issued in favour of the respondent by the appellant, since the respondent was the lowest tenderer. The initial date of completion of the work was 16th April 1993 under the said contract.
On 17th January, 1994 a consolidated letter of claim was submitted by the respondent to the petitioner and the respondent had lodged a purported claim of Rs.31,18,369/-and requested the petitioner to refer the disputes to arbitration in terms of clause 64 of the General Conditions of Contracts 1974. The appellant denied such request of the respondent by its letter dated 17th January, 1994. Application was filed by the respondent for appointment of an Arbitrator before the learned First Assistant District Judge at Howrah whereby an order was passed on 29th November, 1994 directing the appellant to appoint an Arbitrator to decide the disputes within one month.
On 12th January, 1995 the General Manager, Railways appointed two departmental arbitrators and the said Joint Arbitrators were requested to appoint an Umpire to refer the case in respect of any difference of opinion between the said Joint Arbitrators. Request was made by a letter dated 19th April, 1995 to the Joint Arbitrators by the respondent to appoint an Umpire within seven days from the receipt of the letter. No steps were taken, hence, application was filed under Sections 5, 8, 11 and 12 of the said Act for removal of the said Joint Arbitrators and for appointment of new Arbitrator. Subsequently, on 7th February, 1996 one of the Joint Arbitrators, Shri Rajat Mitra, Chief Planning & Design Engineer/SER/Garden Reach/Calcutta was appointed as an Umpire. Since Joint Arbitrators did not enter upon reference, the application which was filed before the learned Civil Judge Senior Division was transferred before the High Court and the matter was taken up by the Court. Ultimately, on 13th March, 2000 a Retired Judge of this Court Mr. Justice Samir Kumar Mukherjee was appointed as an Umpire. By an order dated 30th November, 2000 the High Court passed an order directing that the Joint Arbitrators had become functus officio and the learned Umpire appointed in the matter was directed to act as an Arbitrator to proceed afresh and to adjudicate the disputes between the parties. It appears that on 20th May, 2003 an Award was passed by the Arbitrator in the matter.
The points which have been urged before us that the Award is void ab initio and is a nullity since the said Arbitrator had no jurisdiction to deal with the said matter. Therefore, it is submitted that the said Arbitrator functioned as quorum non-judis. In support of his contention Mr. R.N. Das, learned Senior Advocate, appearing on behalf of the Union of India relied on the decisions reported in 2000 (2) Arbitration Law Reporter 2 (SC) (A.Mohammed Yunus Vs. Food Corporation of India) and in the case of Union of India Vs. Sohanlal Puglia reported in 2003 (3) Arbitration Law Reporter 557 and in 2004 (10) (SCC) 504 (Union of India Vs. M. P. Gupta).
Mr. Das further contended before us that the impugned award is a nullity and passed by the learned Arbitrator without jurisdiction. Therefore, it should be challenged at any stage and reliance has bee
