IN THE HIGH COURT OF CALCUTTA
Soumen Sen, J.
Union of India and others - Petitioners
Versus
M/s. Venus Engineering Concern Pvt. Ltd. - Respondent
AP No. 274 of 2005
Decided On : 28-02-2017
award setting aside - Eastern Railway - Arbitration Act, 1940, Section 20, 28, First Schedule - The court discussed the existence of a prior award, legal misconduct, and exceeding authority by the arbitrator. The court found that the arbitrator had acted without jurisdiction in allowing certain claims and set aside the award in part. The court also discussed the relevant provisions of the Arbitration Act, 1940, and their implications on the case.
Fact of the Case:
The application for setting aside of an award was made by the Eastern Railway, challenging the award on three grounds: existence of a prior award, legal misconduct, and exceeding authority by the arbitrator. The court found that the arbitrator had acted without jurisdiction in allowing certain claims and set aside the award in part.
Finding of the Court:
The court found that the arbitrator had acted without jurisdiction in allowing certain claims and set aside the award in part.
Issues: Existence of a prior award, legal misconduct, exceeding authority by the arbitrator
Ratio Decidendi: The court found that the arbitrator had acted without jurisdiction in allowing certain claims and set aside the award in part.
Final Decision: The court allowed the application for setting aside of the award in part, setting aside the award in respect of certain claims.
Soumen Sen, J.
This is an application for setting aside of an award at the instance of the Eastern Railway.
The award is assailed principally on three grounds.
The first ground is the existence of the prior award.
2. The second ground is of legal misconduct since the arbitrator had no authority to allow Claim No. 6 by disregarding Clause 17(3) of General Conditions of Contract.
3. The third ground is that the arbitrator has exceeded its authority in allowing Claim No. 15 which is a claim on account of interest pendente lite by disregarding Clause 16(2) of the General Conditions of Contract.
4. In order to appreciate the first point I have called for affidavits and production of the record. It appears from the documents disclosed by the parties that the umpire published an award on 31st July, 1999. The reference arose as normally used to happen under the 1940 Act by filing an application under Section 20 of the Arbitration Act, 1940 which used to be treated as special suit being Special Suit No. 32 of 1995 filed by the claimant. On 15th September, 1995 the said application was allowed by directing the General Manager, Eastern Railway to take steps to appoint two arbitrators within six weeks from the date of communication of the order. The procedures were duly followed and on 15th May, 1996 the Joint Arbitrators entered into the reference. On 11th February, 1999 the umpire entered into reference. Between February 25, 1999 and June 14, 1999 some sittings were held and it appears that on 14th June, 1999 the claimant requested the umpire to publish the award within 15 days. In view of failure of the arbitrator to dispose of the reference and make and publish the award within the stipulated time, an application under Sections 5, 8, 11 and 12 of the Arbitration Act, 1940 being AP No. 222 of 1999 was filed on 5th July, 1999 and the said application was allowed in presence of the Advocates for the petitioner by appointing Justice Murari Mohan Dutt (Retd.) to adjudicate upon the disputes between the parties.
5. Consequent upon the said order on 22nd September, 1999 the sole arbitrator entered reference and published an award on 20th December, 2004 after holding 68 meetings.
6. Before the arbitrator the petitioner urged that prior to the appointment of the sole arbitrator the umpire had published an award on 31st July, 1999 and produced a copy of the award and letter dated 21st September, 1999 of the Eastern Railway wherein it was stated that the railway would prefer an appeal against the order dated 19th August, 1999 appointing the present incumbent and prayed for stay of the proceedings. The Umpire, however, refused to stay the proceedings in absence of any order either staying or reversing the order appointing His Lordship to act as a sole arbitrator. Thereafter 68 sittings were held. It appears that the parties have adduced extensive evidence and on consideration of the materials and appreciation of the evidence an award was passed.
7. The learned senior counsel appearing for the petitioner submits that in view of a prior published award the entering upon reference of Justice Dutt to act as a sole arbitrator is coram non judice and accordingly the award made and published by the learned arbitrator is a nullity. It is submitted that once an objection to the jurisdiction is raised before the learned arbitrator it was the duty of the learned arbitrator to decide the question of jurisdiction before deciding the other issues on merit and the decision to the jurisdiction is no way affected by the order appointing him to act as an arbitrator.
This submission is unacceptable to this Court.
8. The said submission proceeds on an assumption that the arbitrator under the 1940 Act exercises same and/or similar jurisdiction as of an arbitrator appointed under the 1996 Act where he is empowered to decide his jurisdiction under Section 16 of the 1996 Act notwithstanding an appointment made by the Court under Section 11 of the 1996 Act. Until the Larg
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