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1974 Supreme(Gau) 18
GAUHATI HIGH COURT
R. S. BINDRA, J.
Makhan Lal Lodh -Appellant
Versus
Union of India -Respondent
First Appeal No. 4 of 1969
Decided On : 23-04-1974
S. Deb, Advocate, H.C. Nath, Advocate-General and R. Ghosh, Govt. Advocate
An arbitrator has jurisdiction to entertain a counter-claim made by a party even when the reference to arbitration is made at the instance of the other party.
Headnote:
ARBITRATION - AWARD - FILING IN COURT - LIMITATION - ARTICLE 119 OF THE LIMITATION ACT, 1963 - APPLICATION BY ARBITRATOR - WHETHER CONTEMPLATED - REFERENCE TO ARBITRATION - INITIATIVE TAKEN BY ONE PARTY - COUNTER-CLAIM BY OTHER PARTY - JURISDICTION OF ARBITRATOR.
Fact of the Case:
The contractor, Shri Makhan Lal Lodh, entered into a contract with the Union of India for the construction of barracks in Agartala. The contract contained an arbitration clause providing for the appointment of an arbitrator by the Administrator of Tripura in case of disputes. The contractor petitioned the Administrator to arbitrate or appoint an arbitrator, specifying the heads of dispute. The Administrator appointed Shri A.K. Dasgupta as the sole arbitrator. The arbitrator called for statements of facts from the parties and, after hearing them, gave an award in favor of the Union of India. The contractor challenged the validity of the award, arguing that the arbitrator lacked jurisdiction to entertain the Union of India's counter-claim since the reference to arbitration was made at the instance of the contractor.
Finding of the Court:
The court held that the arbitrator had jurisdiction to entertain the Union of India's counter-claim. The court reasoned that the reference to arbitration was a bilateral affair and that the arbitrator had to decide the disputes ascertained from the parties' pleadings. The court also noted that the contractor had not raised an objection before the arbitrator that the latter could not adjudicate upon the counter-claim.
Issues: 1. Whether an application by an arbitrator to file an award in court is contemplated under Article 119 of the Limitation Act, 1963? 2. Whether a counter-claim can be made by a party when the reference to arbitration is made at the instance of the other party?
Ratio Decidendi: 1. Article 119 of the Limitation Act, 1963, relates to applications for filing an award in court or setting aside an award. The court held that this Article does not contemplate an application by an arbitrator to file an award in court. The court reasoned that the arbitrator is not personally interested in the award and that the Parliament could not have visualized an application by an arbitrator to the court respecting an award made by him. 2. The court held that a counter-claim can be made by a party even when the reference to arbitration is made at the instance of the other party. The court reasoned that a reference to arbitration is primarily a bilateral affair and that the arbitrator has to give his award on the disputes ascertained from the parties' pleadings.
Final Decision: The court dismissed the contractor's appeal and held that the arbitrator had jurisdiction to entertain the Union of India's counter-claim.
Shri Makhan Lal Lodh of Agartala entered into a contract with the Union of India for construction of barracks meant for bachelor officers at Agartala sometime in the year 1961-62. The formal agreement executed between the parties contained an arbitration clause providing that in case of any dispute between the parties the matter shall be referred for arbitration to the Administrator of Tripura. It was also provided in that clause that if for any reason the Administrator found any difficulty to do the arbitration himself he could appoint some one else as an arbitrator. On 12th September, 1966, the contractor petitioned the Administrator "to arbitrate or kindly appoint some other person for the purpose", and mentioned in his petition the various heads of dispute which had cropped up between the parties. By an order dated 21-11-1966 the Administrator appointed Shri A.K. Dasgupta, Superintendent Engineer, Additional Circle, Agartala as sole arbitrator "for the purpose of making the award on the points of disputes referred to in the above petition". It was on 20th January, 1967, that Shri A.K. Dasgupta called upon the parties to submit statements of facts relating to the disputes between the parties. After receiving the statements of facts from the parties Shri A.K. Dasgupta heard the parties and gave his award which he happened to sign on 18-5-1967. The award was to the effect that it was the contractor who had to pay Rs. 10,093.06 to the Union of India. The arbitrator communicated the fact of his having signed the award to the parties and also sent to them each a copy of the award.
2. It appears that some officer of the Government wrote to the arbitrator on 12-9-1967 requesting the latter to file the award in Court so that a decree in terms thereof may be made in favour of the Government against the contractor. The arbitrator consequently moved the Court on 16-9-1967 but he produced the award in original before that Court on 15-1-1968. The Court apprised the parties that the arbitrator had filed the award in Court and called upon them to put in their objections, if any. The contractor filed objections challenging the validity of the award and contending that no decree in terms thereof could be made against him in favour of the Union of India. The Court on rejecting the objections filed by the contractor made an order on 21-2-69 making the award a rule of the Court and passing a decree in terms thereof. The present appeal by the contractor is directed against that order of the Court.
3. Shri S. Deb levelled a three-pronged attack on the order made by the Court and the award given by the arbitrator. In the first place he urged that the arbitrator having not forwarded to the Court, along with the award, the records of the arbitration proceedings the award is rendered irregular if not invalid, and as such it cannot form the basis of a decree against his client. The second point urged by the counsel was that the award having been filed in the Court more than 30 days after the date of service on the parties of the notice of making of the award, the Court should have rejected the prayer for making the award the rule of the Court rather entertain the proceedings and pass a judgment on the basis of that award. The last and the most important point urged by Shri Deb was that reference to the arbitrator having been made at the instance of the contractor the arbitrator lacked jurisdiction to entertain any claim made by the Union of India or to make an award in favour of Union of India. The learned Advocate-General entered the lists with Shri Deb on all the three points canvassed by the latter. I proceed to examine the validity or otherwise of those points seriatim.
4. The Advocate General did not dispute the point of fact that the arbitrator did not forward to the Court the records of arbitration proceedings along with the award. On the authority of sub-section (2) of Section 14 of the Arbitration Act, Shri Deb urged that the Court c
