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1974 Supreme(Ker) 177

Judges : A.N.RAY,K.K.MATHEW,UNTWALIA
N.CHELLAPPAN - Appellant
Versus
SECRETARY, KERALA STATE ELECTRICITY BOARD AND ANOTHER - Respondent
Case No : C. A. No. 682 (N) of 1974
Decided On : 11/21/1974
Advocates Appeared :
For the Petitioner:---. For the Respondent:----.

The main legal point established in the judgment is that the umpire as sole arbitrator had jurisdiction to pass the award, and the Board was precluded from challenging the jurisdiction of the umpire by acquiescence.

Headnote:

Arbitration - Jurisdiction - Kerala State Electricity Board v. Shri Chellappan - Arbitration Act, S.5, 11, 16, 30, 33 - The court allowed the application to appoint the umpire as sole arbitrator and to proceed with the arbitration. The umpire made the award in favor of the appellant. The High Court set aside the order appointing the umpire as sole arbitrator and the award and remitted the case for fresh disposal. The main point for consideration was whether the umpire as sole arbitrator had jurisdiction to enter upon the reference and pass the award. The court held that the umpire had jurisdiction to pass the award and the Board was precluded from challenging the jurisdiction of the umpire by acquiescence. The High Court was wrong in thinking that acquiescence did not preclude the Board from challenging the jurisdiction of the umpire as sole arbitrator. The court allowed the appeal and set aside the judgment of the High Court.

Fact of the Case:

The case involved a dispute between the Kerala State Electricity Board and Shri Chellappan regarding the construction of the Kuttiyadi Dam. The appellant stopped the work, and the Chief Engineer terminated the contract. The matter was referred to arbitration, and the umpire made an award in favor of the appellant. The High Court set aside the award and remitted the case for fresh disposal.

Finding of the Court:

The court found that the umpire as sole arbitrator had jurisdiction to pass the award, and the Board was precluded from challenging the jurisdiction of the umpire by acquiescence. The High Court's decision to set aside the award was wrong.

Issues: The main issue was whether the umpire as sole arbitrator had jurisdiction to enter upon the reference and pass the award. The court also considered the validity of the appellant's claim in the award and the return of the security deposit.

Ratio Decidendi: The court held that the umpire had jurisdiction to pass the award, and the Board was precluded from challenging the jurisdiction of the umpire by acquiescence. The court also found that the return of the security deposit fell under the reference to arbitration.

Final Decision: The court allowed the appeal and set aside the judgment of the High Court.

Judgment :-

1. This is an appeal, by special leave, from the judgment of the Kerala High Court reversing an order passed by the District Judge making an award passed by the umpire a rule of the Court after dismissing an application to set aside the award.

2. By a contract dated 214 1964, the construction of the Kuttiyadi Dam was entrusted by the Kerala State Electricity Board (for short the 'Board') to Shri Chellappan, the appellant. The work was left unfinished and therefore dispute arose between the appellant and the Board by reason of the non-execution of the work. While these disputes were pending, a second contract dated 15 71967 was entered into between the appellant and the Board for the execution of the remaining part of the work on or before 3151969.On 4 6 1968, the appellant stopped the work and the Chief Engineer terminated the second contract on 1510-1968. The Board thereafter carried on with the unfinished work. On 22 8 1970, five points were referred for the derision of two arbitrators, both retired Chief Engineers, one to be nominated by the Board and the other by the appellant. The arbitrators entered on the reference and they nominated Shri G. Kumara Pillai, a retired judge of the Kerala High Court as umpire. The arbitrators did not make the award within the time-limit which was extended from time to time and which expired on 18121971 Thereupon the appellant filed O.P. No. 11 of 1972 on 2811972 for revoking the authority of the arbitrators under S.5 and 11 of the Arbitration Act. The grounds for the application were that the arbitrators did not make the award within the time-limit for submission of the award and that they were disqualified by bias from proceeding, with the arbitration. The prayer in the application was that Shri Kumara Pillai may be directed to enter upon the reference in his capacity as umpire and to proceed with the arbitration. The arbitrators filed statements explaining the reasons for the delay in making the award and denying the bias attributed to them. One of the arbitrators in his statement submitted that he has no objection to his being discharged as he no longer wished to be an arbitrator. In this O.P. the appellant filed another application on 2131972 to appoint Shri Kumara Pillai as a sole arbitrator in place of the two arbitrators. By an order dated 22 61972, the court allowed O.P. 11 of 1972 and revoked the authority of the arbitrators and directed the umpire to enter upon the reference in his capacity as umpire and also 'allowed' the application (LA. 1918/72) to appoint Shri Kumara Pillai as the sole arbitrator. On 5 21972, the Board filed O.P. No. 19 of 1972 for extension of time for passing the award by the arbitrators. This was disposed of by an order dated 22-6-1972 stating that since O. P.11 of 1972 had been allowed, it had become unnecessary to extend the period. The umpire entered on reference in his capacity as umpire on 30-6-1972. Both the appellant and the Board participated in the proceedings before the umpire without demur and the umpire made the award in favour of the appellant for nearly Rs. 30 lakhs on 15 21973. The umpire filed the award in court on 30 21973 and prayed by O.P. 21 of 1973 that notice of the filing of the award be issued to the parties and that the award be made a rule.of the court. Notice was ordered on the application on 21-3-1973. The Board filed an application on 22 31973 (I. A. 895 (a)) challenging the award under S.16,30 and 33 of the Arbitration Act and praying to set aside the award. On 24 31973, the appellant filed an application to pass a decree in terms of the award and for interest at 15 per cent, from the date of the decree. The appellant filed his objection on 26 31973 to the Board's application to set aside the award. The case was posted for hearing on 4 41973.On that day, the Board filed an application I.A. 1176 of 1973 stating that it was necessary to file a detailed affidavit in rejoinder to the objections filed by the appellant to




































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