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2006 Supreme(HP) 268
High Court Of Himachal Pradesh
DEEPAK GUPTA
COSMO FERRITES LTD. - Appellant
Versus
HIMACHAL BUILDERS - Respondent
Arbitration Case No. 50 of 2003
Decided On : 09/04/2006
Mr. G.D. Verma, Senior Advocate, with Mr. B.C. Verma, Advocate, for the Applicant; Mr. N.K. Sood, Advocate, for the Respondent.
Headnote:(i) Arbitration and Conciliation Act, 1996, Section 34 Objections _ The governed petitioner filed objections to the effect that the proceedings are governed by the Arbitration Act, 1940 and not by the Act of 1996 - Held, that during the arbitration proceedings the petitioner raised no objection with regard to the applicability of the Act and proceeded to appoint the arbitrator and it was not specified that the proceedings would be under the old act of 1940 - The conduct of the parties shows that they had agreed that the provisions of new Act will apply - The petitioner is estopped from raising this plea - Petition dismissed with costs.
(Paras 13 & 22)
(ii) Limitation - Claim highly belated and time barred - The petitioner contending that the claim itself barred by time - Held, that the court cannot replace the award of the arbitrator(s), if the award of the arbitrator is based on evidence and is not opposed to public policy of India, the same cannot be set aside even if it is erroneous - Petition dismissed with costs. (Paras 19 & 22)
(iii) Arbitration and Conciliation Act, 1996, Section 4 - Waiver of right to object - Petitioner pleads that the arbitrator appointed by the respondent was not qualified to be appointed as such - Held, that no objection was raised during the arbitration proceedings which continued for many years - Thus in view of the provisions of Section 4 r/w Section 12 and 13 of the Arbitration and Conciliation Act, the petitioner has waived of its right to raise such an objection - This contention is rejected - Petition dismissed with costs. (Paras 18 & 22)
Deepak Gupta, J.— Two agreements dated 21.3.1986 were entered into between the parties which contained an arbitration clause. By these agreements, the present objector-petitioner had entrusted some construction work to the respondent. The work was done by the respondent and disputes arose between the parties with regard to the payment for the work done by the respondent.
2. The respondent thereafter filed a petition before this Court under Sections 8 and 20 of the Arbitration Act, 1940 for appointment of an Arbitrator. This petition was registered as Civil Suit No. 33 of 1992. By an order dated 5.3.1993 the petition was allowed and this Court directed the parties to appoint their respective Arbitrators in terms of the agreement. Pursuant to the directions of this Court the petitioner appointed Shri CM. Kaushal as its Arbitrator. The respondent appointed Shri S.K. Sawhney as its Arbitrator. Soon after his appointment, Shri CM. Kaushal, the Arbitrator appointed on behalf of the petitioner, sent a communication dated 8.10.1993 that he as unable to perform his duties as Arbitrator and resigned from the office of the Arbitrator. On 19.10.1993 Shri S.K. Sawhney wrote a letter to both the parties that an Umpire should be appointed by the Court and stated that he could not enter into agreement unless Umpire was appointed. It appears that even Shri Sawhney did not take any further action in the matter and did not enter into reference.
3. Thereafter for almost 3 years nothing happened. In June, 1996 the Advocate of the respondent sent a letter by registered post to the present petitioner. In this letter it was stated that Arbitration Act, 1940 stands repealed by Section 85 of the Arbitration and Conciliation Ordinance, 1996 and, therefore, the prior actions taken under the Arbitration Act, 1940 stood automatically annulled. In this letter it was further stated that the Arbitral Tribunal had to be reconstituted under Sections 10 and 11 of the Arbitration and Conciliation Ordinance and it was suggested that a sole Arbitrator be appointed with mutual consent. It was also stated in this letter that in case the appointment of sole Arbitrator is not acceptable to the present petitioner, then each party may appoint its Arbitrator.
4. In reply to this letter the present petitioner sent a letter dated 22.7.1996. Reference was made to the resignation of Shri CM. Kaushal and finally the present petitioner proposed the name of one Shri Ramesh Malhotra as its Arbitrator. Thereupon the respondent sent another letter dated 5.8.1992 appointing Shri A.K. Ummat as its Arbitrator under Section 11 of the Arbitration and Conciliation Ordinance, 1996.
5. Thereafter the two Arbitrators did not agree upon the names of third Arbitrator and the respondent approached this Court by filing Arbitration Petition No. 18 of 1997 and under the Arbitration and Conciliation Act, 1996 with a request that a third Arbitrator be appointed. This petition was contested by the present petitioner firstly on the ground that the application was barred by limitation and it was also contended that the proceedings were governed by the Arbitration Act, 1940 and not Arbitration and Conciliation Act, 1996. It was also urged that the claim itself was barred by limitation. This matter was disposed of vide judgment dated 1st August, 1997 reported in M/s. Himachal Builders v. M/s. Cosmo Ferrites Ltd., 1997 (2) Sim.L.C.430. This Court rejected the first contention of the present petitioner on the following grounds:— "9. The provision in Section 85 clearly shows that normally the provisions of the repealed Acts could apply to the proceedings which commenced before the present Act came into force. But there could be an agreement between the parties otherwise. That means that parties could agree that the proceedings should be governed by the present Act. I have already referred to Section 21 under which the arbitration proceedings shall be deemed to have commenced when a request was made for
