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2001 Supreme(P&H) 131
PUNJAB AND HARYANA HIGH COURT
Bakhshish Kaur, J.
Punjab Agro Rice Bran Extractions Ltd. - Petitioner
Versus
M/s. Banwari Lal Suresh Kumar - Respondents
C.R. No. 1795 of 2000.
Decided On : 24 January, 2001
For the Petitioner:Mr. Ashwani Talwar, Advocate.
For the Respondent No. 1:Mr. P.S. Rana, Advocate.
For the Respondent No. 2:Ms. Kumud Sharma, Advocate.
The principle of estoppel prevented the petitioner from challenging the proceedings under the new Act after repeatedly requesting the other party to consent to be governed by the new Act and participating in the proceedings held under the new Act.
Headnote:
Arbitration Tribunal - Constitution, Jurisdiction, and Procedure - Arbitration Act, 1940, Arbitration and Conciliation Act, 1996 - Section 85, Section 13, Section 16 - The court discussed the constitution, jurisdiction, and procedure of the Arbitration Tribunal under the Arbitration Act, 1940 and the Arbitration and Conciliation Act, 1996. It highlighted the provisions of Section 85, Section 13, and Section 16 and their interpretations, emphasizing the estoppel of a party from challenging the proceedings under the new Act after repeatedly requesting the other party to consent to be governed by the new Act and participating in the proceedings held under the new Act.
Fact of the Case:
The petitioner filed a petition under Articles 226/227 of the Constitution of India, challenging the constitution and jurisdiction of the Arbitral Tribunal and seeking to quash the order passed by the Tribunal. The dispute arose from an agreement between the parties for construction of a factory and office building, and the proceedings were governed by the Arbitration Act, 1940 and the Arbitration and Conciliation Act, 1996.
Finding of the Court:
The court found that the petitioner, by repeatedly requesting the other party to consent to be governed by the new Act and participating in the proceedings held under the new Act, was estopped from challenging the proceedings under the new Act. It held that the petitions were not maintainable under Article 227 of the Constitution of India.
Issues: The issues involved the constitution and jurisdiction of the Arbitral Tribunal, the applicability of the Arbitration Act, 1940 and the Arbitration and Conciliation Act, 1996, and the estoppel of a party from challenging the proceedings under the new Act.
Ratio Decidendi: The court's decision was based on the interpretation of the provisions of Section 85, Section 13, and Section 16 of the Arbitration and Conciliation Act, 1996, and the principle of estoppel, which prevented the petitioner from challenging the proceedings under the new Act after repeatedly requesting the other party to consent to be governed by the new Act and participating in the proceedings held under the new Act.
Final Decision: The court dismissed the petitions as not maintainable under Article 227 of the Constitution of India.
Bakhshish Kaur, J. - This order will dispose of CR No. 1796 of 2000 as well.
This is a petition under Articles 226/227 of the Constitution of India for holding that the proceedings before the Arbitral Tribunal comprising of Shri A.C. Sharma, Shri S.D.K. Puri and Shri S.R.K. Agnihotri are void ab-initio and nullity as the Tribunal was not constituted in accordance with the law. It is further prayed that the order passed by the Tribunal Annexure P-1 be quashed and the proceedings shall be governed in accordance with the provisions of Arbitration Act, 1940 rather than the Arbitration and Conciliation Act, 1996.
2. The Arbitral Tribunal which was constituted for adjudication of the dispute between the parties, passed the impugned order Annexure P-1 on January 22, 2000, which reads as under :-
"4. Arbitral Tribunal has carefully gone into the evidence produced before it and has heard the oral arguments of the parties and hold the unanimous view that :-
(i)(a) It was on persistent suggestion/pressurization by respondent No. 1 (PARBEL) that claimant agreed to participate in the settlement of dispute under the new Act i.e. Arbitration and Conciliation Act, 1996 and such a change over is allowed under Section 85 of the said Act.
(b) The provisions of this Section do not debar the parties to come under the New Act even after proceedings commenced under the old Act. Further there is no stipulation therein that these provisions will not come into play if arbitral proceedings under the old Act commenced with the intervention of a Court.
(ii) The application of the respondent is time-barred under Section 13(2) and Section 16(2) of the Act i.e., it has neither raised objections within 15 days of the appointment of Arbitration Tribunal nor challenged its jurisdiction before filing its written statement of the claim.
(iii) Furthermore, respondent (PARBEL) is estopped by its own act and conduct from raising any objection as it continued participating in the proceedings for about 14 months after constitution of the Tribunal and raised objections only on 13.10.1999 just 3 days before 12th hearing in the case and that too as an additional matter while submitting its reply to the application made by respondent No. 2 for deleting its name from arena of the parties.
5. In view of the above findings, application of respondent No. 1 for closing the proceedings forthwith is hereby dismissed."
3. The order has been challenged on the ground that the Tribunal did not appreciate that in the first instance, Shri A.K. Mishra and Shri K.C. Mohindru were appointed as Arbitrators as per order of the Court Annexure P-2 and Shri V.P. Duggal was appointed as Umpire by the two Arbitrators in accordance with the terms and conditions of the agreement. His appointment was intimated to the Court vide Annexure P-5. Thus, these members of the Tribunal had sanction of the Court of law. Shri A.K. Mishra died and Shri K.C. Mohindru withdrew from the Tribunal. Shri S.R.K. Agnihotri and Shri S.D.K. Puri were nominated on their behalf, but their names were not ratified by the Court in place of the Arbitrators initially appointed. These Arbitrators are, therefore, estopped from conducting arbitral proceedings. These Arbitrators had also no authority to appoint the new Umpire, namely Shri A.C. Sharma, as Shri V.P. Duggal was already appointed as Umpire and his appointment was never revoked. The authority of the Arbitrators who had been duly appointed by the Court can be revoked only with the permission of the Court. Similarly, the substitution can be made by the Court alone. It is averred that the Arbitral Tribunal has also erred in holding that as both the parties have requested for adopting the procedure as mentioned in the Arbitration and Conciliation Act, 1996, the arbitration proceedings before the Tribunal shall be governed by the procedure as laid down in the 1996 Act, rather than than the 1940 Act. Similarly, the order of the Tribunal that the objections have not been file
