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IN THE HIGH COURT OF ALLAHABAD
RAJNISH KUMAR, J.
Uttar Pradesh Rajya Bhandaran Nigam Ltd. – Appellant
Versus
Uttar Pradesh Purva Sainik Kalyan Nigam Ltd. – Respondent
First Appeal No. 184 of 2013
Decided On : 05-08-2024
ARBITRATION - ARBITRATION AND CONCILIATION ACT, 1996 - Sections 2(b), 4, 7, 16, 31(7)(a), 31(8), 43 - The court discussed the validity of the arbitration agreement under Section 7, emphasizing that an arbitration agreement need not be in a specific form, but must reflect the parties' intention to arbitrate. The court interpreted Section 4 regarding waiver of objections, stating that failure to raise jurisdictional issues at the appropriate time results in waiver. The court also addressed the applicability of limitation under Section 43, concluding that the appellants could not raise this objection after participating in the arbitration process. The provisions of Sections 31(7)(a) and 31(8) regarding interest and costs were upheld, affirming the arbitrator's discretion in these matters. These interpretations were pivotal in affirming the validity of the arbitration proceedings and the award made by the arbitrator.
Fact of the Case:
The appellants challenged an arbitration award on grounds of lack of jurisdiction due to the absence of an arbitration agreement, claims being time-barred, and unequal treatment in costs awarded. The dispute arose from a contract for security services, where the appellants alleged negligence leading to theft and sought to withhold payment for services rendered.
Finding of the Court:
The court found that the arbitration agreement was valid despite not being explicitly stated in the contract, as the parties had consented to arbitration and engaged in the process without objection. The court upheld the arbitrator's award, finding no jurisdictional errors or violations of public policy.
Issues: 1. Whether there was a valid arbitration agreement between the parties. 2. Whether the claims were barred by limitation. 3. Whether the arbitrator's award was against public policy or resulted in unequal treatment of the parties.
Ratio Decidendi: The court held that the intention to arbitrate can be inferred from the conduct of the parties and their correspondence, thus validating the arbitration process. It emphasized that objections regarding jurisdiction and limitation must be raised at the earliest opportunity, and failure to do so results in waiver. The court also affirmed the arbitrator's discretion in awarding interest and costs.
Final Decision: The appeal was dismissed, affirming the district court's decision to uphold the arbitration award, as the appellants' objections were deemed waived and without merit.
JUDGMENT :
RAJNISH KUMAR, J.
1. Heard, Shri Rakesh K. Chaudhary, learned counsel for the appellants alongwith Shri Aditya Pandey, Advocate and Shri Vibhanshu Srivastava, learned counsel for the respondents.
2. This First Appeal under Section 37(1)(b) of the Arbitration and Conciliation Act, 1996 (here-in-after referred as Act of 1996) has been preferred against the judgment and decree dated 16.09.2013 passed in Regular Suit No. 17 of 2011; Uttar Pradesh Rajya Bhandaran Nigam Ltd. and Others vs. Uttar Pradesh Purva Sainik Kalyan Nigam Ltd. by the District Judge, Lucknow and to set aside the award dated 16.01.2011 passed by the sole Arbitrator in Arbitration Case No. 28 of 2008; Uttar Pradesh Purva Sainik Kalyan Nigam Ltd. vs. The Managing Director, Uttar Pradesh Rajya Bhandaran Nigam Limited and Others by allowing the application under Section 34 of the Arbitration and Conciliation Act, 1996 (here-in-after referred as the Act of 1996).
3. Learned counsel for the appellants submitted that there was no Arbitration Agreement between the parties and it could not have been even by consent of parties, therefore the arbitration could not have been held and the judgment and award passed by the sole Arbitrator is without jurisdiction. He further submitted that even the claims raised by the respondent-claimant were beyond limitation in view of Section 43 of the Act of 1996, according to which the provision of Limitation Act 1963 (36 of 1963) are applicable which provides the limitation of three years for such claims, therefore the same could not have been considered and the claim was liable to be dismissed on this ground alone. He further submitted that the impugned judgment and award made by the sole Arbitrator is against the public policy in view of Section 31(7) (a) and 31(8) of the Act of 1996. Learned counsel for the appellants further submitted that the award is also not sustainable as the parties have not been treated equally as different costs have been awarded to both the parties, therefore there is violation of Section 18 of the Act of 1996. Learned counsel for the appellants further submitted that on account of theft, the appellants had suffered loss for which the First Information Report was also lodged. The correspondences show that the action was taken by the respondent against the Guards, therefore the bills were rightly withheld, which could not have been directed to be paid.
4. On the basis of above learned counsel for the appellant submitted that since the arbitration proceedings are without jurisdiction, therefor the impugned judgment and award passed by the sole Arbitrator and the judgment and order passed by the District Judge on Application under Section 34 of the Act of 1996 are not sustainable and the same are liable to be set aside. Learned counsel for the appellants relied on Yeswant Deorao Deshmukh vs. Walchand Ramchand Lothari, 1950 Supreme Court Reports 852, The United Commercial Bank Ltd. Versus Their Workmen, 1951 Supreme Court Reports 380, Kiran Singh and others Versus Chaman Paswan and others, 1954 AIR 340, Judgment and order dated 13th of January 2020 passed by Hon’ble Supreme Court in K. Lubna and others Versus Beevi & others; Civil Appeal Nos. 2442-2443 of 2011 and M/s. B and T AG versus Ministry of Defence, 2023 Live Law (SC) 466.
5. Per contra, learned counsel for the respondents submitted that the Sole Arbitrator was appointed with the consent of the appellants and no objection in this regard was taken before the Arbitrator. The appellants not only consented for appointment of Arbitrator but made a counter claim also before the Arbitrator, therefore the appellant cannot raise this objection after disposal of arbitration proceedings and it cannot be said that the proceedings are without jurisdiction in view of Section 7(4)(c) of the Act of 1996. He further submitted that no denial of notice for appointment of Arbitrator was ever made, rather the claims were raised and the Arbitrator was appointed by this c
An arbitration agreement can be inferred from the parties' conduct and correspondence, and failure to raise jurisdictional objections in a timely manner results in waiver of those rights.
The main legal point established in the judgment is that objections to jurisdiction must be raised at the appropriate stage, and the findings of the arbitrator on the point of jurisdiction, if not ch....
The court emphasized that an arbitrator's jurisdiction is confined to claims explicitly referred to in the arbitration clause; claims arising from separate contracts cannot be entertained.
The main legal point established in the judgment is that an application filed under Section 11(6)(C) of the Act, 1996 is barred by limitation if filed after a delay of more than the period of three y....
The appointment of a sole arbitrator deviated from the statutory requirements and terms of the arbitration agreement, making proceedings invalid under the Arbitration and Conciliation Act, 1996.
The limited scope of interference under Section 34 of the A&C Act of 1996 and the requirement for an arbitral award to be suffering from patent illegality for it to be set aside.
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