IN THE HIGH COURT OF ALLAHABAD
Arun Bhansali, CJ, Vikas Budhwar, J
Bharat Sanchar Nigam Limited and another - Appellant
Versus
Chaurasiya Enterprises and others - Respondents
Appeal Under Section 37 of Arbitration And Conciliation Act 1996 No. - 305 of 2024 (Leading) Appeal Under Section 37 of Arbitration And Conciliation Act 1996 No. - 306 of 2024 (Connected C1), Appeal Under Section 37 of Arbitration And Conciliation Act 1996 No. - 307 of 2024 (Connected C2), Appeal Under Section 37 of Arbitration And Conciliation Act 1996 No. - 308 of 2024 (Connected C3), Appeal Under Section 37 of Arbitration And Conciliation Act 1996 No. - 310 of 2024 (Connected C4)
Decided On : 22-10-2024
(A) Arbitration and Conciliation Act, 1996 - Sections 34, 23(4), 29A, 12(5) - Appeals challenging the orders of the Commercial Court rejecting objections under Section 34 against arbitration awards - The court upheld the awards, finding no violation of natural justice or procedural irregularities despite the pandemic-related delays - The BSNL's conduct was deemed reckless, leading to an ex parte award - The claimant's statement of claim was filed within the stipulated time, excluding pandemic delays. (Paras 1, 13, 25, 30)
(B) Natural Justice - The principle of natural justice was upheld as the BSNL was given multiple opportunities to participate in the proceedings but failed to do so, leading to the arbitrator's decision. (Paras 20, 22)
(C) Ex Parte Award - The court found that the ex parte award was justified due to the BSNL's absence and lack of communication regarding their difficulties. (Paras 24, 28)
Facts of the case:
The appeals arose from arbitration awards in favor of the claimant, Chaurasiya Enterprises, against BSNL regarding contracts for laying underground Optical Fibre Cable. Disputes led to arbitration proceedings initiated by the claimant after BSNL failed to clear outstanding dues. (Paras 3-6)
Findings of Court:
The court found no merit in BSNL's objections, affirming the awards and dismissing the appeals. (Paras 29, 30)
Issues: The main issues included whether the arbitrator's mandate was terminated due to non-compliance with procedural timelines and whether the awards violated principles of natural justice. (Paras 21, 25)
Ratio Decidendi: The court ruled that the BSNL's failure to participate in the arbitration proceedings and the timely filing of the claimant's statement of claim justified the upholding of the awards. (Paras 28, 30)
Result: Appeals dismissed.
JUDGMENT :
Vikas Budhwar, J.
1. Challenge in these appeals under Section 37 of the Arbitration and Conciliation Act, 1996 (in short ‘A & C Act 1996’) are the orders of the Commercial Court rejecting the objections preferred by the Bharat Sanchar Nigam Ltd. (in short ‘BSNL’) under Section 34 of the A & C Act, 1996 upholding the awards passed in favour of the Chaurasiya Enterprises (in short ‘claimant’).
2. Since common question of facts and law are involved in all the captioned appeals, thus, they are being decided by a common order.
Facts
3. Briefly stated facts, sans unnecessary details are that BSNL in the year 2015 in order to lay down underground Optical Fibre Cable in District Bhadoi floated tenders, seeking bids from the prospective bidders. The claimant is stated to have been issued work orders, however, owing to certain disputes/differences which arose between the parties in respect of different contracts, notices came to be issued by the claimants to the BSNL on 20.03.2019 to clear the outstanding dues within a period of 30 days and, in case, the said request is not acceded, then to appoint an arbitrator in term of Section 12(5) of the 7th Schedule of the A & C Act, 1996. A reminder was also sent by the claimant to the BSNL on 08.05.2019 and since nothing happened, the claimant approached this Court while filing an arbitration application purported to be under Section 11(4) of the A & C Act, 1996 for appointment of an arbitrator.
4. Sri Brahmdeo Mishra, a retired District Judge was appointed as the sole arbitrator. The arbitrator entered into the reference on 08.11.2019 and thereafter proceeded to pass awards in favour of the claimant.
5. Questioning the awards, objections under Section 34 of the A & C Act, 1996 came to be filed by the BSNL which was rejected by the Commercial Court, Varanasi.
6. Assailing the said orders, the present arbitration appeals have been preferred.
7. For the sake of clarity, the descriptions and the details of the proceedings which are subject matter of the present appeal are being recapitulated in the form of a tabular chart:-
| A | B | C | D | E | F |
| Description of Appeals | Arbitration Case No. | Date of Award | Quantum of monetary benefits awarded to the claimant (in INR) | Number of objections under Section 34 of the A & C Act, 1996 | Date of the order of rejection of the application under Section 34 of the A & C Act, 1996 |
| Leading | 3 of 2019 | 05.04.20 21 | 83,23,416 | 13 of 2021 | 06.05.2024 |
| Connected C1 | 6 of 2019 | 04.05.20 21 | 15,24,931 | 14 of 2021 | 06.05.2024 |
| Connected C2 | 5 of 2019 | 03.05.20 21 | 6,01,516 | 15 of 2021 | 06.05.2024 |
| Connected C3 | 4 of 2019 | 03.05.20 21 | 13,96,465 | 12 of 2021 | 04.05.2024 |
| Connected C4 | 7 of 2019 | 04.05.20 21 | 5,04,568 | 11 of 2021 | 04.05.2024 |
Arguments of counsel for BSNL (Appellants)
8. Sri B.K. Singh Raghuvanshi, learned counsel for the BSNL has sought to argue that the orders of the Commercial Court rejecting the objections under Section 34 of the A & C Act, 1996 upholding the awards cannot be sustained for a single moment inasmuch as the Commercial Court, Varanasi has misconstrued the entire controversy and has adopted an incorrect approach. Elaborating the said submission, it is submitted that though pursuant to the orders of this Court in the proceedings under Section 11(4) of the A & C Act, 1996, the sole arbitrator came to be appointed, however, the entire proceedings undertaken by the arbitrator are in the teeth of the procedure as envisaged under the A & C Act, 1996. Submission is that the present cases are classic example of violation of principles of natural justice and also equal treatment has not been meted to the BSNL as per Section 18 of the A & C Act, 1996 particularly when, though the claimant on 16.11.2019 submitted statement of claim
Lachmi Narain vs. Union of India reported in (1976) 2 SCC 953
The court upheld arbitration awards, finding no violation of natural justice, as BSNL's failure to participate justified the ex parte award.
The court upheld the right to appoint a Substitute Arbitrator due to the previous Arbitrator's mandate termination, ensuring the unresolved disputes could be adjudicated. This reflects the essential ....
Court determined claims are not time-barred and appointment of an arbitrator is valid despite the respondent's challenges regarding jurisdiction and limitations.
Arbitrator shall ensure compliance of Section 12 of Arbitration and Conciliation Act, 1996 before commencing arbitration.
Arbitration claims must be initiated only after requisite mediation processes have failed; the cause of action arises post mediation conclusion, impacting limitation periods.
The petitioner must first seek termination of the existing Arbitrator's mandate through the appropriate civil court before requesting a new Arbitrator, as the existing proceedings had commenced.
The unilateral appointment of an arbitrator is impermissible under the Arbitration and Conciliation Act, 1996, unless there is a valid express waiver of ineligibility subsequent to the dispute arisin....
Section 28(1)(b) of A&C Act is reproduced as Rules applicable to substance of dispute Where the place of arbitration is situate in India.
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