A party waives their right to contest the validity of an arbitration award by participating in proceedings without timely objections regarding appointment of arbitrators or stamp duty deficiencies.

1. Challenge in this appeal under S.37 of the Arbitration and Conciliation Act, 1996 is to the order dated 23-2-2015, passed in M.J.C. No. 121/2013, passed by the District Judge, Bilaspur, whereby an interim application (I.A. No. 2/15), filed by the appellant to set aside the arbitral award dated 15-7-2013 was dismissed.

2. Brief facts of the case are that an award was passed by the Arbitral Tribunal consisting of Hon'ble Shri Justice S. K. Tiwari (Retd.) and two others. After passing of the said award, as application was filed under S.34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as 'the Act of 1996') to set aside the said award raising various grounds. While the said application for setting aside the award was pending, another preliminary objection to the maintainability of the award was made by I.A. No. 2/15 on 16-1-2015. It was contended in the said application that share purchase agreement containing arbitration clause was not executed on the requisite non - judicial stamp as applicable in the State of Chhattisgarh and since the necessary stamp duty was not paid, the said agreement cannot be acted upon. The objection was further to the effect that the appointment of arbitrator was not according to the mandatory provisions of S.11(3) of the Act of 1996 as the arbitrator was appointed by the counsel and not by the parties, therefore, the constitution of Arbitral Tribunal itself was bad and the proceedings drawn thereafter has no sanctity in the eyes of law.

3. The learned District Judge of such preliminary objections, while adjudicating the same by the impugned order dated 23-2-2015 held that the appointment of arbitrator was not objected during arbitral proceeding, therefore, it would amount to waiver of the right. It was further held that the case law relied on by the appellant / applicant reported in 2011 (14) SCC 66 : AIR 2011 SC (Civ) 1972 SMS Tea Estates Pvt. Ltd. v. Chandmari Tea Company Pvt. Ltd. that the question of stamp duty would be in between the State and the persons, who executed it and further held that it will not prejudice the parties. Further the Court held that under S.19 of the Act of 1996, the Arbitral Tribunal has power to determine the admissibility of the documents. The Court further held that since no objection was raised during arbitral proceeding, therefore, the appointment of arbitrator cannot be called in question subsequently. Eventually the I.A. No. 2 was rejected. As against such dismissal, the instant appeal under S.37 of the Arbitration & Conciliation Act, 1996 has been filed.

4. Mr. B. P. Sharma, learned counsel appearing on behalf of the appellant would submit that the learned District Judge had wrongly observed the fact that Hon'ble Justice Shri S. K. Tiwari (Retd.) was appointed by the Hon'ble High Court as in this case, arbitrator was not by the Court but was appointed by the counsel and not by any of the parties. Therefore a wrong finding of fact is recorded. It is contended that the error is apparent on the face of record, therefore, it cannot be sustained. He would further submit that as per scheme for appointment of presiding arbitrator, consent of the other appointed arbitrator namely Mr. Prashant Jaiswal, Sr. Advocate was not taken, therefore, the very appointment of the arbitrator was bad. It is further contended that as per Art.5 of Schedule I - A of the Indian Stamp Act, as is applicable in the State of Chhattisgarh, the agreement of sale of share, it attracts a requisite stamp duty, which was not paid and therefore, the said agreement which has been acted upon by the arbitrator was not admissible in view of S.33 of the Indian Stamp Act, 1899. It is further contended that a