IMPORTANT POINT
By their conduct by participating in the arbitration proceedings without any protest the parties would be deemed to have waived their right to challenge validity of the proceedings and the awards.

Headnote:Arbitration Act, 1940-Section 30 -Objections to Arbitration Award- Maintainability-Disputes pertaining to works of construction of Houses in Housing Board Colony-Appointment of Superintending Engineer, P.W.D. as Arbitrator-Proceedings commenced-Transfer of Arbitrator, Superintending Engineer from Faridabad to Chandigarh -However, he continued with arbitration proceedings in spite of his transfer-Parties continued with proceedings -Award given-Applications u/s 14(2) for making the award rule of Court-Objections filed by Housing Board that awards were without authority and jurisdiction as upon transfer, Arbitrator had no authority to continue with proceedings-Whether maintainable?-(No)-Parties consciously having participated in arbitration proceedings would be deemed to have acquiesced to continuance of Arbitrator with proceedings.
       Held : In view of the foregoing discussions, with reference to the provisions of the Act, we conclude thus:
        (i) Grounds of objection under Section 30 of the Act to the reference made, with or without intervention of the Court, arbitration proceedings and the award can be classified into two categories, viz., one emanating from agreement and the other law.
        (ii) In case the ground of attack flows from agreement between the parties which would undoubtedly be a lawful agreement, and the same is raised at the initial stage, Court may set it right at the initial stage or even subsequently in case the party objecting has not participated in the proceedings or participated under protest. But if a party acquiesced to the invalidity by his conduct by participating in the proceedings and taking a chance therein cannot be allowed to turn round after the award goes against him and is estopped from challenging validity or otherwise of reference, arbitration proceedings and/or award inasmuch as right of such a party to take objection is defeated.
        (iii) Where ground is based upon breach of mandatory provision of law, a party cannot be estopped from raising the same in his objection to the award even after he participated in the arbitration proceedings in view of the well settled maxim that there is no estoppel against statute.
        (iv) If, however, basis for ground of attack is violation of such a provision of law which is not mandatory but directory and raised at the initial stage, the illegality, in appropriate case, may be set right, but in such an eventuality if a party participated in the proceedings without any protest, he would be precluded from raising the point in the objection after making of the award. (Para 12)
       In the case on hand, it cannot be said that continuance of the proceedings and rendering of awards therein by the Arbitrator after his transfer was in disregard of any provision of law much less mandatory one but, at the highest, in breach of agreement. Therefore, by their conduct by participating in the arbitration proceedings without any protest the parties would be deemed to have waived their right to challenge validity of the proceedings and the awards, consequently, the objections taken to the effect did not merit any consideration and the High Court was not justified in allowing the same and setting aside the award. (Para 13)

JUDGMENT

B.N. Agrawal, J.-Leave granted.

2. These appeals by special leave are directed against judgment rendered by the High Court of Punjab & Haryana at Chandigarh in Civil Revision Applications whereby the same have been allowed, orders passed by the appellate court upholding orders of the trial court disallowing the objections under Section 30 of the Arbitration Act, 1940 (hereinafter referred to as the Act ) have been set aside, objections allowed and awards set aside.

3. The Housing Board, Haryana-respondent No. 1 (hereinafter referred to as the Board ), filed two separate money suits against the appellant in the Court of the Senior Sub Judge, Sonepat, which were transferred to the Court of Addl. Civil Judge (Sr. Divn.), Sonepat, who, by separate orders dated 19th March, 1997, as agreed to by the parties, appointed Superintending Engineer, A.D.B. Branch Circle, P.W.D. (B & R) Br. Faridabad, as Arbitrator for settlement of certain disputes between the parties pertaining to the works of construction of Houses in the Housing Board Colony at Sonepat. On receipt of the references, the Arbitrator entered thereupon and fixed 6th May, 1997 as the date for hearing the parties in the arbitration proceedings, on which date the Contractor attended the proceedings whereas the Executive Engineer, who was representing the Board, absented himself. On the next date of hearing, i.e., on 13th May, 1997, while the Executive Engineer made a prayer for adjournment for filing the written reply, the Contractor attended the proceedings and filed documents and his counsel almost concluded the argument. The matter was, however, adjourned to 8th June, 1997. In the meantime, on 2nd June, 1997, Shri R.K. Jain, Superintending Engineer, A.D.B., Branch Circle, P.W.D. (B & R) Branch, Faridabad, who was the Arbitrator, was transferred and posted as Superintending Engineer, Construction Circle, No. 1, Union Territory Chandigarh, but he continued with the arbitration proceedings in spite of his transfer. On the next date of hearing, i.e., on 8th June, 1997, the Contractor attended the arbitration proceedings with his counsel whereas Executive Engineer representing the Board though attended the proceedings but without counsel and did not file written reply but requested for adjournment. Accordingly the arbitration proceedings were adjourned to 18th June, 1997, on which date, an affidavit was submitted on behalf of the Board in support of its case and after evidence was adduced on behalf of the parties, counsel appearing on behalf of the Contractor resumed further argument and concluded the same whereafter. counsel appearing on behalf of the Board also concluded his argument on that day itself.

4. The Arbitrator thereupon gave the awards on 28th June, 1997. Applications under Section 14(2) of the Act were filed on behalf of the Contractor for summoning the original awards from the Arbitrator and, upon receipt of the same and after hearing the parties, making the awards rule of the Court. On the other hand, on behalf of the Board, objections were filed under Section 30 of the Act on grounds, inter alia, that the awards in question were without authority and jurisdiction as the Court appointed Superintending Engineer, A.D.B., Branch Circle, P.W.D. (B & R) Branch, Faridabad, as Arbitrator and upon the transfer of the Arbitrator, Shri R.K.Jain, as Superintending Engineer Circle No.1, Union Territory, Chandigarh, on 2nd June, 1997, he had no authority and jurisdiction to further continue with the arbitration proceedings which should have been taken over from that stage by the successor Superintending Engineer, A.D.B., Branch Circle, P.W.D. (B & R) Branch, Faridabad, who succeeded Shri R.K. Jain upon his transfer.

5. The trial court after due consideration rejected the objections under Section 30 of the Act and directed the awards to be made rule of the Court which order was affirmed in appeal. When the matter was taken to the High Court of Punjab & Haryana at Cha

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2002 Supreme(SC) 258

IMPORTANT POINTBy their conduct by participating in the arbitration proceedings without any protest the parties would be deemed to have waived their right to challenge validity of the proceedings and the awards.

Cases Referred (3)

IMPORTANT POINT
By their conduct by participating in the arbitration proceedings without any protest the parties would be deemed to have waived their right to challenge validity of the proceedings and the awards.