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Union of India (Uoi) Vs. Ch. Radhanath Nanda and anr. - Court Judgment

LegalCrystal Citation
SubjectArbitration;Limitation
CourtOrissa High Court
Decided On
Case NumberMisc. Appeal No. 15 of 1958
Judge
Reported inAIR1961Ori143
ActsLimitation Act, 1908 - Sections 14(2) - Schedule - Article 158; Arbitration Act, 1940 - Sections 2, 17 and 30; Evidence Act, 1872 - Sections 115
AppellantUnion of India (Uoi)
RespondentCh. Radhanath Nanda and anr.
Appellant AdvocateS. Mohanty, Adv.
Respondent AdvocateAsoka Das, ;Srinivas Misra and ;K.P. Acharya, Advs.
DispositionAppeal allowed
Cases ReferredChinoy Chalani v. Y. Anjiah
Excerpt:
.....india assurance co. ltd. v md. makubur rahman, 1993 (2) glr 430 and new india assurance co. ltd. v smt rita devi, 1997(2) glt 406, approved. new india assurance co. ltd. v birendra mohan de, 1995 (2) gau lt 218 (db) and union of india v smt gita banik, 1996 (2) glt 246, are not good law]. - the parties to the contract knew fully well that officers of the union government were liable to transfers to distant parts of india at short notice. his transfer to the planning circle, new delhi, was well known to the respondent, and he had written several letters addressed to him to new delhi (exts......a supplementary statement of facts to him on the 14th september 1953 (ex. e) which he addressed to shri guha as : 'arbitrator and superintending engineer planning circle new delhi'. he also had further correspondence with mr. guha on 21st september 1953 (ex. f), on 2nd october 1953 (ex. g), on the 10th december 1953 (ex 4) and on 12th december 1953 (ex. 5).it is further admitted by the plaintiff that shri guha held an enquiry in calcutta on the 18th and 19th december 1953 in connection with the arbitration dispute, that the plaintiff appeared before him through an advocate of cuttack (shri asoka das) and participated in the proceeding. the arbitrator eventually gave an award on 5th january 1954 and also served a notice of the passing of the award on the plaintiff, on the 7th january.....
Judgment:

R.L. Narasimham, C.J.

1. This is an appeal from the decision of the Additional Subordinate Judge of Cut-tack, setting aside an award given by an Arbitrator in a dispute between the parties.

2. The plaintiff-respondent was a contractor who entered into the usual working Agreement (Ex. A) dated 14th August 1942 with the appellant for the construction of a landing ground and other structures at Charbatia in Cuttack District. Clause 25 of the Agreement contains the usual arbitration clause to the effect that any dispute between the parties in respect of the contract

'shall be referred to the arbitration of the Superintending Engineer of the Circle for the time being in the manner provided by the law relating to arbitration for the time being in force who, after such investigation as he may think proper, shall deliver the award which shall be final, conclusive and binding on all the parties to the contract'.

A dispute arose between the contractor and the Union of India regarding certain payments and adjustment of claims arising out of the contract and one Mr. B. K. Guha who was working as the Superintending Engineer, Calcutta Aviation Circle in the early part of 1952, took up the arbitration and issued notices to both parties.

The Union Government's statement of the facts of the case was sent to him on the 14th July 1952 (Ex. C) and the. appellant's statement of facts was sent to him on the 6th August 1952 (Ex. D/1), some time later Shri B. K. Guha was transferred as Superintending Engineer, Planning Circle, New Delhi, but notwithstanding such transfer he continued to hear the arbitration dispute. The plaintiff also (though aware of the transfer) submitted a supplementary statement of facts to him on the 14th September 1953 (Ex. E) which he addressed to Shri Guha as : 'Arbitrator and Superintending Engineer Planning Circle New Delhi'. He also had further correspondence with Mr. Guha on 21st September 1953 (Ex. F), on 2nd October 1953 (Ex. G), on the 10th December 1953 (Ex 4) and on 12th December 1953 (Ex. 5).

It is further admitted by the plaintiff that Shri Guha held an enquiry in Calcutta on the 18th and 19th December 1953 in connection with the arbitration dispute, that the plaintiff appeared before him through an advocate of Cuttack (Shri Asoka Das) and participated in the proceeding. The arbitrator eventually gave an award on 5th January 1954 and also served a notice of the passing of the award on the plaintiff, on the 7th January 1954.

On the 6th April 1954 the plaintiff filed an application before the lower Court tor a direction to the arbitrator to file the award in Court. This was registered as Title Suit No. 21 of 1954 and notice was issued on the 7th April 1954 to the arbitrator to file the award in Court. The award was actually filed on 30th April 1954, but on the next date of hearing, namely 5th May 1954, the plaintiff and the Government pleader on behalf of the Union of India were both present in Court and filed Hajiras.

The order sheet of that day shews that a special entry was made to the effect that the arbitrator had filed the award. The Court thereupon issued notice to the arbitrator to give full information regarding costs, fees, charges, etc. due in respect of the arbitra-tion. The remaining portion of the order of that date has been torn--obviously by interested parties. There was some delay on the part of the arbitrator in informing the Court about the fees, charges etc. due in respect of the arbitration proceedings. But the plaintiff-respondent filed his objection only on the 27th August 1954.

3. The learned lower court disallowed the objection on the ground that it was filed beyond tne period of limitation prescribed by Article 158 of the limitation Act (one month) and that the 5th May 7954 should be considered to be the date on which the plaintiff, being present in Court, was aware of the filing of the award by the arbitrator.

He, therefore, refused to enter into the merits of the objections raised by the plaintiff against the award, but held that the arbitrator was not competent to decide the dispute because though he was the Superintending Engineer of the Circle in question on the date on which the dispute was referred to him for arbitration, he ceased to be the Superintending Engineer of the Circle on the date on which the award was given, in view of his admitted transfer as Superintending Engineer, Planning Circle, New Delhi. Hence he set aside the award on the question or jurisdiction.

4. Three points arise for consideration in this appeal;

(i) Was the lower court's view on the question of limitation correct?

(ii) Did Mr. Guha cease to have jurisdiction to decide the arbitration dispute in view of his transfer from his original post as Superintending Engineer, Calcutta Aviation Circle, to his new post of Superintending Engineer Planning Circle New Delhi?

and

(iii) Was the plaintiff estopped from raising the objection to the award in view of his submitting to the jurisdiction of Shri Guha knowing that he had been so transferred and in view of his participating in the arbitration proceedings?

5. Mr. Das for the respondent contended that in view of the express provision in Article 158 of the Limitation Act prescribing a period of thirty days from the date of service of notice of the filing of the award the respondent's objection to the award tiled on 27th August 1954 should be held to be within time. It is admitted that no express written notice of the filing of the award was served on the parties by the Court.

But the said Article does not require written notice. The award was actually filed in Court on the 30th April 1954 but on the 5th May 1954 the Government Pleader on behalf of the Union of India and the respondent plaintiff, were both present in Court and filed Hajiras. The Court in its order sheet of that date, noted that the award had been filed. He then called upon the arbitrator to inform the Court about the fees etc. payable.

This order passed in the prasence of the parties in open court must, in the circumstances be held to be sufficient notice to the contesting parties, namely the respondents and the Union of India, about the filing of the award and hence limitation would run from that date. The lower court rightly relied on the Nagpur decision reported in Kawal Singh v. Baldeo Singh, AIR 1957 Nag 57 where, on facts very similar to those of the present case, it was held that the date on which the party while present in Court became aware of the filing of the award, would be the starting point for limitation.

In the aforesaid Nagpur decision the previous decisions of the various High Courts have been fully discussed and with respect I would agree with that view. Valchand Dipchand v. Gunla, AIR 1926 Bom 312 and Ramtaran Das v. Adhar Chandra, AIR 1953 Cal 646 also support the view that where a party enters appearance in Court and thus knows the filing of the award in Court, actual service of notice on him is not necessary for the purpose of limitation.

6. Mr. A Das however urged that though the respondent was aware, on 5th May 1954 of the filing of the award, the filing was not complete inasmuch as full information regarding fees, charges etc. payable in respect of the arbitration proceeding and copies of depositions and documents filed before the Arbitrator, were not available on the date. He relied on the language of Sub-section (2) of Section 14 of the Arbitration Act which says that prior to the giving of notice to the parties about the filing of the award the Court may, at the request of any party to the arbitration, on its own motion, direct the filing of the depositions and the documents by the Arbitrator along with the award on payment of fees, charges etc. due in respect of the arbitration.

Here however, the C tile of the lower court shows that on 30th April 1954 the Government Pleader (Shri S. K. Mohanty) produced before the Court five files sent to him by the Arbitrator. On the next date of hearing, namely 5th May 1954, it the respondent had cared to scrutinise the records, he would have noticed the existence of these files. The Arbitrator, however, did not file along with the award a statement about the fees, charges etc., due in respect of the arbitration and the court had to issue express notice on him on the 5th May 1954, only for that purpose.

7. In my opinion, the mere fact that fees and Other necessary charges Were not known to the Court on the 5th May 1954 (though the award and other necessary papers were already before the Court on that date and the parties had already entered appearance before the Court), is not sufficient to show that the filing of the award is not complete for the purpose of limitation. Article 158 does not say that the date of filing of the award will not foe the date on which the award is actually filed in Court to the knowledge of the parties, but the date on which other information and particulars required by Subsection (2) of Section 14 of the Arbitration Act are fur-nished.

I do not think limitation can be extended by giving such a wide interpretation to Article 158 which is not warranted by the language of that section. It should be further noted in this connection that the respondent was the prime mover in securing the filing of the award before the lower court. It was he who first filed a petition on the 6th April 1954 on the basis of which A regular suit (T. S. No. 21 of 1954) was started by the learned Subordinate Judge.

In his presence, the Court issued notice to the Arbitrator and adjourned the case to 5th May, 1954. The respondent was fully aware of the various stages in the proceeding pending before the Subordinate Judge. I cannot understand how the omission on the part of the Arbitrator to supply to the Court on the 5th May 1954 the exact amount of fees, charges, etc. in respect of the arbitration proceeding can have any bearing on the objection which the respondent intended to file against the award.

All the materials necessary to enable the respondent to file objections to the award or to get it remitted for re-consideration were available to his knowledge on the 5th May 1954. But he filed his objection to the award only on the 27th August 1954 after the expiry or the period of limitation. His objection was rightly overruled as time barred.

8. Mr. A. Das relied on some observations in Jagadish Mahton v. Sunder Mahton, AIR 1949 Pat 393 (Pr. 17) to the effect that for the purpose of Article 178 of the Limitation Act, notice in writing must be given to the parties as required by Sub-section (1) of Section 14 of the Arbitration Act, and mere knowledge of the party about the making of the award would not suffice. This decision deals with the construction of Sub-section (1) of Section 14 of the Arbitration Act read with Article 178 of the Limitation Act and is not helpful in construing Sub-section (2) of Section 14 of the Arbitration Act read with Article 158 of the Limitation Act.

The language of the two sub-sections is somewhat different. While Sub-section (1) requires a 'notice in writing' Sub-section (2) merely says that 'the Court shall thereupon give notice' : it does not say that the notice must be in writing. Hence the aforesaid Patna decision will not be of assistance, in the present case. It is admitted by the respondent himself that notice of the passing of the award was given to him on 7th January 1954.

Hence, the requirement of Sub-section (1) of Section 14 of the Arbitration Act was admittedly complied with. The same remark applies to a single Judge decision of the Andhra Pradesh High Court reported in P. Ramulu v. Appalaswamy, AIR 1957 Andh-Pra 11 on which Mr. Das relied. For these reasons, therefore, I uphold the finding of the lower court on the question of limitation.

9. Coming to the second contention the question for decision is whether the words 'shall be referred to the arbitration of the Superintending Engineer of the Circle for the time being' in clause 25 of the Agreement should be construed to mean that the Arbitrator must be the Superintending En-gineer of the Circle concerned not only on the date on which the reference was actually made to him, but must also continue to be so until the date of his passing the award.

This depends on a construction of the expres-sion 'for the time being' in that clause. The parties to the contract knew fully well that officers of the Union Government were liable to transfers to distant parts of India at short notice. They were also aware that the arbitration proceeding may take some time. Clause 25 expressly authorises the arbitrator to make 'such investigation as he may think proper' and then give his award.

An investigation must necessarily take time and no one can say with certainty how long it will take. Thus with full knowledge of all these facts the parties omitted to make any provision in the Agreement as to what should be done in the event of the. Superintending Engineer of the Circle for the time being to whom the reference was originally made --being transferred elsewhere and being -- succeeded by another Officer.

In Clause 30 of the Agreement, the parties took care to insert the usual interpretation clause defining the expressions 'Governor General', 'Divisional Officer' and 'Sub-Divisional Officer' but they omitted to define the expression 'Superintending Engineer of the Circle'. Hence, as a matter of construction of Clause 25 it must be held that the words 'for the time being' in that clause refer only to the date on which the reference was made to the Arbitrator, and cannot be extended to include the date on which the actual decision was given by the Arbitrator. In other words if on the date of reference the Arbitrator was the Superintending Engineer of the Circle within whose jurisdiction the work in question was completed, he may dispose of the reference even though, he may be transferred elsewhere prior to his giving his decision.

10. The learned lower court relied on Bharat Construction Co., Ltd. v. Union of India, AIR 1954 Cal 606 for taking the contrary view and Mr. Das also relied on that decision in support of his contention. That decision is distinguishable on facts, but some of the observations contained therein would support the view taken above. There the agreement between the contractor and the Government contained a clause to the effect that the dispute should be referred to the 'sole arbitration of the Major General in charge of Eastern Command whose decision shall be final.'

The question before the High Court was whether the expression 'Major General' was a mere surplusage and whether the arbitration dispute could be referred to any officer in charge of the Eastern Command. The learned Judges rejected this argument and held that unless the Officer in charge of the Eastern Command was also a Major General he had no jurisdiction to decide the arbitration dispute. Chakravarty, C. J. rightly emphasised the fact that there was no indication in the Agreement as to what the parties intended to be done if the Major General in charge was transferred to another station or otherwise ceased to hold the particular oifice. 1 may quote the following passage, at page 611;

'Does the agreement contain any indication that even in such an event, the agreement should continue to subsist and that the office of Arbitrator could be filled by the appointment of either the successor of the Major General, or any other officer? I can find no such indication. Originally, when an Arbitrator is chosen by name and some reference is made to his office, it is usual to find a provision to the effect that in the event of the Arbitrator dying or ceasing to hold the particular office, another arbitrator would be appointed. If the arbitration agreement in the present case contained a provision to the effect that in the event of the office ceasing to be held by a Major General the parties would choose another arbitrator it might be said that there was an intention that a vacancy occurring in that office would be supplied'.

The aforesaid observations are very apposite in the instant case.

11. Apart from the above reasoning which, by itself is sufficient, the respondent is estopped by his own conduct from questioning the jurisdiction of Shri B. K. Guha to complete his arbitration proceeding. His transfer to the Planning Circle, New Delhi, was well known to the respondent, and he had written several letters addressed to him to New Delhi (Exts. E, F, G, 4 and 5 from 14th September 1953 to 12th December 1953.) In all this correspondence, no objection was taken to Shri Guha's jurisdiction to continue the arbitration proceeding on account of his transfer to New Delhi.

An ingenious explanation was given by the respondent for such conduct on his part. In his evidence before the lower court he stated that he was under the impression that though Shri Guha was transferred to New Delhi the arrear clearance work of the defunct Cuttack Aviation Division (which was formerly dealt with by the Calcutta Aviation Circle) was being dealt with by the Planning Circle at New Delhi. This explanation is not acceptable.

The respondent is an experienced contractor of the Union of India and it is difficult to believe his statement that he did not know in time the appointment of Shri Dixon as the successor of Shri Guha in charge of the Calcutta Aviation Circle, after the latter's transfer to New Delhi in the early part of 1953 and his continuing to deal with arrear claims of Cuttack Aviation Division. Moreover, on his own admission he was fully aware on the 18th Decr. 1953, that Shri Guha as the Superintending Engineer of the planning Circle at New Delhi had nothing to do with the arrear work of the Cuttack Aviation Division and that Shri Dixon had succeeded him.

With that knowledge he participated in the Arbitration proceeding before Shri Guha on the 18th and 19th December 1953 assisted by an advocate (Shri Asok Das) of this Court. He should have immediately objected to Mr. Guha continuing the proceeding on the ground that there was another Superintending Engineer in charge of the Calcutta Aviation Circle within the meaning of Clause 25 of the Agreement. When questioned about his silence on that date his answer in cross-examination is indeed revealing. He stated :

'On 18-12-53 I did not tell Mr. Guha that he had no power to arbitrate since the contract did not concern his Circle at the time as I apprehended lest he would get displeased to hear so from us and give an adverse decision , I did not object to the hearing of the case fixed on 19-12-53 tor the self same reason'.

The aforesaid reason given by the respondent shows that he expected to get a favourable decision from Mr. Guha and therefore did not want to annoy him by questioning his jurisdiction on the 18th and 19th December 1953, though according to him he was fully aware of the fact that Shri Guha had ceased to have jurisdiction over the arbitration proceeding in consequence of his transfer. Having thus submitted to the jurisdiction of Shri Guha it is not open to him now, to question the award on the ground of want of jurisdiction.

12. The general principle that where a Court has inherent lack of jurisdiction, mere consent of parties cannot confer jurisdiction, has no application to arbitration proceedings where the arbitrator is a person appointed by agreement between the parties. The principle of estoppel will generally apply where a party having consented to arbitration by a person and participated in the proceedings before him subsequently attempted to challenge the jurisdiction of the Arbitrator.

A recent decision of the Calcutta High Court reported in Union of India v. K. P. Mandal, AIR 1958 Cal 415 sums up the law (both Indian and English) on the subject exhaustively, and with respect, I entirely agree with the view taken therein. That was also a case of arbitration in respect of a works contract and a party having submitted to the jurisdiction of an arbitrator one Shri C. P. Mallik, subsequently challenged his jurisdiction on the ground that he did not possess the qualification required by the arbitration clause.

The learned Judges held that there was estoppel by conduct and that it was not open to the party to contend that Shri Mallik was not quali-fied under the terms of the Agreement to arbitrate in the dispute. The present case is hardly distinguishable'from the aforesaid Calcutta case. I may also refer to another decision of the Allahabad High Court reported in Abdul Shakur v. Maham-med Yusuf, AIR 1921 All 64, where the principle of acquiescence was applied in the arbitration proceeding.

13. Mr. Das then cited Chinoy Chalani v. Y. Anjiah, AIR 1958 Andh Pra 384, and urged that the principle of estoppel had no application in the present case inasmuch as, if there was a vacancy in the post of Arbitrator, the Court alone had the power to fill that vacancy by virtue of Section 8(1)(b) el the Arbitration Act, and that there could be no estoppel against a statutory provision. But the aforesaid Andhra decision is distinguishable.

There, the appointment of the Arbitrator was based on the statutory provisions of the Hyderabad Stock Exchange Rules, and their Lordships rightly pointed out that there could be no question of estoppel or waiver of a statutory provision based on public policy. Moreover, in that case as soon aa the Arbitrator (who was not qualified under the Rules) began to function the party vigorously protested and participated in the proceedings under protest.

Hence the learned Judges rightly held that the principle of estoppel did not apply. But in the instant case the qualification of the Arbitrator are not based on any statutory provisions but based on agreement between the parties and moreover the respondent not only did not protest at the earliest opportunity but deliberately allowed the proceedings to continue because (as he himself put it) he did not want to displease the Arbitrator.

14. For these reasons, while agreeing with the lower court that the objection to the award filed by the respondent is time barred I would in disagreement with the lower court, hold that Sri B. K. Guha had jurisdiction to pass the award notwithstanding his transfer from Calcutta Aviation Circle to the Planning Circle, New Delhi.

15. The appeal is, therefore allowed, theorder of the lower court is set aside and a decreeis passed, in terms of the award given by Shri B. K.Guha. The respondent must pay the costs of boththe Courts to the appellant.


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