UNION OF INDIA Vs. SUKBRINDER SINGH ATWAL

JUDGEMENT

(1.) Short question involved in this appeal is whether the appellant is entitled to raise a belated plea of jurisdiction of the arbitrator in view of Clause 64(3)(a)(iii) of the general conditions of contract which specifically provided that the arbitration could only be done through gazetted railway officers and nobody else.

(2.) The parties entered into an agreement for execution of specified jobs stipulated in the work order. The contract was entered into in 1973 which was to be completed by October 31, 1974. Admittedly, work could not be completed within the said period. The parties blamed each other for the delay. Fact remains, time was extended without imposition of any penalty upon the respondent. After completion of the work, final bill was prepared and paid. The respondent thereafter lodged a claim principally on the issue of escalation of price caused due to delay and idle labour cost and other expenses as well as business loss on account of delay. The railway raised dispute. Joint arbitrators were appointed being two railway gazetted officers. The parties filed their respective claims before the joint arbitrators. For some reason or the other the arbitrators could not conclude the arbitration which resulted in an application for revocation of their authority under Section 5, 11 and 12 of the said Act of 1940. The learned single Judge vide judgment and order dated July 31, 1991 revoked the authority of the joint arbitrators and appointed Mr. Shibdas Banerjee, a senior advocate of this Court to act as sole arbitrator. The order was passed in presence of the learned advocate for the appellants. On perusal of the order appearing at page 17 of the paper book it does not appear that the appellants ever raised any objection with regard to appointment of Shri Banerjee. The appellants did not prefer any appeal from the said order as we are told. Shri Banerjee entered upon reference and concluded the arbitration proceedings by publishing his award appearing at pages 248-269 of the paper book. The appellants challenged the said award dated September 2, 1998 through an application made under Section 30 and 33 of the said Act of 1940. Perusal of the said application appearing at pages 1-14 reveals that the appellants were aggrieved as the arbitrator ignored the plea of limitation taken by the appellants. The arbitrator also failed to appreciate the effect of Clause 17(3) of the general conditions of contract which forbids payment of any compensation in the event of any failure or delay on the part of the railway in handing over the site to the contractor. According to the appellants, in view of the "no claim certificate" issued by the respondent, there could not have been any claim as ninety six final bills were duly paid as produced at the twelfth sitting of the arbitration. The learned arbitrator also ignored the schedule of rates. The respondent opposed the application by filing affidavit. The learned single Judge heard the parties on the said application and ultimately dismissed the same by holding it meritless. The learned Judge vide judgment and order dated October 22, 2009 appearing at pages 280-290 held that conjoint reading of Section 11 and 12 empowered the Court to remove an arbitrator or an umpire and appoint another person to act as sole arbitrator. The agreement between the parties could not override such express provision of the statute. His Lordship further observed that the appellants duly accepted and acted upon the order dated July 31, 1991 which assumed finality. His Lordship further observed that the appellants never objected to the authority of Shri Banerjee to act as arbitrator. His Lordship observed that the Court of law derived jurisdiction from statute which could not have been overridden by any private agreement.

(3.) On the plea of limitation His Lordship held that the issue of non-payment was kept alive till June 10, 1998 when the final bills were yet to be settled. Considering such fact His Lordship held that the claim was not barred by limitation. His Lordship also held that the scope of interference under Section 30 and 33 was limited and the Court was not competent to sit on appeal over the award of the arbitrator unless there was any apparent error. Merits of the findings of the arbitrator were not available for challenge in absence of sufficient grounds. His Lordship dismissed the writ petition.