UNION OF INDIA Vs. ASHOKE TUBEWELL

JUDGEMENT

(1.) Preliminary point has been urged by the Union of India as to the authority of the arbitrator to adjudicate upon the disputes covered by the arbitration agreement. Upon the Court not being impressed by such challenge, the merits of the matter have been canvassed. The award has been assailed in the arbitrator accepting in full or in part the claims made under the first, fourth, eighth and 14th heads. The reference was made under the Arbitration and Conciliation Act, 1996. The petitioner points out that the period required to be afforded to the general manager for constituting the arbitral tribunal was not adhered to by the contractor in the contractor making a premature request under Section 11 of the 1996 Act to the Chief Justice of this Court or his designate. The petitioner says that notwithstanding the arbitrator having been appointed by consent of the parties, as recorded in the order disposing of the request under Section 11 of the 1996 Act, by virtue of sub-paragraph (x) of paragraph 47 of the S B P & Co. v. Patel Engineering Limited, 2005 8 SCC 618, it was open to the petitioner to challenge the competence of the arbitrator by way of an application before the arbitrator under Section 16 of the 1996 Act. The petitioner submits that such application was made at the earliest stage of the reference, but the arbitrator declined the prayer and continued with the merits of the matter merely on the ground that the petitioner herein had consented to the appointment of the arbitrator as recorded in the order disposing of the request under Section 11 of the 1996 Act.

(2.) The petitioner has referred to an unreported judgment rendered on February 25, 2010 in AP No. 340 of 2006 (Union of India v. S.S. Construction) where, on the strength of the Division Bench dictum in the judgment (Union of India v. Builders Corporation, 2009 4 CalHN 252), the award was set aside only because the arbitral tribunal was constituted in derogation of the arbitration clause contained in the general conditions governing railway contracts. The petitioner has also carried a single Bench judgment (Atul R. Shah v. V. Vrijlal Lalloobhai & Co, 1999 AIR(Bom) 67). The petitioner reads paragraph 5 of the report to emphasise on the Bombay High Court's acceptance of the proposition that since parties cannot confer jurisdiction by consent, the mere failure of a party to raise an objection would not preclude the party from subsequently objecting to the authority of the arbitral tribunal.

(3.) The facts in the Bombay case need to be appreciated to understand the principle stated therein. The arbitration in that case related to the Bombay Stock Exchange and the Court found that the procedure adopted was in derogation of Section 10 of the 1996 Act. In that case, the party who subsequently carried the objection for setting aside the award had not objected to the constitution of the arbitral tribunal, but had not consented thereto. It was in such context that the Court held that merely because a party had participated in proceedings that were without jurisdiction and had not objected thereto would not disentitle the party from urging the ground of the initial or complete lack of jurisdiction of the tribunal.