Neelakantan
& Bros. Construction Vs. Superintending Engineer, National Highways, Salem
& Ors [1988] INSC 224 (16 August 1988)
Mukharji,
Sabyasachi (J) Mukharji, Sabyasachi (J) Rangnathan, S.
CITATION:
1988 AIR 2045 1988 SCR Supl. (2) 462 1988 SCC (4) 462 JT 1988 (3) 743 1988
SCALE (2)586
ACT:
Arbitration
Act, 1940: Sections 2, 20, 30 and 33- Arbitration- Statements of parties
filed-Evidence adduced- Change of Arbitrator -Parties did not protest and
participate in proceedings before successor-Whether amounts to
acquiescence-Appointment of successor-Whether can be challenged as invalidating
proceedings_ Award-Unreasoned-No legal proposition made-Whether can be
interfered with.
HEAD NOTE:
The
petitioner-Construction firm entered into agreements with respondent No. 3,
Superintending Engineer of a Circle for execution of certain civil works.
Respondent No. 1- Superintending Engineer of another Circle entered into a
reference for arbitration and parties filed statements and adduced evidence.
Before the adjudication was completed, respondent No. 1 was transferred and his
successor-in-office entered into the task of adjudication with the knowledge,
consent and active participation of the petitioner in the proceeding. Since the
arbitrator could not complete the award within time, be sought extension of
time by a letter to the petitioner and the petitioner agreed to such extension
by a letter. The petitioner did not ask for any further or fresh opportunity
for adducing any evidence.
Thereafter,
the arbitrator made his award.
The
petitioner challenged the award under ss. 30 and 33 of the Arbitration Act,
1940 before the District Judge on the ground that the previous arbitrator
having entered into reference, his successor-in-office had no jurisdiction to
conclude it and the award was violative of principles of natural justice.
The
District Judge held that the successor-in-office to the original arbitrator was
competent to pass the award.
Upholding
this, the High Court rejected the challenge to the award. Hence the petitioner
filed the Special Leave Petition in this Court contending that once an
arbitrator had entered into a reference, the next incumbent could not conclude
the said arbitration proceedings without a fresh agreement, that there was
violation of principles of natural justice and PG NO 462 PG NO 463 that the
award was bad.
Dismissing
the Special Leave Petition,
HELD:
1. If the parties to the reference either agree before,hand to the method of
appointment, or afterwards acquiesce in the appointment made, with full
knowledge of all the circumstances, they will be precluded from objecting to
such. appointment as invalidating subsequent proceedings.
Attending
and taking part in the proceedings with full knowledge of the relevant fact
will amount to such acquiescence [465G ] N. Challappan v. Secretary, Kerala
State Electricity Board and another, [1975] 1 S.C.C. 289 relied on.
Chowdhury
Murtaza Hossein v. Mussumat Bibi Bechunnissa, 3 I.A. 209 and Prasun Roy v. The
Calcutta Metropolitan Development Authority and another, [1982] 2 Scale 125,
referred to.
Russell
on Arbitration, 18th Edition/20th Edition, pages 105/432-435, referred to.
In the
instant case, the petitioner had full knowledge of the change of the incumbent
and did not protest and proceedings went on before the new incumbent. Thus, the
petitioner had knowledge of the alleged defect and had acquiesced in the
proceedings before the successor. There was, therefore, no violation of
principles of natural justice. [465C, F]
2.
Unless there was a patent mistake of law and gross misstatement of facts
resulting in miscarriage of justice or of equity, the award remains
unassailable. [466C] Champsey Bhara & Company v. Jivraj Ballo Spinning and
Weaving Company Ltd., 50 I.A. 324 and Firm Madanlal Roshanlal Mahajan v. Hukumchand
Mills Ltd., lndore, [1967j 1 S.C.R. 105, referred to.
In the
instant case, the arbitrator gave no reason for the award. There is no legal
proposition which is the basis of the award, far less any legal proposition
which is erroneous. There is no appeal from the verdict of the arbitrator. The
Court cannot review, in such circumstances, the award and correct any mistake
in the adjudication by the arbitrator. [466D] PG NO 464
3. In
the facts and circumstances of the case, the award is unassailable. The High
Court was right in upholding the District Judge's dismissal of the challenge to
the award. [466F]
CIVIL
APPELLATE JURISDICTION: Special Leave Petition [Civil) Nos. 1 l(i50-58 of 1987.
From
the Judgment and Order dated 3 1.7. 1987 of the Madras High Court in Appeal against Order Nos. 54 1 to 544 and 558
to 562 of 1981.
A.K. Sen,
V. Krishnamurthy and V. Balachandran for the Petitioner.
A. V. Rangam
for the Respondents.
The
Judgment of the Court was delivered by SABYASACHI MUKHARJI, J. These are
petitions under Article 136 of the Constitution seeking leave to appeal against
the judgment and order of the High Court of Madras dated 31st July, 1987. The petitioner company undertook
the work of widening and strengthening pavements in Nation Highway No. 7, Madurai-Kanya-kumari
Road from Reaches 37.6 k.m. to '1', k.m. on the Madurai-Kanyakumari Road and
the work was divided into fourteen Reaches and 14 separate agreements were
entered into between the petitioner and the Superintending Engineer, National
Highways, Tirunelveli.
respondent
No. 3 to the present petitions. There is not much dispute on this point. At the
relevant time, according to, the petitioner, the Superintending Engineer.
National Highways, Salem was one Thiru Mohan. He entered into
reference. He took up the matter for arbitration and called for statements from
the parties. Statements were filed before him and evidence were also adduced
before him. But before he could complete the adjudication he was transferred
and was succeeded by one Thiru J.R. Cornelius, Superintending Engineer. The
contention of the petitioner in this case was that he had no Jurisdiction to,
proceed and complete the arbitration. It appears however, that he entered into
the task of adjudication with the knowledge and consent of the petitioner and
the petitioner had participated actively in the proceeding before him. From the
notices served by Thiru Mohan previously and subsequently by Thiru Cornelius. it
is apparent that the petitioner had knowledge of the change of the incumbent of
the Superintending Engineer who was to arbitrate in the matter.
This
is evident from the documents appearing at pages 164 PG NO 465 and 165 of the
present paper book and both the parties had notice of the succession in office.
The arbitrator could not complete the award within time and there was need for
extension of time. He wrote a letter to the petitioner on lst May 1977 stating
"extension of time was necessary to pass orders on reference and hearing
has been concluded". In reply to that fetter on 11th May, 1977 the
petitioner agreed to such extension. The petitioner was content with that
situation and never asked for any further or fresh opportunity either to make
any submission or to adduce any evidence. In that light the arbitrator has made
the award.
This
was challenged before the learned District Judge by means of a suit under
sections 30 and 33 of the Arbitration Act, 1940 that the previous arbitrator Thiru
Mohan having entered into reference and Thiru Cornelius had-no jurisdiction to
conclude. It was violative of the principles of natural justice, it was
submitted. But as mentioned hereinbefore, the petitioner had knowledge of the
change of the incumbent. He did not protest and the proceedings went on before Thiru
Cornelius. It is apparent from the terms of the agreement between the parties
that the Superintending Engineer of the Circle for the time being was the named
arbitrator. The learned District Judge held that Thiru Cornelius was competent
to pass the award. The High Court also upheld that and rejected the challenge
to the award on this ground made by the petitioner.
Shri
A.K. Sen, learned counsel for the petitioners, urged before us that once an
arbitrator had entered into reference, the next incumbent could not conclude
the said arbitration proceeding without a fresh agreement. In the facts of this
case, as the petitioner had knowledge of the alleged defect and had acquiesced
in the proceedings before the successor, namely, Thiru Cornelius; we are of the
c,pinion, that this contention of Shri Sen cannot be entertained. It was
contended that there was violation of the principles of natural justice. This
objection cannot be entertained. If the parties to the reference either agree
beforehand to the method of appointment, or afterwards acquiescence in the
appointment made with full knowledge of all the circumstances. they will be
precluded from objection~ to such appointment as invalidating subsequent
proceedings. Attending and taking part in the proceedings with full knowledge
of the relevant fact will amount to such acquiescence, explains Russell on
Arbitration. 18th Edition at page 105. This was stated by the Judicial
Committee long ago in Chowdhury Murtaza Hossein v. Mussumat Bibi Bechunnissa, 3
I.A. 209. See also the observations of P.B. Mukherji, J. in the decision of the
Calcutta High Court PG NO 466 Calcutta, A.I.R. 1456 Calcutta 470 at 472. This Court held in N. Challappan
v. Secretary, Kerala State Electricity Board and another, [1975] 1 S.C.C. 289
that acquiescence defeated the right of the appellant at a latter stage. See
also the observations of this Court in Prasun Roy v. The Calcutta Metropolitan
Development Authority and another, [1982] 2 Scale 125. See Russell on
Arbitration, 20th Edition, pages 432-435. Shri Sen contended that no notice was
issued after the appointment of the new arbitrator. This was factually
incorrect, as mentioned before. Then, it was said that the award was bad as it
did not consider all the claims. This also cannot be entertained. It must be
assumed that the arbitrator had considered all the evidence adduced before him.
There was no disregard of any principle of law.
There
was nothing to indicate that the arbitrator had not considered all the
evidence. Unless there was a patent mistake of law and gross misstatement of
facts resulting in miscarriage of justice or of equity, the award remains
unassailable. In this case the arbitrator gave no reason for the award. There
is no legal proposition which is the basis of the award, far less any legal
proposition which is erroneous. There is no appeal from the verdict of the
arbitrator. The Court cannot review, in such circumstances, the award and
correct any mistake in the adjudication by the arbitrator-See Champsey Bhara B
Company v. Jivray Ballo Spinning and Weaving Company Ltd., 50 I.A. 324 and the
observations of Bachawat, J. in Firm Madanlal Roshanlal Mahajan v. Hukumchand
Mills Ltd., Indore, [ l967] 1 S. C. R. 105 of this Court.
In the
facts and circumstances of the case, in our opinion, this award is not
assailable. The High Court was, therefore, right in upholding the learned
District judge's dismissal of the challenge to the award. These petitions,
therefore, fail and are dismissed accordingly ,without any order as to costs.
N.P.V.
Petitions dismissed.
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