Construction India Vs. Secretary, Works Department,
Government of Orissa & Ors  INSC 920 (10 December 1997)
V. MANOHAR, D.P. WADHWA
10TH DAY OF DECEMBER, 1997 Present:
Mrs. Justice Sujata V. Manohar Hon'ble Mr. Justice D.P. Wadhwa Vinoo Bhagat,
Adv. for the appellant Jayant Das, Sr. Adv., R.K. Mehta and P.N.. Misra, Advs.
with him for the Respondents.
J U D
G M E NT The following Judgment of the Court was delivered:
716/91 and CA No 8829/97 (Arising out of SLP (C)No.9060/91 Mrs. Sujata V. Manohar,
granted in S.L.P. (C) No. 9060 of 1991.
appellant in these three appeals had entered into three separate agreements
with the respondents relating to a works contract. The arbitration clauses under
these three contracts were similar and required a reference being made to the
Superintending Engineer of the respondents unconnected with the work. However,
as the respondents unconnected with the work. however, as the respondents did
not refer the disputes to arbitration, an application was made by the appellant
under Section 8 of the Arbitration Act of 1940. The Court passed the following
order dated 15.9.1981 on the application by consent of parties from the panel
of names given by both parties. Both the panels contained the name of Shri G.S.
Patnaik. The order was as follows:
the parties have filed panel of names for appointment of Arbitrator. Heard. Shri
Chairman, Arbitration Tribunal, Orissa, is appointed as sole Arbitrator, send
the reference to him." Accordingly, arbitration proceedings were commenced
by the Arbitrator. The appellant filed separate statements of case in each of
the three cases. The respondents filed their counter claim and/or replies. The
parties were heard and the impugned Awards were pronounced by the Arbitrator on
17th of March, 1982.
respondents challenged these Awards on the ground that while the arbitration
proceedings were going on, the Arbitrator, on 19th of February, 1982 ceased to
be the Chairman of the Orissa Arbitration Tribunal. On 3rd of March, 1982 the
respondents filed a petition before the Arbitrator to the effect that since the
Arbitrator had ceased to be the Chairman of the Orissa Arbitration Tribunal, he
had no jurisdiction to continue with arbitration. The appellant filed his
objections to this application. On 9th of March, 1982, the Arbitrator made the
and his Advocate present.
Bhubaneswar present on behalf of respondent. heard on the petition of A.G.P.
filed earlier and objections of claimant. I have been appointed by name as sole
Arbitrator. A.G.P. also does not press his petition any further.
petition is rejected as not pressed. hearing of the arbitration case stands
reserved for pronouncing award. Claimant to file stamp paper." Thereafter,
the Arbitrator pronounced his Award on 17th of March, 1982.
contended by the respondents that the appointment of the Arbitrator Shri G.S. Patnaik
was an appointment by designation and hence he ceased to have jurisdiction when
he demited the office of the Chairman, Orissa Arbitration Tribunal. While the
appellant contends that the Arbitrator is a named Arbitrator, who is appointed
by consent of parties and that he continues to have jurisdiction, although he
may have demited his office as the Chairman of the Orissa Arbitration Tribunal.
The appellant also relies upon the proceedings before the Arbitrator of 9th of
March, 1982 when the objection as to the jurisdiction of the Arbitrator on his demiting
office was not pressed by the respondents.
to the appellant this will amount to acquiescence by the respondents to the
continuation of the arbitration before the named Arbitrator. Since they have so
acquiesced, they cannot object to his arbitration.
order of appointment clearly shows that the appointment of Shri G.S. Patnaik,
Chairman of the Orissa Arbitration Tribunal, is of a named Arbitrator. The
order of appointment does not qualify this appointment either by prescribing
that he can act as an Arbitrator so long as he continues as Chairman of the Orissa
there any implication to this effect in the sub- Court's order. The reference
to arbitration is also not to the Orissa Arbitration Tribunal. This would require
three members constituting the Tribunal to sit together.
it is difficult to hold that the Arbitrator who was named was to act as an
Arbitrator only so long as he held the office of the Chairman of the Orissa
Arbitration Tribunal. The parties may choose an Arbitrator for various reasons.
They may rely on his expertise or his special skills at the time when they
choose the Arbitrator.
to the respondents they agreed to the name because there were departmental
instructions to refer disputes to the arbitration of any member of the Orissa
Arbitration Tribunal. But when the Arbitrator is named, unless there is a clear
intention spelt out in the agreement of reference to indicate that he would
continue to be an Arbitrator only so long as he holds a particular office, a
mere reference to the office held by the Arbitrator will not disqualify him
from being an Arbitrator after he ceases to hold that office. the arbitrator,
therefore, had jurisdiction to give the awards.
attention was drawn to a decision of the Calcutta High Court in the case of Smt.
Pratima Sarkar v. Corporation of Calcutta & ors., (AIR 1973 Calcutta 434 at 437). The parties agreed to
settle their dispute on the basis of a report which was to be submitted by
Respondent No.3. The order in this connection, which was passed, records,
"Owing to the technical nature of the dispute involved in this case, it
would be better to have all the questions in dispute between the parties
decided by the Commissioner of the Corporation of Calcutta, who is Respondent
No.3...." The High Court pointed out that while Respondent No.2 was the
Commissioner of the Corporation of Calcutta, Respondent No.3 was the same
person who was impleaded in his personal capacity.
although the Arbitrator was named and described by his designation, this was a
case where Respondent No.3 was personally selected by the parties on account of
his technical qualifications. he does not cease to have jurisdiction on his
ceasing to be the Commissioner of the Corporation of Calcutta.
were two other judgments cited, one of the Orissa High Court in the case of
Union of India v. Ch. Radhanath Nanda & Anr. (AIR 1961 Orissa 143( and the
other of the Delhi High Court in the case of Mrs. Sushila Seth & Ors. v. The
State of Madhya Pradesh (AIR 1980 Delhi 244). In both the
cases, in the arbitration agreement, the Arbitrator was described with
reference to the office he was holding. The name of the Arbitrator was not
mentioned. In the case before the Orissa High Court, the High Court said that
the identity of the Arbitrator had to be determined with reference to the point
of time when a reference was made to arbitration.
was holding that office on the date of the reference was the arbitrator. what
is more, although he is not named as such, he can dispose of the reference even
though he may be transferred elsewhere prior to giving his decision.
case before the Delhi High Court, the words in the Arbitration clause,
"the Chief Engineer of the circle for the time being" were held to
refer, in the context of that case, to the Chief Engineer at the time when the
dispute arose. The court observed that the relevant time will depend upon
"the context of the facts and the object of the Arbitration". Neither
of these two cases are of any direct assistance in the present case when there
is no dispute about the identity of the Arbitrator who has been expressly named
in the order of reference.
respondents relied upon a decision of this Court in Hari Dutt Bhardwaj v. Haryana
State Agriculture Marketing Board, Punchkula & Anr, (AIR 1989 SC 1670). In
this case the Arbitrator was a Superintending Engineer on deputation to the
Marketing Board. While he was conducting arbitration proceedings he was
reverted to his parent department. But by a subsequent order he was redeputed
as Superintending Engineer of the Marketing Board. He then completed the
arbitration proceedings and gave his Award. The Court said that he had
jurisdiction to complete the arbitration proceedings and gave his Award It was
contended that this decision is to the effect that once the Arbitrator ceased
to be on deputation to the Marketing Board, he would not have jurisdiction to
continue as an Arbitrator. But this question was not required to be dealt with
at all, not has this Court given any finding on this question because the
person concerned was redeputed to the same post. There was, therefore, no
difficulty in holding that he had jurisdiction. This case, therefore, does not
assist the respondents.
respondents also relied upon a decision of this Court in the case of Union of
India & Ors. v. Prabhat Kumar and Brors. & Anr. (1995 Supp. [4 SCC
525). Under the arbitration clause, all disputes between the parties to the
contract were to be referred to the sole arbitration of an Engineer Officer to
be appointed by the authority mentioned in the tender documents. The clause
further provided that i the Arbitrator so resigns his appointment or (inter alia)
vacates his office, the authority appointing him may appoint a new Arbitrator
to act in his place. The Arbitrator who was so appointed conducted the
proceedings until he voluntarily retired from Government service. This Court
held that looking to the Arbitration clause, the Arbitrator ceased to be an
Arbitrator on his retirement. In terms of the Arbitration clause, the Union of
India was competent to appoint a new Arbitrator. This decision turns entirely
on the Arbitration clause where it is expressly provided that in the case,
inter alia, of the Arbitrator ceasing to hold office, a new Arbitrator has to
be appointed. This case also does not help the respondents as the present
Arbitration reference does not contain any such provision.
jurisdiction which is conferred on an Arbitrator is on account of the consent
of the parties to the arbitration agreement. Before the Arbitrator, the
objection as to jurisdiction of the Arbitrator was withdrawn by the
respondents. It shows acquiescence on the part of the respondents in the
continued jurisdiction of the Arbitrator to decide the dispute. The minutes
recorded show that after raising the objection, the respondents have withdrawn
the same. This would indicate a conscious acquiescence on the part of the
respondents in the continued jurisdiction of the Arbitrator. In the case of N. Chellappan
v. Secretary, Kerala State Electricity Board & Anr. (1975  SCR 811 at
817), this Court on similar grounds held that the State Electricity Board was
precluded from challenging the jurisdiction of the umpire. A passage from
Russell on Arbitration, 17th Edition at page 215 was relied upon. It is to the
the parties to the reference either agree beforehand 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." It has also relied upon a decision of Privy Council in
the case of Chowdhari Murtaza Hossein v. Mussumat Bibi Bechunnissa (III I.A.
same passages have been quoted by this Court in a later judgment in the case of
Prasun Roy v. Calcutta Metropolitan Development Authority & Anr. (1987 
SCR 569 at 574), where this Court said that long participation and acquiescence
in the arbitration proceedings preclude a party from contending that the
proceedings were without jurisdiction. Therefore, on this ground also the
appellant is entitled to succeed.
Civil Appeal No.858/97 one additional point was examined by the High Court. The
Arbitrator had maintained three sets of minutes relating to the three
proceedings before him although they were heard together. In the minutes of
27th of February, 1982, which relate to the set of 30 claims which are the
subject matter of Civil Appeal No.858/1987, one of the sentences is as follows:
up on 2.3.82 at 9 A.M. for hearing on the law points and
claim items 31 to 37....." Minutes of the same date viz. 27.2.82
pertaining to the set of claims in Civil Appeal No.716/1991, contains the
up on 27.2.82 at 9 A.M. for filing counter claim and
objection thereon." In the same minute book for the earlier date i.e. 20.2.82
it is stated, inter alia:
claimants on claim items 31 to 37." Clearly the reference to hearing
claimants on claim items 31 to 37 has a reference to the claims which are the
subject matter of Civil Appeal No.716/1991. The reference to claims 31 to 37 in
the minutes relating to claims in Civil Appeal No.858/1987 appears to be a
mistake. The High Court, however, has, on its own, considered this as a case of
non-application of mind by the Arbitrator to the disputes before him. This
issue was not raised by the respondents at any time and even in the grounds of
appeal filed in the High Court. In our vies. This inadvertent reference to
claim items 31 to 37 pertaining to the claims in other disputes before the
Arbitrator between the same parties, cannot be construed as non-application of
mind by the Arbitrator. All the three disputes were being heard simultaneously
by the Arbitrator and the dates in the minute books are a clear indication of
this fact. A mistake in recording the minutes of one date cannot be the ground
for setting aside the arbitration Award.
appeals are, therefore, allowed. the impugned judgment of the High Court is set
aside. The orders of the Subordinate Judge upholding the Awards and granting
decrees in terms of the Awards are upheld.