Full Judgment Text
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CASE NO.:
Appeal (civil) 4109 of 2006
PETITIONER:
B.S.N.L. & Ors.
RESPONDENT:
M/s. Subash Chandra Kanchan & Anr.
DATE OF JUDGMENT: 13/09/2006
BENCH:
S.B. Sinha & Dalveer Bhandari
JUDGMENT:
J U D G M E N T
[Arising out of SLP (Civil) No. 9242 of 2006]
S.B. SINHA, J :
Leave granted.
The parties herein entered into a contract pursuant to a notice inviting
tender by Appellant No. 1 for the work of construction of 9 Nos. Type-V
quarters at Jayadev Vihar, Bhubaneshwar. The said contract contained an
arbitration clause in terms whereof the Chief Engineer, Telecommunication/
Postal Department in charge of the work at the time of dispute or if there be
no Chief Engineer the administrative head of the said Telecommunication/
Postal Department was to be appointed as an arbitrator. The said provision
envisaged that in terms thereof no person other than the one appointed by
such Chief Engineer or administrative head of the Telecommunication/
Postal as aforesaid should act as arbitrator.
A notice in terms of arbitration agreement contained in clause 25 of
the contract was issued by the Respondents on 7.1.2002. A letter appointing
one Shri Gurbax Singh, Principal Chief Engineer (Arb.), New Delhi as the
sole arbitrator was said to have been drafted on 4.2.2002. It, however, was
dispatched on 7.02.2002. On the same day, having regard to the fact that
allegedly the Managing Director of the Appellant did not respond to the
notice issued to him, an application was filed by Respondent herein before
the High Court of Orissa purported to be under Section 11 of the Arbitration
and Conciliation Act, 1996 (for short "the 1996 Act").
It is stated that the said Shri Gurbax Singh submitted his resignation
whereupon the Chief Engineer appointed one Shri A.K. Naik as the sole
arbitrator on 7.07.2002. He is also said to have resigned and in his place
Shri Gurbax Singh was again appointed as arbitrator on 17.03.2003. The
appointments were made during pendency of the said proceedings before the
High Court under the 1996 Act. When the matter came up for hearing
before a Division Bench of the High Court, in its order dated 20th January,
2006, it was recorded:
"Learned counsel for the petitioners placed before
me a list of names of six persons to appoint one of
them as Arbitrator and to refer to him the dispute
between the parties for adjudication in terms of the
arbitration clause. On being asked, learned
counsel for the opposite parties submits that he has
no objection if Shri B.C. Bhattacharya, Chartered
Engineer, Former Chief Engineer, W.B. P.W.D.,
FD-216/4, Salt Lake City, Kolkata \026 700 091 is
appointed as Arbitrator and the dispute between
the parties in terms of arbitration clause is referred
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to him for adjudication. In view of the aforesaid,
said Shri B.C. Bhattacharya is appointed as
Arbitrator and the dispute between the parties in
terms of the arbitration clause is referred to him for
adjudication."
The learned arbitrator appointed by the High Court thereafter entered
into reference. The parties hereto appeared before him on 18.03.2006 and
participated in the proceedings. Respondent also filed his statement of
claim. The learned arbitrator has called upon the Appellants to file their
written statement.
However, on 27th January, 2006, an application was filed by Appellant
herein purported to be under Section 151 of the Code of Civil Procedure for
modification of the said order dated 20.1.2006 contending:
"2. That after dictation of orders when the
counsel of the op. party went out, a Junior Lawyer
informed him that Your Lordship had dictated that
the counsel for the opp. Party has no objection if
Shri B.C. Bhattacharya, Chartered Engineer, and
former C.E.W.B. PWD Kolkata is appointed as the
Arbitrator, which due to inadvertence, had escaped
notice/ audibility of the opp. Party counsel.
3. That then the counsel for the opposite party
promptly rushed to the court and with due
permission of your Lordship, apprised about such
dictation with a rest for omission of the "No
Objection" portion which occurred due to some
communication lapses. And Your Lordship was
considerable and gracious enough to ask the
Stenographer on duty at that time to take down the
sought for change after confirming from me
whether it was about Mr. Bhattacharya of
KOLKATA."
The prayer made in the said application reads as under:
"Under the circumstances stated above, the
opposite party, therefore, earnestly pray that your
Lordship may graciously be pleased in the ends of
justice to direct appropriately for proper reflection
of your Lordship’s subsequent instruction in the
order."
By an order dated 3rd March, 2006, the High Court refused to recall its
order dated 20th January, 2006 stating:
"Now, learned counsel for opposite parties appears
and submits that the aforesaid recording that he
had no objection against the appointment of Shri
B.C. Bhattacharya is not correct and in fact he had
objection. He wants this to be recorded in the
order. But, I do not find any reason to change the
appointment of Shri B.C. Bhattacharya as the
Arbitrator, as I am told that Shri B.C. Bhattacharya
has already started functioning as Arbitrator by
issuing notice to the concerned parties. Further,
the learned counsel for opp. Parties could not give
any reason as to why he has objection against the
appointment of Shri B.C. Bhattacharya as
Arbitrator. In this view of the matter, no further
order is required to be passed."
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Mr. Chetan Sharma, learned senior counsel appearing on behalf of the
Appellants submitted that keeping in view the arbitration agreement
contained in Clause 25 of the contract, the High Court had no jurisdiction to
appoint any person other than the one nominated by the Chief Engineer as
appointment of person other than the nominee of the Chief Engineer was
invalid.
On the other hand, Mr. Parmanand Gaur, learned counsel appearing
on behalf of the Respondents, submitted that the High Court having
exercised its discretionary jurisdiction under Section 11 of the 1996 Act, this
Court should not interfere therewith.
The relevant portions of Section 11 of the 1996 Act read as under:
"11. Appointment of arbitrators.\027 (1) A person of
any nationality may be an arbitrator, unless
otherwise agreed by the parties.
(2) Subject to sub-section (6), the parties are free
to agree on a procedure for appointing the
arbitrator or arbitrators.
*
(5) Failing any agreement referred to in sub-
section (2), in an arbitration with a sole arbitrator,
if the parties fail to agree on the arbitrator within
thirty days from receipt of a request by one party
from the other party to so agree the appointment
shall be made, upon request of a party, by the
Chief Justice or any person or institution
designated by him.
(6) Where, under an appointment procedure agreed
upon by the parties,-
(a) a party fails to act as required under that
procedure; or
(b) the parties, or the two appointed arbitrators,
fail to reach an agreement expected of them under
that procedure; or
(c) a person, including an institution, fails to
perform any function entrusted to him or it under
that procedure, a party may request the Chief
Justice or any person or institution designated by
him to take the necessary measure, unless the
agreement on the appointment procedure provides
other means for securing the appointment.
(7) A decision on a matter entrusted by sub-section
(4) or sub-section (5) or sub-section (6) to the
Chief Justice or the person or institution
designated by him is final.
(8) The Chief Justice or the person or institution
designated by him, in appointing an arbitrator,
shall have due regard to-
(a) any qualifications required of the arbitrator by
the agreement of the parties; and
(b) other considerations as are likely to secure the
appointment of an independent and impartial
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arbitrator..."
Evidently, the Managing Director of the Appellant was served with a
notice on 7th January, 2002. The letter appointing the arbitrator was
communicated to Respondent on 7th February, 2002. By that time, 30-days
period contemplated under the Act lapsed. The Managing Director of the
Appellant was required to communicate his decision in terms of Clause 25
of the contract.
What would be the meaning of the term ’communicate’ came up for
consideration before this Court in State of Punjab v. Amar Singh Harika
[AIR 1966 SC 1313], wherein it was held:
"\005It is plain that the mere passing of an order of
dismissal would not be effective unless it is
published and communicated to the officer
concerned. If the appointing authority passed an
order of dismissal, but does not communicate it to
the officer concerned, theoretically it is possible
that unlike in the case of a judicial order
pronounced in Court, the authority may change its
mind and decide to modify its order\005"
[See also Sultan Sadik v. Sanjay Raj Subba and Others, (2004) 2 SCC
377]
The contract entered into by and between the parties was subject to
the provisions contained in the 1996 Act.
Although in terms of the arbitration agreement contained in Clause 25
of the contract, ordinarily the arbitrator appointed by the Managing Director
should act as arbitral tribunal in respect of the disputes and differences
between the parties to the contract; in this case, the Appellants must be held
to have waived their right as they consented to the appointment of Shri
Bhattacharya as an arbitral tribunal. The High Court having appointed the
arbitral tribunal on consent, it is, in our opinion, not open to the Appellants
now to contend that no such concession was made.
We are not oblivious of the recent decision of this Court in Yashwith
Constructions (P) Ltd. v. Simplex Concrete Piles India Ltd. and Another
[(2006) 6 SCC 204], wherein Balasubramanyan, J. stated the law in the
following terms:
"\005It is true that in the arbitration agreement there
is no specific provision authorizing the Managing
Director to appoint a substitute arbitrator if the
original appointment terminates or if the originally
appointed arbitrator withdraws from the
arbitration. But, this so called omission in the
arbitration agreement is made up by the specific
provision contained in Section 15(2) of the Act.
The withdrawal of an arbitrator from the office for
any reason is within the purview of Section
15(1)(a) of the Act. Obviously, therefore Section
15(2) would be attracted and a substitute arbitrator
has to be appointed according to the rules that are
applicable for the appointment of the arbitrator to
be replaced. Therefore, what Section 15(2)
contemplates is an appointment of the substituted
arbitrator or the replacing of the arbitrator by
another according to the rules that were applicable
to the appointment of the original arbitrator who
was being replaced. The term "rules" in Section
15(2) obviously referred to the provision for
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appointment, contained in the arbitration
agreement or any Rules of any Institution under
which the disputes were referred to arbitration.
There was no failure on the part of the concerned
party as per the arbitration agreement, to fulfil his
obligation in terms of Section 11 of the Act so as
to attract the jurisdiction of the Chief Justice under
Section 11(6) of the Act for appointing a substitute
arbitrator. Obviously, Section 11(6) of the Act has
application only when a party or the concerned
person had failed to act in terms of the arbitration
agreement. When Section 15(2) says that a
substitute arbitrator can be appointed according to
the rules that were applicable for the appointment
of the arbitrator originally, it is not confined to an
appointment under any statutory rule or rule
framed under the Act or under the Scheme. It only
means that the appointment of the substitute
arbitrator must be done according to the original
agreement or provision applicable to the
appointment of the arbitrator at the initial stage.
We are not in a position to agree with the contrary
view taken by some of the High Courts."
But, herein the issue is entirely different. Apart from failure on the
part of the Managing Director of the Appellant to appoint an arbitrator
within the specified time, the Appellants evidently waived their right under
the arbitration agreement.
Mr. Sharma’s submission to the effect that the learned counsel who
consented to the appointment of Shri Bhattacharya was a junior counsel and
he had no instructions in this behalf cannot be accepted. No such statement
was made before the High Court. It had never been contended before the
High Court that the counsel had no authority to make such concession.
Moreover, the application filed under Section 151 of the Code of Civil
Procedure by the Appellant did not contain such statements. The High
Court, thus, did not commit any error in recording that such a concession
had in fact been made by the learned counsel. In a matter of this nature
again, the High Court’s decision subject to just exception must be held to be
final.
Furthermore, in terms of Order III, Rule 1 of the Code of Civil
Procedure, a litigant is represented by an advocate. A concession made by
such an advocate is binding on the party whom he represents. If it is binding
on the parties, again subject to just exceptions, they cannot at a later stage
resile therefrom. The matter may, however, be different if a concession is
made on a question of law. A wrong concession on legal question may not
be binding upon his client. Here, however, despite the stand taken by the
Appellant in its written statement before the High Court the learned
Advocate consented to appointment of a person as an arbitrator by the High
Court in exercise of its jurisdiction under Section 11 of the 1996 Act, in our
considered view, the same should not be permitted to be resiled from. A
person may have a legal right but if the same is waived, enforcement thereof
cannot be insisted.
In Ramdev Food Products Pvt. Ltd. v. Arvindbhai Rambhai Patel and
Ors. [2006 (8) SCALE 631], this Court observed:
"The matter may be considered from another
angle. If the first respondent has expressly waived
his right on the trade mark registered in the name
of the appellant-Company, could he claim the said
right indirectly? The answer to the said question
must be rendered in the negative. It is well-settled
that what cannot be done directly cannot be done
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indirectly. The term ’Waiver’ has been described in
the following words: "Waiver is the abandonment
of a right in such a way that the other party is
entitled to plead the abandonment by way of
confession and avoidance if the right is thereafter
asserted, and is either express or implied from
conduct. A person who is entitled to rely on a
stipulation, existing for his benefit alone, in a
contract or of a statutory provision may waive it,
and allow the contract or transaction to proceed as
though the stipulation or provision did not exist.
Waiver of this kind depends upon consent, and the
fact that the other party has acted upon it is
sufficient consideration It seems that, in general,
where one party has, by his words or conduct,
made to the other a promise or assurance which
was intended to affect the legal relations between
them and to be acted on accordingly, then, once
the other party has taken him at his word and acted
on it, so as to alter his position, the party who gave
the promise or assurance cannot afterwards be
allowed to revert to the previous legal relationship
as if no such promise or assurance had been made
by him, but he must accept their legal relations
subject to the qualification which he has himself so
introduced, even though it is not supported in point
of law by any consideration. [See 16 Halsbury’s
Laws (4th edn) para 1471]
Waiver may sometimes resemble a form of
election, and sometimes be based on ordinary
principles of estoppel. [See 45 Halsbury’s Laws
(4th edn.) para 1269]
In Indu Shekhar Singh and Ors. v. State of U.P.
and Ors. 2006 (5) SCALE 107, this Court held:
"They, therefore, exercised their right of option.
Once they obtained entry on the basis of election,
they cannot be allowed to turn round and contend
that the conditions are illegal""
Prima facie also it does not appear that the allegations contained in the
said application were supported by an affidavit. In that view of the matter,
no credence to the averments contained therein cannot be given.
Furthermore, it is not a case where this Court should exercise its
discretionary jurisdiction. For the reasons aforementioned, this appeal is
dismissed. No costs.