J. Kodanda Rami Reddy Vs State of A.P. .

11 November 2010
Supreme Court
Download

J. KODANDA RAMI REDDY Vs STATE OF A.P. .

Bench: R.V. RAVEENDRAN,DALVEER BHANDARI, , ,
Case number: C.A. No.-001401-001405 / 2002
Diary number: 15394 / 2000
Advocates: V. N. RAGHUPATHY Vs T. V. GEORGE

Reportable

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NOS. 1401-1405 OF 2002

J. Kodanda Rami Reddy … Appellant

Vs.

State of A.P. & Ors. … Respondents

J U D G M E N T

R.V. Raveendran J.

The first respondent (State of A.P.) entered into an agreement dated

22.6.1987 in regard to execution of the work “Ongole Water Supply

Improvement Scheme with NS canals as a source” in pursuance of

acceptance of appellant’s tender on 31.3.1987.

2. By GOM No. 430 dated 24.10.1983, the first respondent issued the

following revised procedure in regard to arbitration introduced by GOM

dated 31.7.1975. The relevant portions of the revised procedure (paras 2, 3

& 4) are extracted below:

GOM No. 430 [Irrigation (IRA V) Dept, dated 24.10.1983

“ x x x x x 2. The question of revising the above procedure has been receiving the attention of government for some time past. The government, after careful consideration of various aspects to issues involved direct the procedure be revised as follows :

Value of Amount Panel of Arbitrators

1.Claims upto Rs. 10,000/-

2. Claims above Rs. 10,000/- upto Rs.50,000/-

3. Claims above Rs. 50,000/-

Superintending Engineer of another Circle

(a) Another Chief Engineer of the same Department.

(b) Where there is only one Chief Engineer, in the Dept., the Chief Engineer will submit proposals to Govt. in the Administrative Dept. for nomination of another Chief Engineers as Arbitrator by Govt.

Court of competent jurisdiction.

3. Claims means all claims in the contract.

4. The orders referred to in paras 2 and 3 above shall be applicable to all the agreements entered into by Govt. from the date of issue of this order and will be applicable to all the Engineering Departments, in the State Govt. referred to para (6) .”

x x x x x x x x x x x

The above GOM dated 24.10.1983 was revised by GOM No.160 dated

1.6.1987 as follows:

“ORDER Govt., after careful consideration of various aspects, issued orders in para (2) of the G.O. read above prescribing the revised procedure for arbitra- tion.

2. It has come to the notice of the Govt., that some of the contractors are approaching Courts to decide the claims above Rs. 50,000/- under the pro- visions of the Arbitration Act taking advantage of para 2(3) of the G.O. read above. The intention of the Govt. incorporating the above provision is to dispense with the Arbitration proceedings in respect of claims above Rs. 50,000/- and leave the parties to have their remedy in Civil Court. As some of the contractors have misconstrued that the claims above Rs. 50,000/- have to be decided under the Arbitration Act and not under ordi- nary Law in a regular civil Court, the Govt., direct that the following amendments to G.O.MS. No. 430, I(Irr.V) Deptt., dated 24-10-1983 be is- sued by way of clarification :-

(i) Item (3) of para (2) may be deleted. (ii) Substitute para (3) by the following. "All claims above Rs. 50,000/- shall be decided by the Civil Court of competent jurisdiction by way of a regular suit." (iii) Para 3 to 7 are renumbered as para 4 to 8.”

3. By letter dated 15.2.1990 the appellant lodged fourteen claims (of

which claims 12, 13 and 14 related to pre-reference, pendente lite and future

interest respectively) in regard to the said work, with the first respondent and

demanded payment. As the first respondent did not settle the claims, the ap-

pellant filed a petition before the Sub-ordinate Judge, Nellore, under Clause

73 of the A.P. Standard Specifications, requesting the said court to act as the

arbitrator and settle the claims, in terms of the provision for arbitration, con-

tained in the contract dated 22.6.1987. This was on the assumption that Item

(3) of para 2 of GOM dated 24.10.1983 required all claims above

Rs.50,000/- to be decided by arbitration, the named Arbitrator being ‘the

court of competent jurisdiction’. The Sub-ordinate Judge, by order dated

17.4.1990, held that he could not act as an arbitrator. Thereafter, the appel-

lant issued a notice dated 6.6.1990, under section 8 of the Arbitration Act,

1940 (‘Act’ for short) seeking reference of the disputes to arbitration and

furnished a panel of three names with a request to the State Government to

concur in the appointment of any one from that Panel as sole arbitrator for

adjudicating the disputes raised in his claim letter dated 15.2.1990. As there

was no response, appellant filed OP No. 62/1990 under Section 8 of the Act

in the Court of Sub-ordinate Judge, Nellore, seeking appointment of a sole

arbitrator from out of the panel of three names suggested by him, to decide

the disputes arising out of agreement dated 22.6.1987.

4. The first respondent filed a counter to the said application disputing

the claims and contending that as per the terms of GOM dated 24.10.1983

as clarified by the GOM dated 1.6.1987, all claims over and above

Rs.50,000/- shall have to be decided by civil court of competent jurisdiction

by way of regular suit and not by way of arbitration. We extract below para

11 of the counter statement filed by the first respondent in the proceedings

under section 8 of the Act :

“11. As per the conditions of the agreement, the settlement of all claims over and above Rs.50,000/- shall be decided by the Civil Court of the competent jurisdiction by way of regular suit only and not by arbitration. As per Government order in G.O.Ms No.430, Irrigation (I&PD) Dept. dat- ed 24.10.1983 an as clarified in subsequent G.O.Ms No.160 Irrigation & CAD (project Wing) Department dated 1.6.1987 wherein it is clearly stat-

ed that all claims above Rs.50,000/- shall be decided by civil court of competent jurisdiction, by way of regular suit for the alleged claims by paying advalorem court fee. The Petitioner can not invoke the provisions of the Arbitration Act, for the appointment of sole arbitrator.”

The Sub-ordinate Judge, Nellore by his order dated 25.3.1991 allowed the

said application and appointed Sh. HS Bhat, retired Chief Engineer as the

sole arbitrator under Section 8(2) of the Act. The civil court accepted the

contentions of the appellant that the contract was concluded by acceptance

of his tender on 31.3.1987 and the subsequent execution of the agreement on

22.6.1987 was merely a formality; that the clarificatory GOM dated

1.6.1987 was prospective in operation and therefore, did not apply to the

contract between appellant and respondent; and that GOM dated 24.10.1983

alone applied, which was capable of being interpreted as providing for arbi-

tration in regard to claims exceeding Rs.50,000/-. The learned Sub-ordinate

Judge then proceeded to nominate the Arbitrator, on the ground that under

GOM dated 24.10.1983, in regard to claims above Rs.50,000/-, there was no

named Arbitrator and the court of competent jurisdiction had to appoint the

arbitrator.

5. The first respondent did not challenge the said order dated 25.3.1991

appointing an arbitrator under Section 8(2) of the Act. The arbitrator ap-

pointed by the court entered upon the reference on 11.4.1991 and after due

hearing made an award dated 8.6.1992. The arbitrator allowed claims 2, 3, 4

and 9 and rejected claims 1, 5, 6, 7, 8, and 10 of the appellant. The arbitrator

also allowed claim 11 by directing release of the final bill amount and secu-

rity deposit with interest @18% per annum on the final bill amount from

15.2.1990 and on the security deposit amount from 1.10.1991 upto date of

payment or decree, whichever was earlier. The arbitrator also granted a sim-

ple interest at 18% per annum on the amounts awarded under claim Nos. 2,

3, 4 and 9 for the pre-reference period (15.2.1990 to 10.4.1991), pendente

lite (11.4.1991 to 8.6.1992) and also as future interest (9.6.1992 to date of

decree).

6. The Arbitrator filed the award before the Sub-ordinate Judge, Nellore

under Section 14(2) of the Act which was registered as OP No. 56/1992. The

first respondent filed OP No. 81/1992 under Sections 30 and 33 of the Act

for setting aside the award. The Sub-ordinate Judge, Nellore by common or-

der dated 8.4.1993 dismissed OP No. 81/1992 filed by the first respondent

for setting aside the award, and allowed OP No.56/1992 filed under Section

14(2) of the Act and made the award, a rule of the court, and awarded further

interest at 18% per annum from the date of decree till the date of realization.

7. Feeling aggrieved, on 17.4.1993, the first respondent filed an appeal

and a revision against the order dated 8.4.1993. CMA No. 1251/1993 was

filed challenging the dismissal of its application under Sections 30 and 33 of

the Act. CRP No. 4055/1993 was filed challenging the direction that a de-

cree be made in terms of the award under Section 14(2) of the Act. Along

with the said appeal and revision, it filed another revision petition (CRP No.

134/1995) on 14.7.1993 challenging belatedly the order dated 25.3.1991

made in OP No. 62/1990 under Section 8(2) of the Act appointing the arbi-

trator.

8. The said appeal and two revision petitions were disposed of by the

High Court by a brief common order dated 5.10.1999, which is the subject

matter of challenge in these appeals. The High Court held that having regard

to decision of this Court in State of Andhra Pradesh vs. Obulu Reddy (Civil

Appeal No. 7246/1993 decided on 21.9.1999) holding that disputes relating

claims of more than Rs.50000/- shall not be adjudicated by appointment of

an Arbitrator under section 8 of the Act, but should be resolved by a compe-

tent civil court, the revision petition challenging the order dated 25.3.1991

appointing the arbitrator (CRP No. 134/1995), had to be allowed. Conse-

quently, the High Court allowed CMA No. 1251 of 1993 filed against the

dismissal of the application under Sections 30 and 33 of the Act and CRP

No. 4055/1993 filed against the order making the award a rule of the court

and permitted the appellant to convert OP No.62/1990 filed under Section 8

of the Act into a regular civil suit by carrying out necessary amendments and

by payment of necessary court fee. The appellant filed two petitions for re-

viewing the order allowing CMA 1251/1993 and CRP 4055/1993 and the

said review petitions were dismissed by an order dated 28.4.2000. Feeling

aggrieved, the appellant has filed these five appeals challenging the common

order dated 5.10.1999 of the High Court made in CMA No.1251/1993, CRP

No.4055/1993 and CRP No.134/1995 and the common order dated

28.4.2000 dismissing the review petitions in CMP Nos. 5446/1993 and

5447/2000.

9. On the contentions urged, the following questions arise for considera-

tion in this case :

(i) Whether the GOM dated 24.10.1983 provided for arbitration?

(ii) Whether the order dated 25.3.1991 appointing an arbitrator under sec-

tion 8 (2) of the Act, could be challenged by the State Government, two

years later, after participating in the arbitration proceedings without protest

and after the arbitral award being made a rule of the court?

(iii) Whether the High Court was justified in setting aside the order dated

25.3.1991 appointing the arbitrator under section 8(2) of the Act and the

common order dated 8.4.1993 rejecting the first respondent’s application for

setting aside the award and making the award, a rule of the court.

Re : Question No.(i)

10. The GOM dated 24.10.1983 first came up for consideration of this

Court in State of Andhra Pradesh vs. I. Devendra Reddy (decided on

2.3.1990 and reported in 1999 (9) SCC 571). This Court held that the provi-

sions of the GOM dated 24.10.1983 were vague and uncertain and conse-

quently if a reference to arbitration had been made under section 8(2) of the

Act, the same should not be interfered with. It was also held that the GOM

dated 1.6.1987 revising the GOM dated 24.10.1983 by providing that all

claims above Rs.50,000 shall be decided not by arbitration, but by way of a

regular suit by the civil court of competent jurisdiction, was prospective in

application and did not apply to the contracts entered prior to its date

(1.6.1987). However in a subsequent decision in Vishakhapatnam Urban

Development Authority v. V. Narayana Raju [decided on 16.2.1995 reported

in 1999 (9) SCC 572], this Court held that GOM dated 24.10.1983 clearly

provided that the arbitration was available only in regard to claims upto

Rs.50,000/- and not in regard to claims above Rs.50,000/- which had to be

adjudicated by the court of competent jurisdiction; that though the expres-

sion “court of competent jurisdiction” was mentioned in the GOM dated

24.10.1983 under the heading of “panel of arbitrators”, that was only a de-

fective drafting of the GOM and could not be construed to mean that the

claims above Rs.50,000/- were to be adjudicated by arbitration. The decision

in Vishakapatnam Urban Development Authority did not notice the earlier

decision in Devendra Reddy.

11. The divergence between the two decisions was noticed by this Court

in State of Andhra Pradesh vs. Obulu Reddy – 1999 (9) SCC 568 and the

matter was referred to a larger Bench on 1.9.1999. Subsequently, a three

Judge Bench of this Court decided the issue in State of Andhra Pradesh vs.

Obulu Reddy – 2001 (10) SCC 30, upholding the view expressed in

Vishakapatnam Urban Development Authority. This Court held :

“But having examined GOMs No.430, we have no hesitation to agree with the conclusions arrived at in Vishakapatnam case and hold that under the said GOMs question of deciding claims above Rs.50,000/- by way of arbi- tration does not arise. It merely provided that disposal of claims up to Rs.50,000/- by way of arbitration indicating as to who would be the arbi- trator depending upon the claims and all claims above Rs.50,000/- are to be filed before the civil court of competent jurisdiction. This being the po- sition, the second GOMs No.160 is nothing but a clarificatory one and was required to be issued because of the confusion arising in the minds of some of the claimants as well as the civil court, inasmuch as the civil court did entertain application under section 8 and appoint arbitrator in respect of claims above Rs.50,000/-. The earlier judgment of this Court in D. Red- dy case has interpreted GOMs No.430 in a manner which is not the correct interpretation according to us. The orders appointing arbitrator under sec- tion 8 in the two appeals filed by the State are set aside. The appeals filed by the State are allowed.

In CA No.7246 of 1993 filed by the State, it is brought to our notice that not only an arbitrator was appointed by the Sub-ordinate Judge, but an award has already been given. In view of our aforesaid decision, the said award is a nullity and stands annulled.”

Therefore it has to be held that the GOM dated 24.10.1983 does not contain

any provision for arbitration in regard to claims exceeding Rs.50,000/-

though the said GOM was in fact interpreted in many cases prior to 1995, as

a provision for arbitration.

Re : Questions (ii) and (iii)

12. In the application under section 8(2) of the Act, the appellant had

specifically contended that there was an arbitration agreement between the

parties and therefore, the disputes were arbitrable. The first respondent re-

sisted the said petition by specifically contending that there was no arbitra-

tion agreement between the parties. The issue was adjudicated, and by order

dated 25.3.1991, the Sub-ordinate Court, Nellore, held that there was an ar-

bitration agreement and consequently appointed the arbitrator. The said

court in allowing the application under Section 8(2) of the Act filed by the

appellant, by order dated 25.3.1991, followed the decision of this Court in

State of Andhra Pradesh v. I. Devender Reddy [C.A. No.3578/1989 decided

on 2.3.1990] and several decisions of the Andhra Pradesh High Court and

held that the GOM dated 1.6.1987 was prospective in operation, that in re-

gard to contracts concluded prior to 1.6.1987, GOM No.403 dated

24.10.1983 alone applied and consequently disputes involving claims of

more than Rs.50,000/- had to be referred to Arbitration by the court of com-

petent jurisdiction under section 8(2) of the Act. The said order dated

25.3.1991 was not challenged and attained finality. The Arbitrator entered

upon the reference on 11.4.1991. The first respondent participated in the ar-

bitration proceedings fully and contested the claims of the appellant, on mer-

its without challenging the jurisdiction of the arbitrator. More importantly,

the first respondent did not even plead or contend before the Arbitrator that

there was no arbitration agreement or that the entire proceedings were in-

valid. The failure of the first respondent to raise any such contention was ob-

viously because the said contention had already been expressly raised in the

proceedings under section 8 of the Act and negatived by the Sub-ordinate

Court in its order dated 25.3.1991 appointing the Arbitrator and that order

had been accepted and had attained finality.

13. Ultimately, when the arbitrator made an award dated 8.6.1992, the

award was challenged by the first respondent by filing a petition (OP

No.81/1992) under sections 30 and 33 of the Act, on the following grounds:

(i) the Arbitrator had travelled beyond the terms of the agreement; (ii) that as

the contractor had himself terminated the contract on 28.10.1989, he was

disentitled to make any claim under the contract; and (iii) that the contractor

was not entitled to any of the amounts claimed under the contract. The first

respondent did not challenge the award on the ground that there was no arbi-

tration agreement and that consequently, the award was invalid. On the other

hand, the first respondent clearly admitted that it had raised such a con-

tention in its objection statement to the application under section 8 of the

Act and that was negatived by the Sub-ordinate Court. We extract below the

relevant portion of para (4) of the petition under sections 30 and 33 of the

Act:

“As the petitioner rejected the said claims the 1st respondent filed a peti- tion before this Hon’ble Court in O.P. No.62 of 1990 under Section 8 of the Arbitration Act for the appointment of sole arbitrator to adjudicate the disputes raised by him. The petitioner opposed the said petition on the ground that the arbitration clause termed in the agreement do not empower the 1st respondent/contractor to file a petition before this Hon’ble Court under the provisions of the Arbitration Act and that they can only file a civil suit before this Hon’ble Court on payment of ad valorem Court fee on the amounts claimed by him. However, this Hon’ble court was pleased to allow the petition and appointed the 2nd respondent herein as sole arbi- trator under Section 8 of arbitration Act to adjudicate the disputes raised by the 1st respondent. The 2nd respondent entered into the reference and was pleased to pass the Award dated 8.6.1992.”

Thereafter, the first respondent specifically admitted that the arbitrator was

appointed in terms of the agreement between the parties. We extract below

the relevant portion of Para 5 of the said petition under sections 30 and 33 of

the Act.

“The Hon’ble Arbitrator has travelled beyond the terms of agreement and allowed the above said claims. The Arbitrator travelled outside the terms of the Agreement in awarding the claims and thereby mis-conducted him- self and also the proceedings. It is submitted that the 2nd respondent was appointed as sole arbitrator as per the terms of the agreement entered into between the parties. Since the arbitrator is the creature of the agree- ment, he must operate his proceedings within the confines of the terms of the said agreement. His right emanates from the terms of the agreement only.”

(emphasis supplied)

Having failed to contend that there was no arbitration agreement in the pro-

ceedings under sections 30 and 33 of the Act, and on the other hand having

specifically conceded that the Arbitrator was appointed in terms of the

agreement, the first respondent was estopped from subsequently contending

in the appeal (filed against the order dated 8.4.1993 rejecting the challenge

to the arbitration award), that there was no arbitration agreement and the

remedy of the contractor was only by way of a suit. Such a contention would

be barred by the principle of res judicata as it was directly and substantially

in issue in the proceedings under section 8 (2) of the Act and the decision

therein had attained finality.

14. The next question is whether the first respondent could have chal-

lenged the order dated 25.3.1991 passed under section 8(2) of the Act ap-

pointing an arbitrator by filing a belated petition in 1993 two years later. The

issue is not one relating to merely delay. The issue is whether the first re-

spondent having allowed the order dated 25.3.1991 to remain unchallenged

and implemented, and having participated in the arbitration proceedings be-

fore the arbitrator without protest and without raising the contention that

there was no arbitration agreement, and without challenging the award on

the ground that there was no arbitration agreement, could raise the issue in

an appeal against the rejection of the application under sections 30 and 33 of

the Act. The answer is clearly in the negative. The first respondent could not

challenge the order dated 25.3.1991, appointing the Arbitrator, which had at-

tained finality, belatedly on 17.4.1993 by contending that there was no arbi-

tration agreement between the parties.

15. We may in this context refer to the following passage from Russell on

Arbitration, (22nd Edn., page 382):

“Loss of right to object.

A party who objects to the award on the ground that the Tribunal lacks substantive jurisdiction, should not only act promptly but should also take care not to lose his right to object. A party who takes part or continues to take part in the proceedings is in a different position from someone who takes no part in the proceedings. The latter cannot lose his right to object as long as he acts promptly to challenge the award once it is published. The former must however state his objection to the Tribunal’s jurisdiction either forthwith or within such time as is allowed by the agreement or the Tribunal. That statement which should be recorded in writing and sent to the Tribunal and the other parties should not only mention the jurisdiction objection but also make clear that any further participation in the arbitra-

tion will be without prejudice to the objection. If that is not done, the party concerned may not be able to raise that objection before the Court ….”

We may also refer to the following observations of this Court in State Bank

of India vs. Ramdas [2003 (12) SCC 474] :

“It is an established view of law that where a party despite knowledge of the defect in the jurisdiction or bias or malice of an arbitrator participated in the proceedings without any kind of objection, by his conduct it disenti- tles itself from raising such a question in the subsequent proceedings. What we find is that the appellant despite numerous opportunities made available to it, although it was aware of the defect in the award of the um- pire, at no stage made out any case of bias against the umpire. We, there- fore, find that the appellant cannot be permitted to raise the question of bias for the first time before this Court.”

16. Strong reliance was placed by the first respondent on the decision in

State of Andhra Pradesh vs. Obulu Reddy – 2001 (10) SCC 30 wherein a

three-Judge Bench of this Court had observed that even if an award had been

made after the appointment of the arbitrator by the Sub-ordinate Judge, the

award would be a nullity and stands annulled if there was no arbitration

agreement. The said decision is clearly distinguishable and is inapplicable to

the facts of this case. In Obulu Reddy, this Court was considering four ap-

peals – two appeals preferred by the State of Andhra Pradesh and the other

two preferred by the contractors. The appeals filed by the State Government

related to cases where the contractors had made an application before the

Sub-ordinate Judge for appointment of an arbitrator in terms of GOM dated

24.10.1983 and the learned Sub-ordinate Judge had appointed an arbitrator

which were assailed by the State in the High Court contending that even un-

der the GOM dated 24.10.1983, claims for more than Rs.50,000/- were re-

quired to be decided by filing a suit and not by arbitration. The High Court

rejected the said appeals of the State. Consequently, the State filed the two

appeals and by the time the matters were heard by this Court, in one of those

two appeals, the Arbitrator appointed by the Sub-ordinate Judge, had even

made an award. In the other two appeals filed by the contractors, there was a

slight variation. The Sub-ordinate Judge had appointed arbitrators in terms

of the GOM No.403 dated 24.10.1983 as the claims were of more than

Rs.50,000/-. The State assailed the appointment of arbitrators before the

High Court. By the time, the matters came up for hearing before the High

Court, this Court had rendered its decision in Vishakapatnam Urban Devel-

opment Authority. Following the said decision, the High Court allowed the

appeals and set aside the appointments of the arbitrator made by the Sub-or-

dinate Judge in those two cases. Those orders were challenged by the con-

tractors before this Court. The crucial difference is that all the four appeals

considered by this Court in Obulu Reddy, related to cases where the order of

the Sub-ordinate Judge under Section 8 of the Act, appointing the arbitrator

had been challenged by the State without any delay and the High Court in

two of the matters had accepted the challenge and in other two matters re-

jected the challenge and that is how all four appeals came up before this

Court. But in this case, as noticed above, the order under section 8(2) of the

Act, by the Sub-ordinate Judge was not challenged and was allowed to attain

finality. It was challenged only after the award was made and that award was

made a rule of the court. In such circumstance, the rule of finality would

come into play in regard to the order under section 8(2) of the Act appoint-

ing the Arbitrator.

17. The observation in Obulu Reddy that when there was no arbitration

agreement the award is a nullity, was made as the state government had not

accepted the existence of the arbitration agreement at any stage and had all

along challenged the order under section 8 of the Act appointing the Arbitra-

tor. In this case, though the first respondent had initially contended that there

was no arbitration agreement, when the civil court held that there was an ar-

bitration agreement and appointed the arbitrator, the first respondent did not

challenge the decision, but accepted the said position and participated in the

arbitration proceeding without protest. More importantly, when the award

was made by the Arbitrator, the first respondent filed an application for set-

ting aside the award wherein it admitted specifically that the appointment of

the arbitrator was in terms of the agreement between the parties, but chal-

lenged the award on other grounds. In the circumstances, when there was an

adjudication by a court of competent jurisdiction that there was an arbitra-

tion agreement and when that was not challenged and the arbitrator was al-

lowed to proceed on the basis that there was an arbitration agreement, and

when it was specifically conceded that the appointment of arbitrator is in

terms of the agreement between the parties, the award will not be a nullity.

18. The order dated 25.3.1991 appointing an Arbitrator was also not a

nullity, even though it may be erroneous. It is well settled that a decree will

be a nullity only if it is passed by a court usurping a jurisdiction it did not

have. But a mere wrong exercise of jurisdiction or an erroneous decision by

a court having jurisdiction, will not result in a nullity. An order by a compe-

tent court, even if erroneous, is binding, unless it is challenged and set aside

by a higher forum. Be that as it may.

19. We are fortified in our view by the decision in D. Ranganayakulu vs.

Superintending Engineer NSRC (CA No. 1087-1088 of 2008 decided on

7.2.2008). This Court dealing with an identical situation held :

“Mr. Anoop Choudhary, learned senior counsel appearing for the respon- dents, however, referred to a decision of three-Judge Bench of this Court rendered in State of A.P. & Anr. Vs. Oburu Reddy - (2001) 10 SCC 30.

We are of the view that the facts of that case is not applicable in the present case. In the case referred to by Mr. Anoop Choudhary, learned se- nior counsel, it clearly appears that the appointment of arbitrator was chal- lenged in the High Court contending, inter alia, the jurisdiction of the arbi- trator. As already pointed out, in the present case, the respondent did not challenge the order of the Court dated 30/04/1993 appointing Mr. Justice Punniah, retired Judge of the High Court as sole arbitrator. They partici- pated in the entire proceedings before the arbitrator without any demur till the award was passed on 02/03/1995.

In the facts and circumstances as recited above, the respondents waived their rights to file an objection at the time when the award was made Rule of the Court.”

Conclusion :

20. Therefore, the order of the High Court dated 5.10.1999 in CRP

No.134 of 1995 setting aside the order dated 25.3.1991 is liable to be set

aside. When the order dated 25.3.1991 stands restored, the consequential di-

rection in the order dated 5.10.1999 of the High Court allowing CMA

No.12590 and CRP No.4055 of 1990, becomes unsupportable and requires

to be set aside. The High Court has to now consider on merits the challenge

to the order rejecting the application under sections 30 and 33 of the Act.

21. Therefore these appeals are allowed as follows :

(a) The impugned order dated 5.10.1999 in CRP No.134 of 1995 (setting

aside the order dated 25.3.1991 under section 8(2) of the Act in O.P. No.

62/1992 on the file of Sub-ordinate Court, Nellore), is set aside and the said

order dated 25.3.1991 stands restored.

(b) As a consequence, the order dated 5.10.1999 allowing CMA

No.1251/1993 and CRP No.4055/1993 is set aside.

High Court for fresh consideration and disposal in accordance with law on

merits.

(d) Consequently, the order dated 28.4.2000 dismissing the review CMP

Nos.5446/2000 and 5447/2000 is set aside.

………………………J. (R V Raveendran)

New Delhi; ………………………..J. November 11, 2010. (Dalveer Bhandari)