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PETITIONER: NEELAKANTAN & BROS. CONSTRUCTION

       Vs.

RESPONDENT: SUPERINTENDING ENGINEER, NATIONAL HIGHWAYS,SALEM & ORS.

DATE OF JUDGMENT16/08/1988

BENCH: MUKHARJI, SABYASACHI (J) BENCH: 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.

HEADNOTE:     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

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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]

JUDGMENT:     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

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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

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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.