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PETITIONER: M/S. CONSTRUCTION INDIA ETC.

       Vs.

RESPONDENT: SECRETARY, WORKS DEPARTMENT, GOVERNMENT OF ORISSA & ORS.

DATE OF JUDGMENT:       10/12/1997

BENCH: SUJATA V. MANOHAR, D.P. WADHWA

ACT:

HEADNOTE:

JUDGMENT:                THE 10TH DAY OF DECEMBER, 1997 Present:               Hon’ble 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: With C.A.No.  716/91 and  CA No  8829/97 (Arising out of SLP (C)No.9060/91 Mrs. Sujata V. Manohar, J.      Leave granted in S.L.P. (C) No. 9060 of 1991.      The 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:      "Both the  parties have filed panel      of   names   for   appointment   of      Arbitrator.     Heard.  Shri   G.S.      Patnaik,   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.

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    The 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 following record:      "Claimant and his Advocate present.      A.G.P.   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.      hence, petition  is rejected as not      pressed.       hearing    of    the      arbitration  case   stands  closed.      Orders  reserved   for  pronouncing      award.  Claimant   to  file   stamp      paper." Thereafter, the  Arbitrator pronounced  his Award on 17th of March, 1982.      It is 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. According 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.      The  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  Arbitration Tribunal; nor is  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. Therefore, 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. According 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

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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.      Our 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.      Therefore,  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. There 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. Whoever 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.      In the  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.      The 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

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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.      The 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.      The 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 [2] 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 following effect:      "If 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. 209).      The 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 [3] 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

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jurisdiction.   Therefore, on this ground also the appellant is entitled to succeed.      In 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:      "Put 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 following sentence:      "Put 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:      "Heard 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.      The 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.