http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 6  

PETITIONER: PRASUN ROY

       Vs.

RESPONDENT: CALCUTTA METROPOLITAN DEVELOPMENTAUTHORITY & ANR.

DATE OF JUDGMENT20/07/1987

BENCH: MUKHARJI, SABYASACHI (J) BENCH: MUKHARJI, SABYASACHI (J) OZA, G.L. (J)

CITATION:  1988 AIR  205            1987 SCR  (2) 569  1987 SCC  (4) 217        JT 1987 (3)   160  1987 SCALE  (2)125  CITATOR INFO :  R          1988 SC2045  (2)

ACT:     Arbitration  Act, 1940; s. 20--Arbitrator  appointed  by Court--Parties  submitting  to his  jurisdiction  by  filing claims,   attending   sittings--Challenge   to   appointment order--Whether permissible.

HEADNOTE:     Clause  24  of  the arbitration  agreement  between  the parties  provided for reference of all questions of  dispute arising  under the contract to the sole arbitration  of  the Director/Unit  Heads of the respondent Authority,  not  con- nected  with the particular work. All such  officers  having already  expressed their opinion in respect of the  disputes that  had arisen, the appellant apprehended that he may  not get justice or proper relief. He, therefore, moved an appli- cation under s. 20 of the Arbitration Act for appointment of an  independent member of the bar as arbitrator  instead  of the named officer of the respondent Authority.     A Single Judge of the High Court held that the  arbitra- tor named had disqualified himself on the ground of bias and appointed  an  outside advocate as the  sole  arbitrator  on April 19, 1983. When arbitration proceedings commenced  both the  parties submitted to his jurisdiction and  filed  their respective claims and documents. Upto November 1985 the said arbitrator  held  74  sittings which were  attended  by  the parties  of both sides and their counsel. Respondent  No.  1 had moved three interlocutory applications. Both the parties got  extension of arbitration proceedings at least  4  times upto November 1985.     Respondent No. 1 challenged the validity of the order of appointment  of arbitrator dated April 19, 1983 in the  year 1985,  when another Single Judge took the view that  if  the court  was  bound to enforce the particular  agreement  with which  the parties came to the court, the parties  were  not entitled  to  have any fresh opportunity to  appoint  a  new arbitrator  as that would amount to a new agreement  between the parties. He further observed that no appointment can  be made  by the Court on the ground of disqualification of  the arbitrator  without  having proper materials on  record  and

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 6  

without  coming to a definite finding on this  point.  Until then the Court did not have the jurisdiction to appoint 570 any new arbitrator and had to follow the correct  machinery. This  order of the Single Judge dated December 8, 1986  set- ting  aside the earlier order dated April 19, 1983  was  as- sailed in the appeal by special leave. Allowing the appeal, this Court,     HELD: Long participation and acquiescence in arbitration proceedings  preclude a party from contending that the  pro- ceedings were without jurisdiction. The principle is that  a party  shall not be allowed to blow hot and cold  simultane- ously. [573F]     Basically  the principle of Waiver and estoppel  is  not only applicable where the award had been made but also where a party challenges the proceedings in which he participated. In the instant case, there was no demur but something  which can be called acquiescence on the part of the respondents or which  precludes  them from challenging  the  participation. [574G-H]     Arbn. Jupiter General Insce. Co. Ltd. v. Corporation  of Calcutta, A.I.R. 1956 Calcutta 470 at 472; Chowdhury Murtaza Hossein  v. Mussumat Bibi Bechunnissa, 3 I.A. 209; N.  Chel- lappan v. Secretary, Kerala State Electricity Board &  Anr., [1975] 1 S.C.C. 289 and Russel on Arbitration, 18th Edn.  p. 105, referred to.

JUDGMENT:     CIVIL  APPELLATE JURISDICTION: Civil Appeal No. 1466  of 1987.     From  the  Judgment  and Order dated  8.12.1986  of  the Calcutta High Court in Matter No. 1636 of 1985.     A.K. Sen, Shanker Kumar Ghosh and D.P. Mukherjee for the Appellant. S.N. Kacker and G.S. Chatterjee for the Respondents. The Judgment of the Court was delivered by     SABYASACHI  MUKHARJI, J. Special leave granted. this  is an  application challenging the order of the learned  single judge  dated  the 8th December, 1986 of the  High  Court  of Calcutta.  By the impugned judgment the said  learned  Judge has set aside the order dated the 19th April, 1983 of anoth- er learned single judge on the ground, inter-alia, that  the first learned Judge, when she passed the order, acted  with- out    571 jurisdiction. There was an arbitration agreement. Clause  25 of the said Agreement, inter alia, was as follows:               "except   where  otherwise  provided  in   the               contract all questions of disputes relating to               the   granting  of  specifications,   designs,               drawings    and   instructions    hereinbefore               mentioned and as to the quality of workmanship               and  materials used in the work or as  to  any               question  claims, rights, matters,  or  things               whatsoever  in  any  way  arising  out  of  or               relating  to the contract, designs,  drawings,               specifications, estimates, instructions orders               or  these conditions or  otherwise  concerning               the  work or execution or failure  to  execute               the same where arising during the progress  of               the  work or after completion  or  abandonment               thereof was to be referred to sole arbitration               of   the  Director/Unit  Head,  C.M.D.A.   not

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 6  

             connected  with the particular work as may  be               appointed  by the authority. The award of  the               arbitrator  shall  be  final,  conclusive  and               binding on all the parties to the contract."     On that basis the appellant had moved an application for removal  of  the named arbitrator before the  first  learned Judge which came up for hearing on 19th April, 1983 and this was  by  filing of an application under Section  20  of  the Arbitration  Act  for an order for  filing  the  arbitration agreement,  for appointment of an arbitrator and  for  other consequential  reliefs. By the order,dated 19.4.83 the  said learned  Judge has recorded the facts of this case and  fur- ther recorded that by virtue of the Clause 25 of the  agree- ment  the appellant herein and prayed for appointment of  an arbitrator for determination of the dispute that had  arisen which  had  been set out in paragraph 15  of  the  petition. Inasmuch as according to the appellant the directors of  all the units of Calcutta Metropolitan Development Authority had already  expressed their opinion in respect of the  disputes that had arisen between the appellant and the respondent and inasmuch  as by the Central Tender Committee, the  directors were  members. Under the circumstances the appellant  appre- hended  that the appellant might not get justice  or  proper relief under such circumstances. There was reasonable  basis of  the apprehension against the unnamed arbitrator, and  it was  urged  that instead of appointing any  officer  of  the respondent as arbitrator an independent member of the Bar be appointed as arbitrator. The learned Judge passed such order on  19th April, 1983 while recording these facts as  alleged by  the  petitioner. These appear to have been  reasons  for appointing Sri Amitav Guha as the arbitrator in this case in terms of prayer (c) of the said petition. 572     The  learned  judge in the impugned order  has  observed that the Court was bound to enforce the particular agreement with  which the parties came to the Court, and  the  parties were not entitled to have any fresh opportunity to appoint a new  arbitrator  as  that would amount to  a  new  agreement between  the parties. This position is good in so far as  it goes. But that does not solve the problem in all situations. The  learned Judge also observed that no appointment can  be made  by the Court on the ground of disqualification of  the arbitrator  without  having proper materials on  record  and without  coming  to a definite finding on  this  point.  The learned Judge further observed that the Court either  should have given effect to the agreed machinery for appointment of the  arbitrator  or  it could have  appointed  afresh  after coming to a clear finding that all directors of the Unit  of C.M.D.A. were biased against the appellant herein as well as they  had  rendered themselves disqualified from  being  ap- pointed  as arbitrators. Until all of them were  found  dis- qualified,  the Court did not have the jurisdiction  to  ap- point  any new one and had to follow the correct  machinery. It  appears  that the first learned Judge has in  fact  held that  the arbitrator named had disqualified himself  on  the ground  of  bias  and on that basis,  appointed  an  outside Advocate,  Shri  Amitav Guha as the arbitrator. If  the  re- spondents were not satisfied they could have moved an appeal against  the order; instead respondents participated in  the arbitration proceedings and acquiesced in such  appointment. The order was made on 19.4.83 appointing Shri Amitav Guha an advocate of the Calcutta High Court as sole Arbitrator.  The arbitrator  appointed,  started arbitration  proceedings  in which  both  the parties submitted to his  jurisdiction  and filed their respective claims and other documents in support

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 6  

thereof. It appears from the List of Dates submitted  before us that respondent No. 1 moved three interlocutory  applica- tions  at  different  points of time  which  were,  however, disposed  of  with orders in favour of the  appellant.  Both parties got extention of the arbitration proceedings even by Hon’ble  Mrs. Justice Pratibha Bonnerjea at least  14  times and  the last extention was granted upto November,  1985  by Justice Mrs. Bonnerjea. In the meantime the said  Arbitrator had  held 74 sittings which were attended by the parties  of both  sides  and their counsel. A large amount of  time  and money, same at the cost of public have been spent on these.     In  the  year 1985 the respondent No. 1  challenged  the validity of the order of appointment of arbitrator passed by first  learned  judge Where she acted on the  basis  of  the findings mentioned hereinbefore. Can a party be permitted to do that? In Arbn. Jupiter Gener- al  573 Insce.  Co.  Ltd. v. Corporation of Calcutta,  (A.I.R.  1956 Calcutta 470 at 472) P.B. Mukherji, J. as the learned  Chief Justice then was observed:               "It  is necessary to state at the outset  that               Courts  do not favour this kind of  contention               and  conduct of an applicant who  participates               in arbitration proceedings without protest and               fully   avails  of  the   entire   arbitration               proceedings  and  then when he sees  that  the               award has gone against him he comes forward to               challenge   the  whole  of   the   arbitration               proceedings  and without jurisdiction  on  the               ground of a known disability of a party.  That               view of the Court is ably stated by the Editor               of  the 15th Edition of Russell on the Law  of               Arbitration  at  page  295  in  the  following               terms:                         ’Although  a party may by reason  of               some   disability  be  legally  incapable   of               submitting matters to arbitration that fact is               not  one  that can be raised as a  ground  for               disputing  the  award by other  parties  to  a               reference who were aware of the disability. If               one of the parties is incapable the  objection               should  be  taken to the submission.  A  party               will not be permitted to lie by & join in  the               submission  and then if it suits  its  purpose               attack   the   award  on   the   ground.   The               presumption  in  the absence of proof  to  the               contrary  will be that the  party  complaining               was   aware   of  the  disability   when   the               submission was made.’"     Mr.  Kacker submitted that this principle could  be  in- voked  only in a situation where the challenge is made  only after the making of an award, and not before. We are  unable to  accept  this differentiation. The principle  is  that  a party  shall not be allowed to blow hot and cold  simultane- ously. Long participation and acquiescence in the proceeding preclude  such a party from contending that the  proceedings were without jurisdiction.     Russell  on Arbitration, 18th Edition,page 105  explains the position as follows:               "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  circum-               stances, they will be precluded from objecting

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 6  

             to such appointment as invalidating subsequent               proceedings.               574               Attending  and taking part in the  proceedings               with full knowledge of the relevant, fact will               amount to such acquiescence."     The Judicial Committee in decision in Chowdhury  Murtaza Hossein  v. Mussumat Bibi Bechunnissa, (31.A. 209)  observed at page 220:               "On  the  whole,  therefore,  their  Lordships               think  that  the  appellant,  having  a  clear               knowledge  of  the circumstances on  which  he               might   have  founded  an  objection  to   the               arbitrators proceedings to make their  awards,               did  submit to the arbitration going on;  that               he  allowed the arbitrators to deal  with  the               case  as  is  stood before  them,  taking  his               chance  of  the decision being  more  or  less               favourable  to himself; and that is  too  late               for him, after the award has been made, and on               the  application to file the award, to  insist               on this objection to the filing of the award." Relying  on  the  aforesaid observations this  Court  in  N. Chellappan v. Secretary, Kerala State Electricity Board  and Another, [1975] 1 S.C.C. 289, acted upon the principle  that acquiescence defeated the right of the applicant at a  later stage.  In that case the facts were similar. It was held  by conduct there was acquiscence. Even in a case where  initial order  was not passed by consent of the parties a  party  by participation  and  acquiescence can preclude  future  chal- lenges.     In the grounds of appeal no prejudice has been indicated by the appointment of the second arbitrator.     Mr.  S.N.  Kacker, learned counsel for  the  respondents drew  our  attention to the fact that the  decision  in  the Chowdhuri  Murtaza Hossein’s case was where the party  chal- lenged  the appointment of the receiver after the award  was made.  He  also submits that in this  case  the  respondents herein had challenged the order of appointment of the  arbi- trator on 19.4.83 and not after the arbitrator had made  the award.  We are unable to accept this distinction.  Basically the principle of waiver and estoppel is not only  applicable where the award had been made but also where a party to  the proceeding  challenges the proceedings in which he  partici- pated.  In  the facts of this case, there was no  demur  but something  which can be called acquiescence on the  part  of the  respondents which precludes them from  challenging  the participation.    575     In  that view of the matter, we are of the opinion  that the judgment and impugned order cannot be sustained. In  the premises  the appeal is allowed. The order and  judgment  of the  High Court dated the 8th December, 1986 are set  aside. The arbitration proceedings will go on before the Arbitrator appointed  by order dated 19th April, 1983. Time for  making the  award is extended for four months from today. For  fur- ther extention of time the party may apply to the High Court of Calcutta.     The appeal is disposed of accordingly. The parties  will bear their respective costs. P.S.S.                                                Appeal allowed. 576

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 6 of 6