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Judgment
F.M. Reis, J.—Heard Shri M. Amonkar, learned Central Government Standing Counsel appearing for the Central Government/appellant and Shri Nitin Sardessai, learned Counsel appearing for the respondent. The above appeal challenges the order dated 8/07/2003, passed by the learned Additional District Judge, Margao in Civil Misc. Application No. 183/2000.
Briefly the facts of the case are that the appellant awarded a contract to respondent No. 1 to construct a Gymnasium at I.N.S. Hansa at Vasco and the wok order was placed with the respondent No. 1 whereby the date of the commencement of the work was fixed as from 31/07/1990 and the date of the completion was fixed as 30/07/1991. The work was completed by respondent No. 1 after the extended date of completion i.e. on 31/07/1996. Since there were differences between the parties, the respondent No. 1 requested the appellant to appoint an Arbitrator as per condition No. 70 and such request was made by letter dated 24/02/1997. The appellant claimed that they appointed respondent No. 2 as the sole Arbitrator conditionally by their letter dated 23/04/1998. In the meanwhile, the respondent No. 1 filed an application u/s 11 of the Arbitration Act, 1996 before this Court for appointment of Arbitrator as according to them the appellant failed to accede to the request of respondent No. 1 to such appointment of Arbitrator. Accordingly, on 30/04/1998 this Court appointed respondent No. 2 as the sole Arbitrator. Thereafter, the respondent No. 2 proceeded with the arbitration proceedings and passed the award dated 30/03/2000. The appellants filed an application u/s 34 of the Arbitration Act, 1996 disputing two amounts awarded by the Arbitrator. The said claims were pertaining to claim No. 5 and claim No. 8. Claim No. 5 was with regard to the extra expenses incurred due to abnormal prolongation of the contract period due to the various breaches on the part of the applicant and claim No. 8 was the incorrect and illegal preparation of the deviation totally against the terms and conditions of the contract. On account of the claim No. 5 of Rs. 32,80,000/-, the learned respondent No. 2 awarded a sum of Rs. 2,00,000/-and as against the claim No. 8, the Arbitrator awarded a negative sum of Rs. 35,000/-as against the claim of Rs. 6,92,000/-and odd. By the impugned order, the learned Additional District Judge rejected the application filed by the applicant u/s 34 of the said Act. Being aggrieved by the said order, the appellant has preferred the present appeal.
Shri M. Amonkar, the learned Standing Counsel for the Central Government for the appellant has assailed the impugned order essentially on the ground that the appellant had already appointed the Arbitrator vide letter dated 23/04/1998 much prior to the appointment of Arbitrator by this Court on 30/04/1998 and as per the conditions imposed at the time of such appointment there was specific condition to the effect that the said claim nos.5 and 8 were not arbitrable. Learned Counsel further pointed out that as the said claims were not arbitrable the question of the Arbitrator proceeding to award the said amount in favour of the respondent No. 1 would not arise. Learned Counsel further pointed out that as the appointment by the appellant was much prior to the appointment by this Court on 30/04/1998, the condition imposed whilst appointing an Arbitrator vide letter dated 23/04/1998 would prevail and, as such, the Arbitrator has acted in excess of its jurisdiction whilst passing the impugned order. Learned Counsel has taken me through the impugned order and pointed out that the learned Judge has erroneously come to the conclusion that the appointment was effected u/s 11 of the said Act by this Court and that the said conditions do not exist. Learned Counsel, however, does not dispute the correctness of the amounts awarded on account of the said claim nos.5 & 8 which are otherwise not disputed by the appellant. The only objection raised by the appellant is that the Arbitrator did not have jurisdiction to decide the non-arbitrary claim put forward by respondent No. 1. As such, the learned Counsel submitted that the amounts awarded by the claim nos.5 and 8 by the Arbitrator deserve to be quashed and set aside.
On the other hand, Shri Nitin Sardessai, learned Counsel appearing for the respondent has supported the impugned order. Learned Counsel pointed out that the learned Judge after minutely perusing the evidence on record as well as the material produced by the said respondent has come to the conclusion that the appointment by this Court by order dated 30/04/1998 suggests that there was no appointment of an Arbitrator by the applicant before the appointment by this court. The learned Counsel has taken me through the order passed by this Court at the time of appointment and pointed out that the applicant did not even disclose to this Court that such appointment was effected by the applicant. The learned Counsel further pointed out that as the Arbitrator was appointed by this Court, the question of claiming that such appointment was subject to some conditions imposed by letter dated 23/04/1998 would not arise. In support of his submissions, learned Counsel has relied upon the judgment of the Apex Court reported in Union of India (UOI) Vs. Bharat Battery Manufacturing Co. (P) Ltd., . The learned Counsel has taken me through the award passed by the learned Arbitrator and pointed out that there is no infirmity committed by the Arbitrator whilst passing the impugned order and, as such, the question of interference by this Court would not arise at all. It is well settled that the objections u/s 34 are only in respect of the objections dealing with public policy and in the present case such is not the consideration and, as such, the appeal deserves to be rejected.
Having heard the learned Counsel and on perusal of the record, it would be appropriate to consider that whilst appointing an Arbitrator this Court by order dated 30/04/1998 in Arbitration Petition No. 44/1998 has clearly recorded that the learned Counsel appearing for the applicant has stated that the respondent No. 1 has agreed to the appointment of respondent No. 2 as an Arbitrator to adjudicate the dispute raised by the applicant. The learned Counsel also stated that the said Arbitrator would decide the matter as early as possible. It is further recorded in the said judgment that as no Arbitrator was appointed pursuant to the request made by the respondent No. 1, the said respondents were forced to file such application and on account of such delay even costs came to be awarded in favour of respondent No. 1. It is pertinent to note that the applicant themselves have accepted that all the claims put forward by the respondent No. 1 would be adjudicated by the respondent No. 2. Whilst passing the award, the Arbitrator on the basis of the submissions of the parties has recorded at clause 1.11 thus :
... AND WHEREAS thereafter both the parties confirmed that they were satisfied and not contesting the appointment and that all the claims of both the parties be considered for adjudication.
Apart from that, there was no challenge to the said findings of the learned Arbitrator by the applicant while filing the objections u/s 34 of the said Act. The learned Counsel appearing for the appellant does not dispute that the claim nos.5 and 8 were part of the claims put forward by the respondent No. 1 and were disputed by the appellants in the application u/s 11 of the Arbitration Act, 1996 before this Court, but the appointment was made to adjudicate on all the disputes between the parties.
Considering the above, it cannot be accepted that the claim put forward by the respondent No. 1 with regard to the claim nos.5 and 8 were not to be adjudicated by the respondent No. 2. The contentions of the learned Counsel appearing for the appellant to the effect that the claim nos.5 and 8 were non arbitrable by the respondent No. 2, as such, cannot be accepted. The material on record clearly discloses that the said claims were also part of the dispute which was to be adjudicated by the Arbitrator. The contention of the learned Counsel appearing for the appellant to the effect that the conditions in the appointment of the Arbitrator as mentioned in the letter dated 23/04/1998 would prevail over the order passed by this Court whilst appointing an Arbitrator by order dated 30/04/1998 is misplaced. The learned Judge whilst scrutinizing the evidence on record has rightly come to the conclusion that the Arbitrator was appointed pursuant to the order passed by this Court dated 30/04/1998 and not by the appellant. The judgment relied upon by the learned Counsel Shri Sardessai in the case of Union of India (supra) supports the case of the respondent No. 1 to the effect that once the Court has appointed an Arbitrator u/s 11 of the said Act any right of the appellants to appoint the Arbitrator gets extinguished. As such, the contention of the learned Counsel appearing for the appellant to the effect that appointment of the Arbitrator was by the appellant cannot be accepted.
In view of the above, I find that the learned Judge has not committed any error whilst passing the impugned order and rejecting the application u/s 34 of the Arbitration and Conciliation Act, 1996. It is also to be noted that in case there were any objections on the part of the appellant that the Arbitrator has exceeded its jurisdiction to decide the claim such objections should have been raised u/s 16 of the said Act and in the present case records do not reveal that any submissions to that effect were raised by the appellant before, the Arbitrator. Hence, I find no merit in the above appeal which accordingly stands dismissed.