Case: R.D. Gupta Vs. Union of India

HEGDE, J. 1. The vicissitudes of arbitration proceedings are well illustrated by this case. This is the third time this matter is coming before this Court. Even now the last word on the subject has not been said 2. The appellant is a contractor. He entered into a contract with the Union of Indian for carrying out certain works in N.E.F.A. One of the clauses in the agreement provided that if any dispute arose between the parties relating to the contract or concerning works done by it, it shall be referred to the sole arbitration of the Superintending Engineer, N.E.F.A. or to his nominee. At one stage as many as six disputes arose between the appellant and the Union of India. They were referred to the Superintending Engineer, N.E.F.A. who appointed one Mr. O. P. Mittal as his nominee for deciding the disputes. In respect of those disputes, the appellant had claimed a sum of Rs. 2, 81, 871.67 P. During the course of the proceedings before Mr. Mittal, the Superintending Engineer informed him that since he may have to be examined on behalf of the Union of India, it is advisable for him not to continue as the arbitrator in the matter. Thereafter the appellant called upon the Superintending Engineer to appoint some other person in place of Mr. Mittal. The Superintending Engineer did not take immediate action on the request of the appellant. Hence the appellant moved the Assistant to the Deputy Commissioner, Shillong to appoint an arbitrator in place of Mr. Mittal. In the meanwhile the Superintending Engineer appointed one Mr. Malkhani as the sole arbitrator. He was not acceptable to the appellant. Hence the appellant proceeded with his application before the Assistant to the Deputy Commissioner. That was evidently a proceeding under Section 8(1)(b) of the Indian Arbitration Act, 1940. In that proceeding, the Assistant to the Deputy Commissioner appointed one Mr. Nath as the sole arbitrator in place of Mr. Mittal. Against the order, the Union of India went up in appeal to the Additional Deputy Commissioner, Shillong who by his order, dated November 12, 1962, set aside the order of the Assistant to the Deputy Commissioner and held that the appointment of Mr. Malkhani made by the Superintending Engineer was valid. As against that order, the appellant went up in revision under Section 115, Code of Civil Procedure to the High Court of Assam and Nagaland. One of the points raised in that revision application was that the order made by the Assistant to the Deputy Commissioner being one under Section 8(1) of the Arbitration Act, it was not subject to any appeal and therefore the order of the Appellate Court was without jurisdiction. The High Court accepted that contention and set aside the order of the appellate authority. That order of the High Court was brought up in appeal by special leave to this Court and this Court affirmed the order of the High Court. On January 21, 1962, the Union of India filed another application before the Assistant to the Deputy Commissioner for revoking the authority of Shri Nath but this application was dismissed on March 12, 1962. The Union of India took up the matter in revision before the High Court. The High Court remanded the case by its order, dated July 12, 1962. Thereafter on December 6, 1962, the Union of India withdrew its application. On July 9, 1954, the Union of India filed another application before the Assistant to the Deputy Commissioner for revoking the authority of Mr. Nath but that application was dismissed on September 16, 1964. That matter was taken up in revision by the Union of Indian to the High Court. The said revision application was not pressed as in the meantime Mr. Nath died. On the death of Mr. Nath one Mr. G. N. Dutt was appointed as the sole arbitrator by the Assistant to the Deputy Commissioner. A revision petition was filed by the Union of India against that order but the High Court rejected the same by its order, dated September 1, 1965. This matter was again brought up to this Court. That appeal was dismissed by this Court. Mr. Dutt made his award on May 23, 1966. The said award was filed in the Court of the Assistant to the Deputy Commissioner, Shillong on May 26, 1966. It was taken on the file on the same day and a notice was issued to the Union of India which was served on it on May 30, 1966. On June 27, 1966, the Union of India India filed an application for setting aside the award on the ground that Mr. Dutt exceeded his jurisdiction in making the award. At this stage it is necessary to mention that when Mr. Nath was appointed as the arbitrator only six disputes were referred to him for decision but before his successor the appellant tried to raise as many as 17 disputes. As mentioned earlier, initially the appellant had claimed a sum of Rs. 2, 81, 871.67 P. but when the matter went up before Mr. Nath, he raised 17 disputes and enhanced his claim to Rs. 27, 92, 674.80 P. Thereafter before Mr. Dutt he raised his claim to Rs. 48, 65, 295.24 P. Mr. Dutt allowed a sum of Rs. 16 lakhs and odd 3. The Assistant to the Deputy Commissioner set aside the award on the ground that the arbitrator had exceeded his jurisdiction. That order was affirmed by the appellant authority as well as by the High Court. Hence this appeal by special leave 4. The appellant, Mr. Gupta, who appeared in person contended before us that the finding of the High Court and the courts below that Mr. Dutt had exceeded his jurisdiction is erroneous as the reference to Mr. Dutt was under Section 20 of the Arbitration Act and not under Section 8, of the said Act. It is not disputed that if the appointment of Mr. Nath was under Section 8 of the Arbitration Act, Mr. Dutt had undoubtedly exceeded his jurisdiction. From the facts stated earlier, it is clear that at first Mr. Nath and later Mr. Dutt were appointed in place of Mr. Mittal. When the Superintending Engineer appointed Mr. Mittal to be the arbitrator there were only six disputes before him and the total claim made was just about three lakhs. No other dispute had been raised before the Superintending Engineer nor any application under Section 20 of the Arbitration Act had been made before any Court. Hence prima facie Mr. Dutt exceeded his jurisdiction in awarding a sum of rupees over sixteen lakhs to the appellant. It is not the contention of the appellant that at any stage he had filed an application under Section 20 of the Arbitration Act nor is it his case that he had raised any dispute other than the six disputes referred to earlier before the Superintending Engineer 5. The appellant contended that the plea taken by the Union of India that Mr. Dutt had exceeded his jurisdiction is barred by res judicata. His contention was that when the dispute was pending before Mr. Nath, the Union of India had taken the plea that he had no jurisdiction to proceed with the arbitration and in that connection Mr. Nath had made a reference to the Assistant to the Deputy Commissioner to decide whether he had jurisdiction or not to proceed with the arbitration. In that connection the Assistant to the Deputy Commissioner had decided that he had jurisdiction to proceed with arbitration as the reference was under Section 20 of the Arbitration Act. We are unable to accept the contention of the appellant that the plea relating to the jurisdiction of the arbitrator taken by the Union of India is barred by the principles of res judicata. When the dispute about the appointment of Mr. Nath was taken to the High Court and thereafter brought to this Court to which reference has been made earlier both the High Court as well as this Court held that Mr. Naths appointment was under Section 8 of the Arbitration Act. Therefore the observation of the Assistant to the Deputy Commissioner that it was a reference under Section 20 has no value. On that aspect of the case, the matter is concluded by the decision of the High Court as well as of this Court 6. The appellant next contended that the application made on behalf of the Union of India to set aside the award having been signed by the Executive Engineer, the same could not have been entertained by the Assistant to the Deputy Commissioner. We see no substance in this contention. By means of notifications issued under Rules 1 and 2 of Or. 27, Code of Civil Procedure, the Superintending Engineer and the Executive Engineer in the N.E.F.A. had been authorised by the Union of India to sign pleadings on its behalf as well as to act on its behalf. The contention that the provisions of Code of Civil Procedure do not apply to proceedings under the Arbitration Act is untenable in view of Section 41 of that Act 7. The last contention taken by the appellant was that the application made on behalf of the Union of India to set aside the award is barred by limitation. As seen earlier, the award had been filed in Court on May 26, 1966, and a notice of the filing of the award was served on the Union of Indian on May 30, 1966. The petition to set aside the award was made on June 27, 1966. Therefore, prima facie the petition was in time having been filed within thirty days from the date of service of the notice of filing of the award. But what is said on behalf of the appellant is that on the very day the award was filed into Court, the Assistant to the Deputy Commissioner passed the following order "Arbitrator has filed the award alongwith the record of proceedings and his bill is amounting to Rs. 7, 163. Issue notice on the parties fixing 14-7-1966." This order was shown to Mr. L. P. Changakakoti, Government Advocate and his signatures obtained. This amounted to a service of a notice under Section 14(2) of the Act. Hence the petition filed on June 27, 1966 must be held to be barred. It is true that notice under Section 14(2) of the Act need not be in writing but we are unable to accept the contention that the information give to Mr. Changakakoti amounts to a notice to the Government under Section 14(2) of the Arbitration Act. All that Mr. Changakakoti was told was that a written notice of the filing of the award will be given to the Government though he had come to know that the award had been filed into Court. Under the circumstances we are unable to hold that the information given to Mr. Changakakoti amounted to a notice under Section 14(2) of the Arbitration Act

Decision:
0[ds]We see no substance in this contention. By means of notifications issued under Rules 1 and 2 of Or. 27, Code of Civil Procedure, the Superintending Engineer and the Executive Engineer in the N.E.F.A. had been authorised by the Union of India to sign pleadings on its behalf as well as to act on its behalf. The contention that the provisions of Code of Civil Procedure do not apply to proceedings under the Arbitration Act is untenable in view of Section 41 of that Act7. The last contention taken by the appellant was that the application made on behalf of the Union of India to set aside the award is barred by limitation.As seen earlier, the award had been filed in Court on May 26, 1966, and a notice of the filing of the award was served on the Union of Indian on May 30, 1966. The petition to set aside the award was made on June 27, 1966. Therefore, prima facie the petition was in time having been filed within thirty days from the date of service of the notice of filing of the award. But what is said on behalf of the appellant is that on the very day the award was filed into Court, the Assistant to the Deputy Commissioner passed the following orderThis order was shown to Mr. L. P. Changakakoti, Government Advocate and his signatures obtained. This amounted to a service of a notice under Section 14(2) of the Act. Hence the petition filed on June 27, 1966 must be held to be barred. It is true that notice under Section 14(2) of the Act need not be in writing but we are unable to accept the contention that the information give to Mr. Changakakoti amounts to a notice to the Government under Section 14(2) of the Arbitration Act. All that Mr. Changakakoti was told was that a written notice of the filing of the award will be given to the Government though he had come to know that the award had been filed into Court. Under the circumstances we are unable to hold that the information given to Mr. Changakakoti amounted to a notice under Section 14(2) of the Arbitration Act