THE HON'BLE SMT. JUSTICE T.MEENA KUMARI AND THE HON'BLE SRI JUSTICE G.V.SEETHAPATHY CIVIL MISCELLANEOUS APPEAL No.2861 of 2003 ORDER: (Per the Hon’ble Smt. Justice T. Meena Kumari) This appeal is directed against order dated 31.10.2001 passed in O.P.No.708 of 1998 on the file of the Court of the Chief Judge, City Civil Court, Hyderabad, whereby the Court below allowed the O.P. The O.P. was filed by the first respondent herein – Hindustan Flurocarbons Limited, under Section 34 of the Arbitration and Conciliation Act, 1996 (‘the Act’ for brevity), praying to set aside award dated 14.03.1998 passed by the second respondent – arbitrator and to grant the claim for Rs.2,69,00,000/- with interest at 18% per annum and costs. The case of the first respondent company before the Court below was that as per agreement dated 24.04.1996 entered between the first respondent company and the appellant herein – M/s. Rockwell Industries Limited, the appellant company, having purchased and received the material on credit basis from the first respondent company, failed to make payment, and thereby committed breach of terms of the agreement and invoked the arbitration clause to settle the dispute; that there was no valid consent for appointment of the second respondent as arbitrator, since the Deputy Manager, Personal Administration of the first respondent company, who gave consent for appointment of the arbitrator, has no authority to do so and that at the first appearance itself the first respondent company denied the consent and suggested the names of their choice, but the second respondent – arbitrator ignored the same, proceeded with the matter and passed the award and therefore, the arbitration proceedings were not maintainability. The case of the appellant company before the Court below was that as the first respondent company failed to supply gas without a n y bona fide reason contrary to agreement dated 03.05.1996 (revised agreement of previous agreement dated 24.04.1996 entered between the appellant and the first respondent), the appellant company sustained loss, and therefore, the appellant company invoked the arbitration clause under the agreement. On the basis of the pleadings, the Court below framed the following issues: 1. Whether the petition u/s 34 of the Arbitration & Conciliation Act is maintainable with reference to the plea of consent in the matter of appointment arbitrator? 2. Whether the award is valid or not? 3. Whether the petitioner is liable to honour the award? 4. To what relief? On behalf of the first respondent company, P.Ws.1 to 3 were examined and Exs.A-1 to A-24 were marked and on behalf of the appellant company, R.W.1 was examined and Exs.B-1 to B-10 were marked. The Court below, having considered the material available on record, particularly the evidence of P.W.1, the officer who gave consent on behalf of the first respondent company and who himself admitted that he has no such authority, held that the consent given by P.W.1 was not valid as he was not authorized to give such consent and that such consent does not bind the first respondent company, it being not legal. However, in this appeal, the learned counsel for the appellant company submitted that though they tried to bring to the notice of the Court below regarding the legal position by placing reliance on the decisions of this Court and the Hon’ble Apex Court, without considering the same, the Court below allowed the O.P. The case law placed before the Court below are - Secretary to the Govt. of Orissa vs. Sarbeswar Rout[1], Bhupinder Singh Bindra vs. Union of India[2], Managing Director, Nagarjuna Co-op. Sugars Ltd vs. T.K. Mohan Rao[3], Y. Parthasarathy vs. G.M., Railway Electrification[4], Construction India, M/s. vs. Secretary, Works Department, Govt. of Orissa[5], Sundaram Finance Ltd., M/s. vs. M/s. NEPC India Ltd.[6], Olympus Superstructures Pvt. Ltd. v. Meena Vijay Khetan[7], Konkan Railway Corporation Ltd. and Others v. Mehul Construction Co.[8] and Union of India v. Popular Builders, Calcutta[9]. Admittedly, the arbitration proceedings deemed to have been commenced on the date on which notice was given by the arbitrator directing the parties to file their written statements and once an arbitrator is appointed, no party can revoke the appointment of such arbitrator. The Court below, without taking this fact into consideration and without considering the legal position, erroneously set aside the award of the arbitrator. In the circumstances, we deem it appropriate to remand the matter to the Court below for fresh consideration. Accordingly, the Civil Miscellaneous Appeal is disposed of and the matter is remanded to the learned Chief Judge, City Civil Court, Hyderabad, for fresh consideration. The learned Chief Judge shall now dispose of the O.P. in accordance with law after giving due opportunity of hearing to both the parties. No order as to costs. ___________________ T.MEENA KUMARI, J Date: 07th August, 2009 _________________ G.V.SEETHAPATHY, J GHN [1] AIR 1989 SC 2259 [2] 1995 AIR SCW 3634 : (1995) 5 SCC 329 : AIR 1995 SC 2464 [3] AIR 1995 AP 365 [4] 1997(3) ALD 322 [5] AIR 1998 SC 717 [6] AIR 1999 SC 565 [7] AIR 1999 SC 2102 [8] (2000) 7 SCC 201 [9] AIR 2000 SC 3185 : 2000 AIR SCW 3690 : (2000) 8 SCC 1