Case: M/s Laxmi Continental Construction Co Vs. State of U.P. &amp; Anr

the department is appointed as an Arbitrator considering the arbitration clause, whether his mandate to continue the arbitration proceedings shall come to an end on his retirement? The further question which is posed is whether continuance of the arbitration proceedings by such an Arbitrator after his retirement can be said to be committing a misconduct by such a Sole Arbitrator? 11. For the aforesaid question, the relevant arbitration clause required to be considered is clause 52. In the present case, arbitration agreement contains arbitration clause as per clause 52 of the agreement, which is reproduced hereinabove. It provides that on the receipt of the notice from the contractor of his intention to refer the dispute to the arbitration the Chief Engineer shall send to the contractor a list of three officers of the rank of Superintending Engineer or higher, who have not been connected with the work under the contract. Thereafter, the contractor shall within fifteen days of receipt of the list select and communicate to the Chief Engineer the name of one officer from the list, who shall then be appointed as the Sole Arbitrator. It further provides that if a contractor is failed to communicate his selection of name, within the stipulated period, the Chief Engineer shall without delay select one officer from the list and appoint him as the Sole Arbitrator. It further provides that if the Chief Engineer fails to send such a list within 30 days, as stipulated, the contractor shall send a similar list to the Chief Engineer within fifteen days and the Chief Engineer shall then select an officer from the list and appoint him as the Sole Arbitrator within fifteen days. It further provides that the arbitration shall be conducted in accordance with the provisions of the Indian Arbitration Act, 1940. Therefore, the only qualification for appointment as an arbitrator is that he should be the officer of the rank of the Superintending Engineer or higher. Once such an officer is appointed as an Arbitrator, he continues to be the Sole Arbitrator till the arbitration proceedings are concluded unless he incurs the disqualification under the provisions of the Indian Arbitration Act, 1940. Even after his retirement, the arbitration proceedings have to be continued by the same Arbitrator. Clause 52 of the agreement does not provide at all that on the retirement of such an officer, who is appointed as a Sole Arbitrator, he shall not continue as a Sole Arbitrator and/or the mandate to continue with the arbitration proceedings will come to an end. 12. Identical question came to be considered by this Court in the case of Himalayan Construction Co. (supra). The question before this Court was whether the High Court was justified in taking the view that the award, which is made the Rule of the Court by the learned Single Judge was illegal and liable to be set aside on the ground that the arbitrator, who was appointed by designation had retired and has ceased to hold his office when he passed the award. In that case also, the Sole Arbitrator even after his retirement prayed for extension of time and the extension was granted after hearing the parties and as no such objection was raised at that time, and thereafter the nominated Arbitrator, who was the officer, passed the award. This Court overruled the objection that after the retirement of the Sole Arbitrator, who was appointed by designation cannot continue arbitration proceedings after his retirement and cannot pass the award. 13. In the present case also the Sole Arbitrator, who at the relevant time was the Chief Engineer and was qualified to become the Sole Arbitrator was even nominated and/or appointed by the Chief Engineer as per clause 52. Therefore, considering the clause 52 of the agreement, it cannot be said that his mandate to continue with the arbitration proceedings would come to an end on his retirement. 14. It is further required to be noted that even the very objection was raised by the respondents before the learned Civil Judge (Senior Division), Roorkee when the question of extension of time was being considered by the learned Civil Judge (Senior Division), Roorkee. The learned Civil Judge (Senior Division), Roorkee overruled such an objection and granted further one months extension to the Sole Arbitrator to complete the arbitration proceedings. The said order has attained the finality. Therefore, thereafter, it was not open for the respondents to again raise such an objection. 15. Now, so far as the reliance placed upon the amendment to Section 4 of the Indian Arbitration Act, 1940 as applicable to the State of U.P. is concerned, the aforesaid has no substance. State amendment of Section 4 of Arbitration Act, 1940 as applicable to State of U.P. upon which the reliance has been placed reads as under:- XXXXXXXXXX (2) In every such case where any appointed arbitrator neglects or refuses to act, or becomes incapable of acting or dies, the vacancy shall be supplied by the person designated as aforesaid. On fair reading of the aforesaid provision, we are afraid that the aforesaid provision shall be applicable at all. It cannot be said that the Sole Arbitrator had become incapable of acting on his retirement from service. 16. Even the observations made by the High Court in the impugned judgment and order that the Sole Arbitrator has misconducted himself by continuing with the arbitration proceedings after his retirement is also not tenable at law. In the present case, the learned Civil Judge (Senior Division), Roorkee extended the time to the Sole Arbitrator to complete the arbitration proceedings and granted further period of 30 days which was after his retirement and after specifically overruling/rejecting the objections raised by the respondents that after retirement, he cannot continue with the arbitration proceedings. Therefore, once the learned Sole Arbitrator continued with the arbitration proceedings and passed the award within the extended period of time, it cannot be said that he has misconducted himself as he continued with the arbitration proceedings.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]12. Identical question came to be considered by this Court in the case of Himalayan Construction Co. (supra). The question before this Court was whether the High Court was justified in taking the view that the award, which is made the Rule of the Court by the learned Single Judge was illegal and liable to be set aside on the ground that the arbitrator, who was appointed by designation had retired and has ceased to hold his office when he passed the award. In that case also, the Sole Arbitrator even after his retirement prayed for extension of time and the extension was granted after hearing the parties and as no such objection was raised at that time, and thereafter the nominated Arbitrator, who was the officer, passed the award. This Court overruled the objection that after the retirement of the Sole Arbitrator, who was appointed by designation cannot continue arbitration proceedings after his retirement and cannot pass the award.13. In the present case also the Sole Arbitrator, who at the relevant time was the Chief Engineer and was qualified to become the Sole Arbitrator was even nominated and/or appointed by the Chief Engineer as per clause 52. Therefore, considering the clause 52 of the agreement, it cannot be said that his mandate to continue with the arbitration proceedings would come to an end on his retirement.14. It is further required to be noted that even the very objection was raised by the respondents before the learned Civil Judge (Senior Division), Roorkee when the question of extension of time was being considered by the learned Civil Judge (Senior Division), Roorkee. The learned Civil Judge (Senior Division), Roorkee overruled such an objection and granted further one months extension to the Sole Arbitrator to complete the arbitration proceedings. The said order has attained the finality. Therefore, thereafter, it was not open for the respondents to again raise such an objection.15. Now, so far as the reliance placed upon the amendment to Section 4 of the Indian Arbitration Act, 1940 as applicable to the State of U.P. is concerned, the aforesaid has no substance.On fair reading of the aforesaid provision, we are afraid that the aforesaid provision shall be applicable at all. It cannot be said that the Sole Arbitrator had become incapable of acting on his retirement from service.16. Even the observations made by the High Court in the impugned judgment and order that the Sole Arbitrator has misconducted himself by continuing with the arbitration proceedings after his retirement is also not tenable at law. In the present case, the learned Civil Judge (Senior Division), Roorkee extended the time to the Sole Arbitrator to complete the arbitration proceedings and granted further period of 30 days which was after his retirement and after specifically overruling/rejecting the objections raised by the respondents that after retirement, he cannot continue with the arbitration proceedings. Therefore, once the learned Sole Arbitrator continued with the arbitration proceedings and passed the award within the extended period of time, it cannot be said that he has misconducted himself as he continued with the arbitration proceedings.