International Security & ... vs Municipal Corporation Of Delhi & ...
2001 Latest Caselaw 67 Del

ORDER

VIKRAMAJIT SEN, J.

1. Suit No. 569-A of 1997 has been filed for making the Award relating to case No. ARB/JC/1 dated 14th March, 1997, passed by Justice Jagdish Chandra (Retd.) as Rule of the Court and for passing of a decree in terms thereof. The Respondent, the Municipal Corporation of Delhi (MCD) has filed Objections to this Award on 27th May, 1997, in terms of their application numbered as IA. 9207/97. Both these actions shall be disposed off by this judgment. The Petitioner/Claimant immediately raised the preliminary objection that this application cannot be considered on merits since it was barred by limitation. The averment is that the MCD was served with a copy of S.No.569-A/1997, (being the petition under Section 14 of the Arbitration Act, 1940) through its Commissioner (Respondent No.1) and its Commissioner (Slum & JJR) (Respondent No.2.) on 3rd April, 1997. While these averments have not been controverter by the MCD, it is their contention that the period of Limitation should be reckoned from 28th April, 1997 on which date Respondent No.3, i.e. Director (Administration) Slum Wing (S&JJ) had been served, and if so reckoned, the Objections filed on 27.5.1997 are palpably within time.

2. The period of limitation is set down in Article 119 (b) of the Limitation Act, 1963, (corresponding with Article 158 of the earlier Limitation Act) which reads as follows:

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Description of suit                                   Period of                                   Time from which period
                                                      Limitation                                  begins to run
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for setting aside                                     Thirty days                                 The date of service of
an award or                                                                                       the notice of the
getting an award                                                                                  filing of the award.
remitted for
consideration.
-------------------                                  --------------                               -------------------------
 

3. Dr. K.S. Sidhu, Learned Senior Counsel who has appeared for the MCD raised a number of legal questions in his endeavor to show that the impugned Award should be set aside. His contentions are paraphrased as follows-(A) Proceedings under Section 20 partake of the nature of a suit and therefore the relevant period of limitation is not thirty days under Article 119 (b) of the Limitation Act, 1963 but three years under Article 137 of the Limitation Act. (B) The Reference to Arbitration under Section 20 was only an interlocutory order and could be varied at any time till the final stage of the passing of a judgment is arrived at. (C) Even if it is assumed that the Respondents were served on 3.4.1997, the Objections having been filed on 27.5.1997, a delay of only 24 days had occurred, which deserved to be condoned. (D) The Referral Order of this Court is only directional with respect to Shri S.S. Dhindsa. No reference had been made in respect of the 2nd Agreement dated 24.1.1992 and since it is well settled that parties cannot confer jurisdiction, that part of the Award which deals with this Agreement is void ab initio. If the Reference was de hors the Arbitration Clause, it was atonce improper. (E) It was incumbent on the Arbitrator to give reasons, and not having done so, the Award does not justify being made Rule of the Court. (F) The Award was published after the enforcement of the Arbitration and Conciliation Act, 1996 and the procedural provisions contained therein, i.e. the giving of reasons, ought to have been adhered to.

4. Dr. Sidhu, Learned Senior Counsel for the Respondents, relied on the following judgments:

1. State of J & K and another v. Dev Dutt Pandit, .

2. Associated Engineering Co. v. Government of Andhra Pradesh and another, ,

3. Prasun Roy, v. The Calcutta Metropolitan Development Authority and another, .

4. M/s. New Model Industries Ltd. v. Union of India, 1999 (51) DRJ 759.

5. Swaran Arora & Anr. v. Sh. Shyam Lal Jain & Ors., 1999 V AD (Delhi) 755.

6. Prem Sagar Chawla v. Messrs Security & Finance (P) Limited and another, .

7. Abdul Kadir Shamsuddin v. M.P. Oka and another, AIR 1955 NUC (Bombay) 5316.

8. Madan Lal v. Sunder Lal, .

9. Kiran Singh and others v. Chaman Paswan and others, .

10. Hira Lal Patni v. Sri Kali Nath, .

11. Smt. Nai Bahu v. Lala Ramnarayan and others, .

12. Raipur Development Authority v.Chokhamal Contractors, 1989 (1) Arb.L.R. 430.

13. Shri M.L. Jaggi v. Mahanagar Telephones Nigam Ltd. & Ors., .

5. For determining Point (A), I shall first refer to the decision of the Division Bench in the case of Hastimal Dalichand Bora and Ors. v. Hiralal Motichand Mutha, which was authored by Gajendragadkar, J. as his Lordship then was. It was held that "the Court would have no jurisdiction to consider the contentions raised in such an application when it has been filed beyond time". Thereafter the Learned Judge made the following observations, which would appear to me have the effect of bearing no alternative other than non-suiting the Municipal Corporation of Delhi:

"Section 33 deals with the applications to be made by the parties. Before we consider the provisions of this section, it may be relevant to point out that S. 32 enacts a bar to suits contesting arbitration agreements or awards. In other words, all questions with regard to the existence or validity of an arbitration agreement or an award must be determined by the Court in which the award under the agreement has been or may be filed under the provisions of the Arbitration Act and the decision of the Court in these proceedings is final and cannot be challenged by a separate suit. This marks an important departure from the provisions relating to awards contained in Sch.II of the Code of Civil Procedure, 1908.

Section 33, therefore, requires parties to make applications if they wish to challenge the existence or validity of an arbitration agreement or an award or to have the effect of either determined, and it lays down the procedure for dealing with applications which are made under this section. Article 158 of the Limitation Act prescribes a limitation of thirty days for the purpose of applications made for remitting or setting aside an award. It is perfectly true that if a party to an award wants to challenge the validity of the award on any ground and desires that the award should either be remitted or set aside, he has to make an application in that behalf under S.33 within the time prescribed by Art. 158.

It may be that if an application is made by a party raising some contentions against the award, the effect of which is not to have the award either remitted or set aside, the provisions of Art.158 may perhaps not apply to such an application. In the present appeal we are not called upon to consider that point. It is admitted before us that the contentions which the defendants sought to raise before the learned trial Judge fell within the mischief of Art.158. But from the fact that a party is precluded from challenging the validity of the award on the ground that he has not made a proper application within the limitation prescribed by Art. 158, it would not follow that the Court cannot 'suo motu' consider the same question in a proper case.

If the award directs a party to do an act which is prohibited by law or if it is otherwise patently illegal or void, we think it would be open to the Court to consider this patent defect in the award 'suo motu', and when the Court acts 'suo motu' no question of limitation prescribed by Art.158 can arise. In our opinion, the words used both in S 17 and S.30 are wide enough to include the Jurisdiction of the Court to deal with matters covered by those sections 'suo motu'. It would appear that under the English law the Court has a similar power to set aside an award, apart from the motion made by the parties in that behalf. For Russell, while dealing with the power of the Court, to remit or set aside the award, observes:

"The Court has further an inherent power to set aside an award which is bad on its face: either as involving an apparent error in fact or law, or as not complying with the requirements of finality and certainty. The inherent power to set aside also extends to an award which exceeds the arbitrator's jurisdiction, and possibly to cases where fresh evidence has become available."

6. Without reference to Hastimal's case (supra) similar views have subsequently been independently expressed by another Division Bench in Kawalsingh Akbar v. Baldeosingh Akbar, AIR 1957 Nagpur 57. The following passage is significant and deserves reproduction:

"An agreement of reference to arbitration is of a solemn character which is binding on the parties; so is the award. If, therefore, a party wishes to avoid the effect of the agreement or award, he must strictly comply with the provisions of law. In Ebrahim Kassam v. Northern Indian Oil Industries Ltd., an objection to the award was filed in time but the additional ground on which the award was sought to be set aside was taken after the period of limitation.

It was held that the application to take the additional ground should be treated as a new application to set aside the award and must be dismissed as it was barred by limitation. No quarter can, therefore be given to the laches and delay which the appellant has been guilty of. This question, however, does not arise as S.5 of the Indian Limitation Act does not apply to the proceedings under the Arbitration Act and cannot, therefore, be invoked. We, therefore, affirm the finding of the Court below that the application filed by the appellant to set aside the award was barred by limitation".

7. The controversy appears to be fully settled by the ratio set down by the Apex Court in Madan Lal's case (supra), which has recently been followed by Division Bench of the Kerala High Court in State of Kerala & Anr. v. P.N. Sivan Pillai, 1997 (2) Arb. LR 41. This is what it said:

"The question now remains to be considered is whether Section 5 of the Limitation Act can be invoked for condoning the delay in filing a petition to set aside an award under Section 33 of the Arbitration Act, 1940. The Supreme Court in Madan Lal v. Sunder Lal, , observed thus:

"Assuming that the court has power to set aside the award suo moto, we are of opinion that that power cannot be exercised to set aside an award on grounds which fall under Section 30 of the Act, if taken in an objection petition filed more than 30 days after service of notice of filing of the award, for if that were so the limitation provided under Article 158 of the Limitation Act would be completely negatived."

In this context the following observation of the Division Bench of the Bombay High Court in Hastimal Dalichand Barg v. Hiralal Motichand Mutha, is apposite.

"It is common ground that the written statement has been filed by the defendants in the present proceedings beyond the limitation prescribed by Article 158, and it is conceded by Mr. Kotwal that Section 5 of the Limitation Act has not been made applicable and the court has no jurisdiction to condone the delay which a party may make in filing an application under Section 33. In other words, even if the court was inclined to treat the written statement of the defendants as an application made under Section 33 of the Act, the difficulty created by the delay would be insuperable and the court would have no jurisdiction to consider the contentions raised in such an application when it has been filed beyond time, and yet, without considering this point, the learned Judge has proceeded to deal with the merits of the contentions, though it is true that in the end he has rejected them."

In Kawal Singh Akbar v. Baldeo Singh Akbar, AIR 1957 Nagpur 57, the Nagpur High Court observed: "It was held that the application to take the additional ground should be treated as a new application to set aside the award and must be dismissed as it was barred by limitation. No quarter can, therefore, be given to the laches and delay which the appellant has been guilty of. The question, however, does not arise as Section 5 of the Indian Limitation Act does not apply to the proceedings under the Arbitration Act, and cannot, therefore, be invoked. We, therefore, affirm the finding of the court below that the application filed by the appellant to set aside the award was barred by limitation." In view of the aforesaid decisions, we are of the view that the court has no jurisdiction to condone the delay in filing an application to set aside the award under Section 33 of the Act. That would mean the Court has no power to invoke Section 5 of the Limitation Act in such situation. An application to set aside the award under Section 33 of the Arbitration Act is like an Original Suit. Section 5 of the Limitation Act does not apply to suits. In the present case, the application to set aside the award was filed in a suit by the respondent praying to pass a judgment and decree in terms of the award. Even in such situation the character of the application under Section 33 remains in tact. Further, the Arbitration Act does not provide that the powers contained in Section 5 of the Limitation Act would apply to the different proceedings under the said Act."

8. The uniform view therefore is that if Objections are filed beyond the period of thirty days, they cannot be looked into since the Court does not possess the power to entertain an application under Section 5 of the Limitation Act in respect of Objections against an Award being made Rule of the Court.

9. In Union of India vs. Vijay Construction Co., AIR 1981 Delhi 193, a Division Bench of this Court had held that the period of limitation in respect of an application under Section 20 of the Arbitration Act 1940 would be governed by Article 137 of the Limitation Act and the period of three years would commence from the date that the contract was rescinded. The Hon'ble Division Bench had, in paragraph 5, observed that Section 37(1) of the Arbitration Act provides that all provisions of the Limitation Act 1963 shall apply to arbitrations as they would apply to proceedings in Court. Sections 4 and 5 of the Limitation Act read as follows:

"4. Expiry of prescribed period when court is closed. -- Where the prescribed period for any suit, appeal or application expires on a day when the court is closed, the suit, appeal or application may be instituted, preferred or made on the day when the court reopens.

ExpIanation.--A court shall be deemed to be closed on any day within the meaning of this section if during any part of its normal working hours it remains closed on that day."

"5. Extension of prescribed period in certain cases.--Any appeal or any application, other than an application under any of the provisions of Order XXI of the Code of Civil Procedure, 1908, may be admitted after the prescribed period, if the appellant or the applicant satisfies the court that he had sufficient cause for not preferring the appeal or making the application within such period.

Explanation.--The fact that the appellant or the applicant was misled by any order, practice or judgment of the High Court in ascertaining or computing the prescribed period may be sufficient cause within the meaning of this section."

10. Since this decision of the Division Bench was rendered in the context of the earlier Act, the repealed Section 5 of the Indian Limitation Act, 1908 is reproduced below for ready reference and to underscore that this provision has not undergone much change, apart from an inclusion of a reference to Order XXI of the C.P.C.

"5. Extension of period in certain cases.--Any appeal or application for a review of judgment or for leave to appeal or any other application to which this section may be made applicable by or under any enactment for the time being in force may be admitted after the period of limitation prescribed therefore, when the appellant or applicant satisfies the Court that he had sufficient cause for not preferring the appeal or making the application within such period.

Explanation.--The fact that the appellant or applicant was misled by any order, practice or judgment of the High Court in ascertaining or computing the prescribed period of limitation may be sufficient cause within the meaning of this section."

11. If the intention of the Legislature was to permit the extension of time not only to appeals or applications, but also to suits, it would have employed these words in Section 5, as it has done in Section 4. The departure and difference is deliberate and can only lead to be conclusion that Section 5 was not intended to apply to suits. The decision in the case of Union of India v. Vijay Construction Company (supra), apart from the fact that it was in the context of Section 20, is therefore not relevant to the facts of this case. Furthermore, the decision of the Division Bench appears to be contrary to that of the Apex Court in Wazir Chand Mahajan and Anr. vs. Union of India, , in asmuchas, even on an appreciation of the repealed Statute of Repose, i.e. Limitation Act 1908, the provisions of Article 181 were not extended to petitions under Section 20 of the Arbitration Act.

12. A Division Bench of the Andhra Pradesh High Court in Government of Andhra Pradesh vs. Durgaram Prasad, AIR 1984 Andhra Pradesh 15, held that Section 5 of the Limitation Act, 1963, can be invoked where Objections under Section 30 had been filed beyond the period of limitation. The Bench was of the view that by the introduction of the words drawing reference to Order XXI of the Code of Civil Procedure the previous decisions were no longer applicable. It opined that the complexion and texture of the erstwhile Section 5 was totally different and that the scope of the new Section 5 "is enlarged". With due respect to their Lordships, and in all humility, I am unable to agree with this view. It will be useful to reiterate again that if the legislature's intention was to include suits within the amplitude of Section 5 it would have employed the phraseology adopted in Section 4 and simply but specifically included and employed the word 'suits' in Section 5. Secondly, the effect of the amendment appears to be restrictive rather than enlarging. There is no controversy that pleadings in Order XXI of the Code of Civil Procedure are 'applications' in contradistinction to 'suits'. In the old Section therefore the provisions of Section 5 could be pressed to condone delay, which is now not possible even to these applications under Order XXI. If this was the intention of the Legislature, it was necessary to make this incorporation since, indubitably, Section 5 continues to deal with applications alone.

13. Even though I am unable to accept the argument of Dr. K.S. Sidhu learned Senior Advocate for the Municipal Corporation of Delhi, that delay can be condoned, the next question which arises is whether any delay has occurred. Although an application under Section 5 of the Limitation Act has been filed, it is stated that this action has been taken only in abundant caution. The reasons given in the application are two fold-(a) that Respondents 1 and 2 were served on 3.4.1997 and since the delay is only of 25 days, it deserves to be condoned; and (b) that Respondent No.3 was served on 28.4.1997, and hence the Objections filed on 27.5.1997 are within time. The first reason is legally untenable and must be rejected. However, the second ground is of great substance. The contention of the Claimant is that service on Respondent No.3 is of no significance as it is only a proforma party. The Court, it is contented, must look only at the conduct of Respondent No.1, since Section 43(a) of Act 67 of 1993 conspicuously confers all executive powers on the Commissioner, who is alone vested with the right to enter into contracts under Section 202 (a); and Section 476 confers the power to institute legal proceedings on behalf of the Corporation on the Commissioner alone. I am unable to agree with these contentions. In the first place, the present Respondent No.3 has been a party all throughout and undoubtedly has been the Officer actually dealing with the disputes that have arisen between the parties. I find neither logic nor justification in ignoring the Objections filed by this Officer/Respondent. The answer to this hyper-technical objection is that in the event of a divergence or dissension between the stance adopted by the Commissioner and the Director, the former's stand will prevail. Therefore, it is Respondent No. 3 who is the concerned Officer, and the period of limitation ought to be reckoned and computed from the date on which he was served. If this be so, the Objections have been filed within the stipulated time. In Union of India v. Surinder Kumar, , a Division Bench of this Court observed as follows:

"We have considered the submission of learned Counsel for the respondent but we are of the opinion that there was no proper service of the notice of the filing of the award on the appellant. The object of giving notice under Section 14(2) of the Act is to provide an opportunity to a party to submit objections to the award filed by an Arbitrator within a period of 30 days of the receipt of a notice in respect of filing of the award as per Article 119 of the Limitation Act. What is essential is that notice should post him with the knowledge of the award filed by the Arbitrator in a particular matter. Notice should therefore, specify such details as would enable a party to identify the arbitration case, otherwise the notice will not serve the purpose for which it was given and will not meet the requirements of law. In the instant case the notice does not specify the name of the work, the division or department to which the matter pertained or even the contract number. It is needless to point out that Ministry of Urban Development has a very large area of operation covering several departments of the Government including C.P.W.D., which itself has several divisions spread all over the country. Therefore, unless the notice of filing of the award gives the details of the arbitration matter in which award is given, it cannot be considered as a proper notice in accordance with law. Besides, it was not enough to direct notice of the filing of the award to the Secretary to the Govt. of India, Ministry of Urban Development particularly when the notice failed to disclose the material particulars of the matter. In the circumstances, the notice ought to have been sent to the Executive Engineer, who was Engineer-in-charge of the work, and was the person who had signed the contract on behalf of the Union of India and was dealing with the matter. Therefore, it was necessary that he should also have been arrayed as a party respondent in the matter. Merely arraying Union of India and sending the notice to the Secretary, Ministry of Urban Development would not be effective service as the Secretary to the Govt. of India was not aware of the case nor he was furnished with the particulars thereof. He would also be ignorant of the proceedings before the Arbitrator which culminated in the award. Moreover in the present case as already noted it would be difficult for the Secretary to the Govt. of India to link up the notice of the filing of the award to the matter which was subject matter of the Arbitration proceedings as the notice does not give any details except that the award was rendered by Mr. S.S. Juneja. Since no particulars of the case were given, the office of the Secretary, Govt. of India, Ministry of Urban Development made an endorsement on the notice itself to the effect that full particulars of the case were not given and the notice was received without enclosures. Even a letter was written to the Registrar by the office of the Secretary, Ministry of Urban Development, Govt. of India for seeking particulars of the matter. In these circumstances, therefore, failure to serve a notice of the filing of the award on the Executive Engineer amounts to violation of the principles of natural justice. It is well settled that where the principles of natural justice have been violated in passing an order by the Court, the same can be set aside under the inherent powers. It is also well settled that no person can be prejudiced by the act of the Court. Therefore, when the notice of the filing of the award was not given to the Executive Engineer and no proper notice was given to the Secretary to the Government of India. Ministry of Urban Development, the time for filing the objections did not commence and could not have therefore, expired. In such an event the Court will have inherent jurisdiction to set aside the ex-parte decree."

14. Justice R.C. Lahoti, (as he then was) in B.P. Sharma vs. Union of India, in almost identical circumstances, made the following observation:

"It is well known that the government in the very nature of its functioning, acts through some one, commonly known as officer-in-charge in a particular litigation. In the case at hand, it was the Executive Engineer (Civil) who was the in-charge of the case and was throughout conducting the proceedings before the Arbitrator which had pended for about three years. The covering letter filed by the Arbitrator along with the award and record of arbitration proceedings contained details of the contract out of which the disputes and arbitration proceedings had arisen as also a brief indication of arbitration case. The Executive Engineer (Civil) Telecom Civil Division-I, Chanakayapuri, Post Office Building New Delhi was shown in the covering letter as a party likely to be effected by the proceedings or a party interested in the award. Notice of the filing of the award should have been given to the Executive Engineer above said. The notice could have been accompanied by a copy of the covering letter filed by the Arbitrator or else the notice should have given the requisite particulars already stated hereinabove. That having not been done the notice issued on the address of the Secretary, Ministry of Communication did not satisfy the requirement of the notice of the filing of the award. The receiving clerk in the Secretariat was justified in refusing to accept the notice unless it gave particulars of the case or was accompanied by some petition or application to give an idea of the case. In fact the notice tendered to the clerk was not at all a notice of filing of the award."

15. The Full Bench of this Court in Prem Sagar Chawla's case (supra) was concerned with the controversy of whether an application under Section 33 of the Arbitration Act, 1940, challenging the validity of an award on the ground of the non-existence of the arbitration agreement, is governed by Article 119(b) of the Limitation Act, 1963. It was in this context that S.K. Kapur, J. speaking for the Full Bench, opined that if an application for challenging the factual existence of the arbitration agreement and consequently getting an award declared a nullity, is an application for setting aside the award, Article 119 of the Limitation Act, 1963 would apply. The Learned Judge thereafter observed that if an arbitral award made in pursuance of the purported exercise of power under an arbitration agreement which factually does not exist, is not to be set aside but to be declared a nullity, it would be outside the purview of Article 119. The Learned Judge duly considered the decision of a Bench of the Bombay High Court in A.R. Savkur v. Amritlal Kalidas & Others, ; and of the Full Bench of the Calcutta High Court in Saha & Co. v. Ishar Singh Kripal Singh & Co., ; and of a Division Bench of the Patna High Court in Basant Lal v. Surendra Prasad and others, . He thereafter concluded on behalf of the Full Bench of this Court in Prem Sagar Chawla's case (supra) that the non-existence and invalidity of an arbitration agreement are not grounds for setting aside the award under Section 30, and that Article 119 of the Limitation Act would not apply where the relief sought is to have the award declared null and void on the ground that no arbitration agreement existed between the parties.

16. In the case of The Kerala State Electricity Board, Trivandrum v. T.P. Kunhaliumma, , the Court was concerned with the period of limitation for the filing of a petition/application under the Telegraph Act. It opined that Article 137 of the Limitation Act applied and the petition would have to be filed within three years. This reasoning can scarcely be extrapolated into the circumstances of the present case. I am compelled to record that, unfortunately, the impression created/conveyed in the Written Submission dated 27.1.2000 filed on behalf of the MCD is that this case was under the Arbitration Act, and that it held that an application under Section 33 would be filed within "three years from the date when the impugned award was made and notified to the Objector." The ratio set down in Major (Retd.) Inder Singh Rekhi v. Delhi Development Authority, , is that an application under Section 20 of the Arbitration Act is to be filed within three years of the arising of the cause of action. This very conclusion was arrived at in Union of India v. M/s. Momin Construction Company, .

17. Dr. K.S. Sidhu, Learned Senior Counsel for the MCD, predicated his assault on the Award on the judgment of the Full Bench in Prem Sagar Chawla's case (supra). He reiterated Ground (v) of the Objections to the effect that the disputes raised by the claimant were beyond the scope of the Arbitration Agreement as it did not pertain to the period stipulated in the agreement; that there was no agreement between the parties for the subsequent period in question. This ground does not appear to have been agitated before, either at the stage of the disposal of Suit 578-A/95 in terms of the decision of S.K. Mahajan, J. dated 22.2.1996, when' the present parties were referred to the Sole Arbitration of Justice Jagdish Chandra (Retd.). I have perused the pleadings in Suit No. 578-A/1995, between all the parties arrayed in the present petition. Mr. Satvinder Singh Dhindsa is stated to be the Managing Director of the Petitioner i.e. International Security & Intelligence Agency Limited. Annexure P-II is a letter dated 26.9.1994 setting out verbatim the six disputes arbitrated upon by the Sole Arbitration. The Reply was filed by the Director (Administration) Slum & JJ Department, MCD, (which is also the very same Officer/Respondent No.3 who has filed the present Objections). The Reply is conspicuous in its brevity. Nowhere has it been assailed therein that no Arbitration Agreement prevails between the parties, or that the six Claims referred to arbitration are beyond the ambit of any Arbitration Clause between them. Annexure R-1 is the appointment of Shri R.S. Yadav by the Respondents as the Sole Arbitrator and significantly the very same six claims are appended thereto. Annexure R-2, after referring to the pendency of the petition under Section 20 "for reference under Arbitration Clause 16 of agreement dated 7th June, 1989", again appoints Shri R.S. Yadav as the Sole Arbitrator to decide and make his Award regarding the claims/disputes referred to him under reference dated 15.5.1995. The Reply (which does not contain any paragraph 4) reads as follows, and the underlining is mine.

"The respondents above named most respectfully submits as under:-

1. That the petition under reference has been filed by the petitioners for appointment of Arbitrator to adjudicate upon the disputes/claims in terms of an arbitration agreement executed between the parties.

2. That the Slum & J.J. Wings of Delhi Development Authority has been transferred to the Municipal Corporation of Delhi w.e.f. 1.9.1992 on 'as is where is' basis.

3. That the Director (Slum & JJ), Municipal Corporation of Delhi has been pleaded to appoint Shri R.S. Yadav, Superintending Engineer (plg.), slum & JJ Deptt. as a sole Arbitrator to decide and make his award regarding the claims/disputes of the petitioner agency under clause 18 of agreement dated 24.1.1992 vide order No. D/533/C.T.(S &JJ)/95 dated 15.5.1995. All the disputes/claims mentioned in the suit have been referred to the said Arbitrator for adjudication under the provisions of the Arbitration Act, 1940. The Department is at liberty to file counter claims before the Arbitrator, if any subject always however to their admissibility under clause 18 of the said agreement.

4. That the present petition has been filed for reference under clause 16 of the Agreement dated 7.6.1989, therefore a corrigendum vide order No. D/640/CT(S&JJ)/ dated 6.7.1985 has been issued by the Director (Slum & JJ), MCD with regard to the adjudication of disputes/claims preferred in the present petition by the petitioners.

In view of the above submissions, it is respectfully prayed that the petition may be dismissed being infructuous."

18. The next logical step, to my mind, would be to investigate whether the Respondents have raised the question of the Award being non-responsive on the issue of whether the Claims were beyond the Arbitration Clause. I have perused the Counter Statement of facts and Reply to Claims filed before the Sole Arbitrator, and find that although Objections to this effect were raised peripherally and in passing, specific challenge should have been prominently and vociferously raised by the Respondents at the very threshold. But this is not so. Obviously the oral arguments raised before me are an after-thought. The only inference that I can draw is that the argument was not raised before the learned Sole Arbitrator and hence he did not return a finding on the issue. This issue is now being contended as being pivotal and vital. It needs also to be recorded that in the first Agreement dated 7.6.1989 between the Respondents and the sole-proprietary concern, Clause 16 was the Arbitration Clause; in the second Agreement dated 24.1.1992 between the parties hereto, the earlier Clause was reproduced verbatim as Clause 18. I can only surmise that this was the reason why the Respondents as well as their legal advisors/advocates decided and in my view rightly so, not to agitate this attack before the learned Sole Arbitrator. In the absence of any such assault, the six Claims were, therefore, dealt with and disposed off by the Learned Arbitrator on their merits. It would have been appropriate for me not to have countenanced these arguments at all, but having permitted arguments on this issue, I must deal with them. Firstly, it is the Respondents who have themselves referred all six Claims to the Sole Arbitration of Shri R.K. Yadav, even after referring to both the Agreements. No demur to the effect that no consensus to arbitrate existed had been recorded even at that stage. Secondly, the Respondents appear to have accepted the transition and metamorphosis of the sole Proprietary concern into the Limited Company, and Clauses 16 and 18 respectively contained the Arbitration Clause. This is not a case of a total absence of an agreement to arbitrate. Contrary to the previous conduct between the parties a convoluted and intricate skein, of the absence of agreement to refer the six Claims to arbitral resolution, has been spun by the Respondents in their Counter Statement before the Sole Arbitrator, but apparently not pressed any further. Thirdly, the understanding given by the Respondents to the Order allowing the petition under Section 20 in Suit No.578-A/95, by reference to the opening words, that it was only the 7.6.1989 Agreement which was in the Court's contemplation, must be rejected as sophisticated sophistry. There was no doubt, nor any controversy between the parties at that stage, that it was the six Claims that were to be referred/were referred to Arbitration. This debate has been started only since the Award is against the Municipal Corporation of Delhi. It has been held in a plethora of precedents that the Court ought not to countenance an Objection that has been raised after a party has participated in the proceedings. Fourthly, the proper stage for raising the demurrer of nonreferability of disputes to arbitration is in the proceedings under Section 20 of the Arbitration Act. If not so raised, the principles of constructive res judicata would preclude the Court from entering into this debate.

19. The Constitution Bench, in Waverly Jute Mills Co. Ltd. v. Raymon & Co., observed as follows:

"Now an agreement for arbitration is the very foundation on which the jurisdiction of the arbitrators to act rests, and where that is not in existence, at the time when they enter on their duties, the proceedings must be held to be wholly without jurisdiction. And this defect is not cured by the appearance of the parties in those proceedings, even if that is without protest, because it is well settled that consent cannot confer jurisdiction. But in such a case there is nothing to prevent the parties from entering into a fresh agreement to refer the dispute to arbitration while it is pending adjudication before the arbitrators, and in that event the proceedings thereafter before them might be upheld as referable to that agreement, & the award will not be open to attack as without jurisdiction. But it will make all the difference in the result whether the parties have entered into an arbitration agreement as defined in S.2(a) of the Arbitration Act or have merely taken steps in the conduct of proceedings assumed or believed to be valid. In the former case the award will be valid; in the latter, a nullity".

20. Courts have, in a number of instances, applied the principle of Waiver and acquiescence to validate arbitral proceedings. In Pannalal Jugatmal v. State of Madhya Pradesh, , the Division Bench held that even assuming that the reference to arbitration was invalid, the parties would be deemed to have made a fresh appointment of the arbitrator. In R. Prince and Co. v. Governor General in Council, AIR 1955 Punjab 240, the Court declined to consider any objection to the legal impropriety of the appointment of the Umpire since the Government was a party to the Reference and failed to demur at the first opportunity, and took the chance of a favorable decision and held that the Government had acquiesced in the appointment and waived objections to any defect in the appointment. In M/s. Bokaro and Ramgur Ltd. v. Dr. Prasun Kumar Banerjee, , the Full Bench opined as follows, and then held that since the parties participated in the arbitral proceedings even after the expiry of the period of four months, the Award could not be assailed on this ground.

"What is meant by "estoppel against Statute" has been tersely stated in Article 345 at page 176 of Halsbury's Laws of England, 3rd Edition, Vol. 15 in these terms:

"The doctrine of estoppel cannot be invoked to render valid a transaction which the legislature has, on the grounds of general public policy enacted shall be invalid....where a statute enacted for the benefit of a section of the public imposes a duty of a positive kind the person charged with the performance of this duty cannot by estoppel be prevented from exercising his statutory powers."

One of the cases noted in the foot note in support of the second part of the passage extracted above is the case of Maritime Electric Co. Ltd. v. General Dairies Ltd., on which reliance was placed by the learned Advocate General for the petitioner. Lord Maugham delivering the judgment of the Board has quoted with approval at page 117 a passage from Lord Atkin's judgment in "In re A Bankruptcy Notice" (1924) 2 Ch. 76. I may also quote with advantage only a few lines from that passage which say:

"It seems to me well established that it is impossible in law for a person to allege any kind of principle which precludes him from alleging the invalidity of that which the statute has, on grounds of general public policy, enacted shall be invalid."

This is a species for the application of the principle that there cannot be any estoppel against Statute which is wholly inapplicable here. To my mind, and I say so with respect, such a principle was wrongly applied in the Allahabad case and so in Lakhmir Singh's case . On the application of the principle of estoppel, Patto Kumari's case, 4 Pat LJ 265 = (AIR 1919 Pat 93) was rightly decided and must be respectfully approved."

(19) Principles of waiver and acquiescence can also be pressed into service in support of the view taken above. In Article 1175 at page 637 of Halsbury's Laws of England, 3rd Edition, Vol. 14, it is stated:

"Waiver is the abandonment of a right, and is express or implied from conduct. A person who is entitled to the benefit of a stipulation in a contract or of a statutory provision may waive it, and allow the contract or transaction to proceed as though the stipulation or provision did not exist."

The petitioner Company in this case was entitled to put a stop to the Arbitrator proceeding in the matter on the expiry of 4 months after he entered on the reference because of the stipulation in the arbitration agreement imported under the Act but it waived it and allowed the proceeding to proceed as though the stipulation did not exist. In my opinion, it waived its right. In the same Volume in Article 1177 at page 638, the term `acquiescence' has been stated to imply in its proper legal sense that a person abstains from interfering while a violation of his legal rights is in progress. The next Article says that acquiescence operates by way of estoppel and is an instance of estoppel by words or conduct. Of course, for the application of the principles of waiver and acquiescence and also to a certain extent for the application of the doctrine of estoppel by conduct knowledge of one's legal rights or true facts must be there. On the facts of the instant case as narrated above. I have no doubt that it was there."

21. In Union of India v. B.M. Sen, , it was held that since both parties appeared before the Arbitrator fully knowing that he did not answer to the description of the officer referred to in the Arbitration Agreement and that he was not competent to make the Award, the Award could not thereafter be challenged on the grounds of the Arbitrator not fulfillling the description in the Agreement. The Court placed reliance on a Division Bench judgment to the same effect, namely, Union of India v. K.P. Mandal . The Hon'ble Supreme Court in N. Chellappan v. Secretary, Kerala State Electricity Board and another, made the following ruling:

"As we already said, paragraph 5 of the order in O.P. 11 of 1972 leaves no room for doubt that it was a consent order. The Board made no endeavor to have that order vacated by filing a review, if the statement in that order that it was passed on the basis of consent proceeded from a mistake of the Court. On the other hand, we find that the Board participated in the proceedings before the umpire without any demur to his jurisdiction. The only inference from this conduct on the part of the Board is that it had no objection to the order revoking the authority of the arbitrators. Therefore, by acquiescence, the Board was precluded from challenging the jurisdiction of the umpire.

"If the parties to the reference either agree beforehand to the method of appointment, or afterwards acquiesce in the appointment made, with full knowledge of all the circumstances, they will be precluded from objecting to such appointment as invalidating subsequent proceedings. Attending and taking part in the proceedings with full knowledge of the relevant fact will amount to such acquiescence" (See "Russell on Arbitration", 17th Ed., p.215)."

In Chowdhri Murtaza Hossein v. Mt. Bibi Bechunnissa, (1876) 3 Ind App 209 (PC) at p. 220 the Privy Council said:

"On the whole, therefore, there Lordships think that the appellant, having a clear knowledge of the circumstances on which he might have founded an objection to the arbitrators proceeding to make their award, did submit to the arbitration going on; that he allowed the arbitrators to deal with the case as it stood before them, taking his chance of the decision being more or less favorable to himself; and that it 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."

The High Court said that acquiescence of the Board by participating in the proceeding before the umpire as sole arbitrator would not confer jurisdiction as there was inherent lack of jurisdiction in that the order in O.P. 11 of 1972 was bad in law and that it did not clothe the umpire with any jurisdiction. We are of the view that even assuming that the order in O.P. 11 of 1972 was not passed on consent, the umpire had power to pass the award. As we said, the umpire could have entered upon the reference under Rule 4 of the First Schedule when the arbitrators failed to make the award within the extended time. Neither the fact that the umpire wanted an order from the court to enter upon the reference nor the fact that an application was made by the Board on 5.2.1972 to extend the time for the arbitrators to make the award would denude the umpire of his jurisdiction to enter upon the reference and pass an award under Rule 4 of the First Schedule. Therefore, when the Board without demur participated in the proceedings before the umpire and took the chance of an award in its favor, it cannot turn round and say that the umpire had no inherent jurisdiction and therefore its participation in the proceedings before the umpire is of no avail. The fact that the umpire did not purport to act in the exercise of his jurisdiction under Rule 4 of the First Schedule but under the order of the Court, would not make any difference when we are dealing with the question whether he had inherent jurisdiction. As the umpire became clothed with jurisdiction when the extended period for making the award by arbitrators expired, it cannot be said that he had no inherent jurisdiction. As we said, neither the fact that the umpire expressed his unwillingness to enter upon the reference without an order of the court nor the fact that an application to extend the period for making the award by the arbitrators long after the expiry of the period for making the award had the effect of depriving him of his jurisdiction under Rule 4 of the First Schedule. The High Court was, therefore, clearly wrong in thinking that acquiescence did not preclude the Board from challenging the jurisdiction of the umpire as sole arbitrator. We do not find any substance in the contention of the Board that the application for setting aside the award was not posted for evidence as normally such an application should be disposed of on the basis of affidavits. We do not think that there was any exceptional circumstance in this case so that the court should have allowed the Board to adduce other evidence."

22. In Prasun Roy v. The Calcutta Metro Development Authority, it was observed as follows:

"6. Mr. Kacker submitted that this principle could be invoked 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 simultaneously. Long participation and acquiescence in the proceeding preclude such a party from contending that the proceedings were without jurisdiction."

"10. Mr. S.N. Kacker, learned counsel for the respondents drew our attention to the fact that the decision in the Chowdhury Murtaza Hossein's case (1876 (3) Ind App 209) was where the party challenged 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 arbitrator on 19-4-83 and not after the arbitrator had made the award. We are able to accept this distinction, basically the principle of waiver and estoppel is not only applicable where the award had been made but on the principle that a party, from challenging the proceedings in which he participated. In the facts of this case, there was no demur but something which can be called acquiescence on the part of the respondents or which precludes from challenging the participation."

23. In these circumstances, keeping in perspective the existence of the second Agreement, there is every reason to hold that the parties had agreed to refer all their disputes, pertaining to the proprietorship concern and/or the Company, to arbitration. In any event, the disputes are identical and were referred as such by the Municipal Corporation of Delhi, which is now estopped from raising this controversy, only because the Award is against it.

24. I am also unable to accept the argument of Dr. Sidhu that that orders disposing off petitions under Section 20 of the Arbitration Act are interlocutory in character and can be varied at any time prior to the passing of a judgment in terms of the Award. The relief under Section 20 is totally distinct to proceedings either deciding objections impugning an Award or making the Award rule of the Court.

25. Dr. Sidhu next challenged the Award on the grounds that the Arbitrator has not expressed/recorded his reasons. He has relied on M.L. Jaggi v. Mahanagar Telephones Nigam Ltd. & Ors., , and S.N. Mukherjee v. Union of India, , In my view, neither of these decisions has any relevance to the Arbitration Act. He has relied on the observations made in State of J & K v. Dev Dutt Pandit, to the effect that there is no complete bar in examining if the award is in terms of the reference or in terms of the contract. I have already concluded that the Award had been returned on the six Claims referred to the Arbitrator by the Respondent on two occasions. This decision would have no application and is not an authority enjoining the Court must investigate what prevailed in the mind of the Arbitrator to make the Award. The Constitution Bench in Raipur Development Authority v. Chokhamal Contractors, 1989 (1) Arbitration Law Reporter 430, opined as follows:

It is now well-settled that an award can neither be remitted nor set aside merely on the ground that it does not contain reasons in support of the conclusion or decisions reached in it except where the arbitration agreement or the deed of submission requires him to give reasons. the arbitrator or umpire is under no obligation to give reasons in support of the decision reached by him unless under the arbitration agreement or in the deed of submission he is required to give such reasons and if the arbitrator or umpire chooses to give reasons in support of his decision it is pen to the Court to set aside the award if it finds that an error of law has been committed by the arbitrator or umpire on the face of the record on going through such reasons. The arbitrator or umpire shall have to give reasons also where the court has directed in any order such as the one made under Section 20 or Section 21 or Section 34 of the Act that reasons should be given or where the statute which governs an arbitration requires him to do so.

26. In order to overcome the decision of the Apex Court in the Raipur Development Authority's case (supra), it has been contended by Dr. Sidhu, learned counsel for the Respondents, that reasons ought to have been stated in view of Section 31 of the Arbitration and Conciliation Act, 1996. The argument hold no water in view of the opinion expressed in Thyssen Stahlunion GMBH v. Steel Authority of India, 1999 (3) Arbitration Law Reporter 532 and Shetty's Construction Co. Pvt. Ltd. v. Konkon Railway Construction and Another., 1998 (2) Arbitration Law Reporter 314.

27. None of the grounds urged on behalf of the Municipal Corporation of Delhi are tenable. The Objections are accordingly dismissed. Having considered the Award in all its complexions, I find no reason to remit it or to set it aside. Judgment is pronounced in accordance with the Award.

28. Decree sheet be drawn up accordingly.