Sudhir Goel vs S.P. Sabarwal And Anr.
2002 Latest Caselaw 457 Del

JUDGMENT

S.B. Sinha, C.J.

1. A notice of an arbitrator appointed by this Court in exercise of its power conferred upon it under Section 11 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as 'the said Act') was questioned by the appellant herein by filing a writ petition, which was dismissed by reason of the impugned judgment dated 05.03.2000.

2. The appellant herein was employed with respondent No.

2. A dispute arose as regards enforceability of a bond executed by the appellant for his refusal to serve respondent No. 2 for a period of 7 years which is said to be the condition for being sent to Japan.

3. A noticed dated 21.09.2000 was served upon the petitioner by the company, i.e., respondent No. 2 directing him to serve the company for 7 years or pay damages amounting to Rs.66,72,000/-.

4. According to the petitioner, the said notice did not conform to the provisions of Section 21 of the said Act.

5. The appellant contended that there did not exist any arbitration clause for resolution of the dispute as raised by the respondent and, in any event, the said purported legal notice is de hors' the alleged agreement bond. A reply to the said notice was sent by the appellant vide letter dated 23.10.2000 denying the existence of any agreement bond and asserting that the respondent No. 2 itself had driven the appellant out of employment by irritating him so much that he had to seek prolonged medical advice.

6. The respondent No. 2 appointed one Mr. Ravi Sharma, as arbitrator, who called upon the appellant herein to appear before him on 05.01.2001. The appellant questioned his jurisdiction by sending a letter dated 23/26.12.2000

7. He thereafter filed a suit, which was marked as Civil Suit No. 2 of 2001 praying therein that the aforementioned Mr. Ravi Sharma be required to produce warrant of appointment as arbitrator.

In the said suit, a copy of the said purported agreement dated 08.08.1997 containing an arbitration clause in which Mr. Ravi Sharma was named as an arbitrator, was produced.

8. The contention of the petitioner was that his signature in the said agreement was obtained without filing in the blanks.

9. He thereafter filed an application before this Court praying inter alia for the following reliefs including :-

(A) Direct the respondents to produce in this Hon'ble Court this original of the alleged 'Agreement' allegedly dated 08.08.1997, and

(B1) Declare the alleged 'Agreement' allegedly dated 08.08.1997 (copy in annex - A/11), as ab initio null and void,

(B2) If (B1) is not granted, declare arbitration clause (para 14) in the alleged 'Agreement' allegedly dated 08.08.1997 as ab initio null and void,

(C) If (B1) or (B2) is not granted, declare respondent-3 as an usurper in the office of arbitrator in any dispute between Applicant and the Company (respondent-1 through respondent-2),

(D) Appoint an arbitrator (if (B1) or (B2) is not granted) under Section 11(5) of the Arbitration & Conciliation Act (46 of 1996),

(E) Declare that arbitral proceeding have not yet commenced for want of compliance with provisions of Section 21 of the Act,

(F) Any other relief, with costs, may be granted,

(G) Meanwhile, respondent-3 may be restrained from functioning as arbitrator in any dispute between the Applicant and respondents-1, 2 alleged to flow from the alleged 'Agreement' (A/11), till final disposal of this Application."

By an order dated 06.12.2001, the learned Single Judge of this Court in A.A. No. 17 of 2001 after hearing the parties by an order dated 05.03.2002 appointed the respondent No. 1 herein as an arbitrator to adjudicate upon the disputes between the parties. The said order reads thus :-

"Reply stated to have been filed is not on record. Copy thereof has also not been handed over to the counsel for petitioner. In any event of the matter, with the consent of the parties, I appoint Mr. SP Saberwal, retired District Judge of Delhi as arbitrator to adjudicate upon the disputes between the parties under Arbitration & Conciliation Act, 1996. Intimation of appointment be sent to the arbitrator. The arbitrator is directed to start the proceedings do novo.

Petitioner stands disposed of. dusty."

10. The appellant did not question the said judgment. The arbitrator, however, issued a notice to the appellant, which is in the following terms :-

"NOTICE

WHEREAS vide order dated 6.12.2001 passed in AA No: 17/2001, by Hon'ble Mr. Justice Vijender Jain, High Court of Delhi, in the abovenoted case the undersigned has been appointed as Arbitrator to adjudicate upon disputes between the parties under the Arbitration & Conciliation Act, 1996

AND WHEREAS, the undersigned has entered upon the reference

WHEREAS notice is given to the parties to appear before the undersigned themselves or through their Advocate/Representative, on Saturday the 2nd February, 2002, at 10.00 am in the Office of the State Consumer Disputes Redressal Commission, Room No 5, A - Block, Vikas Bhawan, First Floor, IP Estate, New Delhi - 110002

Sd/-

(SP SABERWAL)

ARBITRAtor

D-I/13, Bharati Nagar,

New Delhi - 110003

Tele : (Res) 469-2286, 469-3470

(Off) 337-9146; Mobile: 9810285966"

11. According to the petitioner, respondent No. 1 was not competent to enter into the said reference having regard to the fact that no requisite notice under Section 21 of the said Act was served.

12. The learned Single Judge by reason of the impugned judgment rejected the said contention raised on behalf of the appellant herein inter alia on the ground that once the arbitrator was appointed, there was no necessity now to issue any notice under Section 21 of the said Act.

13. Mr. G.K. Aggarwal, the learned counsel appearing on behalf of the appellant would submit that there did not exist any arbitration clause in the agreement bond as the blanks had not been filled up.

14. The learned counsel would contend that the prayed for appointment of the arbitrator in his arbitration application being A.A. No. 17 of 2001 was made by way of an alternative relief and by reason thereof, the valuable right of the appellant in terms of Section 21 of the said Act cannot be taken away.

15. In support of the aforesaid contention, strong reliance has been placed on Jupiter Chit Fund Pvt. Ltd. v. Shiv Narain Mehta, .

16. Mr. R.K. Saini, the learned counsel appearing on behalf of the respondent, on the other hand, would submit that the writ petition is not maintainable as the appellant herein can raise the objections taken herein only before the arbitral tribunal.

17. It was contended that having regard to the prayer made by the appellant in his arbitration application to the effect that an independent arbitrator be appointed and such a prayer having been granted, he is now estopped and precluded from contending that the arbitration proceedings are vitiated by reason of non-service of notice under Section 21 of the said Act.

18. In this Letters Patent Appeal, this Court is not concerned with as regards the validity of the first arbitration proceedings, which were initiated at the instance of respondent No. 2. In any event, the said arbitration proceedings have been set at naught by this Court at the instance of the appellant himself and thus, he cannot be permitted to raise the said questions once over again.

19. Having regard to the fact that the arbitrator was appointed with the consent of the appellant, he is now estopped and precluded from raising the said contention.

20. Having regard to the provisions contained in Section 16 of the said Act, we are of the opinion that now all the contentions must be raised before the arbitrator himself.

21. As noticed hereinabove, the appellant herein had not questioned and could not question the said order dated 05.03.2002 of the learned Single Judge. He merely challenged the notice issued by the learned arbitrator. Such a notice cannot be, in our opinion, the subject matter of a writ petition.

22. In any event, no writ petition can also be filed having regard to the decisions of the Apex Court in Konkan Railway Corporation Ltd. & Anr. v. Rani Construction Pvt. Ltd., 2002 (1) SCALE 465 wherein it has been held that when an arbitrator is appointed in terms of Section 11 of the said Act, no writ petition would be maintainable. A notice of the arbitrator, in our opinion, cannot be subject matter of a writ petition.

23. Furthermore, at this stage, the Court cannot put the clock back by setting aside the order of appointment of the arbitrator and directing the parties to take recourse to the provisions of Section 21 of the said Act.

24. Even assuming that the provisions of Section 21 of the said Act are mandatory, the appellant by his conduct may be held to have waived the same. We may notice that in relation to composition of the arbitral tribunal if not challenged the same has been held to have been waived by the Apex Court recently in Narayan Prasad Lohia v. Nikunj Kumar Lohia & Ors., 2002 (2) SCALE 232 wherein it was held :-

"20. Respondents 1 and 2 not having raised any objection to the composition of the arbitral tribunal, as provided in Section 16, they must be deemed to have waived their right to object."

25. The decision of the Apex court in Jupiter Chit Fund's case (Supra), was rendered in a case where the Court was concerned with the provisions of Section 37 of Arbitration Act, 1940. The said decision has no application in the facts and circumstances of this case.

26. For the reasons aforementioned, we are of the opinion that no case has been made out for interference with the impugned order. This appeal is accordingly dismissed. However, in the facts and circumstances of the case, there shall be no order as to costs.