National Highways Authority Of ... vs Sheladia Associates, Inc
2009 Latest Caselaw 3287 Del

       *IN THE HIGH COURT OF DELHI AT NEW DELHI

+                  OMP No.176/2009


%                                 Date of decision: 21.08.2009


NATIONAL HIGHWAYS AUTHORITY OF INDIA                      ...Petitioner

                        Through: Mr. Sandeep Sethi, Sr. Advocate with
                                 Ms. Padma Priya, Advocate

                         Versus

SHELADIA ASSOCIATES, INC.                                ..Respondent


                        Through: Mr. Janaranjan Das, Mr. Swetaketu
                                 Mishra & Mr. P.P. Nayar, Advocates


CORAM :-
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW

1.    Whether reporters of Local papers may
      be allowed to see the judgment?                  Yes

2.    To be referred to the reporter or not?           Yes

3.    Whether the judgment should be reported          Yes
      in the Digest?


RAJIV SAHAI ENDLAW, J.

1. This petition under Section 20 r/w Section 2(6) of the

Arbitration Act, 1996 is preferred for a direction to be issued to the

arbitrator to hold the arbitration proceedings at Delhi as provided in

the written agreement between the parties. This court, vide ex-parte

order dated 2nd April, 2009 which continues to be in force, has stayed

the proceedings before the arbitrator. The respondent has contested

the petition, inter-alia on the ground of maintainability thereof.

2. The parties hereto are parties to a contract dated 31st January,

2001. Though in the said contract, the place of execution thereof has

not been stated but the address therein of the petitioner is of New

Delhi and of the respondent of USA. The contract is signed by an

official of the petitioner whose rubber stamp bears the address of

New Delhi. From the contract, it is not clear as to where the same

has been signed on behalf of the respondent. However, since it has

been signed on behalf of the petitioner as well as the respondent on

the same day, it is presumed to have been executed at New Delhi. In

any case, the address given of the petitioner in the said agreement

for service of all notices etc. is that of New Delhi and the address so

given of the respondent is of USA. This court thus is the court within

the meaning of Section 2(e) of the Act. The respondent also has

neither in its reply nor its arguments disputed the territorial

jurisdiction of this court.

3. The contract between the parties is for the respondent to

provide the construction supervision services to the petitioner for

development of the Golden Quadrilateral constituting inter-alia the

road on NH-5 & NH-60 from Chennai to Calcutta and, particularly

four laning and strengthening of the stretches between Khurda to

Bhubaneswar, Chandikhole to Bhadrak and Bhadrak to Balasore all

in the State of Orissa.

4. The contract provides for settlement of disputes by arbitration.

The arbitration was agreed to be either of a sole arbitrator or of an

arbitration panel composed of three arbitrators; where the parties

agreed that the dispute concerns a technical matter, they were given

liberty to agree to appointment of a sole arbitrator and failing such

agreement within 30 days, procedure is provided for the President,

Indian Roads Congress, New Delhi to furnish five nominees of which

the parties were entitled to select one; if the parties could not select

out of the said nominees also, the sole arbitrator is to be appointed

by the President, Indian Roads Congress, New Delhi; however,

where the parties do not agree that the dispute concerns a technical

matter, each party was to appoint an arbitrator with the two

arbitrators jointly appointing the third arbitrator; if the two

arbitrators are unable to agree on the third arbitrator, the same was

agreed to be appointed by the Secretary, Indian Council of

Arbitration, New Delhi (ICA). It is further the agreement that if

either parties fails to appoint its arbitrator within 30 days after the

other has appointed its arbitrator, the party which has appointed the

arbitrator may apply to the ICA to appoint a sole arbitrator for the

matter in dispute. It is further the agreement in Clause 8.2.5 of the

Special Conditions of contract as under:-

"8.2.5 Miscellaneous

In any arbitration proceedings hereunder:

a. Proceedings shall, unless otherwise agreed by the parties, be held in Delhi

b. ............."

5. It is the case of the respondent that disputes and differences

having arisen between the parties and the parties having not

considered the same as technical, the respondent appointed its

arbitrator and called upon the petitioner to nominate its arbitrator;

upon failure of the petitioner to so appoint the arbitrator, the

respondent approached the ICA which vide its letter dated 10th

September, 2008 appointed Mr. B.C. Tripathi, retired Chief

Engineer-cum-Member (Technical), Arbitration Tribunal C/8 404

Radhika Tower, Tankapani Road, Bhubaneswar, to act as the sole

arbitrator in the case.

6. The respondent had also filed Writ Petition (C) No.3765/2008

in High Court of Orissa, inter-alia for directions to the petitioner to

stop deducting amounts towards the damage liability from the bills

of the respondent. The petitioner took inter-alia a stand in the said

proceeding before the Orissa High Court that Shri B.C Tripathi

aforesaid having been appointed as the arbitrator and the arbitration

being underway, the writ was not maintainable.

7. The controversy which has led to the filing of the present

petition is as to the venue of arbitration. The arbitrator appointed by

the ICA, being based at Bhubneshwar issued notice dated 18th

October, 2008 for holding the first sitting of arbitration at

Bhubaneswar on 4th November, 2008. The order of the arbitrator of

that date shows that though the said notice was served on the

petitioner but none on behalf of the petitioner appeared before the

arbitrator. The arbitration proceedings were adjourned by issuing

certain directions. At the end of the said order, it is recorded "till

further decision, the place of arbitration will continue to remain at

the Conference Hall of Radhika Tower, Tankapani Road,

Bhubaneswar".

8. The next hearing before the arbitrator was fixed for 4th

December, 2008. The Project Director of the petitioner at

Bhubaneswar attended the said hearing. The order of the arbitrator

of that date shows that the official of the petitioner raised certain

points before the arbitrator on that date. It is the case of the

petitioner that one of the points raised by it before the arbitrator on

that date was of the agreement between the parties providing for the

venue of arbitration at New Delhi and the arbitrator was thus

requested to hold the arbitration proceedings at New Delhi.

However, the arbitrator at the end of the order of the said date again

recorded as aforesaid that till further decision the place of

arbitration shall remain at Bhubaneswar.

9. The petitioner filed an application dated 23rd December, 2008

before the arbitrator in which also it was stated that in the 2 nd

hearing the question of venue of arbitration was raised. In the said

application, it was also stated that the hearings held at Bhubaneswar

were not legal and valid. The petitioner also requested the arbitrator

to treat the pleas taken in the said application as preliminary

objections and deal with the same first. Though in the body of the

said application, no provision of law is mentioned but in the letter

dated 23rd December, 2008 of the petitioner under cover of which the

said application was forwarded, the application is described to be

under Section 16 of the Act.

10. The petitioner besides the said application filed another

application dated 1st January, 2009 before the arbitrator to intimate

the date and venue of the arbitration at New Delhi, to enable the

petitioner to participate in the proceedings.

11. The third sitting was held by the arbitrator at Bhubaneswar on

3rd January, 2009. None appeared on behalf of the petitioner before

the arbitrator on that date. With respect to the applications aforesaid

of the petitioner the arbitrator preserved the same for consideration

on compliance of the directions earlier issued regarding fee etc. and

which had not been complied with by the petitioner. The next date

of sitting was peremptorily fixed on 19th January, 2009 again at

Bhubaneswar. The copy of the order dated 3rd January, 2009 was

forwarded to the petitioner also.

12. On the next date before the arbitrator i.e. 19th January, 2009

also the petitioner remained unrepresented. The arbitrator thus

proceeded ex-parte against the petitioner. No reference in the

proceeding of that date is made to the applications aforesaid of the

petitioner. The case was adjourned to 21st January, 2009 and

intimation thereof sent to the petitioner also.

13. The petitioner continued to abstain from appearing before the

arbitrator at Bhubaneswar. On 21st January, 2009 it appears that the

respondent filed an objection dated 3rd January, 2009 before the

arbitrator to the application dated 23rd December, 2009 of the

petitioner. With respect to the venue of arbitration, it was stated in

the said opposition that the petitioner had already taken part in the

arbitration proceedings and had also not raised any question of

jurisdiction or competency of the arbitral in the writ petition before

the Orissa High Court also, and in fact it was owing to the plea of the

petitioner, of the arbitrator having been appointed that the writ

petition was disposed of; it was further contended that the cause of

action for the dispute had arisen within the State of Orissa and as

per the law jurisdiction could not be limited merely as per the

condition of agreement; that the venue of arbitration though fixed

prior to the disposal of the writ petition had also not been challenged

by the petitioner before the High Court - rather the petitioner had

admitted the said venue; that the ICA while appointing the sole

arbitrator had taken into consideration that the arbitrator may be

required to inspect documents, place of performance of contract,

convenience of parties and all of which was at Bhubaneswar and in

the absence of any compelling reason to insist on Delhi as the venue

of arbitration meetings, the petitioner ought to abide by the decision

of the Arbitral Tribunal as to the venue of the meeting of the

arbitration. It was further pleaded that both the parties had their

offices at Bhubaneswar, execution of the work was in Orissa and

thus the arbitration proceedings should continue at Orissa only.

14. The arbitrator in the 5th sitting held at Bhubaneswar on 21st

January, 2009 and from which the petitioner continued to abstain,

merely recorded that "the objection filed by the respondent stands

accepted and the petition filed by the petitioner (apparently of 23 rd

December, 2008 and 1st January, 2009) without any evidence is

dismissed". It was further held that challenging the arbitrator is

equal to challenging the appointing authority and the party

aggrieved on this account is at liberty to move the Competent

Authorities for appropriate actions like withdrawal of appointment of

arbitrator/replacement of arbitrator. The case was adjourned to

24,25&26th February, 2009 at Bhubaneswar only.

15. The hearings before the arbitrator continued thereafter in the

absence of the petitioner until the same were stayed vide ex-parte

order dated 2nd April, 2009 (Supra) of this court.

16. The senior counsel for the petitioner has drawn attention to

Section 20 (1) of the Act which gives freedom to the parties to agree

on the place of arbitration; Section 20 (2) empowers the Arbitral

Tribunal to determine the place of arbitration having regard to the

circumstances of the case including the convenience of the party

only "failing any agreement referred to in sub-Section (1)". It has

further been contended that the arbitrator being a creature of the

agreement between the parties has no jurisdiction to hold hearings

at a place other than the place agreed upon by the parties. It is

further highlighted that in the agreement between the parties, while

providing for the venue of arbitration at Delhi, Delhi is underlined.

Attention is also invited to para 30 of the judgment of this court in

Alcove Industries Ltd. Vs. Oriental Structural Engineer's Ltd.

(2008) 1 ARBLR 393 (Delhi) on the basis whereof it is urged that the

courts ought to, where it is so warranted nip any illegality being

committed by the Arbitral Tribunal in the bud rather than allow the

arbitration proceedings to go on and to deal with the same at the

stage of Section 34 of the Act. It is urged that procedure is the

handmaid of justice and the order sought by the petitioner is in aid of

justice and this court ought not to refrain from exercising

jurisdiction to stop the illegality being committed by the Arbitral

Tribunal and the action of the Arbitral Tribunal in contravention of

the agreement between the parties. It is argued that such conduct

ought not to be permitted to be perpetuated and powers of the

courts cannot be stifled. It is further contended that the Supreme

Court in Sanshin Chemicals Industry Vs. Oriental Carbons &

Chemicals Ltd. (2001) 3 SCC 341 has held that a decision

regarding the venue of arbitration could be assailed even in an

appeal under Section 34 of the Act. It is further argued that in any

case the matter is not res integra in view of the judgment of the

single judge of this court in Jagson Airlines Ltd. Vs. Bannari

Amman Exports Pvt. Ltd. 2003 (2) Arb. LR 315 (Delhi) where the

order of the Arbitral Tribunal fixing the venue of arbitration

proceedings at a place other than that agreed by the parties was set

aside. It was further argued that this court in Sharma Enterprises

Vs NBCC Ltd. (2008) 9 AD Delhi 571 has also leaned in favour of

the court under Section 14 of the Act being empowered to terminate

the mandate of the arbitrator. It was contended that in the present

case in-spite of the petitioner having taken objection to the venue of

arbitration on the very first opportunity, the arbitrator has not

decided on the same and is continuing to hold the proceedings at a

place not agreed upon by the parties.

17. Per contra, the counsel for the respondent has made

submission under four heads. Firstly, it is contended that the petition

is not maintainable. Secondly, it is contended that the petitioner has

by its conduct, express and/or implied agreed to the arbitrator

holding the proceedings at Bhubaneswar and has filed the present

petition as an after though. Thirdly, it is contended that since the

arbitrator is at Bhubaneswar, all the records are at Bhubaneswar, it

is convenient that the arbitration proceedings be held at

Bhubaneswar only. Lastly, it is contended that the clause in the

agreement providing for the venue of the arbitration at Delhi does

not provide for the said venue exclusively and on the same reasoning

as applied to a clause qua the jurisdiction of the courts, the

arbitrator is entitled to hold the proceedings at Bhubaneswar also, in

the exercise of his power under Section 20(2) of the Act.

18. On the aspect of maintainability, it is contended that the

judgment of this court in Jagson Airlines Ltd. (Supra) is no longer

good law in view of subsequent decision of the seven judge bench of

the Supreme Court in SBP & Co. Vs. Patel Engineering Ltd.

(2005) 8 SCC 618. Attention is drawn to the summary of conclusions

arrived at in the said judgment in para 142, to sub-paras (iv) to (vi)

where it has been laid down that the Arbitral Tribunal has power to

rule on its own jurisdiction under sub-Section (1) of Section 16 of the

Act; where the Arbitral Tribunal holds that it has jurisdiction, it shall

continue with the arbitral proceedings and make the arbitral award;

remedy available to the party aggrieved is to challenge the award in

accordance with Section 34 or Section 37 of the Act. It is argued that

the application in which the petitioner raised the plea of the venue of

arbitration was described by the petitioner itself in the covering

letter to the said application as under Section 16 of the Act, the

arbitrator has already dealt with the said application in the order

dated 21st January, 2009 (Supra) wherein the said objection of the

petitioner has been rejected. It is argued that the remedy, if any, if

the petitioner is now only under Section 34 of the Act and the court

is not empowered to interfere before that.

19. It is further contended that the reliance by the senior counsel

for the petitioner during the hearing on Section 14 of the Act is

misconceived in as much as the said plea was neither taken before

the arbitrator nor pleaded and cannot be permitted to be taken

orally.

20. On the argument of convenience, the submissions have already

been noted herein above.

21. On the petitioner having expressly or impliedly consented to

the venue of arbitration at Bhubaneswar, it is contended that the ICA

had appointed the arbitrator prior to the petitioner filing the counter

affidavit in the Orissa High Court; in the said counter affidavit no

plea was taken that the arbitrator was at Bhubaneswar while the

agreement was for arbitration at Delhi; it is further contended that in

fact prior to the disposal of the said writ petition the arbitrator had

already issued a notice for first hearing of arbitration to be held at

Bhubaneswar; the petitioner still did not raise the said aspect in the

writ proceedings and allowed the writ petition to be disposed of. In

this regard only, it is further pointed out that the petitioner had vide

its letter dated 2nd December, 2008 appointed its Project Director at

Bhubaneswar to represent the petitioner in the case and from the

appointment of an officer at Bhubaneswar (and not at Delhi) it is

apparent that the petitioner also intended the arbitration

proceedings at Bhubaneswar. It is further contended that the

petitioner participated in the second hearing before the arbitrator

and thereby also consented to the arbitration hearings at

Bhubaneswar only. It is further argued that this court ought not to

be swayed by the pleas of the conduct of the arbitration being

contrary to the agreement as much as similar questions can arise in

a large number of other arbitrations and which if allowed would lead

to courts interfering in arbitral proceedings otherwise than as

permitted under the statute.

22. The senior counsel for the petitioner has in rejoinder

contended that the agreement provides for the venue of arbitration

at Delhi, "unless otherwise agreed by the parties". Such agreement

has to be in writing only and cannot be by conduct. It is further

contended that there cannot be question of any acquiescence in as

much as the objection was taken to the venue on the very first date.

It is also contended that the arbitrator has not dealt with the said

aspect and has not treated the said objection as under Section 16 of

the Act. It is also contended that the use of the word "only" or

"exclusively" is not essential for vesting exclusive jurisdiction to a

certain place. Reliance in this regard is placed on Jatinder Nath Vs.

Chopra Land Developers Pvt. Ltd. AIR 2007 SC 1401. It is

argued that in the present case the intent to hold the arbitration

proceedings at Delhi is clear from the agreement of the parties.

23. The aspect of maintainability of the present petition has

obviously to be considered first in as much as if the petition is found

to be not maintainable, even if this court were to agree with the

contention of the petitioner on merits, the court would be unable to

grant any relief to the petitioner.

24. The petition as filed is under Section 20 & Section 2(e) of the

Act. Neither of the said provisions is of a nature whereunder any

role is attributed to the "court". The said provisions are not

actionable and the petition does not lie thereunder. However, the

nomenclature under which the a petition is filed is irrelevant, if

otherwise is found to be maintainable in law.

25. The effect of Section 5 of the Act barring the courts from

intervening in arbitral proceedings except where so provided in the

Act, need not be restated. In this case, as will be clear from the

above, the respondent is a foreign party. The arbitration under

Section 2 (f) relating to disputes arising out of commercial legal

relationship where at least one of the parties is a body corporate

which is incorporated in any country other than India, is an

"international commercial arbitration". At one stage, it was

considered whether the provisions of Section 5 and Section 20 would

be applicable to such arbitration. However, Section 2 (2) makes part

I of the Act applicable where the place of arbitration is in India. In

the present case there is no dispute that the place of arbitration is in

India and hence part I i.e. Sections 2 to 43 apply.

26. Though the counsels have during the hearing referred to

Section 14 & Section 16 r/w 37 only whereunder courts can

interfere, I had during the course of hearing, in the light of the

judgment of a single judge of the Bombay High Court in

Maharashtra State Electricity Board Vs. Datar Switch Gears

Ltd. MANU/MH/1187/2002 also drawn attention of the counsels to

Section 9 (ii) (e) of the Act, whereunder the court can be approached

for "such other interim measure of protection as may appear to be

just and convenient". Question was posed as to whether the said

provision can be said to permit interference by the courts.

27. First the applicability of Section 16 r/w Section 37 will be

considered in as much as if it is found that the plea of the petitioner

as to the venue of arbitration was under Section 16 of the Act and/or

if the order of the arbitrator thereon is under Section 16 of the Act,

then in view of the legislative provisions i.e. of Sections 16(5) and (6)

of the Act, the remedy, if any, of the petitioner would be at the stage

of Section 34 only and not before that. In the face of the legislative

provisions, no inherent powers of the court can also be invoked in

such as case.

28. I had during the hearing inquired from the counsel for the

respondent as to how the plea of venue of arbitration could be said

to be a plea of the jurisdiction of the arbitrator or with respect to the

existence of the arbitration agreement. No arguments were

addressed on this aspect. The petitioner in contending that the

arbitration proceedings be held at Delhi in accordance with the

agreement cannot be said to be calling upon the arbitral tribunal to

rule on its jurisdiction. Similarly the existence or validity of the

arbitration agreement was/is not being questioned by the petitioner.

The petitioner in insisting that the arbitration proceedings be held at

Delhi was rather seeking enforcement of the arbitration agreement.

Section 16 (3) refers to the Arbitral Tribunal exceeding the scope of

its authority. However, the same has to be read in conjunction with

Section 16(1) i.e. whether a particular dispute is arbitrable or not

and would not include objection as to the venue of arbitration. Thus,

in my view Section 16 is not attracted to such a plea and thus even if

it were to be said that the arbitrator had rejected the said plea, the

provisions of Section 16 (5) and (6) would not apply.

29. I also do not find any merit in the contention of the counsel for

the respondent that the petitioner in the covering letter of the

application dated 28th December, 2008 having described the

application in which the plea of venue was taken to be under Section

16 of the Act is now estopped from contending otherwise. Whether a

plea falls within the ambit of Section 16 of the Act or not is a

question of law and merely because the petitioner described the

same as under Section 16 of the Act would not make the plea if

otherwise not falling under Section 16 to fall thereunder to enable

the respondent to contend that the remedy only at the stage of

Section 34 is available with respect to the decision rejecting the

same.

30. I also do not find that the Arbitral Tribunal has taken any

decision on the said plea of the petitioner. The petitioner had in the

applications dated 28th December, 2008 and 1st January, 2009 taken

several pleas including the plea as to the venue. Under Section 28

(2) the Arbitral Tribunal is required to decide ex aequo et bono or as

amiable compositeur only if the parties expressly authorize so.

Russell on Arbitration 21st Edition at page 163 reads as under:

"The Tribunal has a duty to decide a dispute in accordance with the legal rights of the parties, rather than in what the tribunal considers a fair and reasonable way, unless there is specific agreement between the parties to the contrary. The tribunal may be specifically instructed by the arbitration agreement to decide the disputes on some basis other than the law; an agreement to this effect has generally become known as an 'equity clause'. For example, the parties may agree that the tribunal is to decide the dispute in accordance with concepts variously known as 'honourable engagement', 'amiable compositeur' 'equity', 'ex aequo et bono', the 'general principles of law recognized by civilized nations' or the 'lex mercatoria'. The expression 'lex mercatoria' is not found in arbitration clauses, and some commentators have doubted whether it has any meaning. Those who do assign it a meaning differ

as to whether it is a separate body of international commercial law or equivalent to freedom from strict legal constraint. Various wordings are encountered in arbitration agreements, and each has to be carefully interpreted."

31. Black's Law Dictionary defines the term 'Ex aequo et bono' as

'in justice and fairness' or according to equity and good conscience.

The word, 'amiable compositeur' is a French term. It means a person

who adopts a flexible approach brimful with fairness and reality.

Section 46 (i) (b) of the English Arbitration Act 1996 permits the

arbitrator to decide the dispute in accordance with such other

considerations as are agreed or determined. RUSSELL on

ARBITRATION, 21st Edn. at page 164 states as under on the subject.

"The courts will interpret the new statutory provisions allowing a tribunal to decide a dispute in accordance with such other considerations as are agreed or determined as obliging them to uphold equity clauses. In agreeing that a dispute shall be resolved this way, the parties are in effect excluding any right to appeal to the court, there being no question of law to appeal. Special transitional provisions apply to equity clauses to prevent retrospective changes to their meaning, Section 46(i)(b) of the Arbitration Act, 1996 does not apply to arbitration agreements that were made before the Act came into force (on January 31, 1997)."

Sir Michael J. Mustill and Stewart C. Boyd in 'Commercial

Arbitration' IInd Edn. at page 606 state as follows:

"A commercial arbitration agreement may contain a stipulation or a clause by which arbitrators are empowered not to apply strict or settled principles of law in the settlement of a dispute referred to them, but instead to settle such dispute by the application of what they may deem to be fair and reasonable. In other words, such arbitrators are then meant to act as amiables compositeurs. Considering that an agreement between the parties to an arbitration reference constitutes an essential basis for the establishment of conduct of a commercial arbitration, one would expect any such stipulation on clause in an arbitration agreement to be observed by arbitrators without judicial intervention. Obviously commercial arbitrators cannot be presumed to be entitled

to settle a dispute referred to them by applying what they deem to be fair and reasonable, in the absence of a specific authorization in an arbitration agreement. As an English appellant court Judge had occasion to stress in a recent symposium on international commercial arbitration. 'The arbitrator must not act as amiable compositeur unless authorized to do so."

32. Section 28 (3) also mandates the arbitral tribunal to decide in

accordance with the terms of the contract. It may be highlighted that

Section 28 is applicable to all stages of proceedings before the

arbitral tribunal and not merely to the making of the award. Under

Section 31 also, though applicable to an award, the arbitrator is

required to state reasons for its decisions. This was a change

effected in the 1996 Act from the 1940 Act whereunder the

arbitrator was not required to give any reasons. The requirement of

reasons was perhaps introduced so as to give more efficacy and to

strengthen the arbitration and to make it a alternative forum for

adjudication of disputes. In my opinion, the requirement of giving

reasons also extends to other stages of arbitral proceedings. Even if

it is to be held that the arbitrator has in the year on 21st January,

2009 also dealt with the plea of the petitioner qua the venue of

arbitration, I find that the arbitrator has not given any reasons

whatsoever for continuation to hold proceedings at Bhubaneswar in

the face of the agreement between the parties of the place of

arbitration being Delhi. This leads me to hold that the arbitrator has

not given any decision whatsoever even if the plea of the petitioner

as to venue is treated to have been made under Section 16 of the

Act.

33. Having held that the plea aforesaid was not under Section 16,

and having also found that Sections 20 and 2 (e) whereunder the

petition has been filed are not actionable, the next question is

whether Section 14 relied upon at the time of argument can be

permitted to be relied and if so to what effect.

34. In my view, again merely because the petition is not titled as

under Section 14 of the Act would not bar the petitioner from

contending that the same is maintainable under the said provision or

claims the relief permissible thereunder. On a perusal of Section 14,

I find nothing therein which would prohibit the petitioner from

without having filed the petition under the said provision, contending

that the same to be considered thereunder.

35. The Supreme Court recently in Nawab Shaqafath Khan Vs.

Nawab Imdad Jah Bahadur (2009) 5 SCC 162 has held that the

High Court, on appropriate case being made out and subject to

fulfillment of other requirements, if any, has jurisdiction to convert a

revision application or a writ petition into an appeal or vice versa, in

exercise of its inherent powers.

36. The next question is whether in such a situation it can be said

that the arbitrator has become de jure or de facto unable to perform

his function or for other reasons the arbitrator has failed to act

without undue delay.

37. As noticed above, under Section 28 (3) of the Act the arbitrator

is to act in accordance with the terms of the contract. Axiomatically,

the de jure or de facto inability of the arbitrator to perform his

functions or failure of the arbitrator to act without undue delay has

to be seen in the context of the agreement between the parties. If the

agreement of the parties is for the arbitration proceedings to be held

at Delhi and the arbitrator continues to hold arbitration proceedings

at Bhubaneswar, as in the present case, it would, in my opinion,

amount to the arbitrator being unable to perform his functions or for

other reasons failing to act in terms of the agreement without undue

delay. In the present case, the arbitrator has continued to hold the

proceedings at Bhubaneswar in contravention of the agreement in

writing between the parties and in-spite of objections having been

taken by the petitioner. The action of the arbitrator in-spite the plea

taken in this regard, of continuing to hold the arbitration

proceedings at a place other than Delhi is thus falling within failure

to act in terms of the agreement without undue delay. Thus Section

14 becomes attracted and the mandate of the arbitrator would stand

terminated. However, since the petitioner is persisting that the

arbitrator continues, a controversy within the meaning of Section 14

(2) remains on this ground and the petitioner is entitled to apply to

the court to decide on the said termination.

38. I also do not find any merit in the contention of the respondent

of the petitioner having agreed to the venue of arbitration at

Bhubaneswar. The writ petition preferred by the respondent before

the High Court of Orissa was not concerned with the venue of

arbitration. It was thus not necessary for the petitioner to take the

said plea therein and from the conduct of the petitioner of not taking

the said plea it cannot be said that the petitioner acquiesced in the

venue of arbitration being at Bhubaneswar. Also, merely because the

arbitrator appointed by the ICA was resident of Bhubaneswar did not

necessarily mean that the arbitration proceedings in contravention of

the written agreement between the parties were to be also at

Bhubaneswar. The petitioner cannot be expected to have known at

that time that the arbitrator intended to act in contravention of the

written agreement between the parties and with which he under

Section 28 (3) of the Act was bound. Also, the mere factum of the

arbitrator having given notice of the first sitting of the arbitration at

Bhubaneswar cannot be said to be such a fact which required the

petitioner to in the writ proceedings take up the said cudgels. The

petitioner was till then yet to draw the attention of the arbitrator to

the clause of the agreement aforesaid providing for the place of

arbitration to be at Delhi.

39. Similarly, I do not find the action of the petitioner authorizing

its Project Manager at Bhubaneswar to represent in the said case

cannot be said to be indicative of an intention of the petitioner to

arbitrate at Bhubaneswar. Since, admittedly the works subject

matter of disputes were executed within the area of operation of the

said Director, the said official only being in the know of the facts

would be authorized to act in the said arbitration irrespective of

wherever the place of arbitration may be.

40. I also do not find that the petitioner in any manner participated

in the proceedings at Bhubaneswar. Though, the respondent has

contended that the petitioner had in the second hearing, in which it

had appeared for the first time, not raised the said plea of venue but

in view of the petitioner having in the application filed immediately

thereafter recorded that the said plea was orally taken in the said

hearing, I tend to agree with the version of the petitioner that such

plea was taken before the arbitrator. Thus it is found that the

petitioner had at the first possible opportunity objected to the venue

of arbitration and requested for the venue at Delhi in terms of the

agreement and no case of any express or implied agreement

/acquiescence is made out. The plea of the petitioner having

acquiesced is also negatived from the orders passed by the Arbitral

Tribunal where the next proceeding was ordered at Bhubaneswar for

the time being only. Had the arbitrator taken any decision on the

said plea, such observation would not have appeared in the

successive orders of the arbitrator.

41. The next aspect to be considered is with respect to impact of

the words "only" and "exclusively" missing from the clause providing

for the place of arbitration at Delhi. In my view, the judgments

under Section 20 of the CPC on this aspect are not applicable.

Section 20 deals with a case where more than one courts have

territorial jurisdiction. What the said judgments have held is that the

parties can agree to the jurisdiction of one of such courts. Section 20

of the 1996 Act is however not dealing with the situation of

multifarious venues of arbitration. It gives freedom to the parties to

agree on the place of arbitration. It is not in dispute that in the

present case the parties agreed to Delhi. The parties having so

agreed, were not required to use the words "exclusively" or "only"

with agreed place of arbitration in as much as on such agreement

being reached, the place of arbitration has to be that place only and

none other. Be that as it may, it may also be noted that even the

judgment in Hanil Era Textiles Ltd. Vs. Puromatic Filters (P)

Ltd. (2004) 4 SCC 671 relied upon by the respondent also does not

come to the rescue of the respondent. In that judgment also, it has

been held that even without such words as "only", "exclusively",

"alone", in appropriate cases the maxim expressio unius est exclusio

alterius will apply.

42. Similarly, in the face of such an agreement, the question of

convenience does not arise. The agreement between the parties is

supreme.

43. Though neither counsel drew attention to Section 20 (3) of the

Act, in my view the same requires consideration. After providing in

sub-Section (1) that the parties are free to agree on the place of

arbitration and in sub-Section (2) that failing any agreement, the

place of arbitration shall be determined by the arbitral tribunal, sub-

Section (3) is as under:-

"Notwithstanding sub-section (1) or sub-section (2), the arbitral tribunal may, unless otherwise agreed by the parties, meet at any place it considers appropriate for consultation among its members, for hearing witnesses, experts or the parties, or for inspection of documents, goods or other property."

44. Considerable thought has been expended as to the meaning

thereof in as much as the same starts with a non-obstante provision.

The effect of the non-obstante provision is that notwithstanding any

agreement between the parties the arbitral tribunal may meet at any

place. However the same is again made subject to "unless otherwise

agreed by the parties". I have wondered whether the same gives

supremacy to the Arbitral Tribunal in the matter of place of

arbitration, notwithstanding agreement between the parties or as to

how to reconcile the same with sub-Sections (1)&(2). It cannot be

said that the same is not applicable to arbitration hearings but only

to consultations amongst members of the Arbitral Tribunal in as much

as the same is applicable for hearing witnesses, experts and the

parties as well. The only harmonious interpretation thereof with sub

Sections (1) & (2) is that if the facts & circumstances so demand that

the consultations or recording of statements of witnesses, experts or

the parties has to be at a particular place, owing to the close nexus

thereof with the disputes to be adjudicated, then the Arbitral

Tribunal, notwithstanding the agreement between the parties as to

the place of arbitration, is entitled to hold the proceedings at such

place. However, the same is again made subject to the agreement

between the parties. Such agreement of the parties can only be after

the Arbitral Tribunal has expressed its view to hold the proceedings

mentioned therein at a place other than agreed. At that stage also,

supremacy has been given to the agreement of the parties and the

parties are permitted to with their agreement overrule the

arbitrators at that stage also.

45. However, that stage has not arisen in the present case. The

single member of Arbitral Tribunal has not held that notwithstanding

the agreement of arbitration at Delhi, to enable him to return finding

on the disputes, he is required to conduct any of the stages

mentioned in sub-Section (3) at a place other than Delhi.

46. Though I had during the hearing drawn the attention of the

counsels to Section 9 (ii) (e) but it may be noticed that I have

recently in Shri Krishna Vs. Anand OMP No.597/2008 decided on

18th August, 2009 held that the same cannot be read as giving a

supervisory jurisdiction to the courts over the proceedings before the

Arbitral Tribunal.

47. It is thus found that the Arbitral Tribunal by refusing to hold

the arbitration proceedings at Delhi, in spite of attention having been

invited to the agreement providing so, has become de facto unable to

perform his functions and/or has failed to act without undue delay.

The mandate of the arbitrator thus has to be declared to have stood

terminated.

48. Before parting with the case, I must record that the chain of

events as happened herein is what brings bad name to arbitration.

In spite of the arbitrator having been appointed nearly one year ago,

nothing has been achieved till date and now the mandate of the

arbitrator has to be held to have terminated. I find the Indian

Council of Arbitration, the arbitrator as well as the respondent to be

blamed for the same. The Indian Council for Arbitration being the

appointing authority, in spite of clause in the agreement for the

place of arbitration to be at Delhi, appointed the arbitrator based at

Bhubaneswar. The arbitrator so appointed also in contravention of

the agreement insisted upon holding the arbitration proceedings at

Bhubaneswar and the respondent in contravention of its agreement

in writing supported such stand of the Arbitrator. It appears that the

respondent after obtaining the order from the Orissa High Court

restraining the petitioner from making deductions from the bills of

the respondent was in no hurry in the arbitration proceedings. It

was argued by the respondent before this court that the petitioner is

free to take this objection at the stage under Section 34 of the Act.

When the respondent is aware of the agreement of the place of

arbitration being Delhi and further when Section 34 (2) (a) (v)

permits the award to be set aside on this ground, such action is not

understandable. In the face of the written agreement as to the place

of the arbitration and the same being supreme under Section 20 (1),

it can reasonably be said that even in the event of the petitioner

losing in the arbitration, notice of a petition under Section 34 on this

ground alone is likely to be issued and the arbitral award even, if

any, in favour of respondent would remain in abeyance. It was with

this motive only that on one of the earlier dates it was suggested to

the counsel for the respondent to, for the sake of expediency agree

to the arbitration proceedings at Delhi in accordance with the

agreement. However, the counsel has expressed inability and the

matter was fully argued. It is in these circumstances that finding that

the case can be said to be covered under Section 14 of the Act, I was

loath to allow the respondent and the Arbitral Tribunal to continue

proceedings in contravention of the agreement and to allow the

proceedings to be multiplied in such manner.

49. Arbitration as a mode of settlement of disputes was evolved to

lessen the load on the court and to provide for expeditious resolution

of disputes. However, stand of the parties such as has emerged in

these proceedings is not allowing the same to happen. Though,

undoubtedly the jurisdiction of the courts is limited but wherever

permissible and wherever needed to be exercised for achieving the

said purposes, the courts ought not to fail from exercising their

jurisdiction to serve the said objectives.

50. Thus the petition is treated as one under Section 14 of the Act

and is allowed. The mandate of Mr. B.C. Tripathi is held to have

stood terminated. The parties in accordance with Section 15 (2) of

the Act shall be entitled to appointment of a substitute arbitrator, if

so deemed necessary. In the facts aforesaid, the respondent is also

burdened with costs of Rs.50,000/- of the present petition.

RAJIV SAHAI ENDLAW (JUDGE) August 21, 2009 pp