Uoi vs Usha Sawhney
2009 Latest Caselaw 778 Del

*     IN THE HIGH COURT OF DELHI AT NEW DELHI

+                   F.A.O.(OS) No.396-98/2006

                                     Date of Decision: 06th March, 2009


      U.O.I.                                      ..... Appellant
                          Through:     Mr. Kumar Rajesh Singh, Advocate

                    versus


      USHA SAWHNEY                                 ..... Respondent
                          Through:     Mr. Anil Grover, Advocate


      CORAM:
      HON'BLE MR. JUSTICE MUKUL MUDGAL
      HON'BLE MR. JUSTICE VIPIN SANGHI

      1. Whether the Reporters of local papers may             No
         be allowed to see the judgment?

      2. To be referred to Reporter or not?                    Yes

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


%                            JUDGMENT (Oral)

MUKUL MUDGAL, J.

1. With the consent of the parties the matter is taken up for final

hearing.

2. This appeal challenges the judgment of the learned Single

Judge dated 13.01.2006 dismissing the petition under Section 34 of the

Arbitration Act filed by the appellant, Union of India, challenging the

award dated 02.11.2004 passed by the respondent No.2 as a sole

arbitrator. The dispute between the parties arises out of a contract

appointing the respondent as a commission agent for the sale of

railway tickets, by the General Manager, Northern Railway, Baroda

House, New Delhi. The agency of the respondent was terminated by a

letter dated 17.05.2002. The same was challenged by the respondent

in Writ Petition (C) No.1185/2002.

3. By common consent of the parties, the arbitrator was

appointed on 14.01.2003 by learned Single Judge of this Court. The

said order reads as follows:

"As both the parties agree for settlement of disputes by means of arbitration, Justice Satpal, a retired Judge of the Punjab & Haryana High Court is appointed as arbitrator who shall enter upon reference and adjudicate upon the disputes as raised in this petition."

4. Statement of claim was filed before the said arbitrator. Upon

receiving the notice, the appellant filed its reply, and after hearing

both the parties and going through the record an award was passed

granting a sum of Rs.23,62,649/- with simple interest @ 10% from

10.02.1999 to 31.10.2004, totaling an aggregate sum of

Rs.37,01,550/-. 18% interest was also awarded on the said amount of

Rs.37,01,550/- plus costs of Rs.75,000/-.

5. The main plea before the learned Single Judge centered

around the appointment of arbitrator itself and it was, inter alia,

pleaded that an appointment in a writ petition, was contrary to Clause

16.1, which reads as follows:

"16.1 In the event of any difference of opinion or dispute between the Railway Administration and the contractor as to the respective rights and obligations of the parties hereunder of as to the

true intent and meaning of those presents or any articles of conditions thereof, such difference of opinion shall be referred to the sole arbitration of an officer appointed by the General Manager, Northern Railway for the time being whose decision shall be final, conclusive and binding on the parties, the intention of the parties being that every matter in respect of this agreement must be decided by him as sole arbitrator and not taken to a Civil Court".

6. It was contended by learned counsel for the appellant that

since an approach to a civil Court is forbidden under the agreement,

the arbitrator could not have been appointed by a writ Court.

However, the learned Single Judge has held that both the parties had

agreed that the dispute be referred to the arbitration of the named

arbitrator and thus, the dispute was referred with the consent of the

parties. The submission of the appellant that only the General

Manager, Northern Railway, should appoint an arbitrator was rejected,

as it was held that Clause 16 a constitutes only a contract/agreement

between the parties and that by agreement the parties can modify,

vary or supersede the said agreement. When the statement was made

by the counsel for the parties before the Court, parties agreed to

appointment of an arbitrator and the appellant cannot now turn around

and contend that the appointment has to be made only in accordance

with the aforesaid clause 16 or in an application filed under Section 11

of the Act. Learned Single Judge has held, and in our view rightly so,

that it is not necessary in all cases to approach the Chief Justice by

filing an application under Section 11 of the Act and if the parties

agree to appointment of an arbitrator mutually, the filing of an

application under Section 11(5) of the Act would not be necessary.

The learned Single Judge has held that consequently, the above plea of

the appellant has no merit.

7. The learned Single Judge also noticed that neither in the

arbitration proceedings, at any stage, nor in the reply before the

arbitrator such a plea was raised challenging the appointment of the

arbitrator, or the jurisdiction of the arbitrator to proceed with the

matter. In addition to the above findings of the learned Single Judge,

there are the following additional reasons as to why appeal should not

be allowed:

A. The appellant has taken up this plea only after the award went

against it. This conduct of the appellant disentitles the appellant

to assail the award of the arbitrator. The party cannot take

recourse to challenging the jurisdiction of the arbitrator, for the

first time, in appeal against dismissal of its objections, upon

finding that the award has gone against it.

B. Secondly, it was also contended before us that the counsel did

not have the authority to agree on the appointment of arbitrator

on behalf of Union of India. In our view this plea is

unsustainable. The counsel was representing the General

Manager, Northern Railway, Union of India and in that capacity

he had full authority to agree to the appointment of an arbitrator.

It is significant that the order dated 14.01.2003 was never

challenged, and has become final.

8. The appellant has also raised the plea that the respondent

was a partnership concern. The learned Single Judge has noticed that

the letter dated 17.09.2002 addressed by the appellant itself shows

that the respondent was accepted as a sole proprietor of M/s Srichand

Sawhney & Sons. Learned Single Judge also noticed that except a

solitary communication, there is nothing to show that M/s Srichand

Sawhney & Sons was a partnership firm, and in any case this

eventuality is also covered by directing to filing of an affidavit to that

effect, which has been duly done. In the light of the above, we are

satisfied that there is no merit in the appeal. We have also noticed the

fact that the learned Single Judge has reduced the post award interest

from 18% to 10% per annum. In this view of the matter, we see no

merit in the appeal and dismiss the same with costs quantified at

Rs.10,000/- payable not later than four weeks from today.

MUKUL MUDGAL, J.

VIPIN SANGHI, J.

MARCH 06, 2009 rsk