High Court
Legal Reasoning
IN THE HIGH COURT OF JUDICATURE AT BOMBAYBENCH AT AURANGABAD902 ARBITRATION APPEAL NO. 10 OF 2009M/S GANJEWAR CONSTRUCTION COMPANYVERSUSTHE STATE OF MAHARASHTRAMr. N. S. Jaju h/f Mr. A. S. Bajaj, Advocate for the appellantMr. S. B. Jadhav, AGP for the respondent/StateMr. S. B. Bhapkar, Advocate for the respondentCORAM: R. M. JOSHI, J.DATE: 21st MARCH, 2025PER COURT :-1.This appeal takes exception to the judgment dated 11th April,2005 passed in Misc. R.J.E. No. 159 of 2002 filed under Section 34 of theArbitration and Conciliation Act, 1996 (for short ‘the Act’).2.Admittedly respondent entered into contract with theappellant in respect construction of earth work and structures inkilometer No. 1 to 6 of M-1 (Chenapur Barad Distributary). Thecompletion of the said work was to be done before 30th December, 1988.There were three extensions granted for the completion of said work andlast extension expired on 30th April, 1990. A dispute arose between theparties during execution of the said construction work. The appellantappointed the Chief Engineer, P.W.D. (retired) as a sole Arbitrator byinvoking Clause No. 52 of the agreement between the parties. The said902.arba10.09.odt1 of 7 appointment came to be challenged before the C.J.S.D., Nanded in Misc.(R.J.E.) Application No. 150 of 1995. By order dated 20th January, 1996the appointment of sole Arbitrator was declared as null and void. Beingaggrieved by the said order an Appeal was preferred before this Courtbeing No. 29 of 1997. The Division Bench of this Court by order dated 6thMarch, 2000 has set aside the said order with observations that it will beopen for the State of Maharashtra to raise all contentions including thecontentions of there being no arbitration provided before the soleArbitrator. In the light of these facts a specific objection was raisedbefore the Arbitrator under Section 16 of the Act about the existence ofthe arbitration agreement as well as the appointment of the Arbitrator. Itwas specific case of the respondent before the Arbitral Tribunal thatClause No. 52 of the agreement was deleted and as such in absence ofany procedure agreed between the parties, it was incumbent on the partof the appellant to invoke provisions of Section 11 of the Act of 1966before the High Court for appointment of the Arbitral Tribunal. Thisobjection raised by the respondent was rejected by the Arbitrator.Respondent participated in the arbitration proceeding under protest. Theaward came to be passed on 15th July, 2002. This award wad challengedbefore the District Court under Section 34 of the Act. Since the DistrictCourt entertained to allow the said application, this appeal under Section37 of the Act.902.arba10.09.odt2 of 7
Legal Reasoning
3.Learned counsel for the appellant submits that bycorrespondence dated 24th October, 1994 and the letter dated 1st June,1995 the terms of Clause No. 52 stood revived. It is his submission thatin the letter dated 24th October, 1994 it is specifically communicated bythe Superintending Engineer that the appellant can go for the arbitrationas per the provisions of Clause No. 52. According to him similar is theobservations in the other communication. By taking aid of Section 115 ofthe Evidence Act it is his submission that there is a bar of estoppelagainst the respondent from contending that Clause No.52 does notapply to the agreement. It is his further submission by referring toSection 62 of the Contract Act that the parties have substituted the oldterms by new contract and as such the original contract need not beperformed. It is his further submission that the Arbitral Tribunal hasrightly taken into consideration the correspondence referred above andhas held that the Clause No. 52 of the agreement is applicable to thepresent case. It is his submission that there was extremely limited scopefor the District Court to cause interference in the said findings underSection 34 of the Act. He referred to Section 7(4)(b) in order to contendthat the subsequent communication also amounts to agreement betweenthe parties. 4.Learned counsel for the respondents supported the impugned902.arba10.09.odt3 of 7 judgment. It is his contention that admittedly the provisions of Act of1996 are applicable to the present case. Referring to Section 11 of theAct it is his contention that unless any separate procedure is agreedbetween the parties, it is incumbent on the part of the parties to movethe High Court for appointment of Arbitral Tribunal under Section 11 ofthe Act. It is his further submission that the correspondence does notrevive Clause No.52 in absence of any such specific statement therein. Itis his submission that the letter dated 24th October, 1994 does not callupon the appellant to invoke Clause No.21. In any case it is hissubmission that unless there is a specific agreement or evencorrespondence would indicate that there was revival of Clause No.52,the said Clause which was consciously deleted by the parties cannot beacted upon.5.There is no dispute about the fact that in the agreementbetween the appellant and respondent, Clause No. 52 which wasotherwise part of the general terms of the contract was specificallydeleted. Once there is a conscious decision of the parties to specificallydelete any terms of the contract, unless there is a subsequent contractbetween the parties contrary thereto, such deletion must be held to befinal. In this regard reference made to the correspondence as mentionedabove is totally misplaced. Pertinently, the said correspondence has been902.arba10.09.odt4 of 7 entered into after the period of contract was over and after a dispute wasraised by the appellant. In such circumstances there was no reason oroccasion for the respondent to revive the terms of the contract whichwere specifically deleted. This Court also finds substance in thecontention of the learned counsel for the respondent that even bareperusal of the said communication does not indicate the intention of theparties to revive the Clause No. 52.6.In so far as the issue of estoppel is concerned, since theadmission is not unequivocal, first of all there would not be any estoppelagainst the respondent in this regard. In any case it is open for therespondent to explain the same on the basis of communication enteredbetween parties. In so far as the novation of the contract as observedherein above there is is admittedly no novation of contract till the disputein respect of the work performed under the contract is done. Hence,question of novation of the same does not arise.7.Section 34(2)(iv) of the Act provides further ground forchallenge to the award passed by the Arbitral Tribunal under Section 34of the Act. The said provision indicates that when the composition of thearbitral tribunal or the arbitral procedure was not in accordance with theagreement of the parties, unless such agreement was in conflict with aprovision of this Part from which the parties cannot derogate, or, failing902.arba10.09.odt5 of 7 such agreement, was not in accordance with this Part. The admitted factson the record indicates that Clause No. 52 was consciously deleted bythe parties. As such there was no separate procedure agreed upon bythe parties for the sake of appointment of Arbitrator. In view of Section11(2) of the Act, 1996, in absence of any other agreed procedure forappointment of the Arbitrator, the appellant had no other option but tomove the High Court for appointment of the Arbitrator under Section 11of the Act. The Arbitral Tribunal has rendered perverse finding which arecontrary to the terms of the agreement. It was not open for theArbitral Tribunal to coin a new term in the agreement for the parties. Thelearned District Court has rightly caused interference into the awardpassed by the Tribunal on the ground that its maintainability forappointment of Arbitrator is not in consonance with the Section 11 of theAct. The District Court has also held that Clause No. 51 of the agreementclearly indicates the agreement between the parties for arbitration.Owing to the said clause the District Court has permitted the parties totake resort to Section 11 of the Act for appointment of the ArbitralTribunal. No fault can be found with the said observations having regardto the Clause No. 51.8.In view of the above, there is no merit in the appeal, appealstands dismissed.902.arba10.09.odt6 of 7 9.At this stage, learned counsel for the appellant submits thatif the application is filed within a period of six weeks from today, noobjection with regard to the limitation shall be entertained.10.Learned counsel for the respondent records no objection forthe same.11.In case, application is filed under Section 11 of the Act withina period of six weeks, the issue of limitation shall not be raised by therespondent.(R. M. JOSHI, J.)ssp902.arba10.09.odt7 of 7