Delhi High Court
Ravindra Brothers vs Una Cooperative Group Housing Society on 13 December, 2007
Author: Sanjay Kishan Kaul
Bench: Sanjay Kishan Kaul
JUDGMENT Sanjay Kishan Kaul, J.
IA No. 876/2000 (Under Section 30 & 33 of the Arbitration Act, 1940)
1. The respondent-Society in terms of the letter dated 15.02.1986 awarded the work of plumbing to the petitioner in respect of 100 dwelling units of the respondent-Society at Plot No. 3, Patparganj, New Delhi.
2. It is the case of the petitioner that the work was fully completed and the petitioner was not paid the amounts due while according to the respondent, the work was defective and thus no further amount was payable to the petitioner. The disputes between the parties gave rise to arbitration proceedings as the agreement between the parties contained an arbitration clause. The sole arbitrator Sh. K.L.Sahgal has made and published the awarded dated 04.09.2005. It is this award which is sought to be challenged by the respondent-Society by filing the present objections under Section 30 & 33 of the Arbitration Act, 1940 ('the said Act' for short).
3. The main objection raised by the respondent is about the competency of the arbitrator to proceed with the arbitral proceedings. The petitioner invoked the arbitration clause and appointed an arbitrator while the respondent-Society failed to respond. The arbitrator in question thus proceeded with the matter as the sole arbitrator. The respondent never objected to the arbitrator or approached any forum seeking a right to appoint an arbitrator on their behalf or challenging the jurisdiction of the arbitrator, but appeared before the arbitrator and filed their response to the claim of the petitioner. There is no doubt that the respondent-Society raised objections at that stage about the jurisdiction of the arbitrator.
4. It may be stated that the arbitration Clause 44 of the agreement between the parties required settlement of disputes by arbitration. In terms of the clause, a reference had to be made to a sole arbitrator being a fellow of the Indian Institute of Architects to be agreed upon and appointed by both the parties and in case of a disagreement as to the appointment of single arbitrator, two arbitrators being both fellow of the Indian Institute of Architects one to be appointed by each party, which arbitrators shall before taking upon themselves the burden of reference appoint an umpire. The arbitrator who made and published the award admittedly had the qualifications being a fellow of the Indian Institute of Architects. In view of the failure on the part of the respondent-Society to respond, the arbitrator proceeded to act as the sole arbitrator.
5. The most material aspect is that after raising the initial objections in their reply to the claim of the petitioner, the respondent-Society participated in the proceedings, asked for inspection of site and sought directions from the arbitrator. All these acts were in recognition of the respondent's acceptance to the appointment of the arbitrator. The question thus arises whether it would still be open to the respondent-Society to challenge the jurisdiction of the arbitrator. In my considered view, answer to the said question would be in the negative.
6. The aforesaid view is fortified by the observations of the various courts in this behalf. Learned single Judge of this Court in Security and Finance (P.) Ltd. v. Chandan Singh and Ors. held that non participation in the proceedings before the arbitrator after having obtained time for filing written statement will not alter the fact that the party had once submitted to the jurisdiction of the arbitrator. This case is apposite on the facts of the present case because at some stage, the respondent-Society absented itself from the arbitral proceedings resulting in the Award.
7. The Apex Court also had an occasion to examine the consequences of acquiescence of a party to arbitration proceedings by participating in it for a long time. In Prasun Roy v. The Calcutta Metropolitan Development Authority and Anr. , it was held that such an acquiescing party cannot be allowed to subsequently contend that by reason of some disability the matter could not have been referred to arbitration.
8. Learned Counsel for the respondent-Society sought to draw the attention of this Court to the documents which have been brought on record in pursuance to an application filed by the respondent-Society. There are three such letters dated 12.04.1995, 16.08.1995 and 27.08.1995. The first letter refers to the visit of the arbitrator to the site on 14.03.1995 and seeks that the findings of the inspection be handed over to the respondent-Society. The second letter is to the same effect and makes a further grievance that the Society had not received a working drawing approved by the architect along with the completion report of the project and that the silence on the part of the arbitrator in respect of the inspection had made the Society feel that no useful purpose wold be served by continuing the arbitration proceedings. The last letter dated 27.08.1995 refers to the intimation from the arbitrator that the failure of respondent-Society to appear before the arbitrator would result in ex parte proceedings and that the Society would like to dis-associate itself from the proceedings and would not attend further meetings.
9. Learned Counsel for the respondent contends that once the site visit had been carried out, arbitrator was duty bound to give the inspection report to the respondent-Society specifically in view of the provisions of Order 18 Rule 18 of the Code of Civil Procedure, 1908 ('the said Code' for short), which reads as under:
ORDER xviii HEARING OF THE SUIT AND EXAMINATION OF WITNESSES
18. Power of Court to inspect The Court may at any stage of a suit inspect any property or thing concerning which any question may arise and where the Court inspects any property or thing it shall, as soon as may be practicable, make a memorandum of any relevant facts observed at such inspection and such memorandum shall form a part of the record of the suit.
10. I am unable to persuade myself to agree with the submissions of learned Counsel for the respondent. An arbitrator is not bound by the strict parameters of the said code. Apart form this, it has to be seen that the arbitrator is an architect who visited the site and both the petitioner and the respondent would have pointed out as to how the work was defective or had been completed. If the arbitrator makes some nothings for himself, it cannot be said that the same would have to be mandatorily handed over to the respondent-Society since they are in the nature of nothings made by the arbitrator for self-memory to record findings in the arbitral proceedings. It is not a case where any formal proceedings are stated to have been drawn up regarding the inspection which was signed by both the parties.
11. A perusal of the award shows that after the site visit on 14.03.1995, the next date fixed for proceedings was 30.03.1995. On 30.03.1995, the respondent-Society asked for an adjournment and the proceedings were adjourned to 07.04.1995 when again proceedings were not attended to by the respondent-Society and thus the matter was adjourned to 12.04.1995. On 12.04.1995, the representative of the respondent-Society desired that the arbitrator should give his findings regarding the inspection carried out. The petitioner contended that the alleged deficiencies had in any case been referred to by the respondent in its reply and the petitioner had explained its position in the rejoinder. Thus no findings on merits of the controversy were required at that stage. The arbitrator records that he pointed out to the parties that the nature of work executed and the material used in the work was noticed by him and this would be taken into consideration while giving the award. The respondent thereafter did not insist for the same but suggested that the petitioner should again get the bill verified from the engineer to be appointed by the respondent-Society. The proceedings were thereafter adjourned for the said purpose, but in the subsequent proceedings the respondent absented itself. The petitioner informed the arbitrator that they had accepted the proposal of the respondent-Society for verification of the final bill by Sh.Kamal Singh, Engineer, but nothing had been done in that regard. It is only thereafter when the next date was fixed as 01.09.1995 that the communication of 16.08.1995 was received.
12. The respondent-Society from the beginning appears to have been interested in somehow frustrating the arbitration proceedings and delaying the matter as first it failed to respond to the notice of the petitioner and the arbitrator having been appointed, sought to challenge the jurisdiction. Thereafter, the respondent-Society for its own purpose sought various directions from the arbitrator and participated in the proceedings, but possibly after the inspection of the site by the arbitrator it may have felt that things are not going its way when it decided to absent itself from the arbitral proceedings. This is specifically in the context of a technical person like an architect inspecting the site where one of the questions was whether the seepages etc which had occurred at the site could be blamed on the petitioner or it was on account of any defect in civil works which had been carried out. The findings of the arbitrator are that it is the deficiencies of civil work which have resulted in the seepages.
13. Learned Counsel for the respondent next contends that there is misconduct on the part of the arbitrator in conducting arbitral proceedings, which is a separate matter from the aspect of arbitrator not having any jurisdiction to proceed with the matter. In this behalf, learned Counsel relies on the plea arising from the inspection carried out by the arbitrator. Thus whether it is stated to be a case of no jurisdiction, or misconduct, the plea really arises form the inspection of the site by the arbitrator and dis-satisfaction of the respondent about that inspection.
14. Learned Counsel for the petitioner seeks to contend that it was open to the respondent to have challenged the authority of the arbitrator to proceed further in the matter but they failed to do so. In this behalf, I am unable to find force in the contention of the learned Counsel for the petitioner and accept the plea of learned Counsel for the respondent that the time period between the writing of the last letter and the making of the award was not long enough as to say that the respondent-Society failed to act.
15. It is also relevant to note that what is sought to be canvassed today in the Court is strictly not borne out from the pleadings arising from the objections filed by the respondent-Society. The plea, if examined from the point of view of averments made in the application, would show that the preliminary objections are replete with only a challenge to the initiation of the arbitration proceedings by the arbitrator and seeking to contend that mere participation or seeking directions from the arbitrator including a request for inspection would not constitute steps in arbitral proceedings which would show the acquiescence on the part of the respondent to participate in the arbitral proceedings. This plea on the face of it cannot be accepted in view of the legal pronouncements referred to aforesaid. The application goes on to make general allegations about unfairness, mala fide and prejudice on the part of the arbitrator without any basis. The arbitrator had no option but to proceed ex parte against the respondent-Society once the Society decided to absent itself from the proceedings.
16. The challenge on merits by the respondent-Society is to the factual finding of the arbitrator on the basis of the material on record. This can hardly fall within the parameters of the scrutiny under Section 30 & 33 of the said Act. The first aspect is that the arbitrator is an expert in the field being an architect. In DDA v. Bhagat Construction Co. (P) Ltd. and Anr. 2004 (3) Arb.LR 481 it was held that where an expert arbitrator appointed on the basis of his work experience award certain amounts, the arbitrator is not required to write a detailed judgment as Judges do for it to be a reasoned award. It is sufficient if he indicates his trends and outlines the basis on which he has arrived at the figure. This in fact meets the plea raised by learned Counsel for the respondent that there are no detailed reasons set out for making and publishing the award. In fact, in another judgment between the same parties being DDA v. Bhagat Construction Co. (P) Ltd. and Anr. 2004 (3) Arb.LR 548, it was held that when a technical member goes into the matter in dispute, the court should not substitute its own view with that of an arbitrator even if the court comes to a different conclusion until and unless the decision of the arbitrator is manifestly perverse or has been arrived at on the basis of wrong application of law. The Apex Court has also repeatedly cautioned that unless an award is contrary to law and misconduct is with reference to either personal misconduct of the arbitrator or misconduct of law, an award ought not to be interfered with. It is not ordinarily for the court to re-appreciate the evidence and in the absence of the award being absurd, reasonableness is not a matter to be considered. In this behalf, a reference may be made to the judgments in Gujarat Water Supply and Sewage Board v. Unique Erectors (Gujarat) (P) Ltd. and Anr. , Food Corporation of India v. Joginderpal Mohinderpal and Anr. .
17. The last aspect urged is on the question of interest. Learned Counsel for the respondent states that interest has been granted even for the pre-reference period from 01.06.1993 till the date of payment or decree, whichever is earlier. It is not in dispute that in view of the judgments of the Apex Court, the arbitrator does have power to grant such interest and real plea is only about the rate of interest. The arbitrator has granted interest at the rate of 15 per cent per annum. Learned Counsel for the petitioner submits that the aspect of interest cannot be really interfered with in view of the judgment of this Court in M/s Anurodh Constructions v. Delhi Development Authority and Anr. 2005 (84) DRJ 314 which followed the Division Bench judgment of this Court in EM and EM Associates v. Delhi Development Authority and Anr. 2002(2) Arbitration Law Reporter 222 (Delhi) (DB) where it was held by the Division Bench that it was not proper for the Court to modify the rate of interest which the arbitrator has granted in exercise of discretion vested in him. In that case, interest had been granted at the rate of 18 per cent per annum. In the present case, interest has been granted at the rate of 15 per cent per annum.
18. It was put to learned Counsel for the petitioner that on the earlier occasion when this Court decided the matter vide Orders dated 19.10.2005 and at that time learned Counsel for the respondent did not turn up, learned Counsel for the petitioner had given a concession for reduction of interest to 12 per cent per annum. Learned Counsel, however, states that the respondent-Society took its chance by filing an appeal and the Division Bench set aside the Order of this Court since the respondent had not been heard. The respondent did not pay and thus the petitioner is not willing to make any concession now. In view thereof, it is not possible to grant any concession on the aspect of interest.
19. There is no other issue pressed in respect of the objections.
20. The application is dismissed.
CS(OS) No. 147/20001. In view of the objections filed by the respondent-Society being dismissed, the award dated 04.09.2005 of the sole arbitrator Mr. K.L.Sahgal is made rule of the Court. Petitioner shall also be entitled to interest at the rate of 12 per cent per annum from date of decree till date of payment.
2. The petitioner shall also be entitled to costs.
3. Decree sheet be drawn up accordingly.
4. The suit stands disposed of.