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Supreme Court of India
Quippo Construction Equipment … vs Janardan Nirman Pvt. Ltd on 29 April, 2020Author: Uday Umesh Lalit
Bench: Uday Umesh Lalit, Dinesh Maheshwari
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Civil Appeal No.2378 of 2020 (arising out of SLP (C) NO.11011 of 2019)
QUIPPO CONSTRUCTION EQUIPMENT LTD. Vs. JANARDAN NIRMAN PVT. LTD.
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO.2378 OF 2020
[Arising Out of Special Leave Petition (C) No.11011 of 2019]
QUIPPO CONSTRUCTION EQUIPMENT LIMITED …Appellant
VERSUS
JANARDAN NIRMAN PVT. LIMITED …Respondent
JUDGMENT
Uday Umesh Lalit, J.
1. Leave granted.
2. In this appeal the Original Claimant challenges the final judgment
and order dated 14.02.2019 passed by the High Court at Calcutta in CAN
No.10094 of 2018.
3. The basic facts culled out from the award dated 24.03.2015 passed
by the Arbitrator in the present case are:-
“That the respondent company who is engaged in the
business of infrastructure development activities
approached the claimant company who is also dealing
in the business of providing equipments for
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QUIPPO CONSTRUCTION EQUIPMENT LTD. Vs. JANARDAN NIRMAN PVT. LTD.
infrastructure activities to provide on rent two Piing
Rig HR-180 and (1) 300 CPM compressor
(equipments) for carrying out the work as per the
respondent’s instructions. After deliberations and
negotiations, an agreement dated 1.8.2010 was
entered into between the parties in respect of the
abovesaid construction equipments for its work site
C/o Janardhan Nirman Pvt. Ltd. L & TECC site,
NTPC BARH site, BARH, Distt. Patna, Bihar. Being
satisfied with the equipment services provided by the
claimant company, the respondent further approached
the claimant company for taking on rent another one
(1) Pilling Rig-MAIT HR 180 (equipment) for its
same abovesaid work site, along with double set of
crew/operator for each equipment for carrying out the
works as per the respondent’s instructions. After
deliberations and negotiations, an agreement
2.10.2010 was entered into between the parties herein
in respect of the abovesaid equipments. Thereafter,
the respondent further entered into agreements dated
19.3.2011 and 14.4.2011 for taking on rent one (1)
Pilling Rig HR 180 vide each of the said agreements
for carrying out the work as per the respondent’s
instructions for its work site at C/o Janardhan Nirman
Pvt. Ltd., SAIL, DSP, Durgapur, West Bengal and C/o
Janardhan Nirman Pvt. Ltd., NH-34, Farakka-
Dafkhola Road Project, Near Kaliachak, Distt. Malda,
West Bengal, respectively.”
4. In General Terms and Conditions appended to the aforesaid
Agreements, resolution of disputes between the parties was provided for as
under:-
4.1 The relevant clauses in respect of the agreement dated 01.08.2010
were to the following effect:-
“24. Governing Law Jurisdiction & Arbitration:
The parties hereto agree that the courts and tribunals at
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QUIPPO CONSTRUCTION EQUIPMENT LTD. Vs. JANARDAN NIRMAN PVT. LTD.
New Delhi shall have the exclusive jurisdiction and
shall be governed in accordance with the law in India.
24.1 Arbitration: In the event of any claim, dispute or
difference arising out of or in connection with the
interpretation or implementation of the agreement or
out of or in connection with any breach, or alleged
breach of the Agreement (hereinafter referred to as “the
dispute”) between the parties, the parties hereby agreed
to refer such dispute to Arbitration under Construction
Industry Arbitration Association (CIAA) Rules and
Regulations save and except that on behalf of both the
parties to the Agreement. The owners shall be entitled
to select the sole Arbitrator out of the panel of CIAA.
The proceedings shall be governed by the Arbitration
and Conciliation Act, 1996 with any statutory
modification thereto or re-enactment thereof. The
venue for holding such arbitration proceedings would
be New Delhi.”
4.2 On the other hand, the relevant arbitration clause in the agreement
dated 14.04.2011 was to the following effect:-
“24. Governing Law Jurisdiction & Arbitration:
All and any dispute arising out of or in connection
with this contract, including any question regarding
its existence, validity or termination, shall be referred
to and finally resolved by arbitration in Kolkata in
accordance with the arbitration Rules of the
Construction Industry Arbitration Council (“CIAC
Arbitration Rules”) for the time being in force at the
commencement of the arbitration, which rules are
deemed to be incorporated by reference in this Clause.
The owner shall be entitled to select the sole
Arbitrator out of the panel of CIAC. This agreement
is governed by the laws of India and the parties hereto
agree that only that courts and tribunals at Kolkata
shall have the exclusive jurisdiction the dispute arise
out of the terms of the Agreement or its interpretation.
The language of the arbitration shall be in English
language. The provision shall survive the
termination/expiry of this agreement.”
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QUIPPO CONSTRUCTION EQUIPMENT LTD. Vs. JANARDAN NIRMAN PVT. LTD.
5. In pursuance of the aforementioned agreements, construction
equipments were provided by the appellant to the respondent at the
respective sites as per instructions of the respondent. According to the
terms and conditions of the agreements the respondent was to make
payment within seven days from the date of submission of monthly bills
failing which the respondent would be liable to pay interest for delayed
period. Since the payments were not forthcoming, the appellant by its
letter dated 21.01.2012 asked the respondent to pay the outstanding dues.
In its response dated 01.02.2012 the respondent accepted that every Rig
hired by it was as per the agreement. Since the payments were not
forthcoming, by communication dated 02.03.2012 the appellant gave
notice invoking arbitration. Relying on clauses 24 and 24.1 as stated
above, it was stated that Shri L.C. Jain, President Consumer Forum (Retd.)
was appointed as the Sole Arbitrator who would be conducting
proceedings at New Delhi to adjudicate upon the dispute between the
parties. It was also stated:-
“You are requested to reply and join the arbitration
proceedings within 14 days from the receipt of this
notice and/or make payment of the entire outstanding,
amount of Rs.78,78,533/- (Rupees Seventy Eight
Lakhs Seventy Eight Thousand Five Hundred Thirty
Three Only) with interest @ 18%p.a. to the
outstanding amount.”
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A copy of this communication was marked to Construction
Industry Arbitration Council (‘CIAC’, for short).
6. In its reply dated 15.03.2012 the respondent denied existence of
any agreement between the parties. It, however, did not take any steps to
participate in the arbitration. On the other hand, the respondent filed Title
Suit No.189 of 2012 in the Court of Civil Judge, Junior Division, Second
Court at Sealdah, praying that the agreements be declared null and void
and for permanent injunction restraining the appellant from relying on the
arbitration clauses contained in the agreements. At the interim stage, a
restraint order was passed by the Trial Court as a result of which the
proceedings before the Arbitrator were stayed. An application under
Sections 5 and 8 of the Arbitration and Conciliation Act, 1996 (for short
“the Act”) was filed by the appellant submitting that the dispute between
the parties be referred to arbitration.
7. While accepting the application moved on behalf of the appellant
the Trial Court in its Order dated 26.5.2014 observed:-
“The defendant has already stated that there are
agreements between the parties containing arbitration
clause. They referred the matter to arbitration in terms
of the said arbitration clause to resolve payment related
dispute. In support of their contention, the defendant
produced a series of original agreements, signed by both
parties. I fail to understand why the plaintiff signed in a
series of documents, which they claim to be non-
existing. As stated earlier, the plaintiff failed to give any
explanation regarding falsity and forgery committed by
the defendant in executing the said agreements. On
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perusal of the agreements, it transpires that all the
agreements contain payment and usage terms in detail.
The agreements also contain arbitration clause i.e. with
regard to any claim and any dispute regarding
implementation, execution and interpretation or breach
of the agreements between the parties.
Therefore, the dispute between the parties
regarding payments is within the scope of arbitration
clause. The defendants are justified in referring the
matter to arbitration. Rather the plaintiff filed this suit
even after having knowledge of arbitration proceeding.
……
All the disputes between the parties being the
matters covered by arbitration clause are to be
adjudicated by the arbitrator. Therefore, this court has
no jurisdiction to hear and try this suit.”
The application preferred by the appellant was thus allowed and
the plaint was directed to be returned.
8. The respondent filed Miscellaneous Appeal No.57 of 2014 in the
Court of Additional District Judge, Second Court, Sealdah, challenging
said order dated 26.05.2014. Pending appeal, interim relief was prayed for
by the respondent and repeated adjournments on that count were sought by
the respondent before the Arbitrator. The Arbitrator granted
accommodation to the respondent on some occasions but as no interim
order was passed by the appellate court, the proceedings before the
Arbitrator continued. By ex-parte award dated 24.03.2015, the Arbitrator
accepted the claim preferred by the appellant. The award was a common
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award covering claims in respect of all the four agreements. The award
observed:-
“The claimant company approached the Construction
Industry Arbitration Council (CIAC), the institutional
body set up for this purpose, for appointment of an
arbitrator as per provisions of the agreement entered
between the claimant company and respondents to
resolve the dispute that arose in between the claimant
company and the respondents. To resolve the dispute
in between the parties, the CIAC assigned this matter
to me (L.C. Jain) as sole arbitrator. Notice of
reference sent by the claimant company is dated
02.03.2012 and thereafter the arbitrator was appointed
and file was put up before the sole arbitrator who
fixed the date for appearance of parties.
… … …
The respondent was provided ample opportunities and
time to settle the account but the respondent failed to
settle the account and ultimately the claimant issued
notice dated 02.03.2012 invoking the arbitration
clause of the abovesaid agreements in order to settle
the dispute with the respondent in accordance to the
provisions of CIAC manual and requested to CIAC
for referring the matter to arbitration and accordingly
the matter has been referred to arbitration. CIAC
issued notice dated 30.05.2012 to the respondents and
asked for appearance and filing of reply/written
statement on 04.07.2012.
… … …
On receipt of the notice by the respondent, the
respondent wrote to CIAC that an appeal has been
filed before the Ld. Additional District Judge, at
Sealdah, Kolkata against the order of the Ld. Civil
Judge and the matter may be adjourned and
accordingly the matter was adjourned and intimation
was sent to the respondents. The respondent was also
informed that without obtaining a stay order from the
court of Ld. Additional District Judge, at Sealdah,
Kolkata, the proceedings will not be adjourned but the
respondents have not filed any stay order with CIAC
in the arbitration proceedings in this matter. For not
putting appearance or by not filing the reply/written
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statement, the respondent was proceeded ex-parte and
intimation of the same was sent to respondent by
CIAC. In fact, CIAC sent copy of all proceedings
(orders) of each date to the respondent but the
respondent every time on receipt of intimation from
CIAC continued to send the request for adjournment
of the proceedings before the Sole Arbitrator through
CIAC and has never filed any copy of the stay order,
if any passed by the Ld. Additional District Judge, at
Sealdah, Kolkata, nor filed any reply/written
statement or objections for consideration of the Sole
Arbitrator.
… … …
The respondent has taken the plea before the Ld. Civil
Judge that the agreements as mentioned above have
not been entered by him and all the documents are
forged and fabricated and the Ld. Civil Judge in his
order in the Civil Suit No.189 of 2012 has considered
these pleas of the respondent and after due
consideration of these pleas, directed the respondent
to join the arbitration proceedings. … …
Thus the claimant is entitled to receive from the
respondent an amount of :-
i) Rs.78,78,533/- (Rupees Seventy Eight
Lacs Seventy Eight Thousand Five
Hundred Thirty Three only) i.e. claim
amount.
ii) Interest @ 11% per annum on the amount
of Rs.78,78,533/- (Rupees Seventy Eight
Lacs Seventy Eight Thousand Five
Hundred Thirty Three only) as pendente
lite interest from 2.3.2012 i.e. from date of
reference invoking arbitration till the date
of award i.e. 24.03.2015;
iii) Interest @ 11% per annum from the date
of award i.e. from 25.03.2015 till
realisation;
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iv) The claimant has deposited with CIAC the
cost of arbitration i.e. arbitration fee and
allied charges pertaining to the portion of
respondent amounting to Rs.1,47,072/-
(Rupees One Lac Forty Seven Thousand
Seventy Two only) and the claimant is
entitled to receive the same from the
respondent.
Claimant has been directed to deposit stamp paper
worth Rs.12,000/- with CIAC for pronouncing the
award and the claimant accordingly filed the stamp
paper worth Rs.12,000/- with CIAC and the award
has been pronounced. The award has been filed with
CIAC.”
Soon after the award, OMP No. 449 of 2015 was filed by the
appellant in the High Court of Delhi seeking relief under Section 9 of the
Act post the passing of the award.
9. The respondent being aggrieved filed a petition under Section 34 of
the Act before the High Court at Calcutta being AP No.1141 of 2015,
which was dismissed by the High court on 17.07.2015 after observing that
it was not clear from the cause title how the petition could have been filed
in the High Court.
10. Thereafter a petition under Section 34 of the Act was filed by the
respondent being Miscellaneous Case No.298 of 2015 in the Court of
District Judge, Alipore. The respondent reiterated its case about non-
existence of any agreement. It also stated, inter alia, that the venue of
arbitration in terms of the agreement dated 14.04.2011 was at Kolkata.
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QUIPPO CONSTRUCTION EQUIPMENT LTD. Vs. JANARDAN NIRMAN PVT. LTD.
11. On 20.02.2016 the Appellate Court dismissed Miscellaneous
Appeal No.57 of 2014 as not being maintainable.
12. On 06.01.2007, OMP No. 449 of 2015 was rejected by the High
Court of Delhi, inter alia, on the ground that no prime facie case was made
out by the appellant. It was, however observed that the dismissal would not
have any bearing on the decision that may be rendered in the pending
petition under Section 34 of the Act before the Court at Alipore.
13. Being aggrieved by the order dated 20.02.2016, the respondent
filed Revision Petitions being CO Nos.1320 and 1322 of 2016 in the High
Court at Calcutta, which by its order dated 28.03.2017 dismissed said
Revision Petitions as not being maintainable but reserved rights of the
respondent to agitate all the issues within the ambit of Section 34 of the
Act, in the proceedings pending before the Court at Alipore. Special Leave
Petition (Civil) Nos.25279-25280 of 2017 arising therefrom were
dismissed by this Court on 06.10.2017.
14. The petition filed by the respondent under Section 34 of the Act,
viz. Miscellaneous Case No.298 of 2015 was, thereafter, dismissed by the
Court at Alipore on 13.08.2018 with following observations:-
“After perusal of the case record I find that there was
an arbitration clause in the agreement and the
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Arbitrator was appointed at New Delhi and the Ld.
Arbitrator has passed the award in favour of the
opposite parties. The question of jurisdiction of
Section 34 has been raised. There are several case
laws as cited by the Ld. Lawyer for the opposite
parties. From the said case laws it is found that the
jurisdiction of Section 34 is where the arbitration
award was passed or in the place where the seat of
arbitration was agreed by the parties. In the recent
case laws reported in 2017 SCC Online SC 442 1, I
find that the jurisdiction is exclusively in that place
where the arbitration was done. Ld. Lawyer, for the
petitioner referred the agreement in between the
parties stating that there is a Clause of arbitration at
Kolkata but in reply the Ld. Lawyer for the opposite
parties stated that there are several agreements and the
place of arbitration is mentioned in other agreements
is at Delhi and accordingly the arbitration has made at
New Delhi and this Court has no jurisdiction to
entertain of this Misc. Case U/s 34 of the Act and only
Courts at Delhi have the jurisdiction to entertain the
same.
Accordingly, after careful scrutiny of the case record
as well as the observation of the Hon’ble Apex Court
I find that the arbitration award was passed at New
Delhi and accordingly the Court of New Delhi has the
jurisdiction to entertain the application u/s 34 of the
Arbitration and Conciliation Act. This Court has no
jurisdiction. So, the present case is bad for want of
jurisdiction.”
15. The respondent initially challenged the Order dated 13.08.2018 by
filing Revision Petition (C.O. No.3400 of 2018) which was dismissed as
not being maintainable by the High Court at Calcutta on the ground that a
remedy of filing a petition under Section 37 of the Act was available. The
respondent thereafter filed appropriate petition being CAN No.10094 of
1 Indus Mobile Distribution Pvt. Ltd. vs. Datavind Innovations Pvt. Ltd.: (2017) 7 SCC 678
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2018 which was allowed by the High Court at Calcutta vide judgement
dated 14.02.2019 with the following observations:-
“Accordingly, since it is evident from the cause title
itself that the respondent herein was otherwise
amenable to the jurisdiction of the Alipore court, the
order impugned dated August 13, 2018 is set aside
and Misc. Case No.298 of 2015 (R.No.385 of 2015) is
restored to the board of the Additional District Judge,
16th Court at Alipore.”
Said Judgment of the High Court is presently under challenge.
16. In the circumstances, it is clear that:-
(i) Though each of the four agreements provided for arbitration,
the award rendered by the Arbitrator was a common award;
and
(ii) In one of the agreements the venue was stated to be Kolkata
and yet the proceedings were conducted at Delhi;
However, at no stage, the aforesaid objections were raised by the
respondent before the Arbitrator and the respondent let the arbitral
proceedings conclude and culminate in an ex-parte award. Therefore, the
question that arises is whether the respondent could be said to have waived
the right to raise any of the aforesaid objections.
17. We heard Mr. Ritin Rai, learned Senior Advocate for the appellant
and Mr. Kuriakose Varghese, learned Advocate for the respondent.
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18. Mr. Ritin Rai, learned Senior Advocate submitted that all the while
the respondent was denying the existence of the agreements between the
parties; that after seeing the agreements in original the Civil Court had
accepted the application preferred by the appellant under Sections 5 and 8
of the Act; that the decision rendered by the Civil Court attained finality
with the dismissal of Special Leave Petition by this Court; that the
respondent chose not to participate in the arbitration proceedings; and that
it was only at the stage of preferring petition under Section 34 of the Act
that a submission was raised about the venue of arbitration. It was
submitted that having chosen not to raise any objection on the issue of
jurisdiction or competence of the Arbitrator to go ahead with the matter
pertaining to issue covered by arbitration, the respondent must be taken to
have waived any such objection. It was submitted that, in any case, the
Arbitrator was appointed through Construction Industry Arbitration
Association (‘CIAA’, for short) which was also the modality under the
agreement dated 14.04.2011.
In response, it was submitted by Mr. Varghese, learned Advocate
that every arbitration agreement had to be considered independently and if
an agreement specified the venue to be at Kolkata, the party autonomy in
that behalf ought to be respected. Reliance was placed on the decision of
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this Court in Duro Felguera, S.A. vs. Gangavaram Port Limited 2, where
there were six arbitral agreements and each one of them was subject matter
of independent reference to arbitration.
19. Before we deal with the nature of controversy, we may extract
relevant provisions namely Sections 4, 16 and 20 of the Act.:-
“4. Waiver of right to object.- A party who knows
that-
a) Any provision of this Part from which the
parties may derogate, or
b) Any requirement under the arbitration
agreement,
Has not been complied with and yet proceeds
with the arbitration without stating his
objection to such non-compliance without
undue delay or, if a time limit is provided for
stating that objection, within that period of
time, shall be deemed to have waived his right
to so object.
… … …
16. Competence of arbitral tribunal to rule on its
jurisdiction.-
(1) The arbitral tribunal may rule on its own
jurisdiction, including ruling on any objections with
respect to the existence or validity of the arbitration
agreement, and for that purpose, –
a) An arbitration clause which forms part of a
contract shall be treated as an agreement
independent of the other terms of the contract;
and
2 (2017) 9 SCC 729
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b) A decision by the arbitral tribunal that the
contract is null and void shall not entail ipso
jure the invalidity of the arbitration clause.
(2) A plea that the arbitral tribunal does not have
jurisdiction shall be raised not later than the
submission of the statement of defence; however, a
party shall not be precluded from raising such a plea
merely because that he has appointed, or participated
in the appointment of, an arbitrator.
(3) A plea that the arbitral tribunal is exceeding the
scope of its authority shall be raised as soon as the
matter alleged to be beyond the scope of its authority
is raised during the arbitral proceedings.
(4) The arbitral tribunal may, in either of the cases
referred to in sub-section (2) or sub-section (3), admit
a later plea if it considers the delay justified.
(5) The arbitral tribunal shall decide on a plea
referred to in sub-section (2) or sub-section (3) and,
where the arbitral tribunal takes a decision rejecting
the plea, continue with the arbitral proceedings and
make an arbitral award.
(6) A party aggrieved by such an arbitral award may
make an application for setting aside such an arbitral
award in accordance with section 34.
… … …
20. Place of arbitration. – (1) The parties are free to
agree on the place of arbitration.
(2) Failing any agreement referred to in sub-section
(1), the place of arbitration shall be determined by the
arbitral tribunal having regard to the circumstances of
the case, including the convenience of the parties.
(3) 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.”
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20. While dealing with a case where instead of an odd number of
Arbitrators, as is contemplated under Section 10 of the Act, the parties had
agreed to arbitration of two Arbitrators and where objection in that behalf
was not taken before the Arbitrators, a three Judge Bench of this Court in
Narayan Prasad Lohia vs. Nikunj Kumar Lohia and others 3 considered
the amplitude and applicability of Section 4 of the Act. The relevant
paragraphs of the decision are:-
“5. On 22-12-1997 the 1st respondent filed an
application in the Calcutta High Court for setting
aside the award dated 6-10-1996. On 17-1-1998 the
2nd respondent filed an application for setting aside
this award. One of the grounds, in both these
applications, was that the arbitration was by two
arbitrators whereas under the Arbitration and
Conciliation Act, 1996 (hereinafter called “the said
Act”) there cannot be an even number of arbitrators. It
was contended that an arbitration by two arbitrators
was against the statutory provision of the said Act and
therefore void and invalid. It was contended that
consequently the award was unenforceable and not
binding on the parties. These contentions found
favour with a Single Judge of the Calcutta High Court
who set aside the award on 17-11-1998. On 18-5-
2000 the appeal was also dismissed. Hence this appeal
to this Court.
… … …
8. Mr Venugopal submits that Section 10 of the said
Act is a mandatory provision which cannot be
derogated. He points out that even though the parties
are free to determine the number of arbitrators such
number cannot be an even number. He submits that
any agreement which permits the parties to appoint an
even number of arbitrators would be contrary to this
3 (2002) 3 SCC 572
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mandatory provision of the said Act. He submits that
such an agreement would be invalid and void as the
Arbitral Tribunal would not have been validly
constituted. He submits that composition of the
Arbitral Tribunal itself being invalid, the proceedings
and the award, even if one be passed, would be
invalid and unenforceable.
9. Mr Venugopal submits that Section 4 of the said
Act would only apply provided:
(a) a party knew that he could derogate from any
provision of this part, or
(b) a party knew that any requirement under the
arbitration agreement had not been complied with
and the party still proceeded with the arbitration. He
submits that, this case does not fall under category (b)
above. He submits that even category (a) would not
apply because waiver can only be in respect of a
matter from which a party could derogate. He submits
that in respect of provisions which are non-derogable
there can be no waiver. He submits that Section 10 is
a provision from which a party cannot derogate. He
submits that matters from which a party cannot
derogate are those provided in Sections 4, 8, 9, 10,
11(4) and (6), 12, 13(4), 16(2), (3) and (5), 22(4), 27,
31, 32, 33, 34(2) and (4), 35, 36, 37, 38(1) and 43(3).
He submits that, as against this, matters from which a
party can derogate are those provided under Sections
11(2), 19(1) and (2), 20(1) and (2), 22(1), 24, 25, 26
and 31(3).
… … …
14. We have heard the parties at length. We have
considered the submissions. Undoubtedly, Section 10
provides that the number of arbitrators shall not be an
even number. The question still remains whether
Section 10 is a non-derogable provision. In our view
the answer to this question would depend on the
question as to whether, under the said Act, a party has
a right to object to the composition of the Arbitral
Tribunal, if such composition is not in accordance
with the said Act, and if so, at what stage. It must be
remembered that arbitration is a creature of an
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agreement. There can be no arbitration unless there is
an arbitration agreement in writing between the
parties.
… … …
16. It has been held by a Constitution Bench of this
Court, in the case of Konkan Rly. Corpn. Ltd. v. Rani
Construction (P) Ltd.4 that Section 16 enables the
Arbitral Tribunal to rule on its own jurisdiction. It has
been held that under Section 16 the Arbitral Tribunal
can rule on any objection with respect to existence or
validity of the arbitration agreement. It is held that the
Arbitral Tribunal’s authority under Section 16, is not
confined to the width of its jurisdiction but goes also
to the root of its jurisdiction. Not only this decision is
binding on this Court, but we are in respectful
agreement with the same. Thus it is no longer open to
contend that, under Section 16, a party cannot
challenge the composition of the Arbitral Tribunal
before the Arbitral Tribunal itself. Such a challenge
must be taken, under Section 16(2), not later than the
submission of the statement of defence. Section 16(2)
makes it clear that such a challenge can be taken even
though the party may have participated in the
appointment of the arbitrator and/or may have himself
appointed the arbitrator. Needless to state a party
would be free, if it so chooses, not to raise such a
challenge. Thus a conjoint reading of Sections 10 and
16 shows that an objection to the composition of the
Arbitral Tribunal is a matter which is derogable. It is
derogable because a party is free not to object within
the time prescribed in Section 16(2). If a party
chooses not to so object there will be a deemed
waiver under Section 4. Thus, we are unable to accept
the submission that Section 10 is a non-derogable
provision. In our view Section 10 has to be read along
with Section 16 and is, therefore, a derogable
provision.
… … …
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.”
4 (2002) 2 SCC 388
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QUIPPO CONSTRUCTION EQUIPMENT LTD. Vs. JANARDAN NIRMAN PVT. LTD.
Thus, even stipulation in Section 10 that number of Arbitrators
“shall not be an even number” was found to be a derogable provision and
since no objections were raised to the composition of the Arbitral
Tribunal, as provided in Section 16, the concerned respondents were
deemed to have waived their right to object.
21. In Duro Felguera2 the submission that for convenience of either
side the original contract was split into five different contracts and as such
there ought to be a composite reference to arbitration covering all the
contracts was not accepted by this Court. It was found by this Court:-
“42. … … The case in hand stands entirely on
different footing. As discussed earlier, all five
different packages as well as the Corporate Guarantee
have separate arbitration clauses and they do not
depend on the terms and conditions of the Original
Package No. 4 TR nor on the MoU, which is intended
to have clarity in execution of the work.”
Incidentally, it was a case of International Commercial Arbitration
and in each of those agreements the seat of Arbitration was at Hyderabad.
Moreover, the matter had arisen from an arbitration petition preferred
under Section 11(6) of the Act.
22. In the present case the arbitration in question is a domestic and an
institutional arbitration where CIAA was empowered to and did nominate
the Arbitrator. It is not as if there were completely different mechanisms
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QUIPPO CONSTRUCTION EQUIPMENT LTD. Vs. JANARDAN NIRMAN PVT. LTD.
for appointment of Arbitrator in each of the agreements. The only
distinction is that according to one of the agreements the venue was to be
at Kolkata. The specification of “place of arbitration” may have special
significance in an International Commercial Arbitration, where the “place
of arbitration” may determine which curial law would apply. However, in
the present case, the applicable substantive as well as curial law would be
the same.
23. It was possible for the respondent to raise submissions that
arbitration pertaining to each of the agreements be considered and dealt
with separately. It was also possible for him to contend that in respect of
the agreement where the venue was agreed to be at Kolkata, the
arbitration proceedings be conducted accordingly. Considering the facts
that the respondent failed to participate in the proceedings before the
Arbitrator and did not raise any submission that the Arbitrator did not
have jurisdiction or that he was exceeding the scope of his authority, the
respondent must be deemed to have waived all such objections.
24. In the circumstances, the respondent is now precluded from
raising any submission or objection as to the venue of arbitration, the
conclusion drawn by the Court at Alipore while dismissing Miscellaneous
Case No.298 of 2015 was quite correct and did not call for any
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QUIPPO CONSTRUCTION EQUIPMENT LTD. Vs. JANARDAN NIRMAN PVT. LTD.
interference. The High Court, in our view, was in error in setting aside
said Order. In any case, the fact that the cause title showed that the
present appellant was otherwise amenable to the jurisdiction of the
Alipore Court, could not be the decisive or determining criteria.
25. We, therefore, allow this appeal, set aside the Judgment and Order
under appeal and restore the Order dated 13.08.2018 passed by the Court
at Alipore in Miscellaneous Case No. 298 of 2015. No costs.
……..……………….J.
(Uday Umesh Lalit)
……..……………….J.
(Vineet Saran)
New Delhi;
April 29, 2020.
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