Bhagheeratha Engineering Limited vs Northern Railway

Rajiv Shakdher, J.—This is a petition filed u/s 34 of the Arbitration and Conciliation Act, 1996 (in short the Act) to assail the award dated 30.12.2011. In this petition the challenge is limited to the aspect that the arbitral tribunal did not adjudicate upon the claims referred to in paragraph 20 of the captioned petition. The petition has been filed in the background of the following broad facts:-

1.1. The petitioner had demanded arbitration in terms of the arbitration agreement obtaining between the parties. The arbitration agreement is contained in clause 64(1)(i) of the General Conditions of Contract (GCC). Since there was no movement in the matter, the petitioner had approached this court by way of a petition u/s 11 of the Act. This petition was numbered as Arb. P. 375/2006. The said petition was disposed of vide order dated 10.04.2008, at which stage, the respondent was represented by counsel. Since the learned counsel for the respondent gave its no objection to the proposal made by the petitioner on 15.02.2008 for nomination of an arbitrator from the panel of Railway Gazetted Officers, the court disposed of the petition in terms of the stand taken by the respondent.

1.2. The respondent thereafter issued a communication dated 05.08.2008, referring the disputes to one Mr. S.C. Goyal, Retired C.M.M. Northern Railway.

1.3. By virtue of the said communication which is an order of reference issued by the respondent, claims referred to in paragraph 20 of the petition were excluded. The petitioner thereafter filed statement of claims which included not only the claims adverted to in the communication dated 05.08.2008 but also those which are referred to in paragraph 20 of the petition. The respondent filed a reply in which one of the averments made was that the adjudication by the arbitral tribunal should be limited to the claims referred to him vide communication dated 05.08.2008.

1.4. A rejoinder was filed by the petitioner before the arbitral tribunal consistent with the petitioner''s position as set out in the statement of claims.

1.5. It appears that in the hearing held on 18.03.2010, the arbitral tribunal communicated that it would only adjudicate upon the claims referred to it by the respondent. Though this was put on the petitioner in as much as it was recorded that: "the claimant (i.e., the petitioner) stated that they will be discussing the referred claims only in the next hearing as their petition has been heard today."

1.6. The petitioner filed an appeal qua the recording made by the arbitral tribunal at its hearing held on 18.03.2010. The said appeal was numbered as Arb. A. 14/2010. The appeal was disposed of on 26.11.2010 with the observation that the petitioner should file application for correction of minutes of proceedings dated 18.03.2010. There is no dispute that the petitioner filed an application thereafter with the arbitral tribunal; a copy of this application is appended at page 51 of the documents file. Concededly there was no decision taken on the said application.

1.7. The arbitral tribunal thereafter proceeded to announce the award. The award as indicated above was pronounced on 30.12.2011. The arbitral tribunal in respect of the excluded claims made the following observations in the form of a recital in the award

" ...AND WHEREAS during the hearings, Claimants pleaded that their all claims should be considered by the Arbitral Tribunal, whereas the Respondents pleaded that non-referred claims should not be considered. Arbitral Tribunal considered the stand of both the parties and decided that this Tribunal would consider only referred claims.... "

(emphasis is mine)

1.8. There is no other discussion in the impugned award with regard to the excluded claims.

1.9. The petitioner being aggrieved filed the captioned petition.

Notice in the captioned petition was issued on 13.04.2012. Since then the pleadings have been completed.

Ms. Mohan, who appears for the respondent says that the grievance, if any, which the petitioner may have had with regard to the excluded claims should have been raised at the stage when the communication dated 05.08.2008 was issued referring certain claims to the arbitral tribunal and excluding the claims which are referred to in the present petition. She says that the stage having been passed, this court cannot interdict the award in a Section 34 petition at this stage on this ground.

2.1. Ms. Mohan relies upon clauses 63 and 64(1) of the GCC to support her contention.

Mr. George on the other hand reiterates his submissions made in the petition. Mr. George in support of his submissions has relied upon the judgments in the case of Earnest Builders Vs. Union of India (UOI) and Others, and M/s. Mulkh Raj Mehta and Sons Vs. Union of India and Others, 1996 AIHC 3471.

I have heard the learned counsel for the parties and perused the record. I am of the view that this petition would have to be allowed for the following reason:-

4.1. The petitioner all along as is apparent from the facts set out above insisted on all its claims being adjudicated by the arbitral tribunal. The respondent though vide communication dated 05.08.2008 restricted it to certain claims as according to it, the rest of the claims fell in the category "excepted matters".

4.2. In my view, this itself gave rise to a dispute, which is, as to whether or not claims which were not referred to by the respondent in its communication of 05.08.2008 fell within the category of excepted matters. The arbitral tribunal ought have delved into this aspect of the matter and set out its view by way of a reasoned order. The judgments cited by Mr. George appear to take the same view.

4.3. Apart from the said judgment, the Supreme Court in the case of National Insurance Co. Ltd. Vs. Boghara Polyfab Pvt. Ltd., has taken the same view.

Therefore, for the foregoing reasons, the petitioner''s claims referred to in paragraph 20 of the petition are remitted to the arbitral tribunal for adjudication.

Needless to say, the respondent would be at liberty to take a stand that the claims referred to in paragraph 20 of the captioned petition fall in the category of excepted matters. The petition is allowed, leaving parties to bear their own cost.