Punjab State Electricity Board vs Punjab Pre-Stressed Concrete Ltd. and Others

G.C. Garg, J.—Dispute having arisen between the parties regarding supply of material, the petitioner Board appointed its Chief-Engineer as arbitrator as per the arbitration clause, by order dated 10.10.1991. After the claim was made, the Board filed written statement on 20.1.1992 wherein its was stated that it reserves its right to file counter claim at a later stage. Counter claim was not filed even till the matter was at arguments stage. However, the Board moved an application before the civil court for removal of the arbitrator on the ground of misconduct on his part but during the pendency of the proceedings the Chief Engineer (Arbitrator) superannuated on 30.11.1992 and in that situation the trial court appointed the present arbitrator. Parties put in appearance before the new arbitrator appointed by the Court. Claim statement was filed on 23.7.1993 and the Board filed its written statement on 1.9.1993 again reserving its right to file a counter claim. This was, however, not done till the end of January 1994 and in the meantime, the contractor respondent No. 1 herein concluded his evidence and the Board had examined one witness. At that stage the Board filed a counter-claim and the arbitrator by his order dated 3.2.1994 declined to entertain the counter claim by observing that such a claim can be entertained by him only subject to orders of the Court concerned. The petitioner-Board did not challenge the order dated 3.2.1994 before the civil court nor did make a prayer before it to direct the arbitrator to consider its counter claim. The Board continued to appear before the arbitrator even after the passing of the order dated 3.2.1994 and again pressed for entertaining the counter claim. The arbitrator again by his order dated 24.2.1994 declined the prayer by observing that he had already passed the order on 3.2.1994 declining to entertain the counter claim and in view thereof, no further order was required to be passed in that behalf. The matter went on before the arbitrator and the Board concluded its entire evidence when the Board again pressed into service still another application requesting the arbitrator to entertain the counter claim. The arbitrator again for the third time rejected the prayer by his order dated 11.1.1995 by observing that this prayer has already been rejected by his detailed order dated 3.2.1994. It may be noticed that the matter before the arbitrator was at the arguments stage at that time. It is at this point of time the Board moved an application u/s 5 read with Section 11 of the Arbitration Act (for short ''the Act'') for removal of the arbitrator on the ground of his misconduct. The trial court by its order dated 29.2.1996 dismissed the application and it is against this order the present revision has been filed by the Board.

First contention of the learned counsel for the petitioner is that the order dated 3.2.1994 passed by the arbitrator refusing to entertain the counter claim is against the spirit of arbitration clause and the order of his appointment as arbitrator. Submission of the learned counsel in other words is that the action of the arbitrator in refusing to entertain the counter claim amounts to misconduct and, therefore, he deserves to be removed as arbitrator. Learned counsel in support of his submission placed reliance on Associated Engineering Co. Vs. Government of Andhra Pradesh and another, .

On a consideration of the matter, I find that the contention has no merit. The arbitrator declined to entertain the counter claim by passing a speaking order on 3.2.1994. The Board did not take any step whatsoever for a period of about one year thereafter to approach the court either to challenge the said order or for the removal of the arbitrator. Rather the Board took steps to produce its evidence and in fact concluded its evidence. Now at the fag end of the proceedings, the Board has moved an application u/s 5 read with Section 11 of the Act for the removal of the arbitrator. Firstly, it was incumbent on the Board to make a counter claim in the written statement itself especially having regard to the fact that it had failed to do so before the first arbitrator though a period of over 10 months had gone by. It cannot be expected of the Board to make its counter claim at whatever stage of the proceedings it likes. Again by not challenging the order of the arbitrator and seeking a direction from the court, the Board in my opinion is now precluded from contending that the arbitrator misconducted in the proceedings. Reliance placed by the learned counsel on Associated Engineers'' case (supra), has no application to the facts of this case as that was a case where the challenge was made to the award and not to an order passed during the pendency of the proceedings as is the ''� situation in the present case.

Learned counsel for the petitioner next contended that it was inherent in the order dated 10.6.1993 appointing the arbitrator that he was supposed to entertain the counter claim and decide the controversy between the parties. This may or may not be so, but I do not consider it necessary to go into that matter especially having regard to the order dated 3.2.1994 passed by the arbitrator whereby it has, by making a specific observation, called upon the Board to approach the civil court and get a direction for entertainment of its counter claim. The Board, as already noticed, kept silent and went on pursuing its case, till the matter reached the arguments stage. Thus, the Board cannot take any advantage of the order dated 10.6.1993 appointing the arbitrator, for contending that the arbitrator was bound to entertain the counter claim.

Faced with the above situation, learned counsel for the petitioner submitted that the Board was not required to approach the court for seeking a direction to the arbitrator to entertain the counter claim. This argument in my opinion is an argument of despair and thus stands rejected outrightly.

In view of the above, I see no ground to interfere with the impugned order dated 29.2.1996 passed by the trial court Revision is consequently dismissed.