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TMI Blog2000 (11) TMI 1116X X X X Extracts X X X X X X X X Extracts X X X X ..... thereupon constituted the Arbitral Tribunal. Proceedings commenced on 16-9-1995 and claims were preferred and evidence by way of affidavits was led by both sides before this Arbitral Tribunal. The numerous hearings held thereafter have virtually been frustrated after the demise of Justice G.C. Jain, who was eventually succeeded by Justice H.L. Anand. Although the learned counsel for STC has vehemently argued that the demurrer to be decided herein was instigated by counsel for Ethiopian Airlines, it was Justice Anand who on 30-12-1998, in terms of his letter dated 30-12-1998, raised the question of the appointment of the Presiding Arbitrator. As a consequence of this stalemate no further hearings of the Arbitral Tribunal took place. Succinctly stated, Justice Anand would have further hearings to proceed under section 10(1), the effect being that Justice Avadh Behari Rohtagi would not be a constituent of the Arbitral Tribunal. If selected by the two nominated arbitrators, i.e., Justice Anand and Shri C.S. Agarwal, Justice Avadh Behari Rohtagi would be the Umpire; his participation in the decision-making would arise only if there was no unanimity between the two nominated arbitrato ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agreement provides that a reference shall be to three arbitrators, one to be appointed by each party and the third by the two appointed arbitrators, the agreement shall have effect as if it provided for the appointment of an umpire, and not for the appointment of a third arbitrator, by the two arbitrators appointed by the parties. (2) Where an arbitration agreement provides that a reference shall be to three arbitrators to be appointed otherwise than as mentioned in sub-section (1), the award of the majority shall, unless the arbitration agreement otherwise provides, prevail. (3) Where an arbitration agreement provides for the appointment of more arbitrators than three, the award of the majority, or if the arbitrators are equally divided in their opinions, the award of the umpire shall, unless the arbitration agreement otherwise provides, prevail. 5. A catena of cases was cited by the learned counsels for the parties. The decision of the Constitution Bench of the Supreme Court in Khardah Co. Ltd. v. Raymon Co. (India) (P.) Ltd. AIR 1962 SC 1810, was relied upon in which it had been observed as follows : "14(2) It is next contended for the appellants that even if cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disability that will not be a ground on which the other party can dispute the award if he was aware of it. Vide Russel on Arbitration, 16th Edition 320. We are, therefore, unable to accept the contention of Mr. Sanyal, that the respondents are estopped by their conduct from questioning the validity of the award." (p. 1815) 6. The opinion expressed above is sought to be extrapolated into the matrix of the present case to argue that even if Ethiopian Airlines had acquie- sced in the Chairmanship of Justice Rohtagi in the Arbitral Tribunal, since this was allegedly contrary to section 10, such conduct would not legitimise the proceedings. I am unable to read this decision beyond hav-ing laid down that if the Agreement was illegal, the Arbitration Clause contained in the Agreement would perish along with the Agreement, thus, invalidating the Arbitral Proceedings even though they were willingly participated in by both adversaries. The Court had noted that "if there had been another arbitration agreement apart from and independent of Clause 14 of the contract dated September 7, 1955, it might have been possible to sustain the proceedings as referable to that agreement." 7. The s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... othe himself with power to decide the question of his own jurisdiction unless parties expressly conferred such a power on him." [Emphasis added] 9. Courts have, in a number of instances, applied the principle of Waiver and acquiescence to validate arbitral proceedings. In Pannalal Jugatmal v. State of Madhya Pradesh AIR 1963 MP 242, the Division Bench held that even assuming that the reference to arbitration was invalid, the parties would be deemed to have made a fresh appointment of the arbitrator. In R. Prince Co. v. Governor General in Council AIR 1955 Punjab 240, the Court declined to consider any objection to the legal impropriety of the appointment of the Umpire since the Government was a party to the Reference and failed to demur at the first opportunity, and took the chance of a favourable decision and held that the Government had acquiesced in the appointment and waived objections to any defect in the appointment. In Bakaro Ramgur Ltd. v. Dr. Prasun Kumar Banerjee AIR 1968 Pat. 150, the Full Bench opined as follows, and then held that since the parties participated in the arbitral proceedings even after the expiry of the period of four months, the Award ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a stop to the Arbitrator proceeding in the matter on the expiry of 4 months after he entered on the reference because of the stipulation in the arbitration agreement imported under the Act but it waived it and allowed the proceeding to proceed as though the stipulation did not exist. In my opinion, it waived its right. In the same Volume in article 1177 at page 638, the term acquiescence has been stated to imply in its proper legal sense that a person abstains from interfering while a violation of his legal rights is in progress. The next Article says that acquiescence operates by way of estoppel and is an instance of estoppel by words or conduct. Of course, for the application of the principles of waiver and acquiescence and also to a certain extent for the application of the doctrine of estoppel by conduct knowledge of one s legal rights or true facts must be there. On the facts of the instant case as narrated above, I have no doubt that it was there." (p. 157) 10. In Union of India v. B.M. Sen AIR 1963 Calcutta 456, it was held that since both parties appeared before the arbitrator fully knowing that he did not answer to the description of the officer referred to in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore the umpire as sole arbitrator would not confer jurisdiction as there was inherent lack of jurisdiction in that, the order in O.P. 11 of 1972 was bad in law and that it did not clothe the umpire with any jurisdiction. We are of the view that even assuming that the order in O.P. 11 of 1972 was not passed on consent, the umpire had power to pass the award. As we said, the umpire could have entered upon the reference under rule 4 of the First Schedule when the arbitrators failed to make the award within the extended time. Neither the fact that the umpire wanted an order from the court to enter upon the reference nor the fact that an application was made by the Board on 5-2-1972 to extend the time for the arbitrators to make the award would denude the umpire of his jurisdiction to enter upon the reference and pass an award under rule 4 of the First Schedule. Therefore, when the Board without demur participated in the proceedings before the umpire and took the chance of an award in its favour, it cannot turn round and say that the umpire had no inherent jurisdiction and therefore its participation in the proceedings before the umpire is of no avail. The fact that the umpire did not p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the preponderant opinion is that the principles of estoppel and waiver would operate so as to validate arbitral proceedings which took place albeit with only the tacit approval of the parties. It has been recognized that it is open to the Court to consider whether, from the conduct of the parties, it could be inferred that a fresh agreement to refer disputes to arbitration had evolved or transpired. In my perception, waiver and acquiescence are only one side of a coin, the obverse side being the evolution of a fresh contract. It is also incumbent on the Court to eschew an approach which would invalidate proceedings held over a period of time without demur. A pedantic approach to statutory provisions is also to be avoided. Law is vibrant and not immutable - power should follow justice, not precede it ( sequi debet potentia justitian non praecedere ). Section 10 ought not to be employed to render the Arbitral Proceedings nugatory. 15. A holistic reading of section 10 discloses that first sub-rule contemplates a situation where both adversaries appoint one arbitrator each and these arbitrators thereafter jointly appoint an umpire. The second sub-rule envisages the appointment ..... X X X X Extracts X X X X X X X X Extracts X X X X
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