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TMI Blog2003 (7) TMI 721X X X X Extracts X X X X X X X X Extracts X X X X ..... t Shidlaghatta in Kolar District under Contract No. 20/93-94, dated 23-9-1994. The cost of the work was ₹ 28.60 lakhs and the stipulated period for completion of the work was 12 months. 3. The work could not be completed within the stipulated period and as a result the contract between the parties was terminated. The same work was entrusted to some other agency and got it completed. The respondent raised a dispute and requested for arbitration in terms of Clause 29 of the agreement executed between the parties. As the dispute was not adjudicated by the named arbitrator, the respondent filed a petition under Section 11 of the Act. This Court in C. M. P. No. 4 of 1996 appointed Sri. H. S. Bhat, 599, 10th Cross, 7th Block, Jayanagar, Bangalore as an Arbitrator for adjudication of the dispute between the parties under the contract. Accordingly, the learned Arbitrator entered the reference and after issuing notice to the appellant and the respondent and after hearing them, passed an award dated 15-10-1998 whereby he has allowed some of the claims of the respondent and rejected the others. The Arbitrator (Award) passed by the Arbitrator is improper, illegal and vexatious; the cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the petition filed by the appellant under Section 34 of the Act. Hence, this appeal by the aggrieved K. S. R. T. C. 8. We have heard Sri R. V. Jayaprakash, learned counsel for the appellant and Sri. Gangireddy, learned counsel for the respondent. Sri Jayaprakash would contend that Clause-29 of the agreement executed between the parties is not an arbitration clause which entitles the respondent to seek for adjudication of the claim by referring the same to an Arbitrator; therefore, the order passed by this Court in C.M.P. No. 4 of 1996 appointing Sri. H. S. Bhat, Advocate as an Arbitrator for adjudication of the dispute between the parties is one without jurisdiction and consequently the award dated 15-10-1998 passed by the Arbitrator and the Order dated 20-6-2000 passed by the Court below in Arbitration Suit No. 6 of 1999 are nullity in the eye of law. Sri. Jayaprakash would next contend that the Arbitrator has acted Illegally in law in awarding a sum of ₹ 2,85,000/- towards reimbursement of the overhead charges and further sum of ₹ 2,85,000/- as compensation for loss of profits. According to Sri. Jayaprakash, there is absolutely no evidence on record to show that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the alleged want of jurisdiction in this Court to refer the dispute between the parties to an Arbitrator under Section 11 of the Act, for the first time, in this appeal. (2) Whether the ground regarding the legality and justification on the part of the Arbitrator to award a sum of ₹ 2,85,000/-towards reimbursement of overhead charges and another sum of ₹ 2,85,000/- towards compensating the loss of profits was raised before the Court below, and if it was not raised, whether such plea can be allowed to be raised in this appeal for the first time and if the above plea was in fact raised before the Court below, whether the Arbitrator is justified in awarding a sum of ₹ 2,85,000/- towards reimbursement of overhead charges and another sum of ₹ 2,85,000/- towards compensating loss of profits having regard to Clause 15(a) of the agreement. 11. POINT No. 1 : Before dealing with the point, whether appellant can be permitted to raise the plea that Clause 29 of the agreement executed between the parties, is not an arbitration clause and, therefore, the order made by this Court in C.M.P. No. 4 of 1996 appointing Sri H. S. Bhat as an Arbitrator for adjudication ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 16 grants the Arbitral Tribunal, the power to rule on its jurisdiction, including ruling on any objections with respect to the existence or validity of the arbitration agreement. This power conferred on the Arbitral Tribunal often referred to as Kompetenz - Kompetenz is an essential and widely accepted feature of modern arbitration, particularly, the international arbitration. As per the principle of kompetenz-kompetenz, an Arbitral Tribunal is competent to rule on its own jurisdiction in relation to the arbitral proceedings. Sub-section (2) deals with possible plea of a party that the Arbitral Tribunal does not have jurisdiction to decide the case before it or that it is exceeding the scope of its authority. Subsection (2) of the Act aims, in particular, at ensuring that any such objections are raised without delay. The respondent is required to invoke lack of jurisdiction in the Arbitral Tribunal before the submission of statement of defence, unless the Arbitral Tribunal admits a later plea since it considers the delay justified. Further, the Arbitral Tribunal under Sub-section (5) of Section 16 is required to decide a plea of lack of jurisdiction in the first instance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing jurisdiction point, should raise such plea at the earliest, that is to say, at the threshold of the proceeding. If that is not insisted, it is trite, the very object in enacting the Act, on the basis of the 'Uncitral Modern Law', would be defeated. The jurisdiction plea now raised for the first time in the Memorandum of Appeal was not raised either directly or by necessary implication before this Court in C.M.P. No. 4/1996 or before the Arbitrator or before the Court below. The appellant having acquiesced in the jurisdiction of the Arbitral Tribunal without any demur and protest, having participated in the proceedings and having suffered an award cannot now turn round and raise the plea that the orders of this Court in C.M.P. No. 4 of 1996, the award of the Arbitrator and the judgment of the Civil Court dated 20-6-2000 in Arbitration Suit No. 6 of 1998 are nullity. 16. Thirdly, the appellant should be deemed to have waived his right to object to the jurisdiction of the Arbitrator to pass the impugned award in terms of the provisions of Section 4 of the Act. Section 4 reads as follows :-- 4. Waiver of right to object A party who knows that -- (a) any provisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Where the parties submitted to the jurisdiction of the Arbitrator by filing statement of claim and the counter-claim without raising the question of jurisdiction of the Arbitrator, the award cannot be challenged on the ground of want of jurisdiction. 19. In the case of M/s. Sarkar Enterprise v. M/s. Garden Reach Shipbuilders and Engineers Ltd., AIR2002Cal65 , while negativing the contention of the petitioner therein that though he did not take the point before the Arbitrator with regard to the jurisdiction of the Arbitrator, he can take such point before the Court under Section 13(5) of the Act, the Calcutta High Court held thus:-- I am afraid that such submission is true interpretation of the Act. The new Arbitration Act is prepared so liberally by following United Nation Commission on International Trade Law (UNCITRAL) that the question of jurisdiction can be agitated even before the Arbitrator. Section 16 of the Act speaks for the same. Both the aforesaid sections are arising out of different Chapters. Section 13(5) is provided under Chapter III of the Act made for general procedure for arbitration and challenges thereunder. It is not spelt out Jurisdiction particul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rim rate contract the revision of rates could take place, only in accordance with Clause 12-A when there was a deviation of more than 20 per cent with regard to individual items. On the other hand the terms of the contract, according to the claimant, permitted a claim being made of revision in rates if there was an increase of 20 per cent of the total value of the contract. The dispute before the Arbitrator, therefore, clearly related to the interpretation of the terms of the con-tract. The said contract was being read by the parties differently. The Arbitrators were, therefore, clearly called upon to construe or interpret the terms of the contract. The decision thereon, even if it be erroneous, cannot be said to be without jurisdiction. It cannot be said that the award showed that there was an error of jurisdiction even though there may have been an error in the exercise of jurisdiction by the Arbitrators. 23. The Apex Court having held so, took exception to the Division Bench of the High Court in exceeding its jurisdiction in entering into the facts of the case and interpreting the agreement between the parties and correspondence which was a part of the said agreement and hel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such counter-claim for the first time before the Court cannot be entertained, held thus : 7. Lastly, in the present case, the award passed by the Arbitrator is reasoned one. The contention raised by the learned counsel for the appellant that under Clause 23 of the Agreement between the parties, Contractor was not entitled to recover any interest on delayed payment was neither raised before the Arbitrator, the District Court or before the High Court. This question depends upon the evidence which may be led by the parties as well as interpretation of Clause 23 by the parties and the Arbitrator. The parties have understood that there is no bar on granting interest on delayed payments. It appears that no such contention was raised on behalf of the State of Rajasthan. In this view of the matter, it cannot be held that Arbitrator has committed any error apparent on the face of the record or has misconducted himself in passing the impugned award. It is settled law that scope for setting aside the award is limited to the ground available under the Arbitration Act which have been well defined by long line of decided cases. In this view of the matter, it is not necessary for us to consi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of any loss that he may be put on account of materials purchased or agreed to be purchased, or for unemployment of labour recruited by him. Sri Jayaprakash would contend that the Arbitrator in awarding a sum of ₹ 2,85,000/- towards reimbursing overhead charges and further a sum of ₹ 2.85.000/- towards compensating loss of profits, has completely ignored the bar contained in Clause 15(a) of the agreement, Sri Jayaprakash would contend that the illegality committed by the Arbitrator being a jurisdictional error, the appellant can raise the above plea in this appeal. In support of the contention, Sri Jayaprakash placed reliance on the judgment of the Apex Court in the case of Grid Corporation of Orissa Ltd. v.. Balasore Technical School, AIR1999SC2262 . Per contra, Sri. Gangireddy would contend that the above factual plea was not raised before the Court below and, therefore, such factual plea cannot be permitted to be raised in this appeal. Sri Gangireddy would also maintain, alternatively, that the review of a finding of the fact is not within the domain of this Court. At this stage, Sri Jayaprakash would draw our attention to paragraph h(i) of the amended memorandum of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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