Quippo Construction Equipment Limited V/s Janardan Nirman Pvt. Limited

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.

Case name: Quippo Construction Equipment Limited V/S Janardan Nirman Pvt. Limited

Case number: Civil Appeal NO.2378 OF 2020

Court: Supreme Court of India

Bench: Hon’ble Justice Uday Umesh Lalit,

Hon’ble Justice Vineet Saran

Decided on: 29/4/ 2020

Relevant Statutes: Arbitration and Conciliation Act and Construction Industry Arbitration Association (CIAA) Rules and Regulations.

• BRIEF FACTS AND PROCEDURAL HISTORY
• 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 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 above said 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.
• In pursuance 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, 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.
• 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.
• 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.
• 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 award covering claims in respect of all the four agreements.
• 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.
• 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 nonexistence 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. On 20.02.2016 the Appellate Court dismissed Miscellaneous Appeal No.57 of 2014 as not being maintainable.
• 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.
• 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.
• 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.
• Accordingly, an appeal was filed in the Supreme Court.

• ISSUES BEFORE THE COURT
• Whether the respondent could be said to have waived the right to raise any of the objections?

• RATIO OF THE COURT
• The court observed that though there were four agreements with arbitration seat at Kolkata and New Delhi, a common award was passed by the Arbitrator at New Delhi in respect of all four agreements.
• The Court referred the case of Narayan Prasad Lohia vs. Nikunj Kumar Lohia and others (2002) 3 SCC 572, and observed that 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 considered the amplitude and applicability of Section 4 of the Act.
• The Court observed that 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 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.
• The Court observed that 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.
• The Court observed that 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.
• The court observed that 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.
• The Court observed that 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 interference.

• DECISION OF THE COURT
• The court held that the High Court 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.
• The Court allowed the appeal and set aside the Judgment and Order under appeal and restored the Order dated 13.08.2018 passed by the Court at Alipore in Miscellaneous Case No. 298 of 2015. No costs.