K.RAMASWAMY - (1.) THIS appeal by special leave arises from the judgment and order dated 12/02/1992 of the Division Bench of the Calcutta High Court in F.M.A.T. No.1390 of 1991. The respondent had entered into an agreement in 1968-69 for excavation of Feeder canal from RD.68.00 to RD.97.00. During the course of the execution of the work certain disputes had arisen between the respondent and the appellant. The disputes were referred from time to time to arbitration. THIS is the 5th arbitration in the instalment. Details of previous four arbitrations are as under:- JUDGEMENT_568_3_1996Html1.htm
(2.) THE dispute as regards hire charges of equipment loan by Farakka Barage Project was referred to Goyal Committee for rationalisation. On submission of its report and in furtherance thereof the respondent by letter dated 8/08/1984 had claimed for reference to the arbitration thus: "And whereas M/s. Tarapore and Company having long back been refunded the excess hire charges recovered earlier, but having became refundable on the basis of said Goyal Committee Report, in our case the excess recovered amount and now refunded to us despite repeated, written as well as oral requests and demands in this respect". (Emphasis supplied) In furtherance thereof, by proceedings dated 18/11/1984, the General Manager, Farakka Barrage Project appointed T. Raja Ram as the sole arbitrator to settle the disputes. After entering into the reference on 12/12/1984, admittedly the respondent laid claim for the refund of hire charges which was disputed by counter-statement by the appellant. Later the respondent laid further claims on 6/03/1985 for Rs.1,68,000.00 towards repairs on departmental equipments; Rs.1,38,600.00 towards refund of expenses on security watch and ward; Rs.28,12,085.33 towards final bill of the firm; Rs.95,60,653.10 towards part interest and the amount of claim in addition to the refund of hire charges was Rs.32,45,538.27. The appellant in its statement had objected to unilateral enlargement of the reference. The arbitrator awarded by a non-speaking award dated 18/08/1987, a sum of Rs.35,72,550.00 with interest at 15 Per Cent per annum from 1/07/1976 or the date of the payment of decree whichever was earlier. The appellant filed Misc. Case No.95/8 7/04/1988 under Section 30(c) of the ARBITRATION AND CONCILIATION ACT, 1940 (for short, the 'Act'), questioned the award contending that the claim was barred by limitation; the arbitrator had no power to enlarge the scope of the arbitration and he had no power to award interest at highest rate without any claim before it. The Assistant District Judge, Murshidabad by his order dated 19/01/1991 set aside the award upholding these contentions. On appeal, in the impugned order the High Court set aside the order of the Civil Court holding that there was no error apparent on the face of the award warranting setting aside of the award. It directed the civil Court to take steps for passing a decree in terms of the award as expeditiously as possible not later than four months. Thus this appeal by special leave.
(3.) SINCE Shri Goswamy, learned senior counsel appearing for the appellant has not pressed the bar of limitation for our consideration, it is unnecessary for us to go into that question. Only two questions have been canvassed, viz., the power of the arbitrator to unilaterally enlarge the scope of the reference and the power to award the amount in a non-speaking award and the rate of interest. The question, therefore, is: whether the arbitrator has jurisdiction and power to unilaterally enlarge the reference ? As extracted above, the specific demand and acceptance by the Manager of Farakka Barage Project was to refer the dispute of refund of hire charges pursuant to the report of the Goyal Committee. That was acceded to and reference to T.Raja Ram was made for arbitration on 18/11/1984 and claim in that behalf was duly made. On 6/03/1985 claims were laid by the respondent for arbitration. They were objected to by the respondent. The question emerges; whether the arbitrator has power to unilaterally enlarge the reference ad adjudicate the claims ? It is seen that impugned award is a non speaking award. Shri Soli J. Sorabjee, learned senior counsel for the respondent contended that the appellant having participated before the arbitrator and had an award unfavourable to them, could not question invalidity thereafter. The appellant had participated in the proceedings before the arbitrator with full knowledge of these facts. The conduct of the part of the appellant amounts to acquiescence to the power and jurisdiction of the arbitrator to make the award. Thereby the plea of lack of jurisdiction cannot be permitted to be raised by the unsuccessful party to the arbitration. In support thereof he placed strong reliance in N. Chellappam v. Secretary, Kerala State Electricity Board, (1975) 1 SCC 289 : (AIR 1975 SC 230); M/s. Neelkanthan Construction v. Superintending Engineering, National Highways, Salem, (1988) 4 SCC 462 : (AIR 1988 SC 2045); Russel on Arbitration, 17th Edition, page 215;3, Chowdhri Murtaza Hossein v. Mussumat Bibi Bechunnisa, (1876) 3 Ind App 209; Champsey Bhara and Company v. Jivraj Balloo Spinning and Weaving Company Ltd. (LR (1A) Vol.1 324); Champsey Bhara Company v. Jivraj Balloo Spinning and Weaving Company Ltd., (AIR 1923 PC 66) and Firm Madanlal Roshan Lal Mahajan v. Hukumchand Mills Ltd., Indore (1967) 1 SCR 105 : ( AIR 1967 SC 1030). To constitute an arbitration agreement, there must be an agreement that is to say the parties must be ad diem. Arbitrability of a claim depends upon the dispute between the parties and the reference to the arbitrator. On appointment, he enters upon that dispute for adjudication. The finding of the arbitrator on the arbitrability of the claim is not conclusive, as under Section 33 ultimately it is the Court that decides the controversy. In U.P. Rajkiya Nirman Nigam Ltd. v. Indure Pvt. Ltd. and others decided on 9/02/1996, a three-Judge Bench of this Court (to which one of us, K. Ramaswamy, J., was a member) was to consider the question whether the arbitrator had jurisdiction to decide the arbitrability of the claim itself. In that context, the question arose: whether there was an arbitration agreement for reference to the arbitrator ? It was held that the arbitrability of the controversy of the claim being a jurisdictional issue, the arbitrator cannot clothe himself with jurisdiction to conclusively decide, whether or not be had power to decide his own jurisdiction. Relying upon the passage in "Russel on Arbitration" (19th Edn.) at page 99, this Court had held that it can hardly be within the arbitrator's jurisdiction to decide whether or not a condition precedent to his jurisdiction has been fulfilled. The arbitrator had no power to decide his own jurisdiction. The arbitrator is always entitled to inquire whether or not he has jurisdiction to decide the dispute. He can refuse to deal with the matter at all and leave the parties to go to the Court if he comes to the conclusion that he has no power to deal with the matter; or he can consider the matter and if he forms the view that the contract upon which the claimant is relying on and from which, if established, he alone has jurisdiction, he can proceed to decide the dispute accordingly. Whether or not the arbitrator has jurisdiction and whether the matter is referred to or is within the ambit of clause for reference of any difference or dispute which may arise between the parties, it is for the Court to decide it. The arbitrator by a wrong decision cannot enlarge the scope of the submission. It is for the Court to decide finally the arbitrability of the claim in dispute or any clause or a matter or a thing contained therein or the construction thereof. It was, therefore, held that "arbitrators cannot clothe themselves with jurisdiction to decide conclusively the arbitrability of the dispute". "It is for the Court under Section 33 or on appeal thereon to decide it finally". There is no estoppel to challenge the action and to seek a declaration under section 33. It was further held that "mere acceptance or acquiescence to the jurisdiction of the arbitrator for adjudication of the dispute as to the extent of the arbitration agreement or arbitrability of the dispute does not disentitle the appellant to have the remedy under Section 33 through the Court". The remedy under Section 33 is "the only right royal way for deciding the controversy".;