LexDHARMA PRATHISHTHANAM versus M/S. MADHOK CONSTRUCTION PVT. LTD.
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A DHARMA PRA THISHTHANAM v. M/S. MADHOK CONSTRUCTION PVT. LTD. NOVEMBER 2, 2004 B [R.C. LAHOTI, CJ., G.P. MATHUR AND P.P. NAOLEKAR, JJ.] Arbitration Act, 1940; Ss. 2, 3, 8, 9, 14, 17, 20 and 30: Appointment of an Arbitrator-Requirements of-Award-Validity of- C Held: Arbitration refers to private adjudication of disputes referred to Arbitrator/Arbitrators chosen by parties consensually-Jn case, one party does not give consent for appointment of an Arbitrator proposed by the other party, the other party could seek the appointment from the Court--Since the respondent did not follow the correct procedure and methodology by p appointing the arbitrator and referring the disputes unilaterally, Award void ab initio-Limitation Act, 1963; Article l 19(b). E Appointment of Arbitrator and reference of dispute by one of the parties unilaterally-Effect of-Held: Illegal, since one party cannot usurp the jurisdiction of the Court and proceed to act unilaterally. Appellant, a charitable institution, engaged in a works contract with respondent, a builder, for construction of a building. There was an arbitration clause in the agreement whereby settlement of disputes shall be through arbitration as per provisions of the Indian Arbitration Act. There arose a dispute between the parties. The respondent appointed an Arbitrator and gave F a notice to other party and later referred the dispute for arbitration. Appellant did not participate in the arbitration proceedings.The Arbitrator gave an award with interest in favour of the respondent Respondent filed an application for making the Award rule of the Court Objections filed by the appellant have been dismissed by the Court on the ground of limitation. Aggrieved, appellant G unsuccessfully filed appeal before the Single Judge of the Division Bench of the High Court. Hence the present appeal. It was contended by the appellant that since there was delay in making available the copy of the award, delay in filing objections ought to have been condoned by excluding such period while c;:lculating the period of limitation; I-I 866 r OHARMA PRA THISHTHANAM v. MADHOK CONSTRUCTION PVT. LTD. 867 and that the case may be remanded to Single Judge ofth,e High Court for A decision on merit. Allowing the appeal, the Court HELD: 1.1. Since this Court is satisfied that the Award given by the Arbitrator is a nullity, the proceedings stand terminated fully and finally at B this stage itself. (871-CI 1.2. The Law of Arbitration does not make the arbitration an adjudication by a statutory body but it only aids in implementation of the arbitration contract between the parties which remains a private adjudication by a forum consensually chosen by the parties and made on a consensual reference. C (871-F) 1.3. The procedure followed and the methodology adopted by the respondent is wholly unknown to law and the appointment of the sole Arbitrator, the reference of disputes to such Arbitrator and the ex parte proceedings and Award given by the Arbitrator are all void ab initio and hence D nullity, liable to be ignored. In case of arbitration without the intervention of the Court, the parties must rigorously stick to the agreement entered into between them. If the arbitration clause names an Arbitrator as the one already agreed upon, the appointment of an Arbitrator poses no difficulty. If the arbitration clause does not name an Arbitrator but provides for the manner E in which the Arbitrator is to be chosen and appointed, then the parties are bound to act accordingly. If the parties do not agree then arises the complication which has to be resolved by reference to the provisions of the Act (873-F, G, H; 874-A) 1.4. One party cannot usurp the jurisdiction of the Court and proceed F to act unilaterally. A unilateral appointment and a unilateral reference-both will be illegal It may make a difference if in respect of a unilateral appointment . and reference the other party submits to the jurisdiction of the Arbitrator and waives its rights which it has under the agreement, then the Arbitrator may proceed with the reference and the party submitting to his jurisdiction G and participating in the proceedings before him may later on be precluded and estopped from raising any objection in that regard. (874-A-B) Waverly Jute Mills Co. ltd. v. Raymond and Co. (India) Pvt. ltd., (19631 3 SCR 203 and Khardah Company Ltd. v. Raymond and Co. (India) Private ltd
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