J. KODANDA RAMI REDDY versus STATE OF A.P. & ORS.

Citation: [2010] 13 S.C.R. 753 · Decided: 11-11-2010 · Supreme Court of India · Bench: R.V. RAVEENDRAN, DALVEER BHANDARI · Disposal: Appeal(s) allowed

Judgment (excerpt)

[201 OJ 13 (ADDL.) S.C.R. 753 
J. KODANDA RAMI REDDY 
v. 
STATE OF A.P. & ORS. 
(Civil Appeal Nos. 1401-1405 of 2002) 
NOVEMBER 11, 2010 
[R.V. RAVEENDRAN AND DALVEER BHANDARI, JJ.] 
Arbitration Act, 1940 - ss. 8, 30 and 33 - Application u/ 
A 
B 
s. 8 for appointment of arbitrator by bidder company -
Objection raised by State that in view of GOM No. 430 dated C 
24.10.1983 all claims above Rs. 50,0001- would be decided 
by the civil court of competent jurisdiction - Appointment of 
arbitrator by Sub-ordinate Judge - Order attaining finality -
Passing of award by arbitrator - Award filed before Sub-
ordinate Judge - Application ulss. 30 an 33 by State for D 
setting aside the award - Award made rule of the court -
Appeal and revision petitions - High Court setting aside the 
appointment of arbitrator holding that dispute to be resolved 
by the competent civil court - Held: Not justified - GOM dated 
24.10.1983 does not contain any provision for arbitration in 
E 
regard to claims exceeding Rs. 50, 0001- - However, the State 
did not challenge the order of appointment of arbitrator -
State participated in the arbitration proceedings without 
protest - No submission to the effect that there was no 
arbitration agreement nor the award challenged on the said 
F 
ground - Thus, State estopped from subsequently contending 
that there was no arbitration agreement and the remedy was 
only by way of suit -
Also, it cannot be challenged belatecfly 
- Adjudication was by court of competent jurisdiction, thus, 
award was not a nullity - Also, order appointing the arbitrator G 
not 1 nullity, even though it might be erroneous - Order of 
appointment of arbitrator had attained finality -
Th11s, order 
passed by High Court set aside and that of trial court restored 
- Matter remanded to >-ligh Court to consicfer order rejecting 
753 
H 
754 SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R. 
A the application u/ss. 30 and 33 - Government order - GOM 
No. 430 dated 24. 10. 1983 - Estoppel - Delay - Res judicata 
- Rule of finality. 
The first respondent-State entered into an agreement 
8 dated 22.6.1987 with the appellant in regard to execution 
of certain work. The appellant raised claims in regard to 
the said work with the first respondent. The claims were 
not settled. The appellant filed a petition under Section 8 
of the Arbitration Act, 1940 before the Sub-ordinate Judge, 
seeking appointment of an arbitrator. The first 
C respondent resisted the petition on basis of the GOM No. 
430 dated 24.10.1983 which was clarified by the GOM 
dated 01.06.1987 that all claims above Rs. 50,000/- would 
be decided by the civil court of competent jurisdiction by 
way of regular suit. The Sub-ordinate Judge, by order 
D dated 25.03.1991, appointed the arbitrator under Section 
8(2) of the Act. The first respondent did not challenge the 
said order. The arbitrator passed an award. The arbitrator 
then filed the award before the Sub-ordinate Judge. The 
first respondent filed a petition under Sections 30 and 33 
E of the Act for setting aside the award. The Sub-ordinate 
Judge, by order dated 08.04.1993, dismissed the petition 
and made the award a rule of the court. Aggrieved, the 
first respondent filed CMA No. 1251/1993 challenging the 
dismissal of its application under Sections 30 and 33 of 
F the Act; CRP No. 4055/1993 challenging the direction that 
a decree be made in terms of the award under Section 
14(2) of the Act; and CRP No. 134/1995 challenging 
belatedly the order dated 25.03.1991 under Section 8(2) 
of the Act appointing the arbitrator. The High Court by 
G order dated 05.10.1999 held that the disputes relating 
claims of more than Rs.50,000/- would not be adjudicated 
by appointment of an arbitrator under Section 8 of the 
Act, but should be resolved by a competent civil court. 
Therefore, the appellant filed the instant appeals. 
H 
J. KODANDA RAMI REDDY v. STATE OF A.P. & 
755 
ORS. 
Allowing the appeals, the Court 
A 
HELD: 1.1 The GOM No. 430 dated 24.10.1983 does 
not contain any provision for arbitration in regard to 
claims exceeding Rs.50,000/- though the said GOM was 
in fact interpreted in many cases prior to 1995, as a 
provision for arbitration. [Para 11] [767-D] 
State of Andhra Pradesh vs. Obulu Reddy 2001 (10) SCC 
30 - relied on. 
B 
State of Andhra Pradesh vs. /. Devendra Reddy 1999 (9) c 
SCC 571; Vishakhapatnam Urban Development Authority v. 
V. Narayana Raju 1999 (9) SCC 572; State of Andhra 
Pradesh vs. Obulu

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