KRISHNA BHAGYAJALA NIGAM LTD. versus G. HARISCHANDRA REDDY AND ANR.

Citation: [2007] 1 S.C.R. 698 · Decided: 10-01-2007 · Supreme Court of India · Bench: ARIJIT PASAYAT · Disposal: Case Partly allowed

Cited by 2 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

_j __ 
A 
KRISHNABHAGY A JALA NIGAM LTD. 
f-
v. 
G. HARISCHANDRAREDDY AND ANR. 
-JANUARY 10, 2007 
B 
[DR. ARIJIT PASAYAT AND·S:H. KAPADIA, JJ.] 
Arbitration and Conciliation Act, 1996 : 
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Ss. 11 and 37(i)(b)-Non-existence of arbitration clause-Plea of-
c Held, Not tenable since the aggrieved party had consented to the arbitration 
of disputes and also proceeded on that basis-Therefore, it cannot be 
allowed to contend now that contract did not constitute an arbitration 
agreement. 
D 
Appellant-Jala Nigam entered into agreement for construction work 
with the Contractor-respondent No. 1. Dispute arose and the Contractor 
called upon the Chief Engineer to act as.an arbitrator.under clause 29 of 
l 
the contract. The Chief Engineer refused to act as an.arbitrator on the 
ground that the contract did not provide for arbitration. The Contractor 
filed petition under Section 11 of the Arbitration and •Conciliation Act, 
E 
1996. The High Court directed the ChiefEngineer to act as an Arbitrator. 
The arbitrator gave directions to both the parties .to file statements and 
counter statements. ·Both the parties complied with the .directions and 
ultimately arbitrator gave his award. 
F 
Aggrieved by the award, Jala Nigam filed.a petition.under Section 
34(2)(v) before Civil Judge. The award was confirmed.by the Civil Judge. 
;-
High Court dismissed the appeal. 
In appeal to this Court, appellant contended that.Clause:29 of the 
G 
Contract was not an arbitration clause -and, therefore the proceedings 
before the Arbitrator were without jurisdiction for want of arbitration 
agreement which cannot be cured by appearance of.the parties;:that even 
if there was no protest or even if there was a consent of JalaNigam,.consent 
cannot confer jurisdiction and, therefore, the impugned Award was:nultand 
void. 
H 
698 
h 
/ 
KRISHNA BHAGYA JALA NIGAM LTD. v. G. HARISCHANDRA REDDY 699 
~ 
Partly allowing the appeal, the Court 
A 
HELD: 1. The plea of"no arbitration clause" was not raised in the 
written statement filed by Jala Nigam before the Arbitrator. The said plea 
was not advanced before the civil court in Arbitration Case. On the 
contrary, both the courts below on facts have found that Jala Nigam had 
B 
consented to the arbitration of the disputes by the Chief Engineer. Jala 
Nigam had participated in the arbitration proceedings. It submitted itself 
• 
to the authority of the Arbitrator. It filed its written statements to the 
additional claims made by the contractor. The executive engineer who 
appeared on behalf of Jala Nigam did not challenge the competence of the 
J 
arbitral tribunal. On the contrary, it submitted to the jurisdiction of the c 
arbitral tribunal. It also filed written arguments. It did not challenge the 
order of the High Court passed in the petition under S. 11 of Arbitration 
and Conciliation Act, 1996. Both the parties accepted that there was an 
arbitration agreement, they proceeded on that basis and, therefore, Jala 
Nigam cannot be now allowed to contend that Clause 29 of the Contract did 
D 
not constitute an arbitration agreement. [Para 10] [703-D-G] 
~ 
Mis. P Dasaratharama Reddy Complex v. Government of Karnataka 
and Another dated 26. 7.2005 order of Supreme Court in Civil Appeal No. 
1586 of 2004, referred to. [704-A] 
E 
2. The plea that Clause 29 of the Contract was not an arbitration 
clause, was raised in the present case for the first time only in Miscellaneous 
First Appeal filed under Section 37(l)(b) of the Act before the High Court 
Therefore, on the facts and circumstances of this case and in view of the 
conduct of the parties, Jala Nigam cannot be allowed to urge that Clause 
F 
29 of the Contract is not an arbitration clause. [Para 11) [704-B-C] 
3. On the merits of the claims made by the contractor it is noted from 
the impugned Award that it contains several Heads. The Arbitrator has 
meticulously examined the claims of the contractor under each separate 
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Heads. There is no reason to interfere except on the rates of interest and 
on the quantum awarded for letting machines of the contractor remaining 
idle for the periods mentioned in the Award. The interest awarded by the 
) 
Arbitrator at 18% for the pre-arbitration period, for the pendente lite 
}\e\'\tid and future interest is reduced to 9%. As far as idling charges are 
concerned, the Arbitrator bas awarded Rs. 42,000 per day for the period 
H 
.~· 
700 
SUPREME COURT REPORTS 
[2007] I S.C.R 
A 
1.2.94 to 17.12.94 and 

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