M/S DODSAL PVT. LTD. versus DELHI ELECTRIC SUPPLY UNDERTAKING OF THE MUNICIPAL CORPORATION OF DELHI

Citation: [1996] 2 S.C.R. 629 · Decided: 14-02-1996 · Supreme Court of India · Bench: B.L. HANSARIA, K. VENKATASWAMI · Disposal: Disposed off
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Judgment (excerpt)

*-
I 
, 
M/S. DODSAL PVT. LTD. 
v. 
DELHI ELECTRIC SUPPLY UNDERTAKING OF THE 
MUNICIPAL CORPORATION OF DELHI 
FEBRUARY 14, 1996 
[B.L. HANSARIA AND K. VENKATASWAMY, JJ.] 
Arbitration and Conciliation Ordinace 1996. 
A 
B 
Sections 4, 7(2)-Contract between Delhi Electric Supply Undertaking C 
(DESU) and a consumer-Arbitration agreement-Appointment of Ar-
bitrators-Question of jurisdiction raised by DESU-High Court holding that 
the contract was void inasmuch as Sections 201 and 203 of Delhi Munieipal 
Co1poratio11 Act r/w bye law 3 (1 )(a) were violated--On appeal held, in view 
of a Constitution Bench decision matter ref erred to another Five- Judge 
Bench, as certain questions were not raised before the Constitution Bench in D 
Waverley Jute Mills Case. Delhi Municipal Coiporation Act-Sections 20 I, 
203. 
Waverley Jute Mills Co. Ltd. v. Raymon and Co. (India) Pvt. Ltd., AIR 
(1963) SC 90 and Krishun Lal v. State of J & K, (1994] 4 SCC 422 referred 
to. 
Ridge v. Baldwin, (1964) AC 40 and Anisminic Ltd. v. Foreign Com-
pensation Commission, (1969) 2 AC 147 referred to. 
'Administrative Law' by Wade and Forsyth, 7th Edn. pages 339 to 344, 
referred to. 
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 2372-74 
of 1987. 
E 
F 
From the Judgment and Order Dated 16.2.83 of the Delhi High 
Court in FA.O. (O.S.) Nos. 50-52 of 1979. 
G 
Rajiv Tyagi for Gagrat & Co., for the Appellants. 
The following Order of the Court was delivered : 
An absolutely inequitable stand taken by the respondent (Delhi H 
629 
630 
SUPREME COURT REPORTS 
l 1996] 2 S.C.R. 
A Electric Supply Undertaking) has led us to examine some fundamental 
questions of law. We have opened with this observation inasmuch as the 
respondent has challenged the award of the arbitrators made in favour of 
the appellant on the ground that the contract, which contained arbitrator 
agreement, is void, because of which there is no agreement to refer the 
B dispute to arbitration; and so, the arbitrators had no jurisdiction to pass 
impugned award. Such a stand flies on the face of the respondent inasmuch 
as of the two arbitrators, one, namely Shri K.L. Vijh, had been appointed 
by the respondent itself. But as the award ultimately went in favour of the 
appellant, it raised the question of jurisdiction. We.have no doubt in our 
mind that such a stand is inequitable, indeed highly inequitable. Question, 
C however, is whether the law permits such a question to be raised. 
2. The High Court accepted the contention that the contract was void 
inasmuch as sections 201 and 203 of the Delhi Municipal Corporation Act 
read with bye law 3(1)(a) were violated. Dr. Singhvi, appearing for the 
D respondent has urged that the contract being void, along with it fell the 
arbitration agreement contained in the contract, because of which the 
arbitrators had no jurisdiction to pass the award in question. 
E 
F 
3. It is further submitted that in such a case appearance of the 
respondents in the proceeding, i.e. its acquiscence, would, not, alter the 
situation in view of what has been held by a Constitution Bench of this 
Court in Waverley Jute Mills Co. Ltd. v. Raymon and Co. (India) Pvt. Ltd., 
AIR (1963) SC 90, in. paragraph 21 of which it was stated that" an 
agreement for arbitrator is the very foundation of which the jurisdiction of 
the arbitrators to act rests, and where that is not in existence, at the time 
when they enter on their duties, the proceedings must be held to be wholly 
without jurisdiction. And this defect is not cured by the appearance of the 
parties in those proceedings even if that is with9ut protest, because it is 
well settled that consent cannot confer jurisdiction". 
4. The aforesaid stand brings to the fore the following fundamental 
G questions of law : 
H 
(1) Whether the present was a case of contract being void or 
voidable ? 
(2) Whether a mandatory provision cannot at all be waived ? 
. 
. 
DODSALPVf. LTD. v. D.E.S.U. 
631 
5. As we are proposing to refer to the matter to a Constitution Bench, A 
we may not dilate the questions, except stating that a perusal of 'Ad-
ministrative Law' by Wade and Forsyth (7th Edn. Pages 339 to 344 would 
show that in Ridge v. Baldwin, (1964) AC 40, some of the dissenting Judges 
of the House of Lords suggested that even ultra vires action might be 
merely voidable. Reference has also been made to what was held in B 
Anisminic Ltd. v. Foreign Compensation Commission, (1969) 2 AC 147, 
which has dealt with the quest
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