NARYAN PRASAD LOHIA versus NIKUNJ KUMAR LOHIA AND ORS.

Citation: [2002] 1 S.C.R. 1136 · Decided: 20-02-2002 · Supreme Court of India · Bench: G.B. PATTANAIK · Disposal: Disposed off

Cited by 2 judgment(s) · cites 1 · see the full citation network in Lexace

Judgment (excerpt)

A 
B 
NARY AN PRASAD LOHIA 
v. 
NIKUNJ KUMAR LOHIA AND ORS. 
FEBRUARY 20, 2002 
[G.B. PATIANAIK, S.N. PHUKAN AND S.N. VARIAVA, JJ.] 
Arbitration and Conciliation Act, 1996-Ss. 4, 5, JO, II, 16 and 34 
(2)(a)(v)-Composition of Arbitral Tribunal-Right to objection-Waiving of-
C Dispute-Arbitration by two Arbitrators-Award-Challenge before High Court 
on the ground that there could not be an even member of Arbitrators under 
the Act-Objection not raised before the Arbitral Tribunal-High Court setting 
aside theaward:validi@of-Held, if a party does not object to the composition 
of the tribunal before the Arbitral Tribunal itself within the prescribed time, 
there is deemed waiving of right to objection-Award can be set aside under 
D section 34 (2)(a)(v) of the Act only if the Arbitral Tribunal or procedure were 
not in accordance with the agreement between the parties. 
E 
The issued involved in the present appeal is whether a mandatory 
provision of the Arbitration and conciliation Act, 1996 can be waived by the 
parties. 
Appellant and the respondents agreed to resolve their disputes through 
two Arbitrators and an Award was passed. Subsequently, respondents filed 
an application in the High Court for setting aside the award on the ground 
that under the Act there could not be an even number of Arbitrators. Single 
F judge of the High Court set aside the award. Appeal before the Division Bench 
of the High Court was dismissed. Hence the present appeal Since the question 
involved was an important question of law, the matter was referred to a three-
judge Bench. 
On behalf of appellant it was contended that if an objection to the 
G composition of the Arbitral Tribunal was not raised before the Arbitral 
Tribunal itself within the prescribed time laid down under S. 16(2), then the 
party could be deemed to have waived its right to object by virtue of s.4; that 
s.34(2)(a)(v) of the Act did not permit the setting aside of an award on the 
ground of composition of the Arbitral Tribunal if the composition was in 
accordance with the agreement of the parties and since in the instant case 
H 
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NARA YAN PRASAD LOHIA v. NIKlJNJ KUMAR LOHIA 
113 7 
the composition was in accordance with the agreement of the parties, the A 
award could not be set aside. 
On behalf of respondents it was contended that an agreement which 
permits the parties to appoint an even number <>f arbitrators would be 
cmitrary to the mandatory provisions of 5.10 of the Act which could not be 
derogated; that s.16 did not provide for any challenge to the composition of B 
the Arbitral Tribunal and since an invalid composition of the Arbitral 
Tribunal goes to the root of the jurisdiction, High Court was justified in setting 
aside the Award. 
Answering the question of law referred to, the Court. 
HELD : 1. Coder Section 16 of the Arbitration and conciliation Act, a c 
party can challenge the composition of the arbitral tribunal before the arbitral 
tribunal itself. Such challenge must be taken, under Section 16(2), not later 
than the submission of the statement of defence. Section 16(2) makes it clear 
that such a challenge can be taken even though the party may have 
participated in the appointment of the arbitrator and/or may have himself D 
appointed the arbitrator. A party would be free, if he so chooses not to raise 
such a challenge. Thus, a conjoint reading of Sections 10 and 16 shows that 
an objection to the composition of the arbitral tribunal is a matter which is 
derogable. It is derogable because a party is free not to object within the time 
prescribed in Section 16(2). If a party chooses not to so object there will be a E 
deemed waiver under section 4. Thus, it cannot be accepted that Section 10 
is a non-derogable provision. Section 10 has to be read along with Section 16 
and is, therefore, a derogable provision. In the instant case respondents not 
having raised any objection to the composition of the arbitral tribunal, as 
provided in Section 16, they must be deemed to have waived their right to 
object. 11148-D-FJ 
F 
Konkan Railway Corporation ltd v. Rani Construction Pvt. ltd, 12002) l 
scale 465, relied on. 
2. Even if parties provide for appointment of only two arbitrators, that 
does not mean that the agreement becomes invalid. There is no reason, why G 
the two arbitrators cannot appoint a third arbitrator at a later stage i.e. if 
and when they differ. This would ensure that on a difference of opinion the 
arbitrat

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