UNION OF INDIA versus M/S PAM DEVELOPMENT PVT. LTD.

Citation: [2014] 1 S.C.R. 1069 · Decided: 18-02-2014 · Supreme Court of India · Bench: S.S. NIJJAR, RANJANA PRAKASH DESAI · Disposal: Dismissed

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Judgment (excerpt)

[2014] 1 S.C.R. 1069 
UNION OF INDIA 
v. 
MIS PAM DEVELOPMENT PVT. LTD. 
(Civil Appeal No. 5618 of 2006) 
FEBRUARY 18, 2014. 
[SURINDER SINGH NIJJAR AND 
RANJANA PRAKASH DESAI, JJ.] 
A 
B 
Arbitration and Conciliation Act, 1996: s. 11 (6) -
Jurisdiction of arbitrator to entertain the dispute - Agreement 
C 
for construction of Loco shed - Termination of contract -
Arbitration application uls. 11 (6) by respondent - Appointment 
of former judge as arbitrator - Full participation of appellant -
Award by arbitrator - s.34 application by appellant for setting 
aside of award - Dismissed by High Court - On appeal, held: 
D 
Although in the instant case, arbitration agreement provided 
for appointment of two arbitrators and an Umpire, however, in 
view of repeal of Arbitration Act, 1940 by Arbitration Act, 1996, 
the provision in the arbitration agreement for appointment of 
two arbitrators and an Umpire had become redundant -
E 
Appointment of former judge as arbitrator was not challenged 
by the appellant and, therefore, the same became final and 
binding - This apart, appellant failed to raise objection 
regarding lack of jurisdiction of the Arbitral Tribunal before the 
arbitrator - Appellant not only filed the statement of defence 
F 
but also raised a counter claim against the respondent and,, 
therefore, objection is deemed to have been waived in view 
of the provisions contained in s.4 rlw s. 16 of the Arbitration 
Act, 1996 - s.16 provides that the Arbitral Tribunal may rule 
on its own jurisdiction and clearly recognizes the principle of 
kompetenz-kompetenz - s. 16(2) mandates that a plea that the 
Arbitral Tribunal does not have jurisdiction shall be raised not 
later than the submission of the statement of defence - s. 4 
1069 
1070 
SUPREME COURT REPORTS 
[2014] 1 S.C.R. 
A provides that a parly who knows that any requirement under 
the arbitration agreement has not been complied with and yet 
proceeds with the arbitration without stating his objection to 
such non-compliance without undue delay shall be deemed 
to have waived his right to so object - High Courl rightly held 
B that the appellant having failed to raise the plea of jurisdiction 
before the Arbitral Tribunal cannot be permitted to raise the 
plea before it for the first time - Doctrine/Principle - Principle 
of kompetenz-kompetenz. 
Bharat Sanchar Nigam Limited and another versus 
C Motorola India Private Limited (2009) 2 SCC 337: 2008 (13) 
SCR 445 - relied on. 
D 
Case Law Reference: 
2008 (13) SCR 445Relied on 
Para 18 
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 
5618 of 2006. 
From the Judgment and Order dated 15.06.2005 of the 
E High Court of Calcutta in APOT No. 643 of 2003. 
F 
P.P. Malhotra, ASG, Syed Tanweer Ahmad, Sonia 
Malhotra, Shreekant N. Terdal, Yasir Rauf for the Appellant. 
Pranab Kumar Mullick, Soma Mullick for the Respondent. 
The following Order of the Court was delivered 
ORDER 
1. This appeal has been filed by the Union of India 
G challenging the judgment and order of the Calcutta High Court 
dated 15th June, 2005 rendered in APOT N0.643 of 2003. 
2. We may notice here the bare essential facts, which 
would have a bearing on the legal controversy involved in the 
H appeal. 
UNION OF INDIA v. PAM DEVELOPMENT PVT. LTD.1071 
3. On 19th October, 1992, the appellant entered into an 
A 
agreement with the respondent for construction of Industrial 
Covered Electrical Loco Shed. Subsequently, according to the 
appellant, the agreement was terminated in terms of clause 64 
of the General Conditions of Contract by which ~he agreement 
between the parties was governed. The twin reasons for 
B 
termination of the contract were that the respondent initially 
delayed the commencement of the work and subsequently 
executed the work which was of inferior quality. Therefore, the 
appellant had to get the balance work completed from another 
contractor. 
c 
4. On 24th July, 1996, the respondent raised certain 
claims against the appellant. · 
5. On 30th September, 1996, the respondent demanded 
that the disputes be referred to arbitration. 
D 
6. Since the disputes were not referred to arbitration, the 
respondent approached the High Court of Calcutta under 
Section 11 (6) of the Arbitration and Conciliation Act, 1996 
(hereinafter referred to as "the Arbitration Act, 1996") for the 
E 
appointment of a sole arbitrator. The High Court by its order 
dated 10th July, 1998 appointed Mr. Justice Satyabrat Mitra 
as the sole arbitrator. 

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