UNION OF INDIA versus M/S. POPULAR BUILDERS, CALCUTTA

Citation: [2000] SUPP. 4 S.C.R. 22 · Decided: 17-10-2000 · Supreme Court of India · Bench: G.B. PATTANAIK · Disposal: Case Partly allowed

Judgment (excerpt)

A 
UNION OF INDIA 
v. 
M/S. POPULAR BUILDERS, CALCUTTA 
OCTOBER 17, 2000 
B 
[G.B. PATTANAIK, M.B. SHAH AND S.N. PHUKAN, JJ.] 
Arbitration Act, 1940-Sections 30 and 33-Award of arbitrator-Non-
existence of arbitrable dispute-Plea of-Held, there must be a dispute at the 
C time of reference to arbitration; if such plea is raised before arbitrator and 
was not taken into consideration, then the award is bad. 
Respondent-Builder entered into an agreement with appellant for 
construction of a building. After the construction of the building, the appellant 
drew up a final bill and sent it to the respondent for acceptance. The bill was 
D accepted 11nd money was paid. Therefore, the respondent communicated to the 
appellant that several additional works were executed pursuant to the 
directions of the appellant and such works had not been included in the final 
bill. At the request of the respondent, the appellant appointed an arbitrator. 
The arbitrator passed an award in favour of the respondent, which was filed 
before High Court to make it a rule of Court. Single Judge made the award 
E a rule of Court. Division Bench of the High Court dismissed the appeal of the 
appellant 
F 
In appeal to this Court, the appellant contended that since the respondent 
accepted the final bill without any objection and received the amount, there is 
no dispute subsisting which can be referred to arbitration. 
The respondent, on the other hand, contended that the plea of the 
appellant, that there is no dispute subsisting, was not argued during arbitration 
proceedings and in the High Court; that such a plea cannot be taken up before 
the Court; and that appointment of the arbitrator was made by the appellant at 
G the request of the respondent on the ground that a dispute subsists for 
arbitration. 
Partly allowing the appeal, the Court 
HELD : The existence of an arbitrable dispute is a condition precedent 
H for appointment of an arbitrator. The final bill prepared by the appropriate 
22 
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U.0.1. v. POPULAR BUILDERS [PATTANAIK, J.] 
23 
authority was accepted by the respondent without protest. In respect of the A 
claim, where the appellant objected before the arbitrator on the aforesaid score, 
the award of the arbitrator to that extent is set aside. So far as the other 
claims are concerned, the appellant not having taken any objection to the same 
on the aforesaid score and that even the objection filed under Sections 30 and 
33 of the Arbitration Act, 1940 not being specific on the issue, it is not B 
appropriate to allow the appellant to raise that objection. 125-E-G I 
Mis. P.K. Ramaiah & Co. v. Chairman & Managing Director, National 
Thermal Power Corpn., 11994) Supp. 3 SCC 126 and Nathani Steels ltd. v. 
Associated Constructions, 11995) Supp. 3 SCC 324, referred to. 
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 5937 of2000. C 
From the Judgment and Order dated 28.1.99 of the Calcutta High Court 
in G.A. No. 42/99 in A.P.O.T. No. 10/99 in A.C. No. 52of1997. 
A. Subba Rao, B. Krishna Prasad and K. Swami for the Appellant. 
L. Nageswara Rao, Abhijit Sengupta, Ms. Madhurima Tatia and 
D. Bharat Kumar for the Respondent. 
The Judgment of the Court was delivered by 
PA TT ANAIK, J. Leave Granted. 
This appeal by the Union of India is directed against the judgment 
dated 28th of January, 1999 of the Division Bench of Calcutta High Court, 
dismissing the appeal of the Union of India, arising out of an arbitration 
proceeding. The undisputed facts are that the respondent. had entered into 
D 
E 
an agreement with the appellant for construction of Annex Building to the F 
Telephone Bhawan at Calcutta. The agreement between the parties contained 
an arbitration clause therein. After the completion of work the final bill was 
drawn and was sent to the respondent anc;l he agreed to accept the final bill 
and in fact did receive the money under the final bill without any objection. 
But thereafter, he wrote a letter to the concerned Chief Engineer, indicating G 
several items of claim and additional works which the respondent had executed 
pursuant to the directions of the appropriate authority and the said work had 
not been included in the final bill. He, therefore, requested the Chief Engineer, 
the authority under Clause 25 of the agreement to appoint an arbitrator and 
pursuant to the said request, the Chief Engineer by his letter dated 25.11.1993 
did appoint an arbitrator. Subsequently, the appointed arbitrator was changed.

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