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Civil Appeal No.2378 of 2020 (arising out of SLP (C) NO.11011 of 2019)

QUIPPO CONSTRUCTION EQUIPMENT LTD. Vs. JANARDAN NIRMAN PVT. LTD.

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.2378 OF 2020

[Arising Out of Special Leave Petition (C) No.11011 of 2019]

QUIPPO CONSTRUCTION EQUIPMENT LIMITED …Appellant

VERSUS

JANARDAN NIRMAN PVT. LIMITED …Respondent

J U D G M E N T

Uday Umesh Lalit, J.

1. Leave granted.

2. In this appeal the Original Claimant challenges the final judgment

and order dated 14.02.2019 passed by the High Court at Calcutta in CAN

No.10094 of 2018.

3. The basic facts culled out from the award dated 24.03.2015 passed

by the Arbitrator in the present case are:-

“That the respondent company who is engaged in the

business of infrastructure development activities

approached the claimant company who is also dealing

in the business of providing equipments for

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Civil Appeal No.2378 of 2020 (arising out of SLP (C) NO.11011 of 2019)

QUIPPO CONSTRUCTION EQUIPMENT LTD. Vs. JANARDAN NIRMAN PVT. LTD.

infrastructure activities to provide on rent two Piing

Rig HR-180 and (1) 300 CPM compressor

(equipments) for carrying out the work as per the

respondent’s instructions. After deliberations and

negotiations, an agreement dated 1.8.2010 was

entered into between the parties in respect of the

abovesaid construction equipments for its work site

C/o Janardhan Nirman Pvt. Ltd. L & TECC site,

NTPC BARH site, BARH, Distt. Patna, Bihar. Being

satisfied with the equipment services provided by the

claimant company, the respondent further approached

the claimant company for taking on rent another one

(1) Pilling Rig-MAIT HR 180 (equipment) for its

same abovesaid work site, along with double set of

crew/operator for each equipment for carrying out the

works as per the respondent’s instructions. After

deliberations and negotiations, an agreement

2.10.2010 was entered into between the parties herein

in respect of the abovesaid equipments. Thereafter,

the respondent further entered into agreements dated

19.3.2011 and 14.4.2011 for taking on rent one (1)

Pilling Rig HR 180 vide each of the said agreements

for carrying out the work as per the respondent’s

instructions for its work site at C/o Janardhan Nirman

Pvt. Ltd., SAIL, DSP, Durgapur, West Bengal and C/o

Janardhan Nirman Pvt. Ltd., NH-34, Farakka-

Dafkhola Road Project, Near Kaliachak, Distt. Malda,

West Bengal, respectively.”

4. In General Terms and Conditions appended to the aforesaid

Agreements, resolution of disputes between the parties was provided for as

under:-

4.1The relevant clauses in respect of the agreement dated 01.08.2010

were to the following effect:-

“24. Governing Law Jurisdiction & Arbitration:

The parties hereto agree that the courts and tribunals at

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Civil Appeal No.2378 of 2020 (arising out of SLP (C) NO.11011 of 2019)

QUIPPO CONSTRUCTION EQUIPMENT LTD. Vs. JANARDAN NIRMAN PVT. LTD.

New Delhi shall have the exclusive jurisdiction and

shall be governed in accordance with the law in India.

24.1 Arbitration: In the event of any claim, dispute or

difference arising out of or in connection with the

interpretation or implementation of the agreement or

out of or in connection with any breach, or alleged

breach of the Agreement (hereinafter referred to as “the

dispute”) between the parties, the parties hereby agreed

to refer such dispute to Arbitration under Construction

Industry Arbitration Association (CIAA) Rules and

Regulations save and except that on behalf of both the

parties to the Agreement. The owners shall be entitled

to select the sole Arbitrator out of the panel of CIAA.

The proceedings shall be governed by the Arbitration

and Conciliation Act, 1996 with any statutory

modification thereto or re-enactment thereof. The

venue for holding such arbitration proceedings would

be New Delhi.”

4.2 On the other hand, the relevant arbitration clause in the agreement

dated 14.04.2011 was to the following effect:-

“24. Governing Law Jurisdiction & Arbitration:

All and any dispute arising out of or in connection

with this contract, including any question regarding

its existence, validity or termination, shall be referred

to and finally resolved by arbitration in Kolkata in

accordance with the arbitration Rules of the

Construction Industry Arbitration Council (“CIAC

Arbitration Rules”) for the time being in force at the

commencement of the arbitration, which rules are

deemed to be incorporated by reference in this Clause.

The owner shall be entitled to select the sole

Arbitrator out of the panel of CIAC. This agreement

is governed by the laws of India and the parties hereto

agree that only that courts and tribunals at Kolkata

shall have the exclusive jurisdiction the dispute arise

out of the terms of the Agreement or its interpretation.

The language of the arbitration shall be in English

language. The provision shall survive the

termination/expiry of this agreement.”

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Civil Appeal No.2378 of 2020 (arising out of SLP (C) NO.11011 of 2019)

QUIPPO CONSTRUCTION EQUIPMENT LTD. Vs. JANARDAN NIRMAN PVT. LTD.

5. In pursuance of the aforementioned agreements, construction

equipments were provided by the appellant to the respondent at the

respective sites as per instructions of the respondent. According to the

terms and conditions of the agreements the respondent was to make

payment within seven days from the date of submission of monthly bills

failing which the respondent would be liable to pay interest for delayed

period. Since the payments were not forthcoming, the appellant by its

letter dated 21.01.2012 asked the respondent to pay the outstanding dues.

In its response dated 01.02.2012 the respondent accepted that every Rig

hired by it was as per the agreement. Since the payments were not

forthcoming, by communication dated 02.03.2012 the appellant gave

notice invoking arbitration. Relying on clauses 24 and 24.1 as stated

above, it was stated that Shri L.C. Jain, President Consumer Forum (Retd.)

was appointed as the Sole Arbitrator who would be conducting

proceedings at New Delhi to adjudicate upon the dispute between the

parties. It was also stated:-

“You are requested to reply and join the arbitration

proceedings within 14 days from the receipt of this

notice and/or make payment of the entire outstanding,

amount of Rs.78,78,533/- (Rupees Seventy Eight

Lakhs Seventy Eight Thousand Five Hundred Thirty

Three Only) with interest @ 18%p.a. to the

outstanding amount.”

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Civil Appeal No.2378 of 2020 (arising out of SLP (C) NO.11011 of 2019)

QUIPPO CONSTRUCTION EQUIPMENT LTD. Vs. JANARDAN NIRMAN PVT. LTD.

A copy of this communication was marked to Construction

Industry Arbitration Council (‘CIAC’, for short).

6. In its reply dated 15.03.2012 the respondent denied existence of

any agreement between the parties. It, however, did not take any steps to

participate in the arbitration. On the other hand, the respondent filed Title

Suit No.189 of 2012 in the Court of Civil Judge, Junior Division, Second

Court at Sealdah, praying that the agreements be declared null and void

and for permanent injunction restraining the appellant from relying on the

arbitration clauses contained in the agreements. At the interim stage, a

restraint order was passed by the Trial Court as a result of which the

proceedings before the Arbitrator were stayed. An application under

Sections 5 and 8 of the Arbitration and Conciliation Act, 1996 (for short

“the Act”) was filed by the appellant submitting that the dispute between

the parties be referred to arbitration.

7. While accepting the application moved on behalf of the appellant

the Trial Court in its Order dated 26.5.2014 observed:-

“The defendant has already stated that there are

agreements between the parties containing arbitration

clause. They referred the matter to arbitration in terms

of the said arbitration clause to resolve payment related

dispute. In support of their contention, the defendant

produced a series of original agreements, signed by both

parties. I fail to understand why the plaintiff signed in a

series of documents, which they claim to be non-

existing. As stated earlier, the plaintiff failed to give any

explanation regarding falsity and forgery committed by

the defendant in executing the said agreements. On

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Civil Appeal No.2378 of 2020 (arising out of SLP (C) NO.11011 of 2019)

QUIPPO CONSTRUCTION EQUIPMENT LTD. Vs. JANARDAN NIRMAN PVT. LTD.

perusal of the agreements, it transpires that all the

agreements contain payment and usage terms in detail.

The agreements also contain arbitration clause i.e. with

regard to any claim and any dispute regarding

implementation, execution and interpretation or breach

of the agreements between the parties.

Therefore, the dispute between the parties

regarding payments is within the scope of arbitration

clause. The defendants are justified in referring the

matter to arbitration. Rather the plaintiff filed this suit

even after having knowledge of arbitration proceeding.

… …

All the disputes between the parties being the

matters covered by arbitration clause are to be

adjudicated by the arbitrator. Therefore, this court has

no jurisdiction to hear and try this suit.”

The application preferred by the appellant was thus allowed and

the plaint was directed to be returned.

8. The respondent filed Miscellaneous Appeal No.57 of 2014 in the

Court of Additional District Judge, Second Court, Sealdah, challenging

said order dated 26.05.2014. Pending appeal, interim relief was prayed for

by the respondent and repeated adjournments on that count were sought by

the respondent before the Arbitrator. The Arbitrator granted

accommodation to the respondent on some occasions but as no interim

order was passed by the appellate court, the proceedings before the

Arbitrator continued. By ex-parte award dated 24.03.2015, the Arbitrator

accepted the claim preferred by the appellant. The award was a common

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Civil Appeal No.2378 of 2020 (arising out of SLP (C) NO.11011 of 2019)

QUIPPO CONSTRUCTION EQUIPMENT LTD. Vs. JANARDAN NIRMAN PVT. LTD.

award covering claims in respect of all the four agreements. The award

observed:-

“The claimant company approached the Construction

Industry Arbitration Council (CIAC), the institutional

body set up for this purpose, for appointment of an

arbitrator as per provisions of the agreement entered

between the claimant company and respondents to

resolve the dispute that arose in between the claimant

company and the respondents. To resolve the dispute

in between the parties, the CIAC assigned this matter

to me (L.C. Jain) as sole arbitrator. Notice of

reference sent by the claimant company is dated

02.03.2012 and thereafter the arbitrator was appointed

and file was put up before the sole arbitrator who

fixed the date for appearance of parties.

… … …

The respondent was provided ample opportunities and

time to settle the account but the respondent failed to

settle the account and ultimately the claimant issued

notice dated 02.03.2012 invoking the arbitration

clause of the abovesaid agreements in order to settle

the dispute with the respondent in accordance to the

provisions of CIAC manual and requested to CIAC

for referring the matter to arbitration and accordingly

the matter has been referred to arbitration. CIAC

issued notice dated 30.05.2012 to the respondents and

asked for appearance and filing of reply/written

statement on 04.07.2012.

… … …

On receipt of the notice by the respondent, the

respondent wrote to CIAC that an appeal has been

filed before the Ld. Additional District Judge, at

Sealdah, Kolkata against the order of the Ld. Civil

Judge and the matter may be adjourned and

accordingly the matter was adjourned and intimation

was sent to the respondents. The respondent was also

informed that without obtaining a stay order from the

court of Ld. Additional District Judge, at Sealdah,

Kolkata, the proceedings will not be adjourned but the

respondents have not filed any stay order with CIAC

in the arbitration proceedings in this matter. For not

putting appearance or by not filing the reply/written

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Civil Appeal No.2378 of 2020 (arising out of SLP (C) NO.11011 of 2019)

QUIPPO CONSTRUCTION EQUIPMENT LTD. Vs. JANARDAN NIRMAN PVT. LTD.

statement, the respondent was proceeded ex-parte and

intimation of the same was sent to respondent by

CIAC. In fact, CIAC sent copy of all proceedings

(orders) of each date to the respondent but the

respondent every time on receipt of intimation from

CIAC continued to send the request for adjournment

of the proceedings before the Sole Arbitrator through

CIAC and has never filed any copy of the stay order,

if any passed by the Ld. Additional District Judge, at

Sealdah, Kolkata, nor filed any reply/written

statement or objections for consideration of the Sole

Arbitrator.

… … …

The respondent has taken the plea before the Ld. Civil

Judge that the agreements as mentioned above have

not been entered by him and all the documents are

forged and fabricated and the Ld. Civil Judge in his

order in the Civil Suit No.189 of 2012 has considered

these pleas of the respondent and after due

consideration of these pleas, directed the respondent

to join the arbitration proceedings. … …

Thus the claimant is entitled to receive from the

respondent an amount of :-

i)Rs.78,78,533/- (Rupees Seventy Eight

Lacs Seventy Eight Thousand Five

Hundred Thirty Three only) i.e. claim

amount.

ii)Interest @ 11% per annum on the amount

of Rs.78,78,533/- (Rupees Seventy Eight

Lacs Seventy Eight Thousand Five

Hundred Thirty Three only) as pendente

lite interest from 2.3.2012 i.e. from date of

reference invoking arbitration till the date

of award i.e. 24.03.2015;

iii)Interest @ 11% per annum from the date

of award i.e. from 25.03.2015 till

realisation;

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Civil Appeal No.2378 of 2020 (arising out of SLP (C) NO.11011 of 2019)

QUIPPO CONSTRUCTION EQUIPMENT LTD. Vs. JANARDAN NIRMAN PVT. LTD.

iv)The claimant has deposited with CIAC the

cost of arbitration i.e. arbitration fee and

allied charges pertaining to the portion of

respondent amounting to Rs.1,47,072/-

(Rupees One Lac Forty Seven Thousand

Seventy Two only) and the claimant is

entitled to receive the same from the

respondent.

Claimant has been directed to deposit stamp paper

worth Rs.12,000/- with CIAC for pronouncing the

award and the claimant accordingly filed the stamp

paper worth Rs.12,000/- with CIAC and the award

has been pronounced. The award has been filed with

CIAC.”

Soon after the award, OMP No. 449 of 2015 was filed by the

appellant in the High Court of Delhi seeking relief under Section 9 of the

Act post the passing of the award.

9. The respondent being aggrieved filed a petition under Section 34 of

the Act before the High Court at Calcutta being AP No.1141 of 2015,

which was dismissed by the High court on 17.07.2015 after observing that

it was not clear from the cause title how the petition could have been filed

in the High Court.

10.Thereafter a petition under Section 34 of the Act was filed by the

respondent being Miscellaneous Case No.298 of 2015 in the Court of

District Judge, Alipore. The respondent reiterated its case about non-

existence of any agreement. It also stated, inter alia, that the venue of

arbitration in terms of the agreement dated 14.04.2011 was at Kolkata.

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Civil Appeal No.2378 of 2020 (arising out of SLP (C) NO.11011 of 2019)

QUIPPO CONSTRUCTION EQUIPMENT LTD. Vs. JANARDAN NIRMAN PVT. LTD.

11.On 20.02.2016 the Appellate Court dismissed Miscellaneous

Appeal No.57 of 2014 as not being maintainable.

12.On 06.01.2007, OMP No. 449 of 2015 was rejected by the High

Court of Delhi, inter alia, on the ground that no prime facie case was made

out by the appellant. It was, however observed that the dismissal would not

have any bearing on the decision that may be rendered in the pending

petition under Section 34 of the Act before the Court at Alipore.

13. Being aggrieved by the order dated 20.02.2016, the respondent

filed Revision Petitions being CO Nos.1320 and 1322 of 2016 in the High

Court at Calcutta, which by its order dated 28.03.2017 dismissed said

Revision Petitions as not being maintainable but reserved rights of the

respondent to agitate all the issues within the ambit of Section 34 of the

Act, in the proceedings pending before the Court at Alipore. Special Leave

Petition (Civil) Nos.25279-25280 of 2017 arising therefrom were

dismissed by this Court on 06.10.2017.

14.The petition filed by the respondent under Section 34 of the Act,

viz. Miscellaneous Case No.298 of 2015 was, thereafter, dismissed by the

Court at Alipore on 13.08.2018 with following observations:-

“After perusal of the case record I find that there was

an arbitration clause in the agreement and the

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Civil Appeal No.2378 of 2020 (arising out of SLP (C) NO.11011 of 2019)

QUIPPO CONSTRUCTION EQUIPMENT LTD. Vs. JANARDAN NIRMAN PVT. LTD.

Arbitrator was appointed at New Delhi and the Ld.

Arbitrator has passed the award in favour of the

opposite parties. The question of jurisdiction of

Section 34 has been raised. There are several case

laws as cited by the Ld. Lawyer for the opposite

parties. From the said case laws it is found that the

jurisdiction of Section 34 is where the arbitration

award was passed or in the place where the seat of

arbitration was agreed by the parties. In the recent

case laws reported in 2017 SCC Online SC 442

1

, I

find that the jurisdiction is exclusively in that place

where the arbitration was done. Ld. Lawyer, for the

petitioner referred the agreement in between the

parties stating that there is a Clause of arbitration at

Kolkata but in reply the Ld. Lawyer for the opposite

parties stated that there are several agreements and the

place of arbitration is mentioned in other agreements

is at Delhi and accordingly the arbitration has made at

New Delhi and this Court has no jurisdiction to

entertain of this Misc. Case U/s 34 of the Act and only

Courts at Delhi have the jurisdiction to entertain the

same.

Accordingly, after careful scrutiny of the case record

as well as the observation of the Hon’ble Apex Court

I find that the arbitration award was passed at New

Delhi and accordingly the Court of New Delhi has the

jurisdiction to entertain the application u/s 34 of the

Arbitration and Conciliation Act. This Court has no

jurisdiction. So, the present case is bad for want of

jurisdiction.”

15.The respondent initially challenged the Order dated 13.08.2018 by

filing Revision Petition (C.O. No.3400 of 2018) which was dismissed as

not being maintainable by the High Court at Calcutta on the ground that a

remedy of filing a petition under Section 37 of the Act was available. The

respondent thereafter filed appropriate petition being CAN No.10094 of

1 Indus Mobile Distribution Pvt. Ltd. vs. Datavind Innovations Pvt. Ltd.: (2017) 7 SCC 678

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Civil Appeal No.2378 of 2020 (arising out of SLP (C) NO.11011 of 2019)

QUIPPO CONSTRUCTION EQUIPMENT LTD. Vs. JANARDAN NIRMAN PVT. LTD.

2018 which was allowed by the High Court at Calcutta vide judgement

dated 14.02.2019 with the following observations:-

“Accordingly, since it is evident from the cause title

itself that the respondent herein was otherwise

amenable to the jurisdiction of the Alipore court, the

order impugned dated August 13, 2018 is set aside

and Misc. Case No.298 of 2015 (R.No.385 of 2015) is

restored to the board of the Additional District Judge,

16

th

Court at Alipore.”

Said Judgment of the High Court is presently under challenge.

16. In the circumstances, it is clear that:-

(i)Though each of the four agreements provided for arbitration,

the award rendered by the Arbitrator was a common award;

and

(ii)In one of the agreements the venue was stated to be Kolkata

and yet the proceedings were conducted at Delhi;

However, at no stage, the aforesaid objections were raised by the

respondent before the Arbitrator and the respondent let the arbitral

proceedings conclude and culminate in an ex-parte award. Therefore, the

question that arises is whether the respondent could be said to have waived

the right to raise any of the aforesaid objections.

17.We heard Mr. Ritin Rai, learned Senior Advocate for the appellant

and Mr. Kuriakose Varghese, learned Advocate for the respondent.

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Civil Appeal No.2378 of 2020 (arising out of SLP (C) NO.11011 of 2019)

QUIPPO CONSTRUCTION EQUIPMENT LTD. Vs. JANARDAN NIRMAN PVT. LTD.

18.Mr. Ritin Rai, learned Senior Advocate submitted that all the while

the respondent was denying the existence of the agreements between the

parties; that after seeing the agreements in original the Civil Court had

accepted the application preferred by the appellant under Sections 5 and 8

of the Act; that the decision rendered by the Civil Court attained finality

with the dismissal of Special Leave Petition by this Court; that the

respondent chose not to participate in the arbitration proceedings; and that

it was only at the stage of preferring petition under Section 34 of the Act

that a submission was raised about the venue of arbitration. It was

submitted that having chosen not to raise any objection on the issue of

jurisdiction or competence of the Arbitrator to go ahead with the matter

pertaining to issue covered by arbitration, the respondent must be taken to

have waived any such objection. It was submitted that, in any case, the

Arbitrator was appointed through Construction Industry Arbitration

Association (‘CIAA’, for short) which was also the modality under the

agreement dated 14.04.2011.

In response, it was submitted by Mr. Varghese, learned Advocate

that every arbitration agreement had to be considered independently and if

an agreement specified the venue to be at Kolkata, the party autonomy in

that behalf ought to be respected. Reliance was placed on the decision of

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Civil Appeal No.2378 of 2020 (arising out of SLP (C) NO.11011 of 2019)

QUIPPO CONSTRUCTION EQUIPMENT LTD. Vs. JANARDAN NIRMAN PVT. LTD.

this Court in Duro Felguera, S.A. vs. Gangavaram Port Limited

2

, where

there were six arbitral agreements and each one of them was subject matter

of independent reference to arbitration.

19.Before we deal with the nature of controversy, we may extract

relevant provisions namely Sections 4, 16 and 20 of the Act.:-

“4. Waiver of right to object.- A party who knows

that-

a)Any provision of this Part from which the

parties may derogate, or

b)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 or, if a time limit is provided for

stating that objection, within that period of

time, shall be deemed to have waived his right

to so object.

… … …

16. Competence of arbitral tribunal to rule on its

jurisdiction.-

(1) The arbitral tribunal may rule on its own

jurisdiction, including ruling on any objections with

respect to the existence or validity of the arbitration

agreement, and for that purpose, -

a) An arbitration clause which forms part of a

contract shall be treated as an agreement

independent of the other terms of the contract;

and

2 (2017) 9 SCC 729

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Civil Appeal No.2378 of 2020 (arising out of SLP (C) NO.11011 of 2019)

QUIPPO CONSTRUCTION EQUIPMENT LTD. Vs. JANARDAN NIRMAN PVT. LTD.

b)A decision by the arbitral tribunal that the

contract is null and void shall not entail ipso

jure the invalidity of the arbitration clause.

(2) A plea that the arbitral tribunal does not have

jurisdiction shall be raised not later than the

submission of the statement of defence; however, a

party shall not be precluded from raising such a plea

merely because that he has appointed, or participated

in the appointment of, an arbitrator.

(3) A plea that the arbitral tribunal is exceeding the

scope of its authority shall be raised as soon as the

matter alleged to be beyond the scope of its authority

is raised during the arbitral proceedings.

(4) The arbitral tribunal may, in either of the cases

referred to in sub-section (2) or sub-section (3), admit

a later plea if it considers the delay justified.

(5) The arbitral tribunal shall decide on a plea

referred to in sub-section (2) or sub-section (3) and,

where the arbitral tribunal takes a decision rejecting

the plea, continue with the arbitral proceedings and

make an arbitral award.

(6) A party aggrieved by such an arbitral award may

make an application for setting aside such an arbitral

award in accordance with section 34.

… … …

20. Place of arbitration. - (1) The parties are free to

agree on the place of arbitration.

(2) Failing any agreement referred to in sub-section

(1), the place of arbitration shall be determined by the

arbitral tribunal having regard to the circumstances of

the case, including the convenience of the parties.

(3) Notwithstanding sub-section (1) or sub-section

(2), the arbitral tribunal may, unless otherwise agreed

by the parties, meet at any place it considers

appropriate for consultation among its members, for

hearing witnesses, experts or the parties, or for

inspection of documents, goods or other property.”

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Civil Appeal No.2378 of 2020 (arising out of SLP (C) NO.11011 of 2019)

QUIPPO CONSTRUCTION EQUIPMENT LTD. Vs. JANARDAN NIRMAN PVT. LTD.

20.While dealing with a case where instead of an odd number of

Arbitrators, as is contemplated under Section 10 of the Act, the parties had

agreed to arbitration of two Arbitrators and where objection in that behalf

was not taken before the Arbitrators, a three Judge Bench of this Court in

Narayan Prasad Lohia vs. Nikunj Kumar Lohia and others

3

considered

the amplitude and applicability of Section 4 of the Act. The relevant

paragraphs of the decision are:-

“5. On 22-12-1997 the 1st respondent filed an

application in the Calcutta High Court for setting

aside the award dated 6-10-1996. On 17-1-1998 the

2nd respondent filed an application for setting aside

this award. One of the grounds, in both these

applications, was that the arbitration was by two

arbitrators whereas under the Arbitration and

Conciliation Act, 1996 (hereinafter called “the said

Act”) there cannot be an even number of arbitrators. It

was contended that an arbitration by two arbitrators

was against the statutory provision of the said Act and

therefore void and invalid. It was contended that

consequently the award was unenforceable and not

binding on the parties. These contentions found

favour with a Single Judge of the Calcutta High Court

who set aside the award on 17-11-1998. On 18-5-

2000 the appeal was also dismissed. Hence this appeal

to this Court.

… … …

8. Mr Venugopal submits that Section 10 of the said

Act is a mandatory provision which cannot be

derogated. He points out that even though the parties

are free to determine the number of arbitrators such

number cannot be an even number. He submits that

any agreement which permits the parties to appoint an

even number of arbitrators would be contrary to this

3 (2002) 3 SCC 572

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Civil Appeal No.2378 of 2020 (arising out of SLP (C) NO.11011 of 2019)

QUIPPO CONSTRUCTION EQUIPMENT LTD. Vs. JANARDAN NIRMAN PVT. LTD.

mandatory provision of the said Act. He submits that

such an agreement would be invalid and void as the

Arbitral Tribunal would not have been validly

constituted. He submits that composition of the

Arbitral Tribunal itself being invalid, the proceedings

and the award, even if one be passed, would be

invalid and unenforceable.

9. Mr Venugopal submits that Section 4 of the said

Act would only apply provided:

(a) a party knew that he could derogate from any

provision of this part, or

(b) a party knew that any requirement under the

arbitration agreement had not been complied with

and the party still proceeded with the arbitration. He

submits that, this case does not fall under category (b)

above. He submits that even category (a) would not

apply because waiver can only be in respect of a

matter from which a party could derogate. He submits

that in respect of provisions which are non-derogable

there can be no waiver. He submits that Section 10 is

a provision from which a party cannot derogate. He

submits that matters from which a party cannot

derogate are those provided in Sections 4, 8, 9, 10,

11(4) and (6), 12, 13(4), 16(2), (3) and (5), 22(4), 27,

31, 32, 33, 34(2) and (4), 35, 36, 37, 38(1) and 43(3).

He submits that, as against this, matters from which a

party can derogate are those provided under Sections

11(2), 19(1) and (2), 20(1) and (2), 22(1), 24, 25, 26

and 31(3).

… … …

14. We have heard the parties at length. We have

considered the submissions. Undoubtedly, Section 10

provides that the number of arbitrators shall not be an

even number. The question still remains whether

Section 10 is a non-derogable provision. In our view

the answer to this question would depend on the

question as to whether, under the said Act, a party has

a right to object to the composition of the Arbitral

Tribunal, if such composition is not in accordance

with the said Act, and if so, at what stage. It must be

remembered that arbitration is a creature of an

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QUIPPO CONSTRUCTION EQUIPMENT LTD. Vs. JANARDAN NIRMAN PVT. LTD.

agreement. There can be no arbitration unless there is

an arbitration agreement in writing between the

parties.

… … …

16. It has been held by a Constitution Bench of this

Court, in the case of Konkan Rly. Corpn. Ltd. v. Rani

Construction (P) Ltd.

4

that Section 16 enables the

Arbitral Tribunal to rule on its own jurisdiction. It has

been held that under Section 16 the Arbitral Tribunal

can rule on any objection with respect to existence or

validity of the arbitration agreement. It is held that the

Arbitral Tribunal’s authority under Section 16, is not

confined to the width of its jurisdiction but goes also

to the root of its jurisdiction. Not only this decision is

binding on this Court, but we are in respectful

agreement with the same. Thus it is no longer open to

contend that, under Section 16, a party cannot

challenge the composition of the Arbitral Tribunal

before the Arbitral Tribunal itself. Such a 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

appointed the arbitrator. Needless to state a party

would be free, if it 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 deemed

waiver under Section 4. Thus, we are unable to accept

the submission that Section 10 is a non-derogable

provision. In our view Section 10 has to be read along

with Section 16 and is, therefore, a derogable

provision.

… … …

20. Respondents 1 and 2 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.”

4 (2002) 2 SCC 388

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Civil Appeal No.2378 of 2020 (arising out of SLP (C) NO.11011 of 2019)

QUIPPO CONSTRUCTION EQUIPMENT LTD. Vs. JANARDAN NIRMAN PVT. LTD.

Thus, even stipulation in Section 10 that number of Arbitrators

“shall not be an even number” was found to be a derogable provision and

since no objections were raised to the composition of the Arbitral

Tribunal, as provided in Section 16, the concerned respondents were

deemed to have waived their right to object.

21.In Duro Felguera

2

the submission that for convenience of either

side the original contract was split into five different contracts and as such

there ought to be a composite reference to arbitration covering all the

contracts was not accepted by this Court. It was found by this Court:-

“42. … … The case in hand stands entirely on

different footing. As discussed earlier, all five

different packages as well as the Corporate Guarantee

have separate arbitration clauses and they do not

depend on the terms and conditions of the Original

Package No. 4 TR nor on the MoU, which is intended

to have clarity in execution of the work.”

Incidentally, it was a case of International Commercial Arbitration

and in each of those agreements the seat of Arbitration was at Hyderabad.

Moreover, the matter had arisen from an arbitration petition preferred

under Section 11(6) of the Act.

22.In the present case the arbitration in question is a domestic and an

institutional arbitration where CIAA was empowered to and did nominate

the Arbitrator. It is not as if there were completely different mechanisms

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Civil Appeal No.2378 of 2020 (arising out of SLP (C) NO.11011 of 2019)

QUIPPO CONSTRUCTION EQUIPMENT LTD. Vs. JANARDAN NIRMAN PVT. LTD.

for appointment of Arbitrator in each of the agreements. The only

distinction is that according to one of the agreements the venue was to be

at Kolkata. The specification of “place of arbitration” may have special

significance in an International Commercial Arbitration, where the “place

of arbitration” may determine which curial law would apply. However, in

the present case, the applicable substantive as well as curial law would be

the same.

23.It was possible for the respondent to raise submissions that

arbitration pertaining to each of the agreements be considered and dealt

with separately. It was also possible for him to contend that in respect of

the agreement where the venue was agreed to be at Kolkata, the

arbitration proceedings be conducted accordingly. Considering the facts

that the respondent failed to participate in the proceedings before the

Arbitrator and did not raise any submission that the Arbitrator did not

have jurisdiction or that he was exceeding the scope of his authority, the

respondent must be deemed to have waived all such objections.

24.In the circumstances, the respondent is now precluded from

raising any submission or objection as to the venue of arbitration, the

conclusion drawn by the Court at Alipore while dismissing Miscellaneous

Case No.298 of 2015 was quite correct and did not call for any

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Civil Appeal No.2378 of 2020 (arising out of SLP (C) NO.11011 of 2019)

QUIPPO CONSTRUCTION EQUIPMENT LTD. Vs. JANARDAN NIRMAN PVT. LTD.

interference. The High Court, in our view, was in error in setting aside

said Order. In any case, the fact that the cause title showed that the

present appellant was otherwise amenable to the jurisdiction of the

Alipore Court, could not be the decisive or determining criteria.

25.We, therefore, allow this appeal, set aside the Judgment and Order

under appeal and restore the Order dated 13.08.2018 passed by the Court

at Alipore in Miscellaneous Case No. 298 of 2015. No costs.

...…..……………….J.

(Uday Umesh Lalit)

...…..……………….J.

(Vineet Saran)

New Delhi;

April 29, 2020.