# Meerut Development Authority, Meerut v. M/s. Civil Engineering Construction Corporation & Ors

- **Citation:** (2020) 2 ILRA 1082
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2020-01-20
- **Case number:** FAFO No. 3706 of 2018
- **Bench:** Saumitra Dayal Singh
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/meerut-development-authority-meerut-v-m-s-civil-engineering-construction-45617
- **Pages:** 20

## Headnote

A. Arbitration Act - "entering upon the
reference" - meaning - An arbitrator
enters on a reference when he first
applies his mind to the dispute - when
arbitrator actually enters upon the
matter of reference & not when an
arbitrator accepted the office or took
upon himself that duty

Fact - on 04.09.2004 Civil Judge directed
to appoint arbitrator make his award with a
period of four months - Civil Judge vide
order dated 25.10.2004 appointed sole
arbitrator
-
on
15.11.2004
arbitrator
accepted the appointment and entered into
reference accordingly and issued notice
fixing the first date in the proceedings, on
20.11.2004 for appearance of the parties -
Appellant
case
that
award
dated
19.03.2005 was time barred made after the
mandate of four months had expired - Held
- on 20.11.2004 arbitrator applied his mind
to the subject matter of dispute put up for
arbitration
-
thus
arbitrator
entered
reference on 20.11.2004 - Computed from
the first date fixed in arbitration, he had
time upto 19 March 2005 to make the
award as his four month mandate survived
till then - - No interference (Para 51)
2 All. Meerut Development Authority, Meerut Vs. M/s Civil Engineering Construction Corporation & Ors.
1083
B. Arbitration Act, 1940 - Arbitration &
Conciliation Act, 1996
- S. 85
-
Abatement - no provision for abatement
of any existing arbitration proceeding
under 1940 Act on enforcement of the
1996 Act - S. 85(2)(a) of 1996 Act saves
operation of 1940 Act - however parties
have
option
to
plead
&
establish
existence of an agreement between the
parties or consent to apply the New 1996
Act

Held - No provision for abatement of any
existing arbitration proceeding under 1940 Act
upon enforcement of the New 1996 Act - Even
upon the enforcement of the New Act w.e.f.
25.01.1996, the proceedings instituted under
Section 20 of the Old 1940 Act, that were
pending (on that date), survived - arbitration to
be governed by the provision of the 1940 Act
(Para 29, 30, 36)

C. Practice & Procedure - Arbitration
proceeding - Consent - Stage - stage
when consent may be given by the
parties to adopt the procedure under the
New 1996 Act - parties to an arbitration
contract could agree to the applicability
of the New 1996 Act even before the New
1996 Act came into force and even when
the Old 1940 Act was still holding the
field.

Appellant
contention
that
even
upon
enforcement of the New 1996 Act the claimant
pressed application made under Section 20 of
the Old 1940 Act (for appointment of
arbitrator) - thus parties consented in negative
to not proceed under the New 1996 Act -
subsequent
conduct
of
the
parties
of
consenting before the arbitrator on 15.02.2005
(to allow the arbitration proceedings to be
conducted under the New Act), is an act of no
legal consequence - Held - by virtue of Clause
34 of the contract bonds, the New 1996 Act
became available upon its enforcement - on
15.02.2005 parties signified to follow the
procedur

## Text

_Characters 0–39,706 of 69,451. This is a partial read: ask again with offset=39706 for what follows._

1082 INDIAN LAW REPORTS ALLAHABAD SERIES
proper multiplier to be applicable would
be 7 instead of 5 and the Tribunal erred in
law while it applied multiplier of 5 in the
annual dependency, therefore, the amount
of annual dependency, ought to have been
multiplied by 7. Thus, counting at the rate
of 7, it is aggregated to Rs.1,68,000/-
along-with 7% interest per annum. The
Tribunal has also awarded rest of the
amount under various other heads - say
loss of companionship and estate and the
funeral expenses i.e. Rs. 5000/-, Rs.2000/-
and Rs. 2,500/- respectively which are
justified amount and needs no interference
by this Court. The total compensation
amount would thus swell to Rs. 1,77,500/-
along-with
7%
interest
instead
of
1,29,500/-.

22. In view of above analysis, the
instant appeal is partly allowed for and
over
all
compensation
amount
Rs.1,77,500/-. The judgment and award of
the tribunal dated 5.8.2010 passed in
Motor Accident Claim Petition No. 72 of
2008 Smt. Shyama @ Rani and others Vs.
I.C.I.C.I. Lombard General Insurance
Company and others, is hereby modified
to the aforesaid extent.

23. Proportional distribution of
aforesaid amount among the claimants
shall be in line with the disbursement as
ordered by the tribunal.

24. The aforesaid entire amount is to
be realized from the insurance company
and deposited with the tribunal within one
month from today.

25. Costs easy.
----------
(2020)02ILR A1082

APPELLATE JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 20.01.2020

BEFORE
THE HON'BLE SAUMITRA DAYAL SINGH, J.

FAFO No. 3706 of 2018

Meerut Development Authority, Meerut
 ...Appellant
Versus
M/s.
Civil
Engineering
Construction
Corporation & Ors. ...Respondents

Counsel for the Appellant:
Sri Faizan Ahmad, Sri Bhupeshwar Dayal,
Sri S.F.A. Naqvi

Counsel for the Respondents:
Sri Murshid Khan, Sri Amit Saxena, Sri
Mushir Khan

A. Arbitration Act - "entering upon the
reference" - meaning - An arbitrator
enters on a reference when he first
applies his mind to the dispute - when
arbitrator actually enters upon the
matter of reference & not when an
arbitrator accepted the office or took
upon himself that duty

Fact - on 04.09.2004 Civil Judge directed
to appoint arbitrator make his award with a
period of four months - Civil Judge vide
order dated 25.10.2004 appointed sole
arbitrator
-
on
15.11.2004
arbitrator
accepted the appointment and entered into
reference accordingly and issued notice
fixing the first date in the proceedings, on
20.11.2004 for appearance of the parties -
Appellant
case
that
award
dated
19.03.2005 was time barred made after the
mandate of four months had expired - Held
- on 20.11.2004 arbitrator applied his mind
to the subject matter of dispute put up for
arbitration
-
thus
arbitrator
entered
reference on 20.11.2004 - Computed from
the first date fixed in arbitration, he had
time upto 19 March 2005 to make the
award as his four month mandate survived
till then - - No interference (Para 51)
2 All. Meerut Development Authority, Meerut Vs. M/s Civil Engineering Construction Corporation & Ors.
1083
B. Arbitration Act, 1940 - Arbitration &
Conciliation Act, 1996
- S. 85
-
Abatement - no provision for abatement
of any existing arbitration proceeding
under 1940 Act on enforcement of the
1996 Act - S. 85(2)(a) of 1996 Act saves
operation of 1940 Act - however parties
have
option
to
plead
&
establish
existence of an agreement between the
parties or consent to apply the New 1996
Act

Held - No provision for abatement of any
existing arbitration proceeding under 1940 Act
upon enforcement of the New 1996 Act - Even
upon the enforcement of the New Act w.e.f.
25.01.1996, the proceedings instituted under
Section 20 of the Old 1940 Act, that were
pending (on that date), survived - arbitration to
be governed by the provision of the 1940 Act
(Para 29, 30, 36)

C. Practice & Procedure - Arbitration
proceeding - Consent - Stage - stage
when consent may be given by the
parties to adopt the procedure under the
New 1996 Act - parties to an arbitration
contract could agree to the applicability
of the New 1996 Act even before the New
1996 Act came into force and even when
the Old 1940 Act was still holding the
field.

Appellant
contention
that
even
upon
enforcement of the New 1996 Act the claimant
pressed application made under Section 20 of
the Old 1940 Act (for appointment of
arbitrator) - thus parties consented in negative
to not proceed under the New 1996 Act -
subsequent
conduct
of
the
parties
of
consenting before the arbitrator on 15.02.2005
(to allow the arbitration proceedings to be
conducted under the New Act), is an act of no
legal consequence - Held - by virtue of Clause
34 of the contract bonds, the New 1996 Act
became available upon its enforcement - on
15.02.2005 parties signified to follow the
procedure prescribed under the New 1996 Act
only - submission by appellant that the option
to proceed under the New Act had to be
exercised at the first instance, i.e. at the
earliest upon enforcement of the New Act, is
plainly unsubstantiated - nothing in the New
Act or in the language of Section 85, as may
allow such an interpretation to arise - consent
given by the parties, on 15.02.2005 (before the
learned arbitrator), to proceed under the New
Act is valid consent - award made in
accordance with the provisions of the New Act
(Para 40)

D. Arbitration Act (10 of 1940) - S.20(4)
- Appointment of sole arbitrator - failure
to
appoint
arbitrator
upon
specific
request - Gives right to other party to
invoke
jurisdiction
of
Court
for
appointment of arbitrator.

MDA contention appointment of the arbitrator
by Civil Judge was without jurisdiction as such
jurisdiction to appoint arbitrator was available
only to Vice Chairman of the MDA -Held - once
MDA failed to appoint an arbitrator upon
specific request made by the claimant -
claimant
within
its
rights
to
move
an
application for appointment of an arbitrator -
once parties could not agree to appointment of
a consented arbitrator - it was left only to the
Court to make that appointment - appointment
of sole arbitrator did not suffer from any
defect. (Para 47)

E. Practice & Procedure - Jurisdiction -
acquiescence - Long participation and
acquiescence in the proceeding preclude
such a party from contending that the
proceedings were without jurisdiction -
principle is that a party shall not be
allowed to blow hot and cold

Held - Once the MDA participated in the
proceedings for appointment of arbitrator
without raising any objection as to his
jurisdiction on account of New 1996 Act having
been enforced and allowed such appointment
to be made and participated in the proceedings
before the arbitrator so appointed - clearly
MDA acquiesced - therefore despite defect of
jurisdiction, the plea of nullity does not arise -
objection raised by the appellant as to inherent
lack of jurisdiction and consequently to the
award being void ab initio, rejected. (Para 36)

First Appeal From Order Dismissed (E-5)

List of cases cited :
1084 INDIAN LAW REPORTS ALLAHABAD SERIES
1.Food Corporation of India & Anr. Vs A. Mohd.
Yunus AIR 1987 Kerala 231

2.Oriental
Insurance
Company
Limited
Vs
Narbheram Power & Steel Pvt. Ltd. (2018) 6 SCC
534

3.M/s Dozco India Pvt. Ltd. Vs M/s Doosan Infracore
Co. Ltd. (2011) 6 SCC 179

4.M/S N. S. Nayak & sons Vs State of Goa & Anr.
(2003) 6 SCC 56

5.M/s Setty's Construction Co. Pvt. Ltd. Vs M/s
Kundan Railway Construction Co. Pvt. Ltd. AIR 1999
SC 1535

6.Thyssen Stahlunion GMBH Vs Steel Authority of
India Ltd (1999) 9 SCC 334

7. Milkfood Ltd. Vs GMC Ice Cream (P) Ltd (2004) 7
SCC 288

8. Delhi Transport Corporation Vs Rose Advertising
AIR 2003 SC 2523

9. National Aluminium Co. Ltd. Vs Pressteel &
Fabrications Pvt. Ltd. & Ors. AIR 2005 SC 1514

10. State of U.P. Vs Allied Construction Engineers &
Contractors 2009 (2) AWC 1953

11. Nandyal Coop. Spinning Mills Ltd. Vs K.V. Mohan
Rao (1993) 2 SCC 654

12. G. Ramachandra Reddy & Co. Vs Chief Engineer,
Madras Zone, M.E.S, (1994) 5 SCC 142

13. Agra Development Authority, Agra & Ors. Vs
Sheikhein International & Anr., 2007 (3) AWC 2371

14.Agra Development Authority Agra & Ors. Vs. M/S
Sheikhein International & Anr. Civil Appeal No. 5349
of 2009 decided on 24.07.2019

15. UCO Bank Vs Workmen AIR 1951 SC 230

16.
Prasun
Roy
Vs
Calcutta
Metropolitan
Development Authority (1987) 4 SCC 217

17. Dharma Pratisthanam Vs Madhok Construction
(Pvt. Ltd.) (2005) 9 SCC 686
(Delivered by Hon'ble Saumitra Dayal
Singh, J.)

1. The present first appeal from order
has been filed by the appellant-Meerut
Development Authority (in short 'MDA')
against rejection of it's objections filed
under Section 34 of the Arbitration &
Conciliation
Act,
1996
(hereinafter
referred to as the 'New Act'). The award
framed by the learned sole arbitrator dated
19.03.2005 has become enforceable, thus
entitling the respondent - M/S Civil
Engineering Corporation Ltd. through its
proprietor Ms. Tripti Garg (hereinafter
referred to as the 'claimant') to monies
awarded by the learned arbitrator.

2. Admittedly in 1987, the MDA
invited
two
separate
tenders
for
construction of 62 MIG and 92 LIG
houses. Two separate bids were submitted
by the claimant for award of the aforesaid
two works. They were accepted by MDA.
Two separate contract bonds - for
construction of 62 MIG and 92 LIG
houses, were then executed between the
parties on 17.02.1987 and 12.05.1987. The
work itself was to be completed within ten
months from the date of commencement.
However, it remains a fact, despite
repeated extensions of time granted, the
work could not be completed by the
claimant. Ultimately, the MDA cancelled
the two contract bonds awarded to the
claimant on 01.09.1989. Further, the
claimant was black-listed.

3. In such background facts, relying
on Clause-34, that was identical in both
the contract bonds and which contained an
arbitration agreement, the claimant issued
a notice dated 08.05.1989 to the MDA to
appoint an arbitrator under provisions of
2 All. Meerut Development Authority, Meerut Vs. M/s Civil Engineering Construction Corporation & Ors.
1085
the Arbitration Act, 1940 (hereinafter
referred to as the 'Old Act').

4. It is also an undisputed fact that no
arbitrator came to be appointed by the
Vice Chairman, MDA. According to the
claimant, it therefore filed an application
under Section 20 of the Old Act before the
Civil Judge (Senior Division), Meerut,
which came to be registered and described
as Original Suit No. 904 of 1989.
Admittedly, the MDA filed appearance
and also it's objections, in that case. Vide
order
dated
04.09.2004,
the
said
proceeding
was
allowed
and
the
Additional Civil Judge (Senior Division),
Meerut, directed for appointment of an
arbitrator. Perusal of that order reveals, in
the application filed under Section 20 of
the Old Act, the claimant had sought
directions to the Vice Chairman of MDA
to:- (i) appoint an independent arbitrator
and; (ii) to restrain the MDA from
awarding the remaining works to any other
person. A further direction was sought to
issue a commission to prepare inventory of
the materials/goods.

5. The order dated 04.09.2004 also
reveals that the learned Additional Civil
Judge (Senior Division), Meerut directed
the parties to propose names of three
persons each for appointment of the sole
arbitrator. It was further indicated that the
arbitrator would be directed to make his
award within a period of four months.
Before passing the order dated 04.09.2004,
the learned Additional Civil Judge (Senior
Division), Meerut, appears to have framed
five issues, broadly: (i) whether under the
contract bonds dated 17.02.1987 and
12.05.1987, there existed any right to
appoint an arbitrator; (ii) whether adequate
court fee had been paid; (iii) whether the
claimant was entitled to any relief; (iv)
whether there were any disputes between
the claimant & MDA? If yes, it's effect
and; (v) whether the application filed
under Section 20 was maintainable. All the
issues were decided in favour of the
claimant.

6. In those proceedings, no objection
appears to have been raised by MDA and
therefore no issue appears to have been
framed
as
to
whether,
upon
the
enforcement of the New Act w.e.f.
25.01.1996, the proceedings instituted by
the claimant under Section 20 of the Old
Act, that were pending (on that date),
survived. Also, it is an undisputed fact that
the MDA did not challenge the order dated
04.09.2004 or the consequential order
appointing the learned arbitrator, in any
separate proceedings.

7. Again undisputedly, neither the
MDA appointed any arbitrator during
pendency of those proceedings nor any
consented arbitrator came to be appointed
therein, upon order dated 04.09.2004.
Thus, the learned Additional Civil Judge
(Senior Division) Meerut, vide his further
order dated 25.10.2004 appointed Sri V.K.
Tyagi, as the learned sole arbitrator.

8. Upon such order (of appointment),
Sri V.K. Tyagi, the learned sole arbitrator
issued notice fixing the first date in the
proceedings, on 20.11.2004. Both parties
then
appeared
before
the
learned
Arbitrator. It may be noted here itself that
even in the course of those arbitration
proceedings before the learned arbitrator,
no objection was raised by the MDA as to
any defect of jurisdiction.

9. At the same time, perusal of the
order passed under Section 34 of the New
Act reveals, on 15.2.2005 (before the
1086 INDIAN LAW REPORTS ALLAHABAD SERIES
learned Arbitrator) the parties specifically
consented
to
allow
the
arbitration
proceedings to be governed by the New
Act. Thereupon, the learned Arbitrator
appears to have framed his award dated
19.3.2005. The same was challenged by
the
MDA
on
19.4.2005
by
filing
objections under Section 34 of the New
Act. That proceedings was registered as
Arbitration Case No. 49 of 2005. It came
to be rejected by the impugned order dated
23.3.2013.

10. Perusal of the impugned order
reveals that no specific finding has been
returned by the the learned District Judge.
Though submissions made have been noticed
being - the appointment of the arbitrator was
made without jurisdiction, such jurisdiction
being available only by the Vice Chairman of
the MDA; that appointment had been made
contrary to the terms of contract between the
parties; in any case, the award dated 19.3.2005
was time barred and; the award is against
public policy of India, after noting the counter
submissions made on behalf of the claimant,
the learned District Judge proceeded to reject
the objections filed by the MDA, on a cryptic
observation - "After considering the entire
facts and circumstances of the case I am of the
opinion that the application deserves to be
dismissed". No other or separate reason has
been assigned to deal with the objections
raised by the MDA. Only submissions made
have been recorded.

11. Heard Sri Bhupeshwar Dayal,
learned counsel for the appellant- MDA and
Sri Amit Saxena, learned Senior Advocate,
assisted by Sri Mushir Khan, learned counsel
for the respondents.

12. First, it has been submitted by
learned counsel for the appellant, under Clause
34 of the agreement, the sole arbitrator could
be appointed only by the Vice Chairman of
MDA and by no other person. If, for any
reason whatsoever, as in the present case, it
was not possible for the Vice Chairman to
appoint an arbitrator, the matter could not be
referred to arbitration at all. In this regard, nonappointment of an arbitrator simpliciter (after
demand made by the claimant), has been
canvassed as sufficient to invoke nonarbitrability clause between the parties.
Reliance has been placed on a decision of
Kerala High Court in Food Corporation of
India & Anr. Vs. A. Mohd. Yunus, AIR
1987 Kerala 231.

13. By way of another reasoning, it
has been further submitted, the terms of
the agreement i.e. Clause 34 of the
contract bonds must be construed strictly,
both as to subject matter of arbitration as
also the procedure for appointment of the
arbitrator. In the instant case though there
is no dispute as to the subject matter of
dispute (which is clearly arbitrable), yet, in
view of the binding clause providing that
arbitration may arise only if the arbitrator
be appointed by the Vice Chairman, MDA,
the appointment made by the learned
Additional Civil Judge (Senior Division),
Meerut is void. Reliance has been placed
on
Oriental
Insurance
Company
Limited Vs. Narbheram Power & Steel
Pvt. Ltd., (2018) 6 SCC 534 and; M/s
Dozco India Pvt. Ltd. Vs. M/s Doosan
Infracore Co. Ltd., (2011) 6 SCC 179.

14.

Alternatively,
since
the
application made under Section 20 of the
Old Act (for appointment of arbitrator),
had been pressed by the claimant even
upon enforcement of the New Act, clearly
therefore, at the first opportunity available,
the parties consented to proceed under the
Old Act alone. No further power or
occasion survived thereafter, to allow the
2 All. Meerut Development Authority, Meerut Vs. M/s Civil Engineering Construction Corporation & Ors.
1087
parties to later change their consent, to
continue the arbitration proceedings under
the New Act. The Old Act alone would
govern the arbitration proceedings that
followed. In this regard, reliance has also
been placed on M/S N. S. Nayak & sons
Vs. State of Goa & Anr., (2003) 6 SCC
56.

15. Section 85(2) of the New Act
does not contemplate or allow parties to
switch between procedures prescribed or
created under the Old Act and the New
Act. In the instant case, at the first
instance,
the
claimant
proceeded
to
continue with the application filed under
Section 20 of the Old Act and the learned
sole arbitrator was appointed upon order
passed in those proceedings. The parties
thus consented in the negative - to not
proceed under the New Act. They, bound
themselves to be governed by the Old Act.
No further scope or occasion survived to
the parties, to later agree to proceed with
the arbitration under the New Act. Thus,
the subsequent conduct of the parties noted
in the order passed under Section 34 of the
New Act, of consenting before the
arbitrator on 15.02.2005 (to allow the
arbitration proceedings to be conducted
under the New Act), is an act of no legal
consequence. Reliance has been placed on
M/s Setty's Construction Co. Pvt. Ltd.
Vs M/s Kundan Railway Construction
Co. Pvt. Ltd., AIR 1999 SC 1535. Since,
no proceedings were pending before the
arbitrator on 25.01.1996, there did not
exist a stage for grant of consent to
proceed under the New Act. In such facts,
execution of the award that arose later
could be pressed only under the Old Act,
after obtaining a Rule of Court, as is also
clearly held in the case of Thyssen
Stahlunion GMBH Vs. Steel Authority
of India Ltd., (1999) 9 SCC 334 (in the
case of Thyssen itself). Milkfood Ltd. Vs
GMC Ice Cream (P) Ltd., (2004) 7 SCC
288 has also been relied as to stage when
consent may be given by the parties to
adopt the procedure under the New Act.

16. Still alternatively, it has been
submitted, if by any stretch, Clause 34 of
the contract bonds dated 17.2.1987 and
12.5.1987, is read as evidence - parties had
"otherwise agreed" to be governed by the
New Act, the proceedings under Section
20 must necessarily be seen to have lost
their legal sanction, immediately upon
enforcement of the New Act. The
continuance of proceedings under Section
20 of the Old Act and the appointment of
arbitrator made thereafter, was contrary to
Section 11 of the New Act and therefore
wholly void ab initio.

17. Last, it has been submitted,
without prejudice to the above, in any
case, the arbitrator was appointed by the
learned Additional Civil Judge (Sr. Div.),
Meerut vide order dated 25.10.2004
whereas
the
award
was
made
on
19.03.2005 well after the mandate of four
months had expired. In that regard, it has
been further submitted, in any case, the
learned sole arbitrator has to be treated to
have entered reference on 15.11.2004 -
when he issued notice fixing the date
20.11.2004. Computed from that date, the
mandate of four months expired on
14.03.2005. Therefore, the award made on
19.03.2005 was time barred. On such
submissions, the order passed by the
learned District Judge, Meerut rejecting
the objections filed under Section 34 of the
Act has been assailed.

18. Other grounds of challenge as
had been raised in proceedings under
Section 34 of the New Act, relating to the
1088 INDIAN LAW REPORTS ALLAHABAD SERIES
merits and other issues have not been
canvassed in the present proceedings.
Hence, the same are not being adverted to
here.

19. Responding first to the second
alternate submission made by learned
counsel for the MDA, learned Senior
Counsel for the claimant submits - the
MDA never raised any challenge to the
appointment of the learned sole arbitrator
made by the learned Additional Civil
Judge (Sr. Div.), Meerut (vide his orders
dated 04.09.2004 and 25.10.2004), on
ground of the New Act becoming the
governing law between the parties, MDA
did not raise any challenge under Section
33 of the Old Act, on that count and it also
did not raise any such challenge in its
objections filed under Section 34 of the
New Act. Hence, no objection may be
raised at this belated stage.

20. On the first alternate submission
advanced by learned counsel for the MDA
- regarding consent to abide by the
Old/New Act, reference has been made
both to Clause 34 of the contract bonds
that clearly records that the parties agreed
to proceed under the New Act, in case of
disputes arising between them in future.
Reference has been made to the decision
of the Supreme Court in the case of Rani
Constructions Pvt. Ltd. (CA No. 61 of
1999) Vs. Thyssen Stahlunion (supra) as
followed and applied in Delhi Transport
Corporation Vs. Rose Advertising, AIR
2003 SC 2523 as approved in Milkfood
Ltd. Vs GMC Ice Cream (P) Ltd.
(supra). Thus, it has been submitted, there
is no defect in the pre-existing/prior
consent given by the parties to be
governed by the New Act, in the event of
any disputes arising between them, in
future, though on the date of execution of
the contract, the New Act had not seen the
light of day. The decision of the Supreme
Court in M/s N.S. Nayak & Sons Vs St.
of Goa (supra) nowhere holds that
consent cannot be given to adopt and
apply the procedure under the New Act,
after appointment of an arbitrator. Thus
the consent given by the parties, on
15.02.2005 (before the learned arbitrator),
to proceed under the New Act is stated to
be a valid consent. In that regard reliance
has been placed on a decision of the
Supreme Court in National Aluminium
Co. Ltd. Vs. Pressteel and Fabrications
Pvt. Ltd. & Ors., AIR 2005 SC 1514 and
another decision of this Court in State of
U.P. Vs. Allied Construction Engineers
& Contractors, 2009 (2) AWC 1953.

21. As to the first submission raised
by learned counsel for the MDA it has
been submitted that the objection raised to
the appointment of the learned arbitrator
made by the learned court below under
Section 20 of the Old Act has no merit
inasmuch as it has never been the case of
the MDA, either in proceedings under
Section 20 of the Old Act or in objections
filed under Section 34 of the New Act or
in the present appeal that it was, in any
way, impossible for the Vice Chairman of
MDA to appoint an arbitrator. Therefore,
in terms of Section 20(4) of the Old Act,
the learned Additional Civil Judge (Sr.
Div.), Meerut acquired the jurisdiction to
make such an appointment. Reliance has
been placed on the decisions of the
Supreme Court in the cases of Nandyal
Coop. Spinning Mills Ltd. Vs. K.V.
Mohan Rao, (1993) 2 SCC 654 and G.
Ramachandra Reddy & Co. Vs. Chief
Engineer,
Madras
Zone,
Military
Engineering Service, (1994) 5 SCC 142.
Reliance has also been placed on a
decision
of
this
Court
in
Agra
2 All. Meerut Development Authority, Meerut Vs. M/s Civil Engineering Construction Corporation & Ors.
1089
Development Authority, Agra & Ors.
Vs. Sheikhein International & Anr.,
2007 (3) AWC 2371 as affirmed by the
Supreme Court in Civil Appeal No. 5349
of 2009 (Agra Development Authority
Agra & Ors. Vs. M/S Sheikhein
International & Anr.) decided on
24.07.2019.

22. Next, it has been submitted, the
award dated 19.03.2005 was made well
within the mandate of four months in as
much as it was made within four calendar
months from the first date fixed by the
arbitrator, in the arbitration proceedings,
being
20.11.2004.Last,
it
has
been
submitted, if the appointment of the
learned arbitrator is treated to have been
made under the Old Act and therefore, the
award framed is also treated to be one
under the Old Act, then, on such reasoning
the objections filed by the MDA and it's
appeal filed under Section 37, both under
the New Act, would also be not
maintainable.

23. Last, it has been submitted, if the
appointment of the learned arbitrator is
treated to have been made under the Old
Act and therefore, the award framed is also
treated to be one under the Old Act, then,
on such reasoning the objections filed by
the MDA under Section 34 and it's appeal
filed under Section 37, both under the New
Act, would also be not maintainable.

24. Having heard learned counsel for
the parties and having perused the record,
in the first place, by way of a principle, it
cannot be disputed to any extent that lack
of inherent jurisdiction, if established, may
result in the order dated 04.09.2004 being
nullity in all or any proceedings. For any
order passed by any authority, court or
even arbitrator to have legal effect, it must
be shown to be fulfilling inherent
jurisdictional requirements. The majority
view of four out of the seven judge
Constitution Bench of the Supreme Court,
in the case of UCO Bank Vs. Workmen,
AIR 1951 SC 230 had laid down in early
days of our constitutional law:-

"The final contention that the
sittings in the interval constituted only an
irregularity in the proceedings cannot
again be accepted because, in the first
place, an objection was raised about the
sitting of the two members as the Tribunal.
That objection, whether it was raised by
the appellants or the other party, is
immaterial. The objection having been
overruled, no question of acquiescence or
estoppel arises. Nor can consent give a
court jurisdiction if a condition which goes
to the root of the jurisdiction has not been
performed or fulfilled. No acquiescence or
consent can give a jurisdiction to a court
of limited jurisdiction which it does not
possess. In our opinion, the position here
clearly is that the responsibility to work
and decide being the joint responsibility of
all the three members, if proceedings are
conducted and discussions on several
general issues took place in the presence
of only two, followed by an award made by
three, the question goes to the root of the
jurisdiction of the Tribunal and is not a
matter of irregularity in the conduct of
those proceedings. The absence of a
condition
necessary
to
found
the
jurisdiction to make the award or give a
decision deprives the award or decision of
any conclusive effect. The distinction
clearly is between the jurisdiction to
decide matters and the ambit of the
matters to be heard by a Tribunal having
jurisdiction to deal with the same. In the
second case, the question of acquiescence
or irregularity may be considered and
1090 INDIAN LAW REPORTS ALLAHABAD SERIES
overlooked. When however the question is
of the jurisdiction of the Tribunal to make
the
award under
the
circumstances
summarized
above,
no
question
of
acquiescence or consent can affect the
decision."

25. Undisputedly, the application
under Section 20 of the Old Act had been
filed on 11.10.1989. On that date, the only
law
applicable
for
appointment
of
arbitrator was the Arbitration Act, 1940.
Under Section 20 of that Act, in face of an
arbitration agreement between the parties
and upon arising a difference, either party
to that agreement could have applied the
Court to require filing of such agreement,
in Court. Thereafter, upon notice to the
other party, the Court was empowered to
make an order of reference to the
arbitrator, in the first place, appointed by
the parties or if the parties were unable to
agree to such an appointment, to an
arbitrator appointed by the Court.

26. In the present facts, there is no
doubt that there existed an arbitration
agreement between the parties and also
that there had arisen a dispute between
them. Further, despite service of notice
dated 08.05.2019 issued by the claimant to
the MDA, to appoint an arbitrator, no such
appointment came to be made. Hence, the
pre-requirement for filing an application
under Section 20 of the Old Act
undisputedly stood established on the date
11.10.1989, when that application came to
be filed by the claimant. It is also a fact
that such application remained pending for
a long period of time i.e. till 04.09.2004
which is close to 15 years.

27. On the other hand, the New Act
that is the Arbitration & Conciliation Act,
1996 was enforced on 25.01.1996. Up to
that date, the application filed by the
claimant under Section 20 of the Old Act
did not suffer from any defect of
jurisdiction or otherwise. In fact, that
application
had
remained
fully
maintainable till then. If it had been
decided till as late as 24.01.1996 (as, in
fact, it should have been), there would
have no issue with any party.

28. Thus, clearly the application
filed by the claimant under Section
20 of the Old Act did not suffer from
any inherent lack of jurisdiction, on
the date of its filing. Therefore, the
plea of nullity set up by MDA has to
be examined only in the context of
the enforcement of the New Act and
its impact on proceedings that upto
that point in time, were within
jurisdiction. In this regard, Section
85 of the New Act reads as below:-

"85. Repeal and savings.--
(1) The Arbitration (Protocol and
Convention) Act, 1937 (6 of 1937),
the Arbitration Act, 1940 (10 of
1940)
and
the
Foreign
Awards
(Recognition and Enforcement) Act,
1961
(45
of
1961)
are
hereby
repealed.

(2)
Notwithstanding
such
repeal,--

(a) the provisions of the said
enactments shall apply in relation to
arbitral
proceedings
which
commenced before this Act came into
force unless otherwise agreed by the
parties but this Act shall apply in
relation
to
arbitral
proceedings
which commenced on or after this Act
comes into force;

(b)
all
rules
made
and
notifications published, under the
said enactments shall, to the extent to
2 All. Meerut Development Authority, Meerut Vs. M/s Civil Engineering Construction Corporation & Ors.
1091
which they are not repugnant to this
Act, be deemed respectively to have
been made or issued under this Act."

Also, Section 21 of the New Act
reads as below:-

"21. Commencement of arbitral
proceedings.--Unless otherwise agreed by
the parties, the arbitral proceedings in
respect of a particular dispute commence
on the date on which a request for that
dispute to be referred to arbitration is
received by the respondent."

29. Plainly, in absence of any agreement,
otherwise drawn, the statutory scheme clearly
protects the arbitral proceedings that had been
instituted before enforcement of the New Act.
By virtue of Section 21 of the New Act,
arbitral proceedings commenced as soon as
notice for appointment of arbitrator was
received by the opposite party. In absence of
any dispute to service of notice (to appoint
arbitrator), on MDA, prior to 25.01.1996, it has
to be accepted that in the first place the
application filed under Section 20 of the Old
Act, by the claimant on 11.10.1989 and the
arbitration to follow would be governed by the
provision of the Old Act. Not only pending
arbitration proceedings been saved, but also,
the provisions of the Old Act have been saved
in entirety with respect to any arbitral
proceedings that may be found to have
commenced. Moreover, there is no provision
for transfer or abatement of any existing
arbitral
proceeding
or
any
arbitration
proceeding. Therefore there was no inherent
lack of jurisdiction in institution of those
proceedings even upon enforcement of the
New Act.

30. By virtue of saving clause contained
in Section 85 of the New Act, it became a fact
or a ground available to the parties to be
pleaded and proved, that the proceedings under
Section 20 of the Old Act would not survive
because the New Act came into force on
25.01.1996. In other words, the legislative
action did not, by its own force, oust the
jurisdiction of the learned Additional Civil
Judge (Senior Division), Meerut, to proceed
with the application filed under Section 20 of
the Old Act. It only allowed the parties an
option to plead that the New Act applied. Such
plea could be accepted only if the party
pleading such fact could establish existence of
an agreement between the parties or consent of
the other, to apply the New Act.

31. Then, for ready reference, Clause
34 i.e. the arbitration clause (identical in
both contract bonds), is quoted below:

"Clause
34-
Except
where
otherwise provided in the arbitration
contract
all
questions
and
disputes
relating
to
the
meaning
of
the
specification,
designs,
drawing
and
instruction herein mentioned, and as to the
quality of workmanship of materials used
on the work or as to any other questions,
claim right materials used or thing
whatsoever, in any way arising out of
relating, to the contract, designs, drawing,
specifications, estimates, instruction, order
or these conditions or otherwise the work
or the execution or failure to execute the
same whether arising during or failure to
execute the same whether arising during
the progress of the work or after the
completion or abandonment thereof shall
be referred to the Sole Arbitration of the
person appointed by the Vice Chairman
M.D.A. Of the work at the time of dispute.
It will be no objection to any such
appointment that the Arbitrator is a
Government servant then he had to deal
with matters, to which the contract relates
and that in the course of his duties as
1092 INDIAN LAW REPORTS ALLAHABAD SERIES
Government servant, he had expressed
views on all or any of the matters in
dispute or difference in the event of the
arbitrator or to whom the matter is
originally referred being transferred or
vacating his office or being unable to act
for any such reason, Chief Engineer at the
time of such transfer, vacation of office or
inability to act, shall appoint another
person to act as Arbitrator in accordance
with the terms of the Contract. Such
person shall be entitled to proceed with
reference from the stage at which it was
left by his predecessor. It is also a term of
this contract that no person other than a
person appointed by the Vice Chairman
should act as Arbitrator, and if for any
reason that is not possible, the matter is
not to be referred to arbitrator at all.

Subject as aforesaid-the provision
of the Arbitration Act, 1940 or any statutory
modification or re-enactment thereof and the
rules made thereunder and for the time being
in force shall apply to the arbitration
proceeding under this clause."

32. Undoubtedly, in view of categorical
pronouncement of the Supreme Court in the
case of Rani Constructions Pvt. Ltd. (CA
No. 61 of 1999) as reported in Thyssen
Stahlunion (supra) and DTC Corporation
Ltd. (supra) there can be no doubt that
aforesaid Clause 34 constitutes a valid, preexisting agreement between the parties, to
allow the New Act to govern the proceedings
for arbitration that arose between them.
Therefore,
all
that
then
survives
for
consideration is, whether in face of such an
agreement, the appointment of arbitrator by the
learned Additional Civil Judge (Senior
Division), Meerut was void.

33. As noted above, the proceedings
under Section 20 of the Old Act did not suffer
from any inherent lack of jurisdiction or defect
on the date of institution. Also, it did not itself
become void upon enforcement of the New
Act. Had the plea based on Clause 34 of the
contract bonds been raised and pressed by the
MDA, before the learned Additional Civil
Judge (Senior Division), Meerut passed the
order dated 04.09.2004, the claimant would
have had a right to object to the same and the
learned Civil Judge would have been obliged
to decide the same. If it had been found, on
such objections, that the application filed by
the claimant could not be pressed, in that case,
a right would have survived to the claimant to
seek appointment of an independent arbitrator
under Section 11 of the New Act. By not
raising any objection at the stage when it
became available to it, the MDA allowed the
proceedings under Section 20 of the Old Act to
continue and conclude. In Prasun Roy v.
Calcutta
Metropolitan
Development
Authority, (1987) 4 SCC 217, appointment of
an arbitrator, made by the Court, in year 1983
was first challenged in the year 1985, that too
after submitting to the jurisdiction of the
learned arbitrator so appointed and after long
participation in such arbitration proceedings.
The Supreme Court considered :-

"5. Can a party be permitted to
do that? In Jupiter General Insce. Co. Ltd.
v. Corporation of Calcutta P.B. Mukharji,
J. as the learned Chief Justice then was
observed:

"It is necessary to state at the
outset that courts do not favour this kind
of contention and conduct of an applicant
who
participates
in
arbitration
proceedings without protest and fully
avails of the entire arbitration proceedings
and then when he sees that the award has
gone against him he comes forward to
challenge the whole of the arbitration
proceedings as without jurisdiction on the
ground of a known disability of a party.
That view of the court is ably stated by the
2 All. Meerut Development Authority, Meerut Vs. M/s Civil Engineering Construction Corporation & Ors.
1093
editor of the 15th edn. of Russell on the
Law of Arbitration at page 295 in the
following terms:

''Although a party may by reason
of some disability be legally incapable of
submitting matters to arbitration that fact
is not one that can be raised as a ground
for disputing the award by other parties to
a reference who were aware of the
disability. If one of the parties is incapable
the objection should be taken to the
submission. A party will not be permitted
to lie by and join in the submission and
then if it suits its purpose attack the award
on that ground. The presumption in the
absence of proof to the contrary will be
that the party complaining was aware of
the disability when the submission was
made'."

6. Mr Kacker submitted that this
principle could be invoked only in a
situation where the challenge is made only
after the making of an award, and not
before. We are unable to accept this
differentiation. The principle is that a
party shall not be allowed to blow hot and
cold simultaneously. Long participation
and acquiescence in the proceeding
preclude such a party from contending
that
the
proceedings
were
without
jurisdiction.

7. Russell on Arbitration, 18th
edn. page 105 explains the position as
follows:

"If the parties to the reference
either agree beforehand to the method of
appointment, or afterwards acquiesce in
the appointment made, with full knowledge
of all the circumstances, they will be
precluded
from
objecting
to
such
appointment as invalidating subsequent
proceedings. Attending and taking part in
the proceedings with full knowledge of the
relevant
fact
will
amount
to
such
acquiescence.

8. The Judicial Committee in its
decision in Chowdhri Murtaza Hossein v.
Mussumat Bibi Bechunnissa observed at
page 220: