Holding

A party that acquiesces by participating in arbitration proceedings without protest is deemed to have waived the right to object to the arbitrator’s authority and the award, rendering the Section 30 objection inadmissible.

Summary

The Housing Board filed civil suits against contractor I.S. Mittal, and the court appointed a Superintending Engineer as arbitrator. The arbitrator was transferred during the proceedings but continued the arbitration and issued an award. The Board objected under Section 30 of the Arbitration Act, 1940, claiming the arbitrator lost authority after transfer. The trial court and appellate court rejected the objection, but the High Court set aside the award. The Supreme Court held that by participating in the arbitration without protest, the parties waived their right to challenge the arbitrator’s authority, and such objections are not maintainable unless the breach involves a mandatory statutory provision. Consequently, the High Court’s order was set aside and the award upheld.

Issues considered

Whether a party can raise an objection under Section 30 of the Arbitration Act, 1940 to the arbitrator’s authority after the arbitrator’s transfer when the party participated in the proceedings without protest.
Whether waiver or estoppel applies to objections based on breach of agreement versus breach of mandatory statutory provisions.

Legislation cited

Arbitration Act, 1940s. 14(2), s. 20, s. 3, s. 30

Subjects

ArbitrationSection 30WaiverEstoppelArbitrator transferAward validityArbitration Act 1940Procedural fairness

Judgment

INDER SAIN MITT AL A
v.
HOUSING BOARD HARYANA AND ORS.

FEBRUARY 21, 2002

[M.B. SHAH AND B.N. AGRAWAL, JJ.] B

Arbitration Act, J940:

Sections 30 and J4(2)-Dispute between parties-Appointment of
Arbitrator-Appointed Arbitrator transferred-However, he continued with C
the proceedings and passed an award-Parties participated in arbitration
proceedings without any protest-Party against whom award passed filed
objection that award not binding as only the successor ofappointed Arbitrator
should have taken over the proceedings and passed award-Right to objection
whether merits consideration-Held, such a case is not in disregard of any D
_, provisions of law but breach of agreement-Thus by their conduct parties
would be deemed to have waived their right to challenge validity ofproceedings
and the award.

... Respondent-Housing Board filed civil suits against the appellant-
Contractor. Court appointed Superintending Engineer as Arbitrator for E
settlement of disputes. Arbitration proceedings commenced. Arbitrator was
transferred, but still he continued with the arbitration proceedings and later
on passed an award. Executive Engineer representing the Board, though
conscious of the transfer of the Arbitrator, continued to attend the arbitration
pr6ceedings with his counsel, and even filed affidavit in support of the claim F
of the Board and adduced evidence. Thereafter, appellant-Contractor filed
applications for making award rule of the Court. Respondent-Board objected
on the ground that as the appointed Arbitrator was transferred, he had no
authority and jurisdiction to further continue with the arbitration proceedings.
Trial Court rejected the objections and directed the award to be made rule
of the Court. Appellate Court upheld the order. However, High Court set G
aside the order. Hence the present appeal.

Appellants contended that by its conduct in participating in the
arbitration proceedings, the Board had acquiesced to the continuance of the
Arbitrator after his transfer and so it was not open to it to challenge the same. H
5
6 SUPREME COURT REPORTS [2002] 2 S.C.R.

A Respondent contended that the Arbitrator could not have continued
with the arbitration proceedings and given the award after his transfer and
only the successor could have continued from that stage and rendered the
award.

Allowing the appeal, the Court
B
HELD: 1.1. Where the ground of objection under Section 30 of the
Arbitration Act, 1940 to the reference made, with or without intervention of
the Court, arbitration proceedings and the award flows from lawful
agreement between the parties and is raised at the initial stage, Court may \....
C set it right at the initial stage or even subsequently in case the party objecting
has not participated in the proceedings or participated under protest. But if
a party acquiesced to the invalidity by his conduct by participating in the
proceedings and taking a chance therein cannot be allowed to turn round after
the award goes against him and is estopped from challenging validity or
1 otherwise of reference, arbitration proceedings and/or award inasmuch as
D right of such a party to take objection is defeated.
,_
1.2. Where ground is based upon breach of mandatory provision of law, \..
a party cannot be estopped from raising the same in his objection to the award
even after he participated in the arbitration proceedings in view of the well-
E settled maxim that there is no estoppel against statute, if, however, basis for
ground of attack is violation of such a provision of law which is not mandatory
but directory and raised at the initial stage, the illegality in appropriate case
may be set right, but in such an eventuality if a party participated in the
proceedings without any protest, he would be precluded from raising the point
in the objection after making of the award.
F
2. In the instant case, it cannot be said that continuance of the
proceed!ngs and rendering of awards therein by the Arbitrator after his
transfer was in disregard of any provision of law much less mandatory one
but, at the highest, in breach of agreement. Therefore, by their conduct by
G participating in the arbitration proceedings without any protest the parties
would be deemed to have waived their right to challenge validity of the
proceedings and the awards, Consequently, the objections taken to this effect
did not merit any consideration.

N. Chellappan v. Secretary, Kera/a State Electricity Board and Anr., [1975)
H 2 SCR 811; Prasun Roy v. Calcutta Metropolitan Development Authority and
•
l.S. MITTAL v. HOUSING BOARD HARYANA [B.N. AGRAWAL, J.] 7
Anr., (1987] 4 SCC 217 and Mis. Nee/akantan and Bros. Construction v. A
S11perintending Engineer, National Highways, Salem and Ors.. (1988] 4 sec 462,
'" r~lied on.

Chowdhri Murtaza Hossin v. Mussumat Bibi Bashunnissa 3 I.A. 209,
approved.
B
State of Punjab v. Hardya/, (1985] 2 sec 629, refer-red to.

CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 1398-99
of 2002.
-<

From the Judgment and Order dated 20.9.2000 of the Punjab and
c
Haryana High Court in C.R. Nos. 5313 and 5321 of 1999.

Dr. Vikas Vashishth and Naresh Kumar for the Appellant.

Ms. Kamini Jaiswal and Mahabir Singh for the Respondents. D
___.
The Judgment of the Court was delivered by
'
B.N. AGRAWAL, J. Leave granted.
E
These appeals by special leave are directed against judgment rendered
by the High Court of Punjab & Haryana at Chandigarh in Civil Revision
Applications whereby the same have been allowed, orders passed by the
appellate court upholding orders of the trial court disallowing the objections
under Section 30 of the Arbitration Act, 1940 (hereinafter referred to as 'the
Act') have been set aside, objections allowed and awards set aside. F
... The Housing Board, Haryana-respondent No. I (hereinafter referred to
as 'the Board'), filed two separate money suits against the appellant in the
Court of the Senior Sub Judge, Sonepat, which were transferred to the Court
of Addi. Civil Judge (Sr. Divn.), Sonepat, who, by separate orders dated 19th
~
-~
March, 1997, as agreed to by the parties, appointed Superintending Engineer,
G
A.D.B. Branch Circle, P.W.D.(B & R) Br. Faridabad, as Arbitrator for
settlement of certain disputes between the parties pertaining to the works of
construction of Houses in the Housing Board Colony at Sonepat. On receipt
of the references, the Arbitrator entered thereupon and fixed 6th May, 1997
as the date for hearing the parties in the arbitration proceedings, on which H
•
8 SUPREME COURT REPORTS [:W02] 2 S.C.R.

A date the Contractor attended the proceedings whereas the Executiv~ Engineer,
who was representing the Board, absented himself. On the next date of hearing, -r"
i.e., on 13th May, 1997, while the Executive Engineer made a prayer for
adjournment for filing the written reply, the Contractor attended the --
proceedings and filed documents and his counsel almost concluded the
argument. The matter was, however, adjourned to 8th June, 1997. In the
B meantime, on 2nd June, 1997, Shri R.K. Jain, Superintending Engineer, A.D.B.,
Branch Circle, P.W.D. (B & R) Branch, Faridabad, who was the Arbitrator,
was transferred and posted as Superintending Engineer, Construction Circle
No. 1, Union Territory Chandigarh, but he continued with the arbitration
proceedings in spite of his transfer. On the next date of hearing, i.e., on 8th
>--
c June, 1997, the Contractor attended the arbitration proceedings with his counsel
whereas Executive Engineer representing the Board though attended the
proceedings but without counsel and did not file written reply but requested
for adjournment. Accordingly the arbitration proceedings were ~djoumed to
18th June, 1997, on which date, an affidavit was submitted on behalf of the
Board in support of its case and after evidence was adduced on behalf of the
D parties, counsel appearing on behalf of the Contractor resumed further
argument and concluded the same whereafter, counsel appearing on behalf of L;

the Board also concluded his argument on that day itself. )--

The Arbitrator thereupon gave the awards on 28th June, 1997.
E Applications under Section 14(2) of the Act were filed on behalf of the
'
Contractor for summoning the original awards from the Arbitrator and, upon
receipt of the same and after hearing the parties, making the awards rule of
the Court. On the pther hand, on b~~alf of the Board, objections were filed
under Section 30 of the Act on grounds, inter alia, that the awards in question
were without authority and jurisdiction as the Court appointed Superintending
F Engineer, A.D.B., Branch Circle, P.W.D. (B & R) Branch, Faridabad, as

-
Arbitrator and upon the transfer of the Arbitrator, Shri R.K. Jain, as
Superintending Engineer Circle No. l, Union Territory, Chandigarh, on 2nd
June, 1997, he had no authority and jurisdiction to further continue with the
arbitration proceedings which should have been taken over from that stage
by the successor Superint~nding Engineer, A.D.B., Branch Circle, P.W.D.(B
G
& R) Branch, Faridabad, who succeeded Shri R.K. Jain upon his transfer. >--
r
The trial court after di.le consideration rejected the objections under
Section 30 of the Act and directed the awards to be made rule of the Court
which order was affirmed in appeal. When the matter was taken to the High
H Court of Punjab & Haryana at Chandigarh in Civil Revision Applications
l.S. MITT AL v. HOUSING BOARDHARYANA [B.N. AGRAWAL, J.] 9

filed under Section 115 of the Code of Civil Procedure (hereinafter referred A
to as 'the Code'), the same have been allowed, orders passed by the appellate
court as well as the original court set aside, objections allowed and awards
set aside. Hence, these appeals by special leave.

Dr. Vikas Vashishth, learned counsel appearing on behalf of the
appellant, in support of the appeals submitted that as the Executive Engineer B
representing the Board not only attended the arbitration proceedings with his
counsel even after transfer of the Arbitrator, Shri R.K. Jain, but also
consciously participated therein by filing affidavit in support of claims of the
• Board, adduced evidence and counsel appearing on behalf of the Board argued
.~
the matter, the Board would be deemed to have acquiesced to the continuance C
of the Arbitrator, Shri R.K. Jain, with the arbitration proceedings and making
of the awards even after his transfer and after the awards having gone against
the Board, it was not open to it to challenge the same on the ground that the
arbitration proceedings were continued and concluded by Shri R.K. Jain after
he ceased to be the Superintending Engineer, ADB Branch Circle, PWD
(B&R) Branch, Faridabad in view of the fact that the Arbitrator was not D
appointed by name but by designation. On the other hand, Shri Mahabir
Singh, learned counsel appearing on behalf of the Board, submitted that as
the appointment of Arbitrator was by designation, the Arbitrator could not
have continued with the arbitration proceedings and given the awards after
his· transfer and the same could have been continued from that stage and E
awards rendered by the successor only.

We find that the point raised in this case is no longer res integra as the
same has been considered by this Court times without number. Reference in
this connection may be made to a decision of this Court rendered in the case
of N. Chellappan v. Secretary, Kera/a State Electricity Board and Anr., F
[1975] 2 SCR 811, in which case the dispute, which had arisen between the
parties , was referred by them for decision of two Arbitrators who appointed
an Umpire, but as the award was not made by the Arbitrators within the time
limit which was extended from time to time, a petition was filed in Court for
revoking authority of the Arbitrators on the ground that they did not make G
the award within the prescribed time limit and further prayer was made that
the Umpire may be appointed as a sole Arbitrator in place of two Arbitrators
and he be directed to enter upon the reference. The prayer was granted by the
Court and after revoking authority of the two Arbitrators, Umpire was
appointed as the sole Arbitrator with the consent of the parties and he was
directed to enter upon the reference and make the award. Parties thereupon H
10 SUPREME COURT REPORTS [2002) 2 S.C.R.

A participated in the proceedings before the Umpire without demur and ultimately
the award was given to which one of the parties filed objections whereas the
other filed a petition for making the award rule of the Court..The objection
was disallowed and prayer for making the award rule of the Court was
granted. When the matter was taken in appeal to the High Court of Kerala
the objection was allowed and award set aside on the ground that the order
B revoking authority of the Arbitrators to pass the award and appointing the
Umpire as the sole Arbitrator was bad in law, as such the Umpire as a sole
Arbitrator had no jurisdiction to enter upon the reference and pass the award.
When the s~id matter was brought to this Court, objectio_n to the award was
disallowed as Umpire was appointed by the Court, with consent of the parties,
C to act as the sole Arbitrator after revoking authority of the Arbitrators already
appointed and no endeavour was made to have that order vacated by _filing
a review inasmuch as the parties participated in the proceedings before the
Umpire without any demur to his jurisdiction from which conduct of the
parties only inference that can be drawn is that the party, who was objecting
to the award, by his conduct had no objection to the order revoking the
D authority of the Arbitrators. Therefore, by acquiescence such a party was
precluded from challenging the jurisdiction of the Umpire by filing an objection
to the award.
Similarly, in the case of Chowdhri Murtaza Hassin v. Mussumat Bibi
Bachunnissa, 3 I.A. 209, which is a decision of the Privy Council and referred
E to in the case of N. Chellappan (Supra) with approval, it has been laid down
that a party having a clear knowledge of the circumstances on which he
might have founded an objection to the Arbitrators proceedings to make their
award, did submit to the proceeding going on; that he allowed the Arbitrators
to deal with the case as it stood before them, taking his chance of the decision
F being more or less favourable to himself; and that it is too late for him, after
the award has been made, and on the application to file the award, to insist
on his objection to the filing of the award.
In the case of Prasim Roy v. Calcutta Metropolitan Development
Authority and Anr., [1987] 4 SCC 217, on an application made under Section
G 20 of the Act, the Court appointed another Arbitrator in place of the arbitrator
named in the arbitration agreement on the allegations of bias and the parties
participated in the proceedings before the new Arbitrator without any objection
for long, which was raised at a later stage to the arbitration award on the
ground that the appointment of Arbitrator was bad. In that case it was laid
down by this Court that on the principle of waiver and estoppel a party would
H be precluded from challenging the award as by participating in the arbitration
LS. MITTAL v. HOUSING BOARD HAR Y ANA [B.N. AGRA WAL, J.] 11

proceedings without any objection it would be deemed to have acquiesced. A
In the case of Mis. Neelakantan & Bros. Construction v. Superintending
Engineer, National Highways, Salem and Ors., [ 1988) 4 SCC 462, according
to the arbitration clause, the Superintending Engineer of the Circle for the
time being was the named Arbitrator and accordingly one Thiru Mohan was
appointed as Arbitrator, who entered upon the reference and before him B
evidence was adduced by the p_arties, but before the Arbitrator could conclude
the arbitration, he was transferred and was succeeded by one Thiru J.R.
Cornelius, who, after taking over charge from Thiru Mohan, concluded the
arbitration proceedings and after giving opportunity of hearing to the parties
gave the award, which was objected to on the ground that the successor C
officer had no jurisdiction to conclude the arbitration proceedings and give
the award. The objection was overruled by the trial court and the said order
was upheld by the High Court as well as this Court on the ground that since
the party who was objecting to the award had knowledge of the alleged
defect and had acquiesced in the proceedings before the successor, it would
be precluded from objecting to the award on the ground that the same made D
by the successor officer upon transfer of his predecessor, who had entered
upon the reference, was invalid, especially when taking over the arbitration
proceedings and its conclusion by the successor would not be in disregard of
any law.
E
Learned counsel appearing for the Board heavily relied upon a decision
of this Court in the case of State of Punjab v. Hardyal, [1985) 2 SCC 629.
In that case the parties participated in the arbitration proceedings, initiated
with the intervention of Court, even after expiry of four months' period
prescribed for submitting the award, as required by law, in the absence of
extension of time granted by the Court, and an award was made. An objection F
was filed under Section 30 of the Act to the award on the ground that the
Arbitrator had no jurisdiction to make the award after the expiry of prescribed
period of four months in the absence of any order of extension. On these
facts, this Court laid down that time to be fixed for making an award is
initially one of agreement between the parties to the agreement, but if no time G
has been specified by the parties in the arbitration agreement, then the award
must be given within four months as prescribed in Section 3 read with clause
3 of the First Schedule to the Arbitration Act as time can be extended by the
court and not by the parties at any stage inasmuch as since the Arbitrator is
injuncted to give an award beyond the prescribed period of four months
unless the same is extended by the Court, he had no jurisdiction to make an H
12 SUPREME COURT REPORTS [2002] 2 S.C.R.

A award after the expiry of specified time in the absence of any order of
extension and in view of this the award made beyond time is ipso facto
invalid, the same having been prohibited by law, and parties are not estopped
by their conduct from challenging the same on the ground that it was made
beyond time, merely because they participated in the proceedings before the
B Arbitrator after expiry of the prescribed period as established principle is that
there can be no estoppel against a statute.

In view of the foregoing discussions, with reference to the provisions
of the Act, we conclude thus:

(i) Grounds of objection under Section 30 of the Act to the reference
c made, with or without intervention of the Court, arbitration
proceedings and the award can be classified into two· categories,
viz., one emanating from agreement and the other law.

(ii) In case the ground of attack flows from agreement between the
parties which would undoubtedly be a lawful agreement, and the
D same is raised at the initial stage, Court may set it right at the
initial stage or even subsequently in case the party objecting has
not participated in the proceedings or participated under protest. )>-.
But if a party acquiesced to the invalidity by his conduct by
participating in the proceedings and taking a chance therein cannot
E be allowed to tum round after the award goes against him and
is estopped from challenging validity or otherwise of reference,
arbitration proceedings and/or award inasmuch as right of such
a party to take objection is defeated.

(iii) Where ground is based upon breach of mandatory provision of
F law, a party cannot be estopped from raising the same in his
objection to the award even after he participated in the arbitration
proceedings in view of the well settled maxim that there is no
estoppel against statute.

(iv) If, however, basis for ground of attack is violation of such a
G provision of Jaw which is not mandatory but directory and raised
at the initial stage, the illegality, in appropriate case, may be set
right, but in such an eventuality if a party participated in the
proceedings without any protest, he would be precluded from
raising the point in the objection after making of the award.

H In the case on hand, it cannot be said that continuance of the proceedings

..
I.S. MITTAL v. HOUSING BOARD HARYANA [B.N. AGRA WAL, J.] 13

and rendering of awards therein by the Arbitrator after his transfer was in A
disregard of any provision of law much less mandatory one but, at the highest,
in breach of agreement. Therefore, by their conduct by participating in the
arbitration proceedings without any protest the parties would be deemed to
have waived their right to challenge validity of the proceedings and the
awards, consequently, the objections taken to this effect did not merit any B
consideration and the High Court was not justified in allowing the same and
setting aside the award.

In the result, the appeals are allowed with cost, which is quantified at
Rs. I 0,000, and the impugned judgment passed by the High Court is set
aside.
c
N.J. Appeals allowed.