Arbitration jurisdiction objection barred after participation, while award was modified only on interest and idling charges.

A party that participated in arbitration without raising a timely objection to the tribunal's competence was held to have submitted to the arbitral jurisdiction and could not later deny the existence of an arbitration agreement or treat the award as a nullity. The award was otherwise upheld on merits, with only limited modification: interest was reduced from 18% to 9% and idling charges were scaled down in light of the circumstances, including delay in supplying drawings and designs. The civil appeal therefore succeeded only in part, leaving the award substantially intact subject to those reductions.

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Issues: (i) Whether the appellant could, after participating in the arbitral proceedings without objection, contend that Clause 29 of the contract was not an arbitration clause and that the award was a nullity for want of jurisdiction. (ii) Whether the arbitral award called for interference on the merits, particularly as regards the rate of interest and the amount awarded towards idling charges.

Issue (i): Whether the appellant could, after participating in the arbitral proceedings without objection, contend that Clause 29 of the contract was not an arbitration clause and that the award was a nullity for want of jurisdiction.

Analysis: The plea that there was no arbitration clause was not raised before the arbitrator in the written statement, nor was it advanced before the civil court. Both courts found, on facts, that the appellant had consented to reference of the disputes to the Chief Engineer, participated in the proceedings, filed statements and written arguments, and never questioned the tribunal's competence under Section 16 of the Arbitration and Conciliation Act, 1996. In these circumstances, the appellant was held to have submitted to the jurisdiction of the arbitral tribunal and could not later repudiate the arbitration agreement.

Conclusion: The objection to jurisdiction based on the alleged absence of an arbitration clause was rejected and the appellant was not permitted to raise it.

Issue (ii): Whether the arbitral award called for interference on the merits, particularly as regards the rate of interest and the amount awarded towards idling charges.

Analysis: The award was examined head-wise and was found to be generally justified. The Court interfered only to the limited extent of reducing the interest from 18% to 9%, taking note of the changed interest regime. On idling charges, the Court found the award broadly fair, but reduced the amount from Rs. 1.47 crores to Rs. 1 crore having regard to the delay caused by non-supply of drawings and designs and the overall circumstances of the dispute.

Conclusion: The award was sustained subject to reduction of interest and idling charges.

Final Conclusion: The civil appeal succeeded only in part, with limited modification of the award while the appellant's jurisdictional challenge failed.

Ratio Decidendi: A party that participates in arbitration proceedings without timely objection and submits to the tribunal's authority cannot subsequently deny the existence of an arbitration agreement or assail the award on that ground; an arbitral award may also be modified to the limited extent necessary where specific components, such as interest or quantified compensation, require reduction.

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