2006 (9) TMI 492 - SC - Companies Law

Court upholds arbitrator appointment, citing waiver of rights and finality of High Court decision.

BSNL. & ORS. Versus SUBASH CHANDRA KANCHAN & ANR.

The Supreme Court upheld the High Court's appointment of Shri B.C. Bhattacharya as the arbitrator, dismissing the appeal. The Court found that the ... Appointment of Arbitrator Held that:- Although in terms of the arbitration agreement contained in Clause 25 of the contract, ordinarily the arbitrator appointed by the Managing Director should act as arbitral tribunal in respect of the disputes and differences between the parties to the contract; in this case, the Appellants must be held to have waived their right as they consented to the appointment of Shri Bhattacharya as an arbitral tribunal. The High Court having appointed the arbitral tribunal on consent, it is, in our opinion, not open to the Appellants now to contend that no such concession was made. Prima facie also it does not appear that the allegations contained in the said application were supported by an affidavit. In that view of the matter, no credence to the averments contained therein cannot be given. Furthermore, it is not a case where this Court should exercise its discretionary jurisdiction. For the reasons aforementioned, this appeal is dismissed. Issues Involved:1. Jurisdiction of the High Court to appoint an arbitrator.2. Validity of the appointment of an arbitrator by the High Court.3. Waiver of the right to appoint an arbitrator as per the arbitration agreement.4. Binding nature of the concession made by the counsel.Issue-wise Detailed Analysis:1. Jurisdiction of the High Court to appoint an arbitrator:The primary issue was whether the High Court had the jurisdiction to appoint an arbitrator other than the one nominated by the Chief Engineer under the arbitration agreement. The Appellants contended that the High Court lacked jurisdiction to appoint any person other than the one nominated by the Chief Engineer, as stipulated in Clause 25 of the contract. The Respondents argued that the High Court exercised its discretionary jurisdiction under Section 11 of the Arbitration and Conciliation Act, 1996, and this should not be interfered with by the Supreme Court.2. Validity of the appointment of an arbitrator by the High Court:The High Court appointed Shri B.C. Bhattacharya as the arbitrator with the consent of both parties. The Appellants later contended that there was no proper communication of the appointment of the arbitrator by the Managing Director within the 30-day period as required by the Act. The Supreme Court referred to Section 11 of the Arbitration and Conciliation Act, 1996, which allows the Chief Justice or a designated person to appoint an arbitrator if the parties fail to agree on one within the specified time frame. The Court held that the High Court's appointment was valid as the Appellants had waived their right to object by consenting to the appointment.3. Waiver of the right to appoint an arbitrator as per the arbitration agreement:The Supreme Court observed that although the arbitration agreement stipulated that the arbitrator should be appointed by the Managing Director, the Appellants waived this right by consenting to the appointment of Shri Bhattacharya by the High Court. The Court cited the principle that a legal right, once waived, cannot be insisted upon later. The Appellants' consent to the appointment and their participation in the arbitration proceedings indicated a waiver of their right under the arbitration agreement.4. Binding nature of the concession made by the counsel:The Appellants argued that the consent given by their counsel for the appointment of Shri Bhattacharya was invalid as the counsel was a junior and had no instructions. The Supreme Court rejected this argument, stating that no such contention was raised before the High Court, and the application filed under Section 151 of the Code of Civil Procedure did not contain such statements. The Court emphasized that a concession made by an advocate is binding on the party, subject to just exceptions. The Court held that the High Court's decision to record the concession and appoint the arbitrator was final and binding.Conclusion:The Supreme Court dismissed the appeal, upholding the High Court's appointment of Shri B.C. Bhattacharya as the arbitrator. The Court concluded that the Appellants had waived their right under the arbitration agreement by consenting to the appointment and participating in the arbitration proceedings. The Court also emphasized that a concession made by an advocate is binding on the party represented.