Arbitration appointment waiver and personal contractual liability upheld; reasoned award survives challenge absent public policy breach.

An arbitral appointment made after the employer missed the contractual time limit was upheld because the contractor was then entitled to proceed under the agreed mechanism, and the employer's participation without timely objection amounted to waiver. The award was also sustained despite the municipal council not being joined, because the contract and surrounding arrangements showed that the employer undertook project responsibilities and was personally liable, making Section 230 of the Contract Act inapplicable. The Section 34 challenge to interest, compensation, price adjustment, and other monetary reliefs failed because the award was reasoned, evidence-based, and disclosed no statutory ground or public policy breach.

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Issues: (i) Whether the appointment of the arbitrator was contrary to the agreed appointment procedure and liable to be set aside under the Arbitration and Conciliation Act, 1996; (ii) Whether the absence of the municipal council as a party and the award against the employer offended Section 230 of the Indian Contract Act, 1872; (iii) Whether the arbitral award, including the grant of interest and compensation, was liable to be set aside as illegal or opposed to public policy.

Issue (i): Whether the appointment of the arbitrator was contrary to the agreed appointment procedure and liable to be set aside under the Arbitration and Conciliation Act, 1996.

Analysis: The appointment mechanism required the employer to send a panel within the stipulated time and, on its failure, enabled the contractor to send a panel and make the appointment if the employer did not act within the further period. The employer sent its panel after expiry of the prescribed time, thereby losing the right to insist on selection from its list. It also did not object to the constitution of the tribunal in the manner contemplated by the Act and proceeded with the arbitration without timely challenge.

Conclusion: The appointment was valid, and the challenge on this ground failed.

Issue (ii): Whether the absence of the municipal council as a party and the award against the employer offended Section 230 of the Indian Contract Act, 1872.

Analysis: Although the contract disclosed that the employer was acting on behalf of the municipal council, the contractual arrangements showed that the employer undertook project management responsibilities, engaged the contractor in its own name, made payments to the contractor, and assumed responsibility for execution and supervision. The surrounding circumstances and the agreement between the parties established a contract to the contrary, taking the case outside the ordinary rule that an agent is not personally liable for contracts made on behalf of a disclosed principal.

Conclusion: The employer was personally liable on the contract, and non-joinder of the municipal council did not vitiate the proceedings or the award.

Issue (iii): Whether the arbitral award, including the grant of interest and compensation, was liable to be set aside as illegal or opposed to public policy.

Analysis: The award was a reasoned one based on contractual terms, admitted breaches, and documentary evidence. The arbitrator's findings on unpaid bills, equitable rates, price adjustment, compensation for idle resources and overheads, refund of excess sales tax, and interest were within the contractual framework and the statutory power to grant interest. In a challenge under Section 34, the Court could not reappreciate evidence or interfere merely because another view was possible. No ground showing conflict with the public policy of India or any other statutory infirmity was established.

Conclusion: The award was not liable to be set aside on the grounds urged.

Final Conclusion: The challenge to the arbitral award failed on all substantial grounds, and the award as upheld by the court below was left undisturbed.

Ratio Decidendi: A party that fails to follow the agreed appointment procedure and participates in the arbitration without timely objection waives its right to challenge the appointment, and a disclosed principal is not the only liable party where the contract and surrounding circumstances establish a contract to the contrary; in a Section 34 challenge, the court will not interfere with a reasoned award absent a statutorily recognised ground.

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