Judgment and Order (CAV):
01. Issue raised in all the three writ petitions i.e., WP(C) Nos.2711/2012, 2789/2012 and 2790/2012 being identical, those were heard together and are being disposed of by this common order.
02. In all the three writ petitions, Guwahati Municipal Corporation (GMC) is the writ petitioner. In WP(C) 2711/2012, the contesting respondent i.e., respondent No. 1 is M/s. Industrial Construction Ltd, in WP(C) No. 2789/2012, it is M/s. SPM Engineers Ltd; whereas in WP(C) No.2790/2012, it is M/s. Zoom Industrial Services Ltd. All the three writ petitions seek quashing of arbitral awards dated 20.01.2004, passed by the respondent No. 2 as the Arbitrator as well as the proceedings in the money execution cases instituted by the claimants/respondent No. 1 in all the three cases for execution of the arbitral awards. The challenge has been made on the sole ground of the arbitral awards being vitiated by fraud and collusion.
03. For the sake of convenience, facts relating to WP(C) No.2711/2012 are briefly referred to hereunder.
04. GMC invited tender vide Notice Inviting Tender (NIT), dated 01.02.1990 for execution of the work âimprovement of existing water supply in the city of Guwahati. A company called M/s. International Pumps and Projects (I) Pvt. Ltd. had participated in the tender and whose tender was accepted. The said company informed the petitioner that for effective and speedy implementation of the contract work, it would be executed by its associate company called, International Pumps and Projects (Eastern) Pvt. Ltd. The associate company was awarded the formal work order on 05.10.1990. Subsequently, on 20.09.1993, the associate company was taken over by a company called, M/s. SPML Industries Ltd. On 04.08.1994, M/s. SPML Industries Ltd., changed its name to M/s. Subhas Capital City Ltd and finally on 08.06.1998, the name was changed to M/s. International Construction Ltd. (respondent No. 1).
05. Differences and disputes arose between respondent No. 1 and the petitioner with regard to execution of the contract. The completion date of the contract work was extended from time to time, but the entire work could not be completed for various reasons. These were disputed by the parties.
06. Respondent No. 1 moved the Commissioner of GMC in September, 2001, to be precise on 10.09.2001, seeking his intervention for resolution of the disputes by way of arbitration in terms of the agreement entered into between the parties. Since the matter could not be amicably settled, respondent No. 1 moved this Court for appointment of an Arbitrator under section 11 (6) (c) of the Arbitration and Conciliation Act, 1996 (briefly the Act hereafter) vide Arbitration Petition Nos. 17, 18 and 19 of 2001. This Court after hearing learned counsel for both the sides and after going through the agreements entered into between the parties while disposing the above arbitration petitions, held that there was an arbitration clause in the agreements. Since there was failure on the part of the Commissioner to act as Arbitrator, the Honble Chief Justice, vide his common order dated 26.03.2002 decided to appoint an Arbitrator under section 11 (6) (c) of the Act. As the dispute related to engineering contract, it was felt that it would be better if an engineer was appointed as an Arbitrator. Since respondent No. 2, a retired Commissioner and Special Secretary to the Govt. of Assam, Public Works Department, was an empanelled arbitrator in the list of arbitrators maintained by the Indian Council of Arbitration, Assam, he was appointed as the Arbitrator in all the three cases.
07. In the present case, the arbitration proceeding was registered as Arbitration Case No. 18/2001 and the first hearing was held on 25.04.2002. The arbitration proceeding was contested by both the sides, whereafter the Arbitrator passed the award on 20.01.2004, awarding a sum of Rs. 1,14,02,150.00 and other incidental amounts with interest at the rate of 12% per annum in favour of respondent No. 1.
08. Respondent No. 1/claimant as the decree holder instituted execution proceedings for execution of the award dated 20.01.2004, passed in Arbitration Case No. 18/2001, in the Court of District Judge, Kamrup at Guwahati. The said execution case was registered as Execution Case No. 30/2004.
09. Objection filed by the petitioner as judgment debtor was dismissed by the executing Court vide order dated 27.03.2006. Petitioner thereafter filed a petition on 21.04.2012 before the executing Court to dismiss the execution case and/or for stay of the execution proceeding. The said prayer was made on the ground that certain documents were obtained subsequently which showed that the arbitral award was obtained by the decree holder fraudulently.
10. Learned District Judge, Kamrup at Guwahati passed order on 21.04.2012 itself, dismissing the said petition filed by the petitioner.
11. Aggrieved thereby, petitioner has filed the present writ petition for quashing the award as well as the execution proceeding including the order dated 21.04.2012.
12. Contention of the petitioner is that the arbitral award was obtained by fraud and collusion between respondent No. 1 on the one hand, lawyer and certain officials of the petitioner and the Arbitrator on the other hand. The claims made by respondent No. 1 were bogus, based on forged and fabricated documents. Since the impugned award is vitiated by fraud, the same cannot be sustained, and question of executing such award does not arise.
13. This Court, by order dated 07.06.2012 issued notice and passed an interim order to the effect that since fraud has been alleged, Money Execution Case No. 30/2004, pending in the Court of District Judge, Kamrup, should remain stayed.
14. Respondent No. 1 has filed affidavit. Maintainability of the writ petition has been questioned. Writ would not lie for quashing of an award as well as against a private party. Petitioner had adequate and efficacious remedy under the Act, which it did not pursue. There is delay in resisting the award and filing of the writ petition which reflects lack of bonafide. On merit, it is submitted that arbitration proceeding was initiated on orders of the Honble Chief Justice by appointment of respondent No. 2 as Arbitrator. The arbitration proceeding was contested by the parties, whereafter award was passed. Petitioner did not challenge the award under section 34 of the Act. The award has attained finality. The same cannot be challenged now on the false plea of fraud. Though fraud has been alleged, no material has been placed before the Court to prove such allegation. Executing Court was justified in rejecting the objection filed by the petitioner. Petitioner acted on the basis of an undated complaint received on 19.04.2012 written by one person called Prashanta Changkakati without any verification. Strongly denying any wrong doing, respondent No. 1 seeks dismissal of the writ petition both on the ground of maintainability as well as on merit.
15. Petitioner has filed rejoinder-affidavit to the counter-affidavit filed by respondent No. 1. While reiterating the contentions made in the writ petition, petitioner has contended that the procedure adopted by the arbitral tribunal was not fair, rather it was conducted in a manner unknown to law. It is also contended that respondent No. 1 had filed a writ appeal against stay order granted by the Single Bench, but the same was dismissed. It is further contended that respondent No. 1 had raised 16 claims for a total amount of Rs.22,42,10,322.00, excluding interest, out of which Rs.1,94,77,619.00 was awarded to the respondent No. 1 excluding interest. In addition to the above, interest was also awarded separately at the rate of 12% per annum, which would come to Rs.1,07,38,994.00 (approximately).
16. Heard Mr. B Singh, learned counsel for the petitioner and Mr. BR Bhattacharjee, learned Senior Counsel assisted by Mr. SR Ganguli, learned counsel along with Mr. GN Sahewalla, learned Senior Counsel for the respondents. None appeared for the respondent No. 2.
17. Learned counsel for the petitioner has based his entire argument on fraud. He has submitted that respondent No. 1 had colluded with the lawyer of the petitioner as well as the Chief Engineer and the Arbitrator also became a party to the fraud. Most of the claims were allowed on admission. He submits that fraud vitiates everything and, therefore, the impugned award cannot be allowed to stand. He further submits that petitioner has lodged FIR against the respondent No. 1. Even the Govt. of Assam has taken serious note of the matter and the matter is being investigated. He has referred to a number of decisions, including the one reported in (2000) 3 SCC 581, UNITED INDIA INSURANCE COMPANY LTD. VS. RAJENDRA SINGH and ORS., in support of his submission that if any benefit has been obtained by way of fraud, the same cannot be allowed to be sustained by taking technical plea. High Court has plenary powers to undo the mischief caused by fraud and collusion.
18. Mr. Bhattacharjee, learned Senior Counsel appearing for the respondent No. 1, at the outset, questioned the maintainability of the writ petition. The award having not been challenged, even though effective and adequate statutory remedy was available, had attained finality. The plea of fraud taken by the petitioner is an afterthought to resist the execution proceeding. He asserts that there was no fraud in the passing of the award, which was passed following the procedure laid down under the law. Petitioner has made serious allegations of fraud against its own lawyer and Chief Engineer, that too, after the lawyer had expired. Referring to the various documents on record, learned Senior Counsel submits that contrary to what is being contended by the petitioner, it was because of the effort of the lawyer that the petitioner was quite successful in the arbitration proceeding, inasmuch as what was finally awarded was a fraction of what was claimed by the respondent No. 1. Perhaps this would explain why the award was not challenged under section 34 of the Act. He submits that the so called complaint dated 19.04.2012 was an engineered document, which was immediately lapped up by the petitioner and was used to file the belated objection in the executing Court. To give it a bonafide look, the said complaint was forwarded to the police authorities for registration of criminal case without any independent verification of the complaint by the petitioner. Referring to various provisions of the Act and the decision of the Apex Court in the case of VENTURE GLOBAL ENGINEERING VS. SATYAM COMPUTER SERVICES LTD. and ORS., reported in (2010) 8 SCC 660, he submits that fraud is a question of fact which has to be proved and demonstrated. Mere insinuation or allegation would not constitute fraud. Contending that the writ petition is an abuse of the process of the Court, Mr. Bhattacharjee, learned Senior Counsel for the respondent No. 1 seeks dismissal of the writ petition with exemplary costs.
19. In his reply, Mr. Singh, learned counsel for the petitioner submits that objection regarding maintainability of the writ petition based on the ground of availability of alternative remedy and finality of award would not be tenable inasmuch as the award having been obtained through fraudulent means would be non est in the eye of law. In the facts and circumstances of the case, no amount of technical plea raised by respondent No. 1 can repel the challenge and sustain the award.
20. I have heard learned counsel for the parties and I have also perused the materials on record.
21. Before proceeding further, it would be apposite to refer to those provisions of the Act which are relevant for the present case.
22. The Act was enacted to consolidate and amend the law relating to arbitration, both domestic and international and for enforcement of foreign arbitral awards, after repealing the earlier Arbitration Act, 1940. The Act also deals with conciliation proceedings and matters connected therewith or incidental thereto. Section 4 of the Act deals with waiver of right to object. It says that a party to an arbitration should know that any provision relating to arbitration from which the parties may derogate or any requirement under the arbitration agreement has not been complied with and yet proceeds without stating his objection to such non-compliance without undue delay or if a time limit is provided for stating that objection within the prescribed period of time, shall be deemed to have waived his right to object. Section 11 of the Act deals with appointment of Arbitrator and lays down the procedure for such appointment. Under sub-section (6), if an Arbitrator is not appointed as per the agreed procedure, a party may request the Chief Justice or any person or institution designated by him, to appoint the Arbitrator and such appointment shall be final. Appointment of an Arbitrator can be challenged on the grounds mentioned in section 12. Under sub-section (3), an Arbitrator may be challenged if justifiable doubts arise as to his independence or impartiality or on the ground of lack of qualification. The arbitral tribunal shall lay down its own procedure which will not be bound by the provisions of the Civil Procedure Code, 1908 or by the Indian Evidence Act, 1872. Section 25 deals with default of a party. If the claimant does not submit its statement of claim, the arbitral tribunal is empowered to terminate the proceedings. Likewise, if the respondent does not submit its statement of defence or fails to appear or produce documentary evidence, the arbitral tribunal shall continue with the proceedings and make the arbitral award. Under section 34 of the Act, a party may apply for setting aside of an arbitral award by making an application before the Principal Civil Court of the district having jurisdiction over the arbitration proceeding. Various grounds are mentioned on the basis of which an arbitral award may be questioned under section 34. As per section 34 (2) (b) (ii), if an arbitral award is in conflict with the public policy of India, it may be set aside by the Principal Civil Court. As per the explanation below the said sub-section, it is declared that an award would be construed to be in conflict with the public policy of India, if the making of the award was induced or affected by fraud or corruption or was in violation of section 75 or section 81. While section 75 relates to confidentiality clause, section 81 deals with admissibility of evidence in other proceedings. Under section 35, an arbitral award would be final and binding on the parties, subject to any challenge under section 34. Enforcement of arbitral award is provided in section 36, which says that after the period of making an application under section 34 has expired, the award shall be enforced under the Civil Procedure Code in the same manner as if it were a decree of the Court. Section 37 is the appellate provision.
23. Having broadly noticed the provisions of the Act relevant for the present case, we may now turn to the facts of the case.
24. It is not disputed that there were differences and disputes between petitioner and respondent No. 1 relating to execution of the contract in question so much so that respondent No. 1 had to approach the Honble Chief Justice of this Court for appointment of Arbitrator. The Honble Chief Justice noticed the dispute between the parties which could not be amicably settled and passed order dated 26.03.2002, appointing respondent No. 2 as the Arbitrator in exercise of the power conferred under section 11(6) (c) of the Act. As already noticed above, the Arbitrator convened the first hearing on 25.04.2002. From 25.04.2002, the proceedings continued and finally culminated in the making of the award on 20.01.2004. In other words, the proceedings lasted for almost two years. During the entire proceedings, not only the lawyer of the petitioner was present, he was assisted by the Chief Engineer, Water Works, GMC and other engineers from time to time. They were throughout in touch with the Commissioner, GMC pertaining to the arbitration proceedings. Minutes of the day to day proceedings were also forwarded to the Commissioner, GMC by the Arbitrator.
25. I am of the view that at this stage, details of the claims lodged by the claimant would not be required to be gone into as this Court is not examining the award as an appellate court. Suffice it to say that respondent No. 1 made 16 claims for various amounts before the Arbitrator. According to the rejoinder-affidavit of the petitioner, the total amount claimed by the respondent No. 1 was Rs.22,42,10,322.00, out of which the Arbitrator awarded Rs.1,94,77,619.00. According to the petitioner, out of the aforesaid amount, an amount of Rs.70,03,664.00 was awarded on the alleged admission of the petitioner and a further amount of Rs.6,97,000.00 was awarded on the ground that petitioner could not place any document relating to the said claim. Against claim of 21%, pre-suit, pendente lite and future interest, the Arbitrator awarded 12% per annum pre-suit and pendente lite interest and 18% per annum as future interest. A perusal of the award would show that majority of the claims raised by respondent No. 1 were not granted by the Arbitrator. It further indicates that at the instance of the Arbitrator negotiations were held between the parties for settlement of the dispute, but conciliation was not possible. In this connection, a meeting was also held in the office of the Commissioner, GMC on 18.07.2003.
26. Coming to the claims of respondent No. 1, in all, the respondent No. 1 made 16 claims. Though details of the claims need not be gone into, the headings of the claims and the decision of the Arbitrator may be briefly noticed. Claim No. 1 and claim No. 6 were taken up together as the GMC had admitted a part of the principal amount claimed against claim No. 1 and the full amount against claim No. 6. Claim No. 1 is âclaim for an amount of Rs.44,46,337.00 towards work done bills, whereas claim No. 6 is âclaim for 5% amount withheld on account of certificate of completion and commissioning (Rs.41,09,079.00). Under Claim No. 1, the Arbitrator awarded Rs. 35,91,585.00 and the full amount under Claim No. 6 as the said amount was admitted by the GMC to be payable to the respondent No. 1. Against claim No. 2 which is âclaim for payment due to extra work done beyond scope of original agreement (Rs.7,61,000.00), the Arbitrator found that the said claim was not maintainable and accordingly rejected the same. Claim Nos. 3,4 and 5 are as under: -
âClaim No. 3 : Claim for interest on delayed payments Rs.1,77,87,201.00 upto 30.03.2000.â
âClaim No. 4 : Claim for interest on delayed payment of 1st installment of mobilization advance (Rs.3,22,666.00).â
âClaim No. 5 : Claim for interest on delayed payment of 2nd installment of mobilization advance (Rs.7,16,261.00).â
Against claim No. 3, Arbitrator held that the claimant was entitled to interest on delayed payment and held that the interest would be calculated at the rate of 12% per annum. However, claim Nos. 4 and 5 were disallowed. Claim No. 7 is âclaim for escalation for work done and supply made after 1994 (Rs.15,00,000.00). Under this claim, the Arbitrator awarded Rs.3,74,805.00. Claim Nos. 8 to 13 are as under:-
Claim No. 8 : Claim for an amount of Rs.15,23,74,103.00 on account of damages.â
âClaim No. 9 : Claim for an amount of Rs. 1,71,03,225.00 on account of compensation for payment of idle time suffered.â
âClaim No. 10 : Claim for an amount of Rs. 2,00,000.00 on account of compensation for additional bank charges for bank guarantee during the extended period of contract.â
âClaim No. 11 : Claim for an amount of Rs. 40,00,000.00 on account of compensation towards depreciation of machinery/equipment etc. during the extended period of contract.â
âClaim No. 12 : Claim for an amount of Rs. 16,74,000.00 on account of expenses incurred for visits to and from the site in the extended period.â
âClaim No. 13 : Claim for an amount of Rs. 58,59,000.00 towards expenditure incurred on hiring of accommodation during the extended period.â
The above claims were taken together as those related to claim of compensation for prolongation of the contract period and losses suffered due to the same. The Arbitrator held that GMC had breached the contract which led to prolongation of the contract period. It was also found that un-rebutted documentary evidence on record had clearly revealed the fact that GMC had grossly delayed in making payment on time. The Arbitrator calculated the period of delay to be the period from 05.06.1992 to 08.04.1996 i.e. the date when the claimant submitted the incomplete final bill. The Arbitrator awarded Rs.1,14,02,150.00 against Claim Nos. 8 and 9, but held that claimant would not be entitled to any further amount under claim Nos. 10 to 13. Accordingly claim Nos. 10 to 13 were rejected. Thus for claim Nos.8 to 13, against the claim of Rs. 18,12,10,328.00, the sum awarded was 1,14,02,150.00. Claim No. 14 is for âclaim on account of loss of goodwill (Rs.1,31,07,450.00). The Arbitrator, however, declined to award any amount under this claim and rejected the same. Claim No. 15 is âclaim for pre-suit, pendente lite and future interest at the rate of 21%. After holding that the claimant was entitled to payment of interest, the Arbitrator held that pre-suit and pendente lite interest to the claimant would be at the rate of 12% per annum, which would be calculated from the various dates mentioned in the award. It was further held that the claimant would be entitled to future interest at the rate of 18% per annum on the principal amount awarded from the date of award till the date of payment. Claim No. 16 is âclaim for an amount of Rs.2,50,000.00 on account of costs. But the Arbitrator declined to award any cost, leaving the parties to bear their own costs.
27. Thus even from a cursory glance at the award, it is seen that many of the claims made by the claimant were rejected. As pointed out by the GMC in its reply-affidavit, against total claim of Rs.22,42,10,322.00, the Arbitrator awarded only Rs.1,94,77,619.00. Though we are not concerned with the quantum of the award, yet the fact that the Arbitrator had awarded only a fraction of what was claimed cannot be overlooked. Full participation of the GMC in the arbitration proceeding cannot also be overlooked. It is evident from the award that the lawyer representing the GMC was assisted by the Chief Engineer and other staff of GMC throughout the proceeding with the Commissioner being kept abreast of the proceedings on regular basis.
28. When a copy of the award was forwarded to their lawyer by the Chief Engineer, Water Works, GMC for opinion, the lawyer replied back on 12.07.2004, firstly, clarifying that he was not the Standing Counsel, GMC and secondly, on the legal opinion sought for, he stated that he had discussed the matter with the Commissioner, GMC about the possibility of an out of Court settlement, but not much headway was made in this regard. He finally stated that for a variety of personal reasons, he had decided not to deal with arbitration cases any further and declined to tender any advice. Request was also made to take away the briefs from his custody. This was a letter of 12.07.2004. The Chief Engineer also put up a note before the Commissioner on 28.08.2004 stating that the award goes in favour of GMC and, therefore, process for out of Court settlement may be initiated. It was pointed out that representative of respondent No. 1 had approached the Chief Engineer for out of Court settlement and he opined that it was a good proposal which was in the best interest of GMC. What followed thereafter has not been brought on record. However, the materials on record do not indicate that GMC had sought for legal opinion of any other counsel or that any view was expressed to challenge the award under section 34 of the Act.
29. In the meanwhile, as the award was not complied with and as no headway was made for out of Court settlement, respondent No. 1 initiated execution proceedings in the year 2004 itself under section 36 of the Act. It further appears that objection filed by the petitioner as judgment debtor was dismissed by the executing Court on 27.03.2006. Long thereafter, notification dated 22.06.2011 was issued by the Commissioner and Secretary to the Govt. of Assam, Guwahati Development Department constituting a âBids Finalization Committee with the following members: -
| Joint Secretary to the Govt. of Assam, Guwahati Development Department : | Chairman |
| Joint Commissioner, Guwahati Municipal Corporation : | Member |
| Chief Engineer, GMC : | Member |
| Standing Counsel, GMC : | Member |
| Sr. FA to the Govt. of Assam, Guwahati Development Department : | Member |
30. What steps the Award Negotiation Committee took regarding the awards in question or the outcome of such steps are not known, as nothing has been placed on record. But what is clear is that the Committee was constituted for settlement of the amount made by the awards and not for scrutiny of the awards. In other words, the objective was to negotiate on the quantum of the awards and not to challenge the basis of the awards. Be that as it may, surprisingly, a complaint written by one Prashanta Changkakati, Guwahati â 3 addressed to the Commissioner, GMC without any date, suddenly appeared, which is available on record. Though there is an endorsement dated 19.04.2012 on the body of the complaint, it is not known as to whose endorsement it was as the endorsement was without any official seal. There is no description of who Prashanta Changkakati was and the address given was also very vague, as he simply described himself as Prashanta Changkakati, Guwahati-3. He, however, alleged that respondent No. 1 had entered into a criminal conspiracy with officials of GMC to misappropriate public money by forgery and cheating. In the course of the complaint, the said Prashanta Changkakati stated that the accused-company got an Arbitrator appointed without an arbitration clause. The complainant further went on to say that having âsecured appointment of an Arbitrator i.e., respondent No. 2, the accused-company filed claims based on forgery and fabricated documents. The complainant called for a comprehensive enquiry into the matter, threatening that if the Commissioner failed to take action, he would approach the High Court and the Supreme Court for a Court monitored CBI enquiry.
31. Without entering into the substance of the allegations made by the complainant, it is evident, as already noticed, that the complainant did not disclose his identity. He also did not disclose as to how, in what manner and in what capacity he had come to know about the alleged forgery and cheating by respondent No. 1. The GMC Commissioner or the other authorities of GMC ought to have been careful and circumspect when the said complainant stated that the accused-company got an Arbitrator appointed without an arbitration clause and that it had âsecured appointment of respondent No. 2 as the Arbitrator when the fact is that it was because of the judgment and order of the Honble Chief Justice dated 26.03.2002, which held that there existed an arbitration clause in the contract agreement, the Arbitrator was appointed. It was further held that the named Arbitrator i.e., Commissioner, GMC had failed to enter into the dispute referred and, therefore, the Honble Chief Justice proceeded to appoint an Arbitrator under section 11 (6) (c) of the Act. This is what was held by the Honble Chief Justice in his judgment and order dated 26.03.2002:-
â Really speaking it is to be seen whether the parties to the agreement intended that any disputes arising between them should be decided by a particular person after holding an enquiry in the nature of judicial enquiry and after hearing the cases of respective parties. If such is the intention, then it is an arbitration clause irrespective of the fact that the words âarbitrator or âarbitration are not used in such clause.
In the present case, reading of the clauses 26 and 30, as well as clause D-6.21 of the agreements quoted above, it is apparent that it was envisaged that any dispute arising out of the agreements, the decision thereon shall be taken by the Commissioner. Consequently, I do not agree with the contention of the learned counsel for the respondent, GMC, and hold that there exists an arbitration clause.
In Arbitration Petition No. 17/2001, the first communication which was received after September 10, 2001 from the Commissioner, GMC is dated 13.11.2001. Admittedly, it is after 30 days of the receipt of the notice dated 10th September, 2001. In Arbitration Petition No. 18/2001, the notice dated 10.09.2001 was duly received by the respondent, but there was no reply to it till the filing of the petition, i.e., 18.10.2001. In Arbitration Petition No. 19/2001, the learned counsel for the respondent referred to a communication dated 28th September, 2001, from the Commissioner, GMC. In that communication, reference is being made to the Chief Engineers letter dated 13.03.2001, which was addressed to the applicant asking them to attend the office of the Chief Engineer along with copy of the agreement and other relevant documents in respect of the work âLabour charge and supply of barge, installation of MS pipeline for Kamakhya Water Supply Scheme on 15.03.2001 at 3:00 p.m.
The communication dated 28th September, 2001 is not in response to the notice dated 10th September, 2001 in which disputes were referred. This petition was filed on 18.10.2001. From the aforesaid facts, I am of the considered view that the named arbitrator, i.e., the Commissioner, GMC failed to enter upon the reference and act as an arbitrator within 30 days of the receipt of the notices dated 10.09.2001.
In view of the above, I proceed to appoint an arbitrator under section 11(6)(c) of the Act.
The matter relates to engineering disputes and it would be better if some engineer is appointed as an arbitrator. One such arbitrator is in the list of arbitrators maintained by the Indian Council of Arbitration, Assam. In these three cases, Mr. N. C. Deka, Commissioner, PWD (Retd), opposite Nehru Stadium, Dr. B. Barooah Road, Guwahati, is appointed as arbitrator.â
Thus, on the face of it, the allegation made by the complainant that the accused-company got an Arbitrator appointed without an arbitration clause or that it had âsecured appointment of an Arbitrator, is not only untenable and false, but is also highly contemptuous. Inspite of that, the Commissioner or other higher authorities of GMC did not think it necessary to verify the antecedents of the complainant and the genuineness of the complaint. Instead, he got a FIR registered against respondent No. 1 though the Joint Commissioner, GMC and the entire complaint was enclosed as the first information.
32. Be that as it may, it was only after receipt of the alleged complaint on 19.04.2012 that the GMC filed an objection immediately thereafter on 21.04.2012 before the executing Court seeking stay of the execution proceeding. Learned District Judge, Kamrup, Guwahati by his order dated 21.04.2012 dismissed the said petition. It was held as under: -
âThe parties are present. The judgment-debtor has filed a petition No.580/12 with a prayer to stay execution proceeding of this case.
I have heard learned counsel for both sides.
Learned counsel for judgment-debtor has referred to the provisions of Section 47 of the CPC to justify his prayer for stay of the proceeding. The judgment-debtor has alleged in the instant petition that the arbitral award was fraudulently obtained by the decree-holder. This is the sole ground on which he has prayed to stay the execution proceeding.
I have visited the provisions of Section 47 of the CPC and I have not found therein that any provision is made therein to condone such a prayer. The provisions of Section 47 have given the power to the Court to decide dispute between the parties arising out of the execution proceeding. The dispute, alleged in the petition between the parties, does not appear to have arisen out of this execution proceeding. In fact the judgment-debtor has challenged the arbitral award which is put to execution in this execution proceeding on the ground that the arbitral award was obtained fraudulently. That being so, the judgment-debtor, instead of resorting to the option of filing a separate suit seeking declaration that the arbitral award was fraudulently obtained or to the provisions for appeal against the arbitral award, has preferred to file this petition which has no approval of the provisions referred to by the learned advocate for the judgment-debtor, as indicated above. The learned advocate for judgment-debtor has also made a prayer to this court to exercise its inherent power u/s 151 of the CPC. The provision of section 151 of the CPC cannot be applied in the instant case in view of the fact that there is a legal provision available for judgment-debtor either to prefer an appeal against the arbitral award or to file a separate suit seeking a declaration.
Accordingly, I am not inclined to exercise the power of this court u/s 151 of the CPC.
The petition stands dismissed, accordingly, after hearing both sides.
Since no out of Court settlement has taken place in this execution proceeding the decree-holder will take steps within 7 days for issuance of the writ.â
33. The executing Court was right in saying that the petitioner ought to have filed a separate suit for declaring the award as being fraudulently obtained or it could have challenged the award under section 34 of the Act on the ground that the arbitral award is in conflict with the public policy of India, which has been explained to mean making of the award by fraud or corruption. Petitioner chose not to take recourse to any of the aforesaid two legal options open to it. For eight years i.e., from January, 2004 when the award was made to 19.04.2012 when the so-called complaint was received, petitioner never raised any objection that the award was vitiated by fraud. From the documents placed on record, it is evident that fraud was alleged for the first time in the complaint received on 19.04.2012. As already noticed above, without making any preliminary verification or enquiry about the antecedent of the complainant or the veracity of the complaint, petitioner accepted the complaint as if it was a gospel truth and immediately filed the petition before the executing Court not to execute the award alleging fraud. This itself raises doubt about the bonafides of the complaint and the action taken by the petitioner based thereon.
34. There is no dispute to the proposition of law advanced on behalf of the petitioner that an award obtained by fraud is a nullity and that the High Court has got plenary powers to set at nought an award obtained through fraud. No amount of technicalities or delay can sustain or rescue an award obtained by fraud from judicial excision. The Apex Court very rightly pointed out in the case of RAJENDRA SINGH (Supra), that fraud and justice never dwell together. However, having said that, it must also be borne in mind that fraud is essentially a question of fact which has to be proved/demonstrated to the satisfaction of the Court by the party alleging fraud. Section 17 of the Indian Contract Act, 1872, defines fraud. It reads as under: -
â17. âFraud defined â Fraud means and includes any of the following acts committed by a party to a contract, or with his connivance, or by his agent, with intent to deceive another party thereto or his agent, or to induce him to enter into the contract: -
(1) the suggestion, as a fact, of that which is not true, by one who does not believe it to be true;
(2) the active concealment of a fact by one having knowledge or belief of the fact;
(3) a promise made without any intention of performing it;
(4) any other act fitted to deceive;
(5) any such act or omission as the law specially declares to be fraudulent.
Explanation â Mere silence as to facts likely to affect the willingness of a person to enter into a contract is not fraud, unless the circumstances of the case are such that, regard being had to them, it is the duty of the person keeping silence to speak, or unless his silence, is, in itself, equivalent to speech.â
35. Section 17 of the Indian Contract Act, 1872, has to be read with the provisions of section 34 (2) (b) (ii) of the Act. When a challenge is made to an arbitral award on the ground of the award being induced or affected by fraud, this has to be proved in the appropriate court either by filing application under section 34 of the Act or by filing an independent suit. Admittedly, petitioner has not availed any of the above remedies. Even in the present writ petition, the pleadings as to fraud are extremely bald and general in nature to warrant or justify coming to any conclusion that fraud or collusion had played a part in making of the award. On the contrary, it is the inordinate delay on the part of the petitioner in making the allegation of fraud and the manner in which the allegation of fraud had surfaced through an anonymous complaint which was immediately acted upon by the petitioner without even any initial verification raises question mark about the bonafides of the petitioner itself in instituting a very belated challenge to the arbitral award by clutching on to the only ground that could be available to sustain such a challenge at this belated stage i.e., fraud.
36. For the aforesaid reasons, this Court is not inclined to accede to the contentions advanced on behalf of the petitioner. This petition is, therefore, devoid of any merit and is accordingly dismissed. Interim order passed by this Court on 07.06.2012 stands vacated.
37. For the grounds and reasons mentioned above, the other two writ petitions i.e., WP(C) No.2789/2012 and WP(C) No.2790/2012 are also dismissed. Stay order passed in those cases on 12.06.2012 are also vacated. No costs.