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Jagat Ram Trehan and Sons v. Union of India
Factual and Procedural Background
The appellant and the Union of India entered into a contract that contained an arbitration clause. Shri J.D. Chopra was initially appointed as arbitrator on 2 May 1988; he was later replaced by Shri N.J. Chandwani while on deputation as an arbitrator in the Ministry of Urban Development. An office order dated 20 November 1990 directed that Shri Chandwani be released from the post of arbitrator on the afternoon of 30 November 1990, with a direction either to deliver pending awards within ten days or resign from the remaining cases. Shri Chandwani issued a certificate confirming that he relinquished the office on 30 November 1990.
Despite the relinquishment, he passed an arbitral award on 5 December 1990. The award was made a rule of the court on 3 August 1993 because no objections were then filed by the Union of India. During execution, however, the Union invoked Section 47 of the Civil Procedure Code, contending that both the award and the consequent decree were nullities because the arbitrator lacked authority after 30 November 1990. The Delhi High Court accepted this contention and set aside the decree. The present appeal challenges that High Court order.
Legal Issues Presented
- Whether an arbitrator who has relinquished his office on 30 November 1990 could validly render an award on 5 December 1990.
- Whether the office order allowing the arbitrator “ten days” to give awards permitted him to act beyond the date of relinquishment.
Arguments of the Parties
Appellant's Arguments
- The office order granted the arbitrator a ten-day window to deliver awards, and the ten-day period should be computed from 30 November 1990, making the 5 December 1990 award timely.
- Because Shri Chandwani was appointed by name, his cessation from the departmental post should not affect his authority to arbitrate.
- Reliance was placed on the Supreme Court decision in “M/s. Construction India v. Secretary, Works Department, Government of Orissa & Ors.” to support the validity of the award.
Respondent's (Union of India) Arguments
- The office order released the arbitrator with effect from 30 November 1990 and required resignation from all other cases immediately thereafter.
- Clause 25 of the General Conditions of Contract specifies that arbitration ceases when the arbitrator is transferred or vacates office, necessitating appointment of a new arbitrator; therefore the award after 30 November 1990 was a nullity.
- The arbitrator’s own certificate confirms relinquishment on 30 November 1990, extinguishing his authority to act.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| M/s. Construction India v. Secretary, Works Department, Government of Orissa & Ors. | Proposition advanced by appellant that a named arbitrator can continue despite transfer or relinquishment. | The Court held that this decision was inapplicable to the present facts and provided no assistance to the appellant’s case. |
Court's Reasoning and Analysis
The Court undertook a textual analysis of the 20 November 1990 office order. It held that the ten-day grace period mentioned therein commenced on 20 November 1990—the date of the order—rather than on 30 November 1990. The concluding lines of the order expressly directed the arbitrator to resign from all cases that could not be decided within that period.
Clause 25 of the General Conditions of Contract reinforced that an arbitrator’s mandate terminates upon transfer or vacation of office, requiring fresh appointment. The arbitrator’s certificate of relinquishment, coupled with the mandatory language of the office order and Clause 25, demonstrated that he lacked authority after 30 November 1990.
Because Shri Chandwani rendered the award on 5 December 1990—after his mandate had ended—the award was a nullity. The precedent cited by the appellant was distinguished as factually and legally inapposite. Consequently, the High Court’s finding that the award and decree were void was affirmed.
Holding and Implications
APPEAL DISMISSED.
The Supreme Court upheld the Delhi High Court’s conclusion that an arbitrator cannot render an award after relinquishing his office. The direct consequence is that the award dated 5 December 1990 and the decree dated 3 August 1993 are void and unenforceable against the Union of India. The decision turns on contractual and administrative terms rather than creating a new legal precedent of broader application.
(1) This appeal is directed against the order of the Delhi High Court wherein the High Court was pleased to allow the appeal of the Union of India.
(2) The contextual facts depict that pursuant to a contract entered into by and between the appellant and the Union of India, and by reason certain disputes Shri J.D. Chopra was appointed as an Arbitrator on 2-5-1988 to adjudicate the same between the parties during the execution of the contract. Subsequently, Mr. Chandwani was appointed in place and stead of Shri J.D. Chopra who was then on deputation and acting as arbitrator in the Ministry of Urban Development, Government of India. Mr. Chandwani, however, passed the award on 5-12-1990 and the award was made the rule of Court on 3-8-93 as on objections have been filed by the Union of India. In the execution proceedings, however, the Union of India has raised objections by filing an application under section 47 civil procedure code contending that the award dated 5-12-1990 and the decree passed thereon dated 3-8-93 were nullity since Shri Chandwani who passed the award had already relinquished his office as arbitrator as on 30-11-1990 in terms of the notification as issued by the Government of India. It has however been contended in support of the appeal that no notification was issued in which Chandwani was asked to relinquish the office and to join his duties in the Income Tax Department being his parent department. For convenience sake, the office order dated 20th November, 1990 containing the Ministry's order dated 5th November, 1990 prospectively releasing the Arbitrator with effect from 30th November, 1990 reads as below:
"In pursuance of the order issued in this Ministry office order No. 150112/50 E.D. dated 5th November, 1990, Sri N.J. Chandwani at present on deputation as arbitrator in this Ministry is released on his duties on the afternoon of 30th November, 1990, with instruction for report for duty, as Member, Appropriate Authority, Income Tax Department, Calcutta, immediately it has also been decided that in respect of arbitration cases which have been heard and are ripe for giving award Shri Chandwani should give awards within 10 days in respect of cases where such awards cannot be given within 10 days and other cases. Shri Chandwani should resign as arbitrator immediately under intimation to all concerned."
(3) The factual score depict that Mr. Chandwani had also given a certificate and that is on record wherein clearly stated that he relinquished his office on 30-11-1990. The arbitration clause in the contract also says that the arbitration shall cease upon the person (who is appointed arbitrator) being transferred or vacating his office.
(4) The provisions of arbitration clause also show that the arbitration is by a person holding office as arbitrator in the department.
(5) Relying upon the aforesaid clause, however, learned advocate for the appellant contended that a specified period of 10 days have been allowed to the Arbitrator to pass the award and as such award is within the time as noticed in the office order hereinbefore. The submission undoubtedly is attractive but on a closer scrutiny, it reveals that the office order dated 20th November, 1990 indicating 10 days period the same shall have to be calculated from 20th November, 1990, and not from 30th November, 1990 as has been contended by the learned advocate for the appellant. The above reasoning finds support from the last three lines of the office order which is as below:
"In respect of cases where such award cannot be given within 10 days and the other cases Shri Chandwani should re- sign as arbitrator immediately under intimation to all concerned."
(6) There is thus a specific direction on to Shri Chandwani to resign from all cases immediately on relinquishing his post as arbitrator. The further factum of relinquishment of office and intimation therefor by Shri Chandwani reinforces the submissions of Mr. Qadri that the award cannot be passed beyond the period noted above. In any event clause 25 of the General Conditions of contract also lends some assistance to Mr. Qadri's submission relevant extract of which reads as below:
"Clause 25 ........The arbitrator to whom the matter is originally referred being transferred or vacating his office or being unable to act for any reason, such Chief Engineer or administrative head as aforesaid at the time of such transfer, vacation office or inability to act, shall appoint another person to act as arbitrator....."
(7) The other count on which learned advocate emphasised is that the arbitrator since appointed by name, question of any resignation would not arise and neither cessation to act as arbitrator as a member in the department would alter the situation.
(8) We are, however, unable to record our concurrence therewith on having due regard to clause 25 read with office memorandum as noted above.
(9) In support of the submission strong reliance has been placed upon the decision of this Court in the case of M/s. Construction India v. Secretary, Works Department Government of Orissa and Ors. In our view the decision above noted does not have any manner of application in the matter under consideration and as such does not lend any assistance to the submissions advanced in support of the appeal.
(10) The factual position as noticed above, reveals that Mr. Chandwani has given a certificate relinquishing his office on 30th November, 1990 and there is no dispute as regards the factum of relinquishment of office of Mr. Chandwani on 30th November, 1990 and the award being passed on 5th December, 1990 - Thus admittedly, beyond the period of relinquishment to act as Arbitrator and the High Court, relying on the above factual situation came to the conclusion that upon relinquishment of the office on 30th November, 1990 as Arbitrator, Mr. Chandwani could not have passed any award on 5th December, 1990 and the award given has been ascribed to be null and void. We do not find any lacuna in such a finding of the High Court warranting the interference of this Court. An arbitrator cannot possibly pass an award after relinquishment of his office as an arbitrator. The appeal thus fails and is dismissed. No order as to costs. Appeal dismissed.
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