Secretary, BADC Vs. M/S. Greeners Engineering Ltd. [4 LNJ AD (2015) 125]

Case No: CIVIL APPEAL No. 137 OF 2006

Judge: Muhammad Imman Ali,

Court: Appellate Division ,,

Advocate: Mr. Abdul Wadud Bhuiyan,Mr. Nurul Amin,,

Citation: 4 LNJ AD (2015) 125

Case Year: 2015

Appellant: Secretary, BADC

Respondent: M/S. Greeners Engineering Ltd.

Subject: Arbitration,

Delivery Date: 2014-04-22

APPELLATE DIVISION
(CIVIL)
 
Syed Mahmud Hossain, J,
Muhammad Imman Ali, J,
Hasan Foez Siddique, J.

Judgment on
22.04.2014
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Secretary, Bangladesh Agricultural Development Corporation (BADC).
...Appellant
Versus
M/S. Greeners Engineering Ltd.
...Respondents
 
 
Arbitration Act (X of 1940)
Sections 30 and 33
Since the order appointing the learned Arbitrator was stayed and it was brought to the notice of the learned Arbitrator, it was clearly a misconduct of the learned Arbitrator to proceed with hearing the Arbitration and making an award during the subsistancy of the order of stay.
In view of the above, it is patently clear that the order appointing the learned Arbitrator was stayed by the court making the appointment and the fact of the stay order and the challenge against the appointment before the High Court Division was brought to the notice of the learned Arbitrator. It appears that the High Court Division has overlooked this aspect of the case. It is also apparent that the learned Arbitrator acted beyond his jurisdiction when the order appointing him as Arbitrator was stayed. These facts having been brought to his notice in the application for adjournment, it was clearly misconduct on the part of the learned Arbitrator to proceed with hearing the arbitration and making an award during the pendency of the order of stay.         . . .  (13)
 
For the Appellant : Mr. Abdul Wadud Bhuiyan, Senior Advocate, instructed by Mr. N.I. Bhuiyan, Advocate-on-Record
For Respondent : Mr. Nurul Amin, Advocate, instructed by Mr. Zainul Abedin, Advocate-on-Record

CIVIL APPEAL No. 137 OF 2006.
 
JUDGMENT
Muhammad Imman Ali, J.

This Civil Appeal, by leave, is directed against the judgment and order dated 11.08.2003 passed by a Division Bench of the High Court Division in First Miscellaneous Appeal No. 22 of 2002 dismissing the Appeal. 

The facts of the case, in brief, are that the respondent as plaintiff filed Arbitration Miscellaneous Case No. 512 of 1986 in the 3rd Court of the Subordinate Judge, Dhaka impleading the present appellant as defendant praying for appointment of an Arbitrator to arbitrate a dispute which arose out of tender invited by the defendant BADC for supplying and installing machinery for the electrical sub-station of the cold storage plant at Zia International Airport on 05.12.1984 on Turn Key basis and acceptance of the lowest bidder submitted by the plaintiff-respondent, who furnished Bank Guarantee of Tk. 87,900/- for the work which was to be completed at a cost of 8,79,000/- in terms of the specification as mentioned in the tender notice. The machineries were to be installed under the direction of one Mr. A.H.M. Aminur Rahman, Executive Engineer and Mr. Imam Ali, Deputy Manager, BADC. The defendant also directed the plaintiff to install a rolling shutter at the cost of Tk. 1,00,000/- as non-tender item. The plaintiff respondent completed the work in terms of the specification mentioned in the tender notice and submitted bill of Tk. 8,79,000/- but the defendant did not pay the bill without any reason. In such facts and circums-tances the plaintiff prayed for appointment of an Arbitrator in terms of the agreement between the parties and claimed an amount of Tk. 8,79,000/- being the cost against the work done in terms of the tender notice, Tk. 1,00,000/- for non-tender item, interest of Tk. 32,00,000/- for withholding the amount for about 12 years and also Tk. 30,00,000/- for damaging plaintiff’s reputation in the form of business loss and loss of goodwill.

The defendant being the second party filed written objection in the arbitration proceeding and Mr. Israil Hossain a retired District Judge was appointed Arbitrator by order dated 11.12.1986. This appointment was challenged before the High Court Division and the appointment was cancelled and the learned Sub-ordinate Judge was directed to appoint a new Arbitrator Mr. Moksudur Rahman, learned Advocate, who was then appointed Arbitrator, but this order was again challenged and the High Court Division set aside the appointment of Mr. Moksudur Rahman as Arbitrator and directed the learned Sub-ordinate Judge to appoint a new Arbitrator. Thereafter, the learned Sub-ordinate Judge upon hearing the parties by order dated 25.02.1997 appointed Mr. Israil Hossain, Advocate as Arbitrator and fixed 02.05.1997 to file the award. The Arbitrator accordingly entered into the reference and filed the award before the court on 30.04.1997.

The plaintiff-respondent then made a prayer for making the award rule of the court and the defendant-appellant filed an application on 01.06.1997 under section 30 and 33 of the Arbitration Act, 1940, for setting aside the award dated 28.04.1997. On these two applications Title Suit No. 191 of 2001 of the 3rd Court of the Joint District Judge, Dhaka was started. The learned Joint District Judge, by the impugned order dated 21.10.2001 found that the learned Arbitrator filed the award in accordance with law and committed no misconduct and the award was proper and valid. Accordingly by judgement and order dated 21.10.2001 the learned Joint District Judge made the award dated 28.04.1997 rule of the court.

Being aggrieved by the aforesaid judgement and order the defendant as appellant has preferred First Miscellaneous Appeal under section 39 (I)(VI) of the  Arbitration Act, 1940.  

By the impugned judgment and order, the High Court Division dismissed the appeal with cost of Tk. 10,000/- which was to be deposited by the appellant before the trial court within a period of 3 months from the date of the receipt of this order by the trial court.

The defendant then filed Civil Petition for Leave to Appeal No. 472 of 2004 before this Division. Leave was granted to consider the following grounds:

“I. Whether the Arbitrator committed misconduct in making the award ex-parte depriving the petitioner BADC of the opportunity to take the matter before the High Court Division and it will be seen on the face of the record that the Arbitrator made the award ex-parte on 28.04.1997 rejecting the prayer for adjournment on 27.04.1997 on the ground that 02.05.1997 was fixed for filing the award although the order of appointment of Arbitrator was stayed till 02.05.1997 and the High Court Division committed an error of law in dismissing the appeal without considering that in view of the facts and circumstances the ex-parte award in not sustainable; and
II. Whether the High Court Division committed an error of law in arriving at a finding that the order of stay has not been brought to the notice of the Arbitrator without considering that on 27.04.1997 an adjournment was sought for bringing the matter to the notice of the Arbitrator that the learned Sub-ordinate Judge stayed the appointment of Arbitrator for moving a revisional application before the High Court Division; hence the Arbitrator committed legal misconduct in rejecting the application for adjournment and in making the award.”

Mr. Abdul Wadud Bhuiyan, learned Senior Advocate appearing on behalf of the appellant made submissions in line with the grounds upon which leave was granted. He submitted that the Arbitrator committed misconduct in making the award on 28.04.1997 where on the face of the record the learned Subordinate Judge had stayed the matter till 02.05.1997. He submitted that the order of stay was communicated to the Arbitrator on 27.04.1997 when a prayer for adjournment of the arbitration was moved. He submitted that the High Court Division committed an error of law in dismissing the appeal without considering the facts and circumstances especially since the award was made when there was an existing order of stay by the learned Subordinate Judge whereby the order to file the award by 02.05.1997 was stayed till 02.05.1997. Hence, the filing of the award on 30.04.1997 was in contravention of the order of stay. The learned Advocate further submitted that the High Court Division committed an error of law in arriving at a finding that the order of stay has not been brought to the notice of the Arbitrator when the facts disclose that on 27.04.1997 an adjourn-ment was sought bringing the matter to the notice of the Arbitrator that the learned Sub-ordinate Judge stayed the appointment of Arbitrator for moving a revisional application before the High Court Division; hence the Arbitrator committed legal misconduct in rejecting the application for adjournment and in making the award. The learned Advocate lastly submitted that the High Court Division committed an error of law in dismissing the appeal without considering that Mr. Md. Israil Hossain (retired District Judge) was appointed Arbitrator by an order dated 03.12.1986 which order was set aside by the High Court Division on 28.04.1994 in Civil Revision No. 653 of 1991 and the same Mr. Md. Israil Hossain was again appointed Arbitrator by an order dated 25.02.1997. He was, therefore obliged to start that arbitration proceedings afresh by issuing fresh notices on the parties. The award shows that the arbitration was started in 1991 which is an illegality since the earlier appointment was cancelled by order of the High Court Division. 

Mr. Nurul Amin, learned Advocate appearing on behalf of the respondent made submission in support of the impugned judgement and order of the High Division. He submitted that the order of stay was not communicated to the arbitrator; only an adjournment was sought. He further submitted the re-appointment of the arbitrator was not illegal since the second appointment was made after hearing both parties.   

We have considered the submissions of the learned Advocates appearing for the parties concerned and perused the impugned judgment of the High Court Division and other connected papers on record.

The High Court Division noted that the learned Subordinate Judge himself stayed operation of his own order dated 25.02.1997 appointing Mr. Md. Israil Hossain as Arbitrator. However, the High Court Division dismissed the appeal upon finding that there was nothing on record to indicate that the order of stay was served on the learned Arbitrator or that any party to the arbitration proceeding brought the stay order to the notice of the Arbitrator.

Upon scrutiny of the papers on record, it is apparent from the order of the learned Arbitrator dated 27.04.1997 that the second party (defendant) prayed for adjournment. It further appears that, in his application dated 27.04.1997 addressed to the learned Arbitrator, the defendant made a prayer to the learned Arbitrator not to proceed with the arbitration in view of the fact that he (defendant) had taken steps to file a civil revision before the High Court Division in connection with appointment of the Arbitrator. The defendant further pointed out in his application for adjournment that the Third Court of Subordinate Judge had stayed the matter for 10 days. It appears to us quite clear that the defendant had categorically intimated to the learned Arbitrator that his appointment was under challenge and that there was an order of stay by the learned Subordinate Judge.

In view of the above, it is patently clear that the order appointing the learned Arbitrator was stayed by the court making the appointment and the fact of the stay order and the challenge against the appointment before the High Court Division was brought to the notice of the learned Arbitrator. It appears that the High Court Division has overlooked this aspect of the case. It is also apparent that the learned Arbitrator acted beyond his jurisdiction when the order appointing him as Arbitrator was stayed. These facts having been brought to his notice in the application for adjournment, it was clearly misconduct on the part of the learned Arbitrator to proceed with hearing the arbitration and making an award during the pendency of the order of stay.

We find substance in the submission of the learned advocate for the appellant and for the reasons stated above we find merit in the appeal, which is, accordingly, allowed, without however any order as to costs. The parties are at liberty to take steps for appointment of a new Arbitrator, if so advised.

Ed.

Reference: 4 LNJ AD (2015) 125