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1988 DIGILAW 111 (GAU)

Babu Lal Garodia v. Union of India

1988-06-23

S.N.PHUKAN

body1988
The appellant entered into a contract with the Union of India represented by Commander, Hq. Works Engineers, Chabua for "re-surfacing to existing aprons at Mohanbari Air Field". During the course of execution of the work differences and disputes arose between the parties and these were referred to arbitration as per clause 70 of the Agreement. It is stated at the Bar that the claim of the appellant before the Arbitrator was Rs.2,00,000/-(Rupees two lakh) and odd. The Arbitrator after considering the entire matter awarded a sum of Rs.. 37.000/- (Rupees thirty seven thousand) and odd against the present appellant. The learned Assistant District, Judge, Dibrugarh by the impugned order dated 31.3.75 passed in Money Suit No. 24 of 1971 made the award a Rule of the Court and hence the present appeal. 2. The only point urged by Mr. Goswami, learned counsel for the appellant before this Court is the legal misconduct of the Arbitrator in the proceeding as he did not allow the appellant to adduce evidence thereby violated the principles of natural justice. 3, Mr. Sk. Chand Mohammad, learned Senior Central Govt. Standing Counsel has strenuously urged that there war Ho legal misconduct on the part of the Arbitrator during the proceeding, and as such, the lower Court validly and legally made the award a Rule of the Court. In this connection Mr. Sk. Chaad Mohammad has further urged that this being an arbitration proceeding the Court cannot sit in appeal and even if the Arbitrator committed an error of law this cannot be challenged before the Court. Mr. Sk. Chand Mohammad has placed reliance on two decisions cf the Apex Court In M/S. Hlndusthan Tea Company vs. M/S. K. Sashi Kant and Company, AIR 1987 S.C. 81 , it was held that under the law the Arbitrator being the final arbiter of the dispute between the parties the award made, by him is not open to challenge on the ground that he reached a wrong conclusion or failed to appreciate the facts In M/S. Tarapore and Company vs. Cochin Shipyard Ltd., 1984 S.C. 1072, the Apex Court held that an error of law Committed by the Arbitrator on specific question of law cannot be challenged. 4. Mr. 4. Mr. Goswami has placed reliance in the decision of the Supreme Court in Coimbatore District P. T. Sangam vs. Bala Subramania Foundry and others, AIR 1987 S. C. 2045 wherein their Lordship quoted with approval the earlier decision of the Apex Court in Union of India vs. A.L. Rellia Ram, AIR 1963 S. C. 1685 and their Lordships held as follows-“The award was a decision of a Domestic Tribunal chosen by the parties, and the civil Courts which were entrusted with the power to facilitate arbitration and to effectuate the award, could: not exercise the appellate powers over the decision. Wrong or right the decision was binding, if it be reached fairly after giving adequate opportunity to the parties to place their grievances in the manner provided by the arbitration agreement. This Court reiterated in the Said decision that it was now firmly established that an award was bad on the ground of error of law on the face of it, when In the award itself or fit document actually incorporated in it, there was found some legal proposition which was the basis of the award and which erroneous." (under­lining mine). . 5. Some of the observations ia Russel on Arbitration (18th Edition) which are relevant for the present purpose are quoted below. At page 378 it was observed as follows,-"Misconduct is often used in a technical sense as denoting irregularity, and not in moral turpitude. But the term also covers cases where there is breach of natural justice..". At page 388 it was observed as follows,-“it would seem, however, that the refusal of an Arbitrator to examine witnesses is sufficient misconduct on his part to induce the Court to set aside the award, though he Arbitrator) may think he has sufficient evidence without them." 6. Situated thus, the law is clear on this point. An Arbitrator is a final arbiter of tie dispute between the parties and his award being a decision of a Domestic Tribunal chosen by the parties is binding and it cannot be challenged on the ground that the Arbitrator has reached a wrong conclusion or failed to appreciate the facts, the Court cannot sic in appeal against the award of the Arbitrator and wrong or right his decision is binding on .the parties. But in arriving at the decision the Arbitrator must give adequate opportunity to the parties to place their grievances. But in arriving at the decision the Arbitrator must give adequate opportunity to the parties to place their grievances. If the Arbitrator does not allow any party to adduce evidence it will amount to violation pf principles of natural justice, and as such, the award can be set aside on the ground of misconduct. If the award is based on some legal propositions which is erroneous and this erroneous proposition of law can be ascertained from the award or any document incorporated or annexed with the award then .the, award is liable to be set aside by the Court. 7. Coming to case in hand, it appears that though award is a non-speaking one the Arbitrator did not send the proceedings recorded by him. However, before the trial Court some documents were exhibited without objection, Ext. 8 is a letter dated, 17.2.7l sent by the appellant to the Arbitrator praying for allowing the appellant to adduce oral evidence before him. In absence of the proceedings recorded by the Arbitrator this Court looked into the said Ext. 8 and there is nothing on record to show what orders were passed on the said letter. It is stated on behalf of the appellant that though the above letter was sent, the Arbitrator did not allow the appellant to adduce any evidence. It has also been urged that the Arbitrator did not allow opportunity to the appellant to place his case. These facts are sufficient for this Court to come to the finding that the Arbitrator in course of the proceeding, did not give adequate opportunity to to the present appellant to place his grievances before him and thereby the Arbitrator violated the principles of natural justice. On this ground alone this Court is constrained to hold that there was misconduct on the part of the Arbitrator. 8. Mr. Sk. Chand Mohammad has raised a very interesting point that it is not obligatory on the part of the Arbitrator to record oral evidence and that the Arbitrator can come to a: finding on the basis of documents produced. From the record I donot find that the Arbitrator came to its finding only on the documents produced by the parties. That apart this Court is of the opinion, in view of the law stated above, that the Arbitrator cannot shut-out evidence if any party wants to adduce such evidence. Therefore, contention of Mr. Sk. From the record I donot find that the Arbitrator came to its finding only on the documents produced by the parties. That apart this Court is of the opinion, in view of the law stated above, that the Arbitrator cannot shut-out evidence if any party wants to adduce such evidence. Therefore, contention of Mr. Sk. Chand Mohammad has no force. 9. For the reasons stated above, I am of the opinion that the present award is liable to be set aside, which I-hereby do. 10. I have perused the clause 70 of the Agreement and I find that the appointing authority has got power even now to appoint another Arbitrator. 11. In the result, the impugned order of the learned Assistant District Judge, Dibrugarh is set aside and the reference is remanded back for a decision by the Arbitrator after allowing the parties more particularly the appellant to adduce evidence. If for any reason, the present Arbitrator cannot continue the reference the appointing authority may appoint a fresh Arbitrator by exercising powers under clause 70 of the Agreement to decide the dispute between the parties. The appeal is allowed. Considering the facts and circumstances of the case I leave the parties to bear their own costs.