BHARAT COKING COAL LIMITED v. CHAKRABORTY — 1992 DIGILAW 175 (CAL)

BABOO LALL JAIN, J. ( 1 ) THE Court : This is an application, inter alia, for condonation of delay in making the present application and for setting aside the award dated August 30, 1991 made by Sri Prabir Roychowdhury, Sole Arbitrator, on the grounds stated in the petition filed on behalf of Bharat Coking Coal Ltd. , the petitioner herein. So far as the question of condonation of the delay in making the present application is concerned, it appears that though the notice under section 14 (2) of the Arbitration Act was directed to the petitioner Bharat Coking Coal Ltd. , yet the same was served on Coal India Ltd. on December 13, 1991. The case of the petitioner is that the service of the said notice was not legal, inasmuch as Coal India Ltd. and Bharat Coking Coal Ltd. are different legal entities and the petitioner did not come to know about the service of the notice until December 23, 1991. The instant application was made on January 21, 1992 and in the premises, I am of the view that there are good and sufficient grounds for condonation of delay in making the present application. I, therefore, condone the delay in making the present application for setting aside the award. ( 2 ) THE present petitioner filed an application under section 20 of the Arbitration Act before this Court. On the said application, originally Sm. Tapati Sengupta was appointed Sole Arbitrator. The said Sm. Tapati Sengupta held 17 (seventeen) sittings and thereafter she declined to proceed further with the arbitration. This Court thereafter appointed Mr. Prabir Roychowdhury as the Sole Arbitrator in place and stead of Sm. Tapati Sengupta. Mr. Prabir Roychowdhury (hereinafter referred to as the Arbitrator) held several sittings. The case of the petitioner is that no oral evidence was adduced either by the petitioner or by the respondent before the Arbitrator. According to the petitioner, arguments were made by the respective counsels on the basis of documentary evidence only. After the hearing of the arbitration was concluded, the Arbitrator made and published his award dated 30. 8. 91. ( 3 ) IN the said award, the Arbitrator had recorded as follows :-"the parties filed their respective pleadings, documents and adduced oral and documentary evidence and also advanced arguments through learned counsel. After the hearing of the arbitration was concluded, the Arbitrator made and published his award dated 30. 8. 91. ( 3 ) IN the said award, the Arbitrator had recorded as follows :-"the parties filed their respective pleadings, documents and adduced oral and documentary evidence and also advanced arguments through learned counsel. I have also heard, weighed and considered the oral and documentary evidences tendered on behalf of the parties. I have also considered the arguments and submissions made by both the parties. After considering the materials on record including documents and the evidence, I award. . . . . . etc. etc. " ( 4 ) MR. Samar Banerjee, learned counsel appearing on behalf of the petitioner, submitted that no oral evidence was at all adduced by any of the parties and there was no question of the Arbitrator considering any oral evidence. According to the learned counsel, the Arbitrator has considered some material which was not on record, viz. , the oral evidence alleged to be adduced on behalf of the parties. According to Mr. Banerjee, the Arbitrator has either considered extraneous materials or it is a case of total non-application of mind by the Arbitrator, inasmuch as he has stated in his award that he considered oral evidence whereas there was no such oral evidence adduced before the Arbitrator, nor did any of the parties adduce any oral evidence. According to Mr. Banerjee, the award is vitiated for non-application of mind and/or is otherwise invalid. ( 5 ) MR. Banerjee relied on a judgment of a Single Bench of this Court, reported in AIR 1987 Cal. 126 (West Bengal Industrial Infra-Structure Development Corporation v. Star Engineering Co. ). In the said case, the Arbitrator made an award in full and final settlement of all disputes and claims and counterclaims of the parties. Factually it was admitted that no counter-claim was referred to the Arbitrator. The Arbitrator adjudicated on an imaginary counter-claim. The Arbitrator adjusted and/or settled the imaginary counter-claim against the claimant's claim and made the award for the balance sum. The learned Judge was of the opinion that this was a gross mistake which had arisen from culpable negligence amounting to legal misconduct on the part of the Arbitrator in making the award and as such the award could not be upheld. ( 6 ) MR. The learned Judge was of the opinion that this was a gross mistake which had arisen from culpable negligence amounting to legal misconduct on the part of the Arbitrator in making the award and as such the award could not be upheld. ( 6 ) MR. Banerjee also relied on a Judgment of a Single Bench of the Orissa high Court, reported in AIR 1986 Ori. 82 (Fertiliser Corporation of India Ltd. v. Bharat Painters ). In the said decision, it was held as follows :-"so far as the third contention of the learned Counsel for the appellant is concerned, I also find sufficient force in the same. The award ex facie shows that the arbitrator has not applied his mind to the records of the case which is apparent from the fact that though admittedly no documents were produced before him, yet the arbitrator indicates that he has gone through the documents produced before him by both the parties. It is too well settled that an award which is the product of non-application of the mind of the arbitrator cannot be permitted to be sustained in law, since this would come within the expression 'otherwise invalid' used in section 30 of the Arbitration Act. Non-application of mind to the materials on record suggests absence of fair play and indicates that the arbitrator did not function in a manner befitting his role. On this ground also, the impugned award is liable to be set aside and is hereby set aside. "in the said case, admittedly no documents were produced before the Arbitrator and yet the Arbitrator indicated that he had gone through the documents produced before him by both the parties. The learned Judge was of the opinion that the said award was the product of non-application of mind of the Arbitrator and could not be permitted to be sustained in law. ( 7 ) IN the instant case, the Arbitrator has at two different places referred to oral evidence having been produced before him. It could not, therefore, be said that it was due to any inadvertence. Of course, the Arbitrator has in his award stated that after considering the materials on record including documents and evidence, the Arbitrator made the award. 7a. It could not, therefore, be said that it was due to any inadvertence. Of course, the Arbitrator has in his award stated that after considering the materials on record including documents and evidence, the Arbitrator made the award. 7a. The only real question that arises is whether there was, in fact, any oral evidence was adduced before the Arbitrator by or on behalf of the parties. ( 8 ) SECTION 1 of the Evidence Act makes it quite clear that the said Act (i. e. , the Evidence Act) does not apply to proceedings before an arbitrator. It is therefore not necessary that the arbitrator has to follow all the formalities as are observed in a court of law. In a court of law a document and/or its contents have to be proved before it can be treated as evidence. Admittedly none of the documents which were there before the arbitrator in this case were proved in the manner as in a court of law nor were the contents thereof proved as in a court of law. What even documents were produced before the arbitrator, were treated by him as documentary evidence and none of the parties is taking any exception thereto. None of the documents or their contents were proved by any witness on oath before the arbitrator, nor did the otherwise have any opportunity cross-examine in respect thereof, even though the same was not admitted or disputed. Similarly any statement made before the arbitrator on any questions or points of fact, though without any oath or without any cross-examination, can be treated by the Arbitrator as oral evidence. Formal proof of such statements, as required in a court of law, is not a necessary element in the case of Arbitration proceedings before an Arbitrator. It is a different thing that the other party may pray for opportunity to cross-examine if it so thinks fit and proper, and if such prayer is made, it is for the arbitrator to decide whether he should ask the party making the statement to tender his witness for cross-examination. But this can be done both in the case of documentary as well as oral evidence. However the courts do not interfere with the award of an arbitrator unless there is violation of rules of natural justice. But this can be done both in the case of documentary as well as oral evidence. However the courts do not interfere with the award of an arbitrator unless there is violation of rules of natural justice. Now let us rest, whether in this case there was no statement made before the Arbitrators of points of facts. Both the parties placed before me the various minutes of the meetings held by the arbitrator. ( 9 ) IN the second meeting held by the Arbitrator on 29th November, 1990, Mr. Banerjee learned counsel for Bharat Coking Coal Ltd. , asked for leave to disclose the measurement book for the relevant work. Such leave was given by the learned Arbitrator and the same was filed and to that Mr. Dutta, learned counsel appearing on behalf of Chakraborty and Mondal, the claimant, had no objection. By consent, the said measurement book was admitted and marked as Ext. A. The admission made on behalf of both the parties and recorded in the said minutes of the 2nd meeting was an oral statement made before the arbitrator and was nothing but an oral evidence before the arbitrator. The minutes of the 4th sitting of the Arbitrator held on 26th February, 1991, show that Mr. Tulsidas Mukherjee assisted Mr. Dutta, advocate for the claimant, to place the relevant documents supporting the claims. It is recorded in the said minutes that the claimant's representative gave answer to various queries made by the Arbitrator in respect of the claims. The queries made by the arbitrator and the answers thereto by the representative of the claimant was in essence oral evidence before the arbitrator. ( 10 ) IT will also appear from various minutes of the Arbitrator that the Arbitrator from time to time gave directions to the parties to disclose their respective documents and the parties through their learned advocates produced the relevant documents on which they relied and the said documents were placed before the learned Arbitrator by the respective advocates. The production of a document by or on behalf of the parties is directly or indirectly associated with a statement by or on behalf of the party that this is the relevant document in the party's possession, which also is an oral statement. The production of a document by or on behalf of the parties is directly or indirectly associated with a statement by or on behalf of the party that this is the relevant document in the party's possession, which also is an oral statement. In a court of law no written document can become evidence unless it is formally proved by evidence on oath or unless it goes by admission of the parties to be recorded by court. Arbitrator is not bound by the rules of proof as laid down by the evidence act but before the arbitrator also there has to be some express or implied statement by or on behalf of the parties that this is the document in the party's possession. ( 11 ) IT appears from the minutes of the 5th meeting held by the Arbitrator on 4th March, 1991 that Mr. Banerjee appearing on behalf of Bharat Coking Coal Ltd. (hereinafter shortly referred to as BCCL) stated that he was not admitting the abstracts of note-sheets and its contents. This was also a oral statement on behalf of the said party on points of facts. In the 8th meeting held on 11th April, 1991 the learned Arbitrator directed the BCCL to bring Mr. D. M. Bose, an employer of BCCL, who was present at the time of execution of the work and also directed the respondent to produce the relevant documents relating to the work so that the contention of the claimant could be verified. In the 9th meeting of the arbitration proceedings Mr. Mukherjee produced some books of accounts on behalf of the claimant to substantiate the claimant's case. The learned Arbitrator after checking those documents sought for various clarifications from the parties which was explained by the counsel of both the parties. These were oral statements made to the arbitrator on questions of facts on instructions of their respective clients. In the 10th meeting held on 7th June, 1991, Mr. Banerjee drew attention to the xerox copies produced by the claimant of documents which were prepared by Mr. Bose of BCCL. These were oral statements to the arbitrator made on instructions of the clients' representatives. In the said meeting it was decided by the parties that the next sitting of the Arbitration proceedings will be held at Dhanbad. Banerjee drew attention to the xerox copies produced by the claimant of documents which were prepared by Mr. Bose of BCCL. These were oral statements to the arbitrator made on instructions of the clients' representatives. In the said meeting it was decided by the parties that the next sitting of the Arbitration proceedings will be held at Dhanbad. The learned Arbitrator directed the BCCL to make arrangement for the site inspection and also to provide necessary documents as explained by the Arbitrator in the arbitration proceedings. ( 12 ) IN the 11th meeting held on 6th July, 1991 the Arbitrator inspected the site of construction and made several enquiries. In the said meeting Mr. Mondal was present on behalf of the claimant and Mr. Bose, Assistant Engineer (Civil) was present on behalf of BCCL apart from the learned advocates on behalf of the parties and the Law Officer of BCCL. It is clear that the representatives on behalf of the parties answered the enquiries made by the learned Arbitrator. The statements were made to the arbitrator orally by the representatives of parties present at the time of inspection. Even in the Award the Arbitrator has referred to that and he has stated that pursuant to request of both parties he had visited the site and also held a meeting at Dhanbad and made enquiries from both the parties. Therefore, in the said meeting the Arbitrator examined the representatives of the parties, made enquiries from them and the answers to the said enquiries by the respective representatives of the parties present in the meeting, were oral statements made by the representatives of the parties. In the 12th meeting held on 20th July, 1991 the learned Arbitrator directed BCCL to ascertain the actual deduction of Sales Tax from the bills and the security deposit of the claimant and to verify the claim from the original record lying at the office of the respondent at Dhanbad. In the 14th meeting of the Arbitration Mr. Banerjee, advocate on behalf of the respondent submitted on instruction from his client that out of the security deposit of the claimant of Rs. 42,863. 99 p. an amount of Rs. 16,256. 89 p, had been deducted as Sales tax. The balance amount due had also been paid. The said statements made on instructions on points of facts were oral statements before the arbitrator on facts. 42,863. 99 p. an amount of Rs. 16,256. 89 p, had been deducted as Sales tax. The balance amount due had also been paid. The said statements made on instructions on points of facts were oral statements before the arbitrator on facts. The oral statements made on points of facts by or on behalf of the parties could well be considered by the arbitrator as oral evidence adduced before him by or on behalf of the parties. The learned Arbitrator heard both, the parties and their submissions in support of their respective contentions. In the said meeting both the parties expressed that they had nothing more to submit. ( 13 ) THE learned counsel for BCCL, the petitioner herein, relied on the minutes of the meeting held by the previous Arbitrator Sm. Tapati Sengupta on 29th September, 1990, that is the 8th sitting of the Arbitration where both the parties submitted that 'they will not adduce any evidence in support of their case'. The word 'evidence' is wide enough to include both documentary as well as oral evidence. The subsequent meetings and the minutes therefore will clearly show that it was the common case of the parties that documentary evidence was intact adduced before the Arbitrator and that there was in fact documentary evidence before the learned Arbitrator. Therefore, it cannot be said that the said statements recorded in the minutes of the 8th meeting held by the Arbitrator Smt. Tapati Sengupta was adhered to by the parties. Admittedly documentary evidence-even accordingly to both the parties had in fact been submitted before the learned Arbitrator and the same formed part of the records before the Arbitrator. Apparently what the parties meant was that they will not adduce any formal evidence; in the manner as is done in a court of law. ( 14 ) THE only question that is disputed is that there was no oral evidence before the Arbitrator. The minutes of the learned Arbitrator placed before me on behalf of BCCL, the petitioner, herein as also on behalf of the respondent clearly show that oral statements on questions of fact were in fact made by or on behalf of the respective parties either by their advocates on instructions or by the representatives who attended the meetings before the Arbitrator. The arbitrator was naturally bound to consider the same and it could only be treated as oral evidence before him and not as a documentary evidence. So far as an Arbitrator is concerned, the Evidence Act has no application and if any representative of any of the parties makes any statements on facts it can well and must be considered as oral evidence before the Arbitrator. Mr. Banerjee on behalf of BCCL submitted that it cannot be described as evidence adduced by the parties. The parties did cause their representatives to be present in the meetings of the Arbitrator and if those representatives answered orally to the queries made by the Arbitrator, it did amount to oral evidence adduced by the parties before the Arbitrator. The Arbitrator is not bound by the provisions of the Evidence Act and the Evidence Act does not apply to the proceedings before the Arbitrator. If any person on behalf of the parties to the proceedings appears before him and makes oral statements on questions of fact to the Arbitrator, it is, in my opinion, oral evidence and the Arbitrator is entitled to treat the same as oral evidence. Even apart from that, the minutes also show that the counsel and/or the advocates appearing on behalf of the parties made statements on questions of facts after obtaining instructions from their clients' representatives and/or the clients. The said statements on questions of fact, by the counsel, made pursuant to the instructions were also oral evidence. If a counsel makes a statement on points of facts pursuant to instructions, the Arbitrator can treat the same as oral evidence on the said fact as already stated by me, the Arbitrator is not bound by the Evidence Act and/or the procedure prescribed by the Evidence Act. ( 15 ) IN section 3 of the Evidence Act, Evidence has been defined as follows :" (1) All statements which the Court permits or requires to be made before it by witnesses, in relation to matters to fact under inquiry; such statements are called oral evidence; (2) All documents produced for the inspection of the Court; such documents are called documentary evidence. "in accordance with the said definition, all statements which the Court permits or requires to be made before it by witnesses in relation to matters of fact under enquiry, such statements are called oral evidence and all documents produced for inspection of the Court are called documentary evidence. Applying the same principle, if any statement had been made before the Arbitrator which the Arbitrator permitted or required to be made before the Arbitrator by the parties or their representatives, the same amounted to oral evidence before him. ( 16 ) THERE is another way of looking at the point raised by Mr. Banerjee appearing on behalf of the BCCL. Admittedly documents were produced on behalf of the parties by their respective advocates pursuant to directions given by the Arbitrator or otherwise. The learned advocates produced the said documents on the basis as if the said documents were the documents in possession of their respective clients relating to the matter in dispute. So far as the measurement book is concerned, that was admitted by the learned advocates appearing on behalf of the parties. The said oral admission by the learned advocates who were authorised to represent their clients and to make admission also amounted to oral evidence before the learned Arbitrator. Even the statements filed on facts before the arbitrator by or on behalf of the parties are in essence oral evidence submitted in writing by or on behalf of the parties. Such statements on facts are not documentary evidence. ( 17 ) I can usefully refer at this juncture to the extract from Best on Evidence, 11th Edn. , sections 215 and 216 as quoted in Sarkar on Evidence, 13th Edn. , at page 26 where the learned author states as hereunder :"documents being inanimate things necessarily come to the cognizance of tribunals through the medium of human testimony; for which reason some old authors have denominated them to be proofs (probatio mortua), in contra distinction to witness who are said to be living proofs (probatio viva ). "a document cannot become an evidence by itself unless somebody produces on behalf of the parties with a statement that this is the document which is relating to the controversy in possession of his client. The strict rules of proof may not apply in arbitration proceedings, as laid down by the Evidence Act. "a document cannot become an evidence by itself unless somebody produces on behalf of the parties with a statement that this is the document which is relating to the controversy in possession of his client. The strict rules of proof may not apply in arbitration proceedings, as laid down by the Evidence Act. Yet somebody on behalf of the litigants has to produce the document on behalf of the litigants associated with either an express or implied statement that these are the genuine documents relating to the subject matter of the controversy in possession of the litigant before the arbitrator. It is only when the documents are produced associated with some sort of implied or express statement on behalf of the producing party, that the arbitrator can consider the same. In essence when a documentary evidence is laid down before the arbitrator it has to come through the medium of human testimony. Unless it comes through the medium of human testimony it does not by itself become evidence. In essence a documentary evidence has to be associated with some oral evidence, viz. , the act was production thereof as also the act of a statement, either express of implied, that the said document is a genuine document relating to the controversy in-question. ( 18 ) LOOKING into the records of the arbitration proceedings and the Minutes of the meetings held by the Arbitrators, both Mrs. Tapati Sengupta as also Mr. Prabir Roychowdhury, I am of the firm view that in fact, there was oral evidence before the Arbitrator. In the premises, I find no substance in the only point raised and canvassed before me on behalf of the petitioner Bharat Coking Coal Ltd. to the effect that there was no oral evidence before the Arbitrator and the parties did not adduce any evidence before the Arbitrator. In the premises, I am of the view that the aforesaid judgments of this Court and the Orissa High Court as referred to earlier, have no application to the facts and circumstances of this case. ( 19 ) MR. Samar Banerjee on behalf of the petitioner clearly stated before me that his client had no allegation against the Arbitrator as such and that his client would not even mind if the award is set aside, to go before the same arbitrator, for a fresh consideration and for a fresh award. ( 19 ) MR. Samar Banerjee on behalf of the petitioner clearly stated before me that his client had no allegation against the Arbitrator as such and that his client would not even mind if the award is set aside, to go before the same arbitrator, for a fresh consideration and for a fresh award. In fact, the Arbitrator gave full hearing and the parties did close their arguments before the Arbitrator proceeded to make his award. ( 20 ) WHATEVER statements were made before the Arbitrator on questions of fact by or on behalf of the parties either in the shape of Statement of Facts or Counter-Statement as verified by the representatives of the parties or any statements made by the representatives of the parties present at the meeting pursuant to enquiries made by the Arbitrator or pursuant to the questions put by the Arbitrator and whatever statements on facts were made by the respective counsels on behalf of the parties on instructions and whatever admissions were made by or on behalf of the parties, they all amounted to oral evidence before the Arbitrator. ( 21 ) EVEN if the same did not or could not amount in law to be termed as oral evidence and even if the Arbitrator did consider the same to be oral evidence in the proceedings before him, I would have given the benefit of doubt to the Arbitrator and in the facts and circumstances of this case, it could not possibly be alleged that the Arbitrator did not apply his mind or that there was any legal misconduct by the Arbitrator in a case of this nature. ( 22 ) THIS application is, therefore, dismissed. The prayer for setting aside the award dated August 30, 1991 made by Sri Prabir Roychowdhury, Sole Arbitrator, is rejected. There will be no order as to costs. On the prayer of the learned counsel on behalf of the petitioner, there will be stay of operation of this judgment and order for a period of four weeks from date. The parties and/or the respective advocates shall be at liberty to obtain a signed copy of the minutes of the operative part of this Judgment upon usual undertaking. Application rejected.