KEM PUBLISHERS v. H. P. BOARD OF SCHOOL EDUCATION — 1996 DIGILAW 55 (HP)

JUDGMENT Arun Kumar Goel, J. —Plaintiff filed Civil Suit No 71/81 wherein he made prayer that the agreement entered into between the parties dated 19-1-1980 may be directed to be filed in Court since the dispute had arisen between them, those may be referred to the Arbitrator L e. Secretary (Education) to the Government of Himachal Pradesh and Arbitrator be directed to file the original award together with original record of the proceedings for the making of the award rule of the court Background giving to the filing of the aforesaid civil suit No. 71/81 is that the plaintiff entered into an agreement with the defendant through its Secretary for supply of text books on 19-1-1980. According to the plaintiff the books were supplied by him in accordance with the terms of the agreement, however, he has not been paid the cost etc. of the books Plaintiff had claimed interest on the amount which according to him is due from the H. P. Board of School Education and thus he claimed interest on the outstanding amount. Since the disputes had arisen and the agreement had been filed in the said suit, this court on 20-1-1982 referred the following disputes to the sole arbitrator i. e. Secretary (Education) to the Government of Himachal Pradesh for adjudication : "1. Whether the defendant No. 2 has made payment of the price of the books to the plaintiff or its authorised agent ? 2. Whether the plaintiff is entitled to any interest etc. as claimed by the plaintiff ?" 2. Proceedings were taken before the Arbitrator on the aforesaid two disputes which were referred to him for adjudication by the Court, the arbitrator has decided Issue No. 1 against the claimant i, e. present plaintiff and has held that dispute No. 2 is irrelevant This award was filed in court on 27th January, 1994 and the matter came before the court on 13-4-1994 when notice was ordered to be issued to the parties regarding filing of the award by the arbitrator. 3. After the receipt of the notice of filing of the award, plaintiff filed objections under sections 30 and 33 of the Arbitration Act (hereinafter referred to as Act) on 26th May, 1994. 4. When O. ML P. No. 331/94 the matter came up before the Court on 22-5-1995. 3. After the receipt of the notice of filing of the award, plaintiff filed objections under sections 30 and 33 of the Arbitration Act (hereinafter referred to as Act) on 26th May, 1994. 4. When O. ML P. No. 331/94 the matter came up before the Court on 22-5-1995. it was stated on behalf of the defendant that in view of the prayer asked for by the plaintiff-objector no reply to the objection petition is necessary and accordingly it is not being filed. Court ordered the objector to put an evidence by way of affidavit for the date to be fixed by the Registrar. Objector filed evidence by way of affidavit, 5. The case was heard on 29-3-1996, thereafter it transpired that issues have not been framed in the case and accordingly it was listed on 3-4-1996 Both the learned Counsel fop the parties staled that formal issues may be framed and they further stated that they do not intend to lead any other or further evidence nor do they want to advance any further arguments. Accordingly on 3-4-1996 following issues were framed : 1. Whether the impugned Award is the result of misconduct on the part of the Arbitrator and whether the Arbitrator has mis-conducted the proceedings ? 2. Relief. 6. I have heard learned Counsel for the parties and have gone through the record Sh Deepak Gupta learned Counsel for the plaintiff has referred to the evidence on record He has submitted that on a bare perusal of the evidence on record the award cannot be sustained as it suffers from error apparent on the face of the record and according to him it is such an error which is discernible from the award itself as well as from the documents and other evidence placed on record by both the parties. He has further submitted that in the present case the arbitrator has passed a reasoned award and therefore it calls for interference as it is based upon a proposition of law which is unsound in law. According to the learned Counsel for the plaintiff award raises an erroneous proposition of law as laid down by the Arbitrator, which establishes to have been vitiated his decision. 7. According to the learned Counsel for the plaintiff award raises an erroneous proposition of law as laid down by the Arbitrator, which establishes to have been vitiated his decision. 7. While stretching his submission further learned Counsel slated that the misconduct in the present case consists of actions on the part of the arbitrator which on the face of the award are opposed to all rational and reasonable principles resulting in unjust result which tend to show non-application of mind to the material facts proved on record before him during the course of proceedings. In fact, according to him, the award points out to the effect that the arbitrator had not applied his mind and had not adjudicated upon the matter although it professes to determine the same. Such a situation tantamounts to misconduct within the meaning of section 30 (a) of the Act. The misconduct does not necessarily comprehend or include misconduct of fraudulent or improper conduct or moral lapse, rather it is often used in a technical sense denoting irregularity i e. in the sense of non-application of mind to the relevant aspects of the dispute in its adjudication. 8. On the other hand Sh. Kanwar learned Counsel appearing for the defendant has forcefully argued that in the present case the arbitrator is the master of both law and facts and he has passed the award in question after due appraisal and appreciation of the evidence as well as after considering the material on record and this court is not sitting as a court of appeal to adjudicate the matter in controversy, as such, no case of misconduct has been made out and therefore the award deserves to be upheld and objections filed by the plaintiff merit dismissal. According to him the arbitrator has passed the award in question after due consideration of all the relevant materials which were there on record placed by the parties and therefore any interference would be contrary to law applicable in that behalf as well as against the spirits of arbitration agreement. 9. After due consideration of the respective submissions both the issues are taken up together. 10. In order to appreciate the respective submissions of the parties, it is necessary to refer to the evidence produced by the parties. 9. After due consideration of the respective submissions both the issues are taken up together. 10. In order to appreciate the respective submissions of the parties, it is necessary to refer to the evidence produced by the parties. It is not a dispute that the plaintiff did supply the books in question and a sum of Rs 77,387.80 was due and outstanding payable by the defendant to the plaintiff, however, the case of the defendant is that the payment stands made to the plaintiff through cheque No. 734588 dated 10-4 1981. At this stage it is necessary to consider the evidence of Sh. B. K Sharma, Ex, Secretary of the defendant Board According to him letter Ext. R-I was brought to in the Board office by one Sh. C. L. Sharma representative of the plaintiff who had brought the latter dated 13th April, 1981 and on the basis of this letter a payees account of the bank draft for the said sum was if sued on 14-4-1981. However, thereafter from 21-4-1981 onwards the Board was informed regarding the non-receipt of amount by the plaintiff. In his cross-examination he admits that he had attested the signature on the reverse of the cheque in question of Sh. C. L. Sharma. 11. There is other evidence to show that the cheque was issued and the person who had taken that cheque had got it deposited in the bank and the bank had finally issued a fresh draft in lieu of the cheque in question on the basis of which the so called representative had withdrawn the amount. There are number of other witnesses produced by the plaintiff to show that the amount had not been received by it. 12. From the file of the arbitrator it is clear that the amount had not reached the plaintiff, not only this but the plaintiff had further challenged the authority of the person who came to collect the amount in question. It appears that without knowing the person who held himself to be one C. L. Sharma the alleged authorised representative of the plaintiff, Sh B. K. Sharma the then Secretary of the defendant Board attested his signatures which accelerated the encashment of the cheque by the said person. It appears that without knowing the person who held himself to be one C. L. Sharma the alleged authorised representative of the plaintiff, Sh B. K. Sharma the then Secretary of the defendant Board attested his signatures which accelerated the encashment of the cheque by the said person. It is not understood as to what necessitated as well as compelled the said Secretary to have entered into all this exercise, more especially when he says that C. L. Sharma was not known to him This is a material aspect of the case and in case the evidence had been properly scanned as well as appraised by the arbitrator, then the only irresistible conclusion would have been that the payment has been made to a person who was not duly authorised to receive the same. It may not be out of place to mention here in this context that no doubt this court ordinarily would not examine the evidence, however, on the basis of the evidence and other material on the record it cannot be held that the arbitrator had properly appreciated and taken into account all the material factors into consideration. 13. What appears to have weighed with the arbitrator is that claimant-plaintiff did not explain or adduce any evidence as to how his authorised letterhead came to be used in an unauthorised way A very perfunctory and cursory view has been taken by the arbitrator saying that in the normal course of usual business tallying signature on a recognised letterhead is not undertaken because it involves expertise and if a fraud has been committed when the letter-head is admitted to be authorised which is a case of fraud against the defendant. Arbitrator has further gone to the extent that the representative of the firm was ultimately given a crossed bank draft at a Delhi based bank and not cashed what happened after that is a story of fraud against claimant firm through the banking system. 14. From the material on record this conclusion can never be arrived at, more especially when a reference is made to the evidence and other documents on record. Had the arbitrator applied his mind in a legal manner, the result would not have been what has been held in the impugned award. 15. It may further be pointed out that the entire case hinges around the testimony of Sh. Had the arbitrator applied his mind in a legal manner, the result would not have been what has been held in the impugned award. 15. It may further be pointed out that the entire case hinges around the testimony of Sh. B, K. Sharma the then Secretary of the defendant Board, where was the necessity and what was the compelling circumstance which necessitated the attestation of the signature of the so-called representative Sh. C. L. Sharma on the back side of the cheque in question which position he has categorically admitted is a material circumstance which goes to the root of the case. This expedited the encashment of the cheque in question. Shri Kanwar argued that brother of owner of the plaintiff had been able to locate the person on whose identification Sh. C. L. Sharma had encashed the cheque in question and got the draft from the bank. This by itself does not explain action of its Secretary or absolve the defendant of its liability towards plaintiff. A bare perusal of the impugned award shows that this aspect of the case has not been dwelt by the arbitrator and thus it has resulted in passing of the impugned award. 16. No doubt that the scope of interference under section 30 is very limited, however, in the premises aforesaid, the conduct on the part of the arbitrator tantamounts to misconduct within the meaning of section 30 of the Act and in taking this view I am guided by the decisions of the apex Court reported in 1994 Vol. IV SC 665, Union of India v. Jain Associate and another, as well as 1995 Vol. V SCC 531, Trustees of Port Trust of Madras Engineering Corporation Lid, 17. In order to support his submission Shri Kanwar referred to a number of cases including AIR 1989 SC 890 and 952, M/s. Sudarsan Trading Co. v. The Government of Kerala and another and Vishwanath Sood v. Union of India and another and AIR 1987 SC 2316, Municipal Corporation of Delhi v. M/s. Jagan Nath Ashok Kumar and another. So far these decisions are concerned, there is no quarrel with the proposition laid down therein, however, it is pointed out that they are not applicable to the facts of the present case and accordingly they do not advance the case of the defendant in any manner whatsoever. So far these decisions are concerned, there is no quarrel with the proposition laid down therein, however, it is pointed out that they are not applicable to the facts of the present case and accordingly they do not advance the case of the defendant in any manner whatsoever. No other submission has been made by the learned Counsel for the parties. 18. As a result of the above discussion issues No. 1 and 2 are decided in favour of the plaintiff and against the defendants, and as a consequence thereof the impugned award is set aside. The matter is sent back for arbitrator for disposal in accordance with law. Order accordingly.