ANANT RAJ AGENCIES v. DELHI DEVELOPMENT AUTHORITY — 1997 DIGILAW 450 (DEL)

LOKESHWAR PRASAD ( 1 ) THE Executive Engineer, Development Davison No. 2 of the Delhi Development Authority (hereinafter REFERRED TO to as the DDA) invited tender for the work titled construction of 504 MIG houses in Block-R (Uttari) at Pitam Pura including internal development (balance work)". The petitioner/objector had tendered for the said work at 9. 92 above the estimated cost i. e. for Rs. 1,48,91,920. 60. The tender of the petitioner/objector was accepted by the DDA and the contract was awarded to the petitioner/objector by the DDA vide letter No. 54 (718)/dd-II/dda/3412 dated the 6th October, 1982. The date of the start of the work was 16. 10. 82 and the work was to be completed within a period of 12 months. ( 2 ) AN agreement No. 36/ee/dd-II/dda/82-83 was executed between the petitioned objector and the respondent DDA containing an arbitration clause (clause25 of the, agreement ). ( 3 ) DURING the currency of the work, disputes arose between the petitioner/objector and the respondent DDA. which were REFERRED TO to the sole arbitration of Sh. O. P. Mittal by the Engineer Member DDA in terms of the above said clause of the agreement vide letter dated 28. 1. 85. ( 4 ) THE arbitrator made his award oh 11. 8. 83 and filed the same in the Court. Notice of the filling of the award was issued to the parties and only the petitioner filed objections to the award (IA 1/87 in 3/2341-A/86 ). The objections filed by the, petitioner objector to the award dated 11. 8. 83 were decided by this Court vide order dated 13. 7. 89 passed in S-2341-A/86. The findings of the arbitrator in respect of claims 1 and 2 in the above said award were set aside and remitted to the arbitrator to decide the abovesaid claims afresh on merits. The above orders of this Court were communications to the arbitrator vide letter dated 3. 11. 89. in compliance with the above directions of this Court in S. 2341-A/86 imparted vide order dated 13. 7. 89 the arbitrator has made his revised, award dated 3. 11. 90. ( 5 ) NOTICE of the filing of the award dated 3. 11. 90 was issued to the parties directing the parties to file objections, if any within the statutory time. The petitioner/objector has filed objections to the award (1a-1471/91) within time. 7. 89 the arbitrator has made his revised, award dated 3. 11. 90. ( 5 ) NOTICE of the filing of the award dated 3. 11. 90 was issued to the parties directing the parties to file objections, if any within the statutory time. The petitioner/objector has filed objections to the award (1a-1471/91) within time. No objections to the award have been filed by the respondent DDA. ( 6 ) IN the objections filed on behalf of the petitioner/objector the main thrust is that the arbitrator has acted with basis and prejudiced mind against the objector, acted with material irregularity right from the very beginning and thus has misconducted himself in the entire proceedings while making the impugned award alleged to be dated the 3rd November, 1990. It has been prayed in the objections filed by the petitioner/objector that the revised award dated the 3rd November, 1990 be set aside. Reply to the objections has been filed on behalf of DDA stating that the objections are mis-conceived and be dismissed with costs. ( 7 ) ON the pleadings of the parties the following issues were framed vide order dated 21. 4. 92:- 1. Whether the award liable to be set aside on the objections taken in the objection petition? 2. Relief. ( 8 ) THE parties have adduced evidence by means of affidavits. On behalf of the petitioner an affidavit of Sh. Anil Sarin has been filed whereas on behalf of respondent DDA an affidavit of Sh. M. C. Behl. Chief Engineer (North Zone) has been filed. ( 9 ) I have heard the learned counsel for the parties at length and have also carefully gone through the documents/material on record. During the course of arguments the learned counsel for the petitioner/objector submitted that the arbitrator has mis-conducted himself and on the above ground alone the award dated 3. 11. 90 made by the arbitrator Sh. O. P. Mittal is liable to be set aside. The learned counsel for the petitioner/objector placed reliance on cases M/s. Lovely Benefit Chit Fund and Finance (P) Ltd. Vs. Puran Dutt Sood and others AIR 1983 Delhi 143. M/s Asiatic Salvors Vs. Dodsal (P) Ltd. AIR 1987 Bombay 335 and B. K. Dhar (P) Ltd. Vs. Union of India AIR 1965 Calcutta 424. The learned counsel for the petitioner/objector placed reliance on cases M/s. Lovely Benefit Chit Fund and Finance (P) Ltd. Vs. Puran Dutt Sood and others AIR 1983 Delhi 143. M/s Asiatic Salvors Vs. Dodsal (P) Ltd. AIR 1987 Bombay 335 and B. K. Dhar (P) Ltd. Vs. Union of India AIR 1965 Calcutta 424. On the other hand the learned counsel for the respondent DDA submitted that the arbitrator has not misconducted in any manner whatsoever and the objections filed by the petitioner/objector deserve to be dismissed with costs and the award dated 3. 11. 90, given by the arbitrator Sh. O. P. Mittal, be made a rule of Court. ( 10 ) THEIR lordship of the Supreme Court in case Jivraj Vs. Chintomani reported to AIR 1965 SC 214 have held that the power of the Court to set aside award is restricted to case set out in Section 30 of the Act. Section 30 of the Act has set forth the grounds on which the award can be set aside name!y:- (i) if the arbitrator or the umpire has misconducted himself; (ii) if the arbitrator or the umpire misconducted the reference proceedings: (iii) if an award has been made after the court has made an order superseding the arbitrations; (iv) when an award has been made after the arbitration proceedings have become invalid under Section 35, i. e. after service of the notice of the legal proceedings as whole of the subject- matter of the preference is also the subject-matter of the pending legal proceedings; (v) when an award has been improperly procured: and (vi) when an award is otherwise invalid. ( 11 ) THUS one of the grounds on which the award can be set aside is misconduct of the arbitrator. It is not at all easy to define what amounts to misconduct of an arbitrator or umpire. The expression is of a very wide import, varying in its gravity and degree according to the act complained of. It may be mere failure or; the part of the arbitrator to comply with the terms of the arbitration agreement either expresses or implied. ( 12 ) THERE are various types of misconduct. The expression is of a very wide import, varying in its gravity and degree according to the act complained of. It may be mere failure or; the part of the arbitrator to comply with the terms of the arbitration agreement either expresses or implied. ( 12 ) THERE are various types of misconduct. The court should hot primarily be guided by the meeting of the word misconduct It really means and includes conduct on the part of the arbitrator or umpire which is on the fact of the award opposed to rational and reasonable principles, it would be a question of fact in each case to be ascertained from the entire proceedings. So long as the arbitrator acts within the scope of his authority he cannot be said to be guilty of misconduct. The word misconduct is an ambiguous term and includes mishandling of arbitration proceedings or laches of duties on the part of the arbitrator. ( 13 ) MISCONDUCT has a wider meaning in arbitration than what is understood in popular sense. It includes mistaken conduct such as reception of inadmissible evidence at the hearing or depying in the parties opportunity to tender evidence or refusing one of the parties properly represented by lawyer. ( 14 ) IN Halsbury s Laws of England (4th ed. Vol. 2 para 622, page 330) the position has been summarized as under: -. "it is accordingly misconduct for an arbitrator to fail to comply with the terms expressed or implied of the arbitration agreement. But even in the arbitrator fully complies with those terms, he will be guilty of misconduct if he makes an award. which on grounds of public policy ought not to be enforced. Much confusion has been caused by the fact the expression misconduct is used to described both those quite separate grounds for setting aside an award, and it is not wholly clear in some of the decided cases on which of these two grounds the award has been set aside. However, on one or other of these ground, the expression includes on the one hand that which is misconduct by any standard, such as being bribed or corrupted, and on the other hand mere technical misconduct, such as making a mere mistake as to the scope of the authority conferred by the agreement of reference. That does not mean that every irregularity of procedure amount to misconduct". That does not mean that every irregularity of procedure amount to misconduct". In Russel on the Law of Arbitration (20th ed. P.-409) the principles on which the court can set aside an award on grounds of public policy are as follows:- 1. that its effect is to enforce an illegal contract; and 2. that the arbitrator, for instance, manifested obvious bias too late for an application for his removal to be effective before he made his award. ( 15 ) "misconduct" of an arbitrator or an umpire does not mean. a deliberate or careless breach of duty on the part of the arbitrator or umpire but also includes a purely technical error of law, e. g. , reception of inadmissible evidence which goes to the root of the case and makes an award on a point which was not in issue before him. It is necessary that the grounds of misconduct of an arbitrator are to be set out in the petition. ( 16 ) 1n case President of India Vs. Kesar Singh reported as AIR 1966 J and K it has been held that if the parties are not given hearing and reasonable time and opportunity to substantiate their respective claim, it would be violation of principles of natural justice amounting to misconduct. In case Moran Vs. Lloyds reported as (1983) 2 All ER 200 it has been held that failure by arbitrator or umpire to allow a party a reasonable or proper opportunity to out forward his case would constitute mis conduct on the part of the arbitrator or the umpire as the case may be. ( 17 ) HAVING discussed the legal position now I propose to examine the fact of the present case with reference to the legal proposition discussed above. From a perusal of the proceedings, received from the end of the arbitrator it is a apparent that the arbitrator vide proceedings recorded on 23. 10. 90, issued on 24. 10. 90 had fixed the next date of hearing for 29. 10. 90 at 5. 00 p. m. The above said date of hearing i. e. 29. 10. 90 was also intimated by the arbitrator to the parties including the petitioner/objector vide his letter 24. 10. 90 requesting that his fee be remitted to him at an early dated. Strangely enough the arbitrator unilaterally changed the dated from 29. 10. 90 to 30. 10. 00 p. m. The above said date of hearing i. e. 29. 10. 90 was also intimated by the arbitrator to the parties including the petitioner/objector vide his letter 24. 10. 90 requesting that his fee be remitted to him at an early dated. Strangely enough the arbitrator unilaterally changed the dated from 29. 10. 90 to 30. 10. 90 which fact is evident from document at page 52 of the proceedings. The perusal of the record/proceeding,further reveals that no hearing took place either on 29. 10. 90 or on 30. 10. 90 and the matter was taken up by the arbitrator on 1. 11. 90 without any notice to the petitioner/objector. In the. proceedings recorded on 1. 11. 90, which were without any notice to the petitioner/ objector it has been recorded that hearing had been ginally closed. After closing the hearing on 1. 11. 90 in the manner stated above, the Arbitrator again on 2. 11. 90 without any notice to the petitioner/objector heard the matter at length. ( 18 ) BESIDES the above fact, on record, received from the end of the arbitrator, containing the proceedings, there is a letter dated 23. 10. 90 written by the petitioner/objector to the arbitrator wherein it is stated in clear cut terms that in view of what had, transpired in the hearing dated 4. 8. 90 and as intimated by the letter dated 10. 8. 90, the petitioner/objector had reasonable apprehension that the petitioner/objector would be victimized by the arbitrator and he had no faith and was moving the Court for the revocation of the authority of the arbitrator. Despite the receipt of the above communication the arbitrator continued with the arbitration proceedings. The letter dated 10. 8. 90 from the petitioner/objector, a reference of which finds place in letter dated 23. 10. 90 is also on the record of the proceedings received from the end of the arbitrator at page 46. In the presence of the above said documents and the allegations levelled, in all fairness the arbitrator should have waited instead of proceeding in the matter with undue haste which implied reflects the bias of the arbitrator. ( 19 ) IN view of the above discussion in my opinion, the impugned award, made by the arbitration Sh. O. P. Mittal is liable to be set aside. ( 19 ) IN view of the above discussion in my opinion, the impugned award, made by the arbitration Sh. O. P. Mittal is liable to be set aside. I, therefore, allow the objectors and the award dated the 3rd November, 1990, made by the arbitrator Sh. O. P. Mittal is hereby set aside. During the course of arguments the learned counsel for the respondent DDA submitted that the arbitrator Sh. O. P. Mittal is no longer alive. In view of the above fact it is directed that the Engineer member DDA, the authority competent to appoint the arbitrator, in terms of the provisions of the arbitration clause of the agreement, shall appoint a fresh arbitrator in place of Sh. O. P. Mitttal and shall refer the arbitration for adjudication to the said arbitrator within four weeks from the date of this order. In the facts and circumstance of the case no order as to costs.