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1999 DIGILAW 753 (MP)

RAVISHANKAR UNIVERSITY v. N. D. B. ENTERPRISES

1999-09-20

D.M.DHARMADHIKARI, USHA SHUKLA

body1999
ORDER D. M. Dharmadhikari, J. - By the impugned order dated 23-1-1995 the 6th Additional District Judge, Raipur in proceedings under Section 30 read with Section 33 of the Arbitration Act, 1940, has set aside the award dated 5-10-1983 passed by the sole Arbitrator appointed in terms of the written agreement between the parties. 2. Aggrieved by the order setting aside the award the appellant University has preferred this appeal under Section 39 of the Arbitration Act, 1940. 3. For deciding of this appeal the only relevant facts are that the respondent under a written agreement executed between the parties on 18-1-1983 supplied answer books to the University. Disputes arose with regard to the quality of the supplies made and the payment of bills of the supplier. The written agreement contained an arbitration clause for resolving disputes between the parties through the Arbitrator to be appointed by the Registrar of the University. The Registrar of the University appointed Mrs. Pushpa Sharma, Advocate as the sole Arbitrator for deciding the disputes. The sole Arbitrator named above proceeded ex-parte against the respondent contractor for the latters default in appearance before her to participate in adjudication of the dispute. She made an award on 5-12-1983. The award in the sum of Rs. 11,708.03 with direction for adjustment of dues payable to the contractor and for balance amount in the sum of Rs. 12,814.28 has been passed in favour of the University. The Arbitrator after accepting her fees and expenses for the proceedings filed the award in the Court whereupon the University made an application for passing a decree in terms of the award and the contractor filed an application under Section 30 of the Act for setting aside the award. 4. The learned Judge of the Lower Court set aside the award on two acts of misconduct committed by the Arbitrator. Firstly, it is held that the Arbitrator mis-conducted herself in accepting her full fees and expenses from the University. The other ground for setting aside the award is that the Arbitrator mis-conducted the proceedings by not giving any opportunity of hearing to the Contractor and in proceeding ex-parte against him on the date on which she had rejected the application made by the contractor for stay of the proceedings to enable him to obtain orders for substitution of the Arbitrator. 5. 5. After hearing learned counsel Shri Kishore Shrivastava for the appellant University and Shri Rakesh Jain for the contractor, we have come to a conclusion that the order of the learned Judge of the lower Court deserves to be sustained on the ground that the Arbitrator in proceeding ex-parte against the contractor has mis-conducted the proceedings. The reasons for coming to the above conclusion we shall hereinafter state in detail. We are, therefore, not deciding the validity of the order of the learned Judge of the Trial Court in setting aside the award on the other ground that the Arbitrator in accepting full fees and expenses from the University committed a misconduct. 6. We, therefore, take up for consideration the question of validity of the ground taken by the learned Judge of the Lower Court in setting aside the award that the Arbitrator mis-conducted the proceedings. For the above purpose, it is necessary to take a note of the proceedings of the Arbitration. The proceedings commenced from 13-9-1983 when the Arbitrator entered upon the reference and called upon the parties to submitted their claims. On 17-11-1933 both the parties were present and filed list of documents. The Arbitrator fixed 26-11-1983 as the date for recording evidence of the parties. Before the date fixed for recording evidence the respondent contractor sent a legal notice to the Registrar of the University with a copy forwarded to the Arbitrator stating therein that since the Arbitrator is working as Lecturer in Law College under R. S. Shukla, Advocate who is standing counsel of the University as also the Principal of the same college some other person be appointed as the sole Arbitrator in place of Smt. Pushpa Sharma. From the order sheet of the Arbitrator dated 26-11-1983 it is clear that the copy of the legal notice sent to the Registrar for change of the Arbitrator was received by the Arbitrator and she took the legal notice on record of the arbitration proceedings. On the same date i.e., 26-11-1983 fixed for evidence when the contractor was absent after serving a legal notice in the evening hours at 5.15 she recorded in the order sheet that the jurisdiction of the Arbitrator cannot be taken away except through the order of Civil Court. She then adjourned the proceedings to 28-11-1983 for recording evidence at 4.00 in the evening. She then adjourned the proceedings to 28-11-1983 for recording evidence at 4.00 in the evening. On 28-11-1983 at 4.00 in the evening the Contractor was not present obviously because he had no notice of the fixation of date of recording evidence of the University ex-parte on 28-11-1983. 7. On 28-11-1983 the Arbitrator recorded the ex-parte evidence led by the University and closed the case. She thereafter passed the award in favour of the University as mentioned above on 31-12-1983 and filed the same in the Court after accepting the fees and expenses from the University. 8. Learned counsel appearing for the University in assailing the order of the Lower Court in setting aside the award contends that the contractor was aware of the date fixed on 26-11-1983 and merely by serving a legal notice desiring a change of Arbitrator, he could not have remained absent on the date fixed for evidence. The Arbitrator, therefore, was fully justified in proceeding against the contractor ex-parte and in fixing the case for evidence of the University. It is submitted that the learned Judge of the Lower Court was wrong in holding that there was any requirement on the part of the Arbitrator as sending a fresh notice to the contractor for next date fixed for recording evidence i.e., 28-11-1983. 9. Learned counsel appearing for the University argues that both the parties knew that the Arbitrator has fixed the case for evidence on 26-11-1983. On 26-11-1983 the contractor had sent a copy of the legal notice addressed to the Registrar of the University and desired change of the Arbitrator. It was, therefore, for the contractor to have found out and ascertained as to what orders were passed by the Arbitrator on 26-11-1983. It is contended that neither the rules of procedure nor fairness required the Arbitrator to issue fresh notice for the next date on which it had listed the case for recording exparte evidence of the University. 10. Learned counsel appearing for the contractor relies on a Division Bench decision of Calcutta High Court in the case of juggilal Kamalapat v. General Fibre Dealers Ltd.( AIR 1955 Cal. 354 .), which was followed by a learned single Judge of the same Court in Dipti Bikash Sen v. India Automobiles ( AIR 1978 Cal. 454 .). 10. Learned counsel appearing for the contractor relies on a Division Bench decision of Calcutta High Court in the case of juggilal Kamalapat v. General Fibre Dealers Ltd.( AIR 1955 Cal. 354 .), which was followed by a learned single Judge of the same Court in Dipti Bikash Sen v. India Automobiles ( AIR 1978 Cal. 454 .). The above decisions of the Calcutta High Court have been relied by the learned Additional District Judge in coming to the conclusion that the rule of fairness demanded that the Arbitrator after rejecting the prayer of the contractor to stay the proceedings awaiting orders on change of Arbitrator, ought to have intimated the next date of hearing to the contractor to enable him to participate in further proceedings of the Arbitrator. 11. We have given our thoughtful consideration to the submissions made at the Bar and have also looked into record of the Arbitrator containing the order-sheets recorded by her on various dates. 12. As has been observed by the Division Bench of Calcutta High Court, "the procedural rule applicable to arbitration proceedings is more tolerant than the rule followed in the Court of Law." The legal position is not disputed that the Arbitrator is not bound by the rules of C.P.C., applicable to proceedings in a Court. The Arbitrator can evolve his own procedure and the only expectation from him a that he should act fairly in consonance with principles of natural justice, otherwise his action would be liable to be set aside on the ground of legal misconduct. 13. As we find from the order-sheets of the Arbitrator, she had fixed the case for recording evidence on 26-11-1983. Before the above date of evidence, she had received a copy of the legal notice sent by the contractor addressed to the Registrar seeking a change of Arbitrator on the ground that the appointed Arbitrator was working as subordinate in Law College under the Standing Counsel of the University. The action of the Arbitrator cannot be said to be illegal in rejecting the prayer of the contractor to stop the proceedings pending change of the Arbitrator. The action of the Arbitrator cannot be said to be illegal in rejecting the prayer of the contractor to stop the proceedings pending change of the Arbitrator. The Arbitrator after having rejected the prayer of the contractor and deciding to proceed against him exparte, as an expected act of fairness on her part, should have intimated to the contractor that his application by way of legal notice had been rejected and he should participate in the subsequent proceedings of the arbitration. It is not possible for this Court to accept the contention advanced on behalf of the University that since the contractor failed to appear on 26-11-1983, which was the date known to him, it was not necessary for the Arbitrator to have sent him a fresh notice. To negative-the above contention made on behalf of the University, the following observations in the Division Bench decision of the Calcutta High Court on which reliance has been placed by the learned Additional District Judge need to be noticed : "If it appears from the circumstances of the case that a particular party is determined not to appear before the Arbitrators in any event, as when he has openly repudiated either the reference itself or the particular Arbitrators and has shown no desire to recant, the Arbitrators are not required to issue a notice of an intention to proceed ex-parte against such a recusant person and may proceed ex-parte and make a valid award without issuing a notice. The better course, however even in such a case is to issue a notice and give the party concerned a chance to change his mind." 14. Relying on the above observations of the Division Bench of the Calcutta High Court, we wish to observe that in this particular case the contractor had approached the Registrar for change of the Arbitrator and intimated the fact to the Arbitrator. The Arbitrator might have been justified in proceeding ahead with the proceedings but it was necessary for the Arbitrator to have intimated the contractor that his prayer had been rejected and he should, if he chooses, participate in further proceedings of the arbitration. In the instant case, in our considered opinion, the Arbitrator has not acted fairly and can, therefore, be held that she was guilty of mis-conducting the proceedings which is a valid ground under Section 30 of the Arbitration Act for setting aside the award. In the instant case, in our considered opinion, the Arbitrator has not acted fairly and can, therefore, be held that she was guilty of mis-conducting the proceedings which is a valid ground under Section 30 of the Arbitration Act for setting aside the award. 15. As we have found above, that the Arbitrator committed a serious error of procedure in not intimating the subsequent date of hearing to the contractor on which the case was listed for ex-parte evidence. The award is, therefore, liable to be set aside on that ground alone. 16. For the aforesaid reason we do not wish to consider and express any opinion on the other ground urged on behalf of the contractor and accepted by the Court that the Arbitrator also committed a misconduct in accepting the full fees and expenses of the arbitration from the University as a successful party. 17. To conclude, we find no error in the order of the learned Additional District Judge. The order passed by him is hereby maintained. The appeal, therefore, fails and is hereby dismissed. In the circumstances there shall be no order as to costs. Appeal dismissed.