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2007 DIGILAW 1065 (DEL)

SHAMINDER SINGH v. MOTOR AND GENERAL FINANCE LTD.

2007-05-17

J.M.MALIK

body2007
JUDGMENT J.M. Malik, J.-Vide order dated 18th February, 2005, the learned Additional District Judge dismissed the petition filed by the appellants herein, under Section 34 of the Arbitration and Conciliation Act. In the present appeal, the appellants have questioned the abovesaid order. 2. The facts of this case are these. Appellant No.1 had obtained a loan of Rs. 3,26,250/ - from respondent No.1 for the purchase of a second hand truck. He agreed to pay the hire amount in 35 instalments. However, except one instalment, he did not pay any other instalment. Appellant No.2 stood guarantor to this hire purchase agreement. Notice of arbitration proceedings dated 2nd April, 2004, was sent to the appellants for appearance on 3rd May, 2004 at 11 a.m. at 23 Lawyers Chamber, Tis Hazari Courts, Delhi-54. However, 3rd May, 2004 was declared as holiday by the Government under the Negotiable Instruments Act. Consequently, when the appellants went there, they found the aforesaid chamber to be locked and finding no other alternative they left. 3. The learned trial Court observed that the Arbitrator was not holding any Government office or a Court which is subject to holidays declared by the Government. The appellants should have approached the Arbitrator on that day. The trial Court upheld the ex parte proceedings conducted by the Arbitrator. 4. The only submission made before me is that the Arbitrator did not give any opportunity of being heard to the appellants. The facts of this case are not in dispute. 5. It is apparent that despite service the appellants did not appear before the arbitrator. Even if it is assumed that it was declared holiday, the appellants should have made the efforts to know as to what is the next date of hearing. The appellants are certainly to be condemned for inaction and passivity on their part. However, I find merit in the argument advanced by the learned Counsel for the appellant to some extent. The prayer made by the learned Counsel for the appellants has to be accepted subject to some condition. 6. Under the old Act, this Court in case Lovely Benefit Chit v. Purandutt, 1983 Rajdhani Law Reporter 420 held: "From these authorities, it is apparent that an arbitrator ought not to proceed ex parte against a party if he has failed to appear at one of the sittings. 6. Under the old Act, this Court in case Lovely Benefit Chit v. Purandutt, 1983 Rajdhani Law Reporter 420 held: "From these authorities, it is apparent that an arbitrator ought not to proceed ex parte against a party if he has failed to appear at one of the sittings. The arbitrator should fix another date for hearing and give notice to the defaulting party, of his intention to proceed ex parte on a specified date, time and place. Even after notice if the defaulting party does not take part in the proceedings the arbitrator may proceed in his absence.” 7. I also followed the above-cited authority i.e. Lovely Benefit Chit (supra) in C.P. Madan (Shri) v. National Small Scale Industrial Corporation Ltd., 138 (2007) DL T 277=2007 IT A.D. Delhi 493 and FAO 112/2005 and CM No. 5721/2005 titled as Shri Balkishan v. M/s Mohini Finance Company decided on 18th April, 2007. 8. Similar view was taken in the judgment reported in Prem Nath L Harsaran Dass and Anr. v. Om Prakash L Ram Kishen Dass Aggarwal, AIR 1956 P&H 187 . 9. Under the new Act, Section 24(3) envisages: "24(3) All statements, documents or other information supplied to, or applications made to the Arbitral Tribunal by one party shall be communicated to the other party, and any expert report or evidentiary document on which the Arbitral Tribunal may rely in making its decision shall be communicated to the parties.” 10. This is crystal clear that the proceedings before the Arbitrator are not to be equated with the Civil Procedure Code. The above said authorities under the old Act and Section 24(3) of new Act clearly make a departure from the Code of Civil Procedure. There is no such provision like Section 24(3) in the Code of Civil Procedure. The Arbitrator should have given another notice to the appellant specifying his intention that he wanted to proceed against him ex parte or regarding the evidence which was produced against him. 11. In Halsburys Law of England, Edn. 3, Vol. 2, at page 34, the law is stated- "In fixing the times and places of meetings it is usual for the arbitrator to consult the convenience of the parties and to comply, so far as possible, with their wishes; but it is within his discretion to fix such times and places as he may think proper." 12. 3, Vol. 2, at page 34, the law is stated- "In fixing the times and places of meetings it is usual for the arbitrator to consult the convenience of the parties and to comply, so far as possible, with their wishes; but it is within his discretion to fix such times and places as he may think proper." 12. In Bache v. Billingham, (1894) 1 QB 107 (G), it has been held that hearing witnesses of one party in the absence of the other is a wrong procedure, and Erle J., in- Oswald v. Earl Grey, (1855) 24 Q3 69 (72) H said: "If there be in any part of the country a usage or practice for arbitrators to make their award not on a mere view but on the examination of witnesses for one party in the absence of the other, and without notice to the latter, I am clearly of the opinion that such a usage would be contrary to law, and that an award made pursuant to such a usage ought to be set aside." 13. In Ramasden and Company Ltd. v. Jacobs, (1922) 1 KB 640 (I), an award was set aside on the ground that the arbitrators had acted improperly in hearing the evidence on behalf of one party in the absence of the other. It was argued in that case that it was a violation of the elementary principles of justice which require that each party should be heard in the presence of the other and should have an opportunity of cross-examining witnesses of the other, and if such a procedure is not adopted, it was held that such a violation would be an absolutely wrong procedure. Bray, J., said at page 641 with which Bailhache, J., agreed- "That procedure was absolutely wrong; I wish to make that quite dear whatever may be the practice." 14. In Gladwin v. Chilkotge, 61 RR 825 (K), it was held that in order to justify an arbitrator proceeding ex patte a very strong case must be shown of wilful delay by the party not attending and therefore if a reasonable excuse is shown the Court will set aside an award. 15. In Gladwin v. Chilkotge, 61 RR 825 (K), it was held that in order to justify an arbitrator proceeding ex patte a very strong case must be shown of wilful delay by the party not attending and therefore if a reasonable excuse is shown the Court will set aside an award. 15. In India the same rule has been adopted and it is stated in Sarkars Arbitration Act at page 126 that notice fixing the date of hearing must be sufficiently long - See also, Pratap Singh v. Kishan Prasad and Co., 33 Born LR 1357=AIR 1932 Born. 68 (J.) at Page 132 are given some of the Indian decisions where it was held that the act of an arbitrator proceeding ex parte without sufficient cause of refusing or failing to give reasonable opportunity to all parties amount to legal misconduct. 16. In view of this position, I remand the case before the Arbitrator with a direction to grant one more opportunity to the appellants of being heard. It is made clear that no further opportunity shall be granted to the appellants. The appellants are directed to deposit 25% of the loan amount with the trial Court towards the above said loan within four weeks, failing which the orders passed by the Court below shall prevail. It is further directed that the amount so deposited by appellants in the shape of FDR, be not disbursed to any body till further orders, to be passed by arbitrator at final stage. The parties are directed to appear before the Arbitrator on 15th June, 2007. The Arbitrator shall decide the matter within one month after the receipt of the file and after satisfying that the said amount stands deposited by the appellants. 17. FAO 189-190/2005 are disposed of. Copies of this order be given dasti to both the Counsel for the parties. A copy of this order along with the lower Court record be sent back forthwith in order to enable the Arbitrator to proceed with the case. FAG disposed of.