CHIEF GENERAL MANAGER SOUTH EASTERN COALFIELDS LTD. v. R. MUKTESHWARRAI
2007-08-21
DHIRENDRA MISHRA
body2007
DigiLaw.ai
ORDER Dhirendra Mishra, J. ;_ 1. This appeal under Section 37 of the Arbitration & Conciliation 1996 (hereinafter shall be referred as 'Act of 1996') has been preferred b: appellant against the order dated 2 I .8.2006 passed by the Court of learned. Judge, Bilaspur, Court under the Act of 1991 in Civil Suit No. 8A/2002 where the Court while affirming the award ofRs.2,46,8 I 4/- passed in favour of respondent No.1/applicant has partly set aside the award by which the sole Arbitrator has rejected the claim of respondent No. I contractor and remitted the dispute to the Sole Arbitrator, through the Chairman cum Managing Director (for short 'CMD'), of the South Eastern Coalfields Ltd., Bilaspur (for short "SECL") with a direction that Sole Arbitrator shall pass fresh award with a reasoned order in accordance with law within a period of six months from the date of the receipt of the order after affording sufficient opportunity of leading evidence to the parties and after ensuring that the documents in possession of the respective parties are produced. 2. Undisputed facts of the case are that a contract agreement was entered into between the SECL and respondent No.1-contractor for construction of security wall along with main road from Dipka barrier to Dipka Chowk and towards B & C types quarters and in accordance with the above agreement, work order dated 16.7.1992 was issued by the appellant herein. The value of the work was Rs.12, 13,810/- and the period for completion of the contract was six months from the 10th day of issuance of the work order. 3. The work could not be completed within the stipulated period and ultimately final extension was granted upto 29.10.1993 without imposition of penalty. After completion of work within the extended period, the respondent No.1 herein raised various claims, however, the claims preferred by respondent No.1 contractor was not allowed and respondent No.1 contractor vide his application dated 16.10.1997 put forth his claim and requested for appointment of the Arbitrator as per arbitration clause in the agreement and the CMD of SECL appointed respondent No.2 herein as the Sole Arbitrator. The sole Arbitrator commenced the arbitration proceedings and its 1st sitting was held on 9.5.1998. The Arbitrator was to pass the award after completing the arbitration proceedings within a period of four months.
The sole Arbitrator commenced the arbitration proceedings and its 1st sitting was held on 9.5.1998. The Arbitrator was to pass the award after completing the arbitration proceedings within a period of four months. However, with the agreement of the parties, time was enlarged for a further period of four months w.e.f. 22.5.1998. The arbitration proceedings continued and in all 17 sittings were held till 7.3 .2002 and the award was passed on 16.4.2002 whereby a sum of Rs. 1,80,877=30 paise was awarded to respondent No.1 contractor for his claim No.1 towards final bills and Rs.65936.70 paise for claim No.2, towards escalation for the value of work executed beyond the original period of contract i.e. from 25.1.1993 to 29.10.1993. 4. The respondent No.1 herein moved an application under Section 34 of the Act before the Court for setting aside the award and the Court allowed the application of respondent No.1 by the impugned order and remanded back the matter to the Sole Arbitrator for passing fresh award against Claim Nos.3 to 10. However, the award passed in favour of respondent No.1 while deciding Claim No.1 & 2 has been confirmed. 5. The Court has passed the impugned order by recording the finding that respondent No.1/applicant vide his application dated 31.8.1998 had prayed for opportunity to adduce evidence in support of his claim, however, the said application was not decided till passing of the award though affidavits were filed by the parties. However, from perusal of the proceedings before the Arbitrator it is not clear that whether any opportunity to cross-examine the witnesses was given to the parties. After filing of the claim by respondent No.1 and reply of the claim, by the appellant herein issues were framed, with the consent of the parties and thereafter without giving any opportunity of adducing evidence, the Arbitrator fixed the matter for arguments. The sole Arbitrator did not give any opportunity to the parties to adduce evidence before giving his decision against the issues, which was necessary and it was not possible to adjudicate the issues between the parties effectively on the basis of affidavits only without affording opportunity of cross-examination of the witnesses who gave evidence through affidavits. The documents were not produced by the appellant even after notice to produce the same and therefore, the Arbitrator ought to have drawn adverse inference against the appellant, however, no adverse inference has been drawn.
The documents were not produced by the appellant even after notice to produce the same and therefore, the Arbitrator ought to have drawn adverse inference against the appellant, however, no adverse inference has been drawn. With the above findings, the portion of the award by which claim of respondent No.1 herein was rejected has been set aside and the matter has been remanded back to the sole Arbitrator for passing of fresh award. 6. Learned Senior Counsel for the appellant submits that finding of the Court that there was a procedural unfairness committed by the Arbitrator is not borne-out from the arbitration proceedings. The Court has misconstrued the provisions of Section 34 of the Act and has exceeded the jurisdiction vested in it by partially confirming the award in favour of respondent No.1 and remanding back the matter to the sole Arbitrator for passing fresh award after setting aside the portion of the award by which the claim of respondent No.1 was rejected. 7. On the other hand, learned counsel for respondent No.1 submitted that so far as the order of the Court confirming the award passed in favour of respondent No.1 against the Claim No.1 & 2 is concerned, from perusal of the award itself it would be evident that the same was passed, as it was not disputed by the appellant before the Arbitrator and the appellant did not challenge the above award passed in favour of respondent No.1. So far as the remission of the award after partially setting aside it is concerned, the provisions for remitting the award under Section 34(4) of the Act has been incorporated with an intent to cure the 4efects in the award so that the grounds of setting aside the award can be eliminated. However, once the Court reaches to the conclusion that the award is liable to be set aside on any of the grounds mentioned in Section 34 of the Act, in such circumstances, in appropriate cases, the Court can also remit the case after setting aside the award notwithstanding the fact that there is no specific provisions in the Act enabling the Court to do so.
Citing the maxim' Ubi jus ibi remedium' i.e. there is no wrong without a remedy, it has been argued that the law is to be interpreted in such a manner so that wrong must not be left unredeemed and right not left un-enforced. Reliance is placed on Sulaikha Clay Mines Vs. Alpha Clays and others & Midex Overseas Ltd. Vs. M/s Dewas Soya Ltd. and others. 8. A plain reading of Section 34 of the Act makes it abundantly clear that there is no specific provision to remit the matter to the Arbitrator for passing fresh award after setting aside the award. Sub-section (4) of Section 34 of the Act enables the Court that in appropriate cases on the request of the party, the proceedings under Section 34 may be adjourned for a specified period of time, in order to give the arbitral tribunal an opportunity to resume arbitral proceedings or to take such other actions as in the opinion of arbitral tribunal will eliminate the grounds for setting aside the arbitral award. This provision nowhere mentions that the award may be set aside and the same may be remitted for passing of fresh award. 9. In the matter of Sulekha Clay Mines (supra) the Division Bench of Kamataka High Court considering the facts of that case that oral hearings were held in the premises of one party without notice to the other, inspections conducted by the arbitrator without notice to both parties, hearing of one party in the absence of other party, evidence collected from one side kept secret from the other side and thus equal opportunity of hearing not given to the both the sides, it was held that there was violation of Sections 18, 19,20 & 24(2) & (3) of the Act and accordingly, the award was set aside under Section 34(2)(a)(iii) of the Act and it was held that the award has been properly set aside by the lower court. In these circumstances, it has been held that even in the absence of the specific provisions in the Act, which enables the court to remit the award after setting it aside, the Court has the power to remit the award in the interest of justice. 10.
In these circumstances, it has been held that even in the absence of the specific provisions in the Act, which enables the court to remit the award after setting it aside, the Court has the power to remit the award in the interest of justice. 10. In the matter of Midex Overseas Ltd.2 (supra) the award was challenged under Section 34 of the Act before the District Judge and in the said proceedings an application under Section 34(4) of the Act praying for adjournment of the proceedings for a fixed period in order to give arbitral tribunal an opportunity to resume arbitral proceeding or to take such other actions as in the opinion of arbitral tribunal will eliminate the grounds for setting aside the arbitral award was filed and the same was allowed. The above order was challenged before the High Court by way of revision, however, the revision was rejected with an observation that the order was passed in exercise of powers conferred under Section 34(4) of the Act in order to enable the arbitrator to take such steps after resuming the arbitral proceedings which in its opinion shall eliminate the grounds for setting aside the award. However, in the instant case no such application under Section 34(4) of the Act was filed by any of the parties before the Court and the proceedings were not adjourned but in fact the award was partially set aside and the matter was remanded back for passing fresh award against Claim No.3 to 10 framed by the sole Arbitrator. 11. Before considering the question whether the Court was justified in remitting the matter back to the sole Arbitrator for passing fresh award after partially setting aside the award, I propose to examine the reasons assigned by the Court for setting aside the award in the light of Section 34 of the Act. The Court on the basis of the proceedings before the sole Arbitrator has arrived at the conclusion that award was passed without deciding the application of respondent No.1 herein dated 31.8.1998 filed for leading evidence and as such, respondent No.1 was not given opportunity to adduce evidence in support of his case. The appellant did not produce the documents even after receipt of the notice to produce the documents from the respondent No.1 contractor.
The appellant did not produce the documents even after receipt of the notice to produce the documents from the respondent No.1 contractor. However, the Arbitrator did not draw any adverse inference for non-production of the documents, which were in possession of the appellant. The parties were not given opportunity to cross-examine the deponents of the affidavits filed by the parties in support of their cases, which was necessary for just adjudication of the issues between the parties. 12. Respondent No.1 herein filed an application on 31.8.1998 and by the said application it was contended by the respondent No.1 herein that from perusal of the reply to his claim petition it is evident that there are disputed facts and therefore, before concluding the proceedings opportunity should be given to adduce evidence in support of the claim before the Arbitrator. During arbitration proceedings commencing from first sitting, which was held on 9.5.1998 and last & 17th sitting held on 7.3.2002, the parties participated in all the 17 sittings along with their advocates, claimant and appellant herein jointly agreed for enlargement of time in the 5th sitting held on 9.9.1998 and from perusal of 6th sitting held on 19.9.1998 it is evident that with the consent of the parties it was resolved to submit agreed issues involved in the dispute and accordingly issues were framed on 31.1 0.1998 and thereafter list of witnesses were filed by the parties and on 9th sitting dated 14.11.1998 next date of sitting i.e. 13.12.1998 was fixed for evidence of the claimants. However, 10th sitting was held on 20.10.2000 and the matter was adjourned with the consent of parties for 18.2.2000. On 11th meeting held on 31.3.200 I on the request of parties date was fixed for 26.4.200 I for filing of the affidavits of the witnesses by the claimant and again on the request of the claimant further time was given for filing of affidavit upto 10.5.200 I and the respondent was directed to file the affidavit on 20.5.2001 with the copies to each other Claimant commenced his argument from 31.7.2001 and concluded it on 14.8.2001 and on that date notice to produce document was filed by the claimant. The appellant filed point wise reply to the notice to produce document with copy to the respondent claimant.
The appellant filed point wise reply to the notice to produce document with copy to the respondent claimant. Respondent No.1 commenced his oral arguments on 5.9.2001 and concluded the same on 12.9.2001 and on that day a copy of the measurement book was also produced with a copy to the claimant. Both the parties agreed to submit written arguments, which was submitted by both the parties with copy to each other on 7.3.2002 i.e. the final date of hearing before the sole Arbitrator. Thus, from perusal of the proceedings before the sole Arbitrator, it is manifestly clear that the sole Arbitrator proceeded with the arbitration proceedings with the consent of the parties and none of the parties objected to the procedure adopted by the sole Arbitrator at any point of time. 13. Chapter 5 of the Act deals with conduct of the arbitral proceedings. Section 18 of the Act mandates that the parties shall be treated with equality by the Arbitrator and each party shall be given full opportunity to present his case. Section 19 confers arbitral tribunal with the power to conduct the proceedings in the manner it considers appropriate in the absence of any agreement between the parties with regard to the procedure to be followed by the arbitral tribunal in conducting its proceedings. Section 23 makes a provision for filing of statement of claim and defence by the claimant and respondent. Parties shall be at liberty to state their claim along with facts supporting their claim and relief or remedy sought. They may also submit their statements all documents or other evidence that they propose to submit. Section 24 confers discretion to the arbitral tribunal to decide whether to hold oral hearing for the presentation of the evidence or for oral argument, or whether the proceedings shall be conducted on the basis of the documents and other materials. This section further mandates that the tribunal shall hold oral hearings, at an appropriate stage of the proceedings, on a request by a party and sufficient advance notice is to be given to the parties regarding meeting of arbitral tribunal and for the purposes of statements, documents etc. 14.
This section further mandates that the tribunal shall hold oral hearings, at an appropriate stage of the proceedings, on a request by a party and sufficient advance notice is to be given to the parties regarding meeting of arbitral tribunal and for the purposes of statements, documents etc. 14. Section 34 (2) of the Act is reproduced herein below: "(a) An arbitral award may be set aside by the Court only if (i) a party as under some incapacity, or (ii) the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law for the time being in force; or (iii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or (iv) the arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration; Provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, only that part of the arbitral award which contains decisions on matters not submitted to arbitration may be set aside; or (v) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of this Part from which the parties cannot derogate, or, failing such agreement, was not in accordance with this Part; or (b) the Court finds that- (i) the subject-matter of the dispute is not capable of settlement by arbitration under the law for the time being in force, or (ii) the arbitral award is in conflict with the public policy in India. Explanation - Without prejudice to the generality of sub-clause (ii) it is hereby declared, for the avoidance of any doubt, that an award is in conflict with the public policy of India if the making of the award was induced or affected by fraud or corruption or was in violation of section 75 or section 15. In the matter of M. Anasuya Devi and another Vs.
In the matter of M. Anasuya Devi and another Vs. M. Manik Reddy and others the Hon'ble Supreme Court in Para 4 of the judgment has held that 'Section 34 of the Act provides for setting aside the award on the grounds numerated therein and an application for setting aside the award would not lie on any other ground, which is not enumerated in Section 34 of the Act." 16. In the instant case, admittedly, there is no agreement between the parties with respect to any particular procedure that was to be adopted during arbitral proceedings and in these circumstances, the sole Arbitrator has directed the parties to submit evidence of their witnesses through affidavits with exchange of the same to each other and the procedure adopted by the sole Arbitrator has not been objected either by the claimant or by the appellant. The Court allowing the application preferred by respondent No.1 herein under Section 34 of the Act has partially set aside the award passed by the sole Arbitrator and accordingly the decision of the sole Arbitrator against claims No.3 to 10 has been set aside on the founds that application preferred by the respondent No.1/claimant in the year 1998 remains undecided and in reply to notice to produce documents, the documents were not produced by the appellant, however, no adverse inference has been drawn by the Arbitrator for non-production of the documents, which were in possession of the appellant. 17. The above finding of the Court is not in accordance with the provisions of the Act as arbitral proceeding is to be conducted in accordance with Chapter-V of the Act which confers powers upon the Arbitrator to determine the rules and procedure to be followed by the arbitral tribunal in conducting its proceeding. The procedure followed by the Arbitrator cannot be held to be opposed to the principles of natural justice, as from perusal of the proceedings it is manifestly clear that the parties to the proceedings have been treated with equality by the sole Arbitrator, they have been afforded full opportunity to present their case and the respondent No.1/claimant has not raised any objection before the sole Arbitrator that his prayer for adducing evidence has not been accepted. 18.
18. So far as the objection regarding non-production of the documents in reply to the notice to produce documents filed by tl1e respondent No.1 claimant is concerned, the said application was duly replied by the appellant vide its reply dated 5.9.2001 and the Sole Arbitrator after considering the evidence available before him adduced by the respective parties has passed the award by a reasoned order. Section 19 of the Act specifically provides that the arbitral tribunal shall not be bound by the Code of Civil Procedure, 1908 and Indian Evidence Act, 1872 and in the absence of any agreement between the parties, the Arbitrator may conduct the proceedings in the manner it considers appropriate. 19. Therefore, there was no ground available to the respondent No.1 claimant under Section 34 of the Act for challenging the impugned award, as the award was passed by the sole Arbitrator after affording full opportunity to the parties. Respondent No.1 herein participated in the arbitration proceedings for a period of 4 years without raising any objection regarding the procedure adopted by the sole Arbitrator for conducting the arbitral proceedings. Evidence was adduced by the respective parties through affidavits with the mutual consent and at no point of time the respondent No.1 herein has made any prayer to adduce oral evidence or express his intention to cross-exan1ine the witnesses whose evidence was given on affidavits by the appellant. 20. In the result, the appeal preferred by the appellant succeeds. Impugned order dated 21.8.2006 passed by the Court is hereby set aside and the application preferred by the respondent No.1 herein under Section 34(2) of the Act is dismissed. No order as to costs. Appeal Rejected.