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2012 DIGILAW 104 (DEL)

Pritam Lal Bansal v. Anand Agarwal

2012-01-10

S.MURALIDHAR

body2012
JUDGMENT S. MURALIDHAR, J. 1. The challenge in this petition under Section 34 of the Arbitration and Conciliation Act, 1996 (‘Act’) is to an Award dated 10th May 2005 passed by the arbitration panel of the Naraina Iron and Steel Merchants Welfare Association (‘NISMWA’) whereby the Petitioner was directed to pay Respondent No. 1 Sri Anand Agarwal a sum of Rs. 44,39,324/- within a period of 30 days. 2. The arbitral record has been perused by this Court. It shows that the proceedings commenced on a complaint by Respondent No. 1 made against the Petitioner before the NISMWA on 17th February 2005. In the said complaint Respondent No. 1 stated that he had been working as a Commission Agent in the steel market in Loha Mandi, Naraina, Delhi and had been dealing with different merchants including the Petitioner, who is the proprietor of M/s. Shivam Steels, for many years. Respondent No. 1 claimed that he used to do commission business as well as finance the goods purchased by the Petitioner from different sellers. The bills of sellers were to be given to the Petitioner and payment thereof was to be made by him to the said sellers through Respondent No. 1. In his complaint Respondent No. 1 stated that “in whole dealings I have been tallying my account and at the time of last dealing between myself and said Shri Pritam Lal Bansal our accounts duly tallied and a sum of Rs. 44,39,324/- is found due towards Shri Pritam Lal Bansal to be recovered by me”. Respondent No. 1 further stated that “there was no dispute at all in tallying of accounts”. It was alleged that the Petitioner herein had been avoiding making payment of the aforementioned sum of Rs. 44,39,324/-. 3. The Constitution of NISMWA envisages resolution of the disputes between its members and non-members in respect of the business transactions by an arbitration panel. Although learned Counsel for the Petitioner submitted that Respondent No. 1 was a Commission Agent and became a member of NISMWA only shortly before the complaint was filed by him, this Court does not propose to examine this question, since in any event as on the date of the commencement of arbitral proceedings both were members of NISMWA. 4. Although learned Counsel for the Petitioner submitted that Respondent No. 1 was a Commission Agent and became a member of NISMWA only shortly before the complaint was filed by him, this Court does not propose to examine this question, since in any event as on the date of the commencement of arbitral proceedings both were members of NISMWA. 4. The arbitral record shows that at the hearing of the arbitration panel on 12th March 2005 the Petitioner appeared before the arbitration panel for the first time and stated as far as he was concerned no amount was due and payable to Respondent No. 1. Thereafter, on 26th April 2005 a statement of the Petitioner, signed by him, was recorded in which he stated that he was agreeable to any decision that may be given by the arbitration panel. However, significantly the proceedings also recorded the contention of the Petitioner that bills on the basis of which Respondent No. 1 was basing his claim were not genuine and that the dispute raised by Respondent No.1 was adversely affecting the Petitioner’s goodwill in the market. At the hearing on 27th April 2005 the Arbitral Panel noted that the Petitioner had sent a statement of accounts. However, he was not present. Unfortunately, the arbitral record does not contain the said statement of account produced by the Petitioner. 5. The Petitioner did not appear on the subsequent dates, i.e., 6th and 8th May 2005. The proceedings drawn up on 8th May 2005 by the Arbitral Panel read as under:- “On the last date proceedings were proceeded ex parte against the Defendant and today none present on his behalf. All witnesses brought by Mr. Anand Aggarwal given their oral evidence and as per them, they all had sold the goods through Mr. Anand Aggarwal to Mr. Pritam Lal Bansal. They had further confirmed that they have been selling goods to Mr. Prital Lal Bansal through the complainant and not received payments from Mr. Pritam Lal Bansal. It is also confirmed that though they has not paid to the complainant for the goods purchased by him. They have proved that there are no forged bills issued to Mr. Pritam Lal Bansal and they had further confirmed that that cheques issued by Mr. Pritam Lal Bansal had been dishonoured from time to time and he has not cleared the payment thereof. They have proved that there are no forged bills issued to Mr. Pritam Lal Bansal and they had further confirmed that that cheques issued by Mr. Pritam Lal Bansal had been dishonoured from time to time and he has not cleared the payment thereof. They had further confirmed that they have returned the cheques to Mr. Pritam Bansal through the complainant and Mr. Vijay Shankar Khandelwal in good faith on oral promises and assurances of Mr. Anand Aggarwal and Mr. Pritam Lal Bansal that payment would be made in the due course but the payment has not been made till date. Now the matter is reserved for judgment on 10th May 2005.” 6. Thereafter the impugned Award was made which proceeded on the basis that the Petitioner had not disputed that he owed a sum of Rs. 44,39,324/- to Respondent No. 1 and that he admitted that Respondent No. 1 had given him a copy of the accounts of different parties whenever called for. 7. Mr. P.D. Gupta, learned Counsel for the Petitioner, submitted that even if the Petitioner was set ex parte before the Arbitral Panel, it was incumbent on the Arbitral Panel to have required Respondent No. 1 to produce documents in support of his claims which were purportedly based on the accounts he claimed to have been maintaining for the transactions he had with Respondent No. 1. 8. The above submission merits acceptance. There is indeed nothing in the proceedings drawn up by the Arbitral Panel or even in the impugned Award to indicate that Respondent No. 1 had produced before it the accounts which he claimed to be maintaining and which would show that the Petitioner owed Respondent No.1 Rs. 44,39,324/-. The statements of the ‘sellers’ who were produced as witnesses by Respondent No. 1 before the Arbitral Panel on 8th May 2005 were not recorded by the Arbitral Panel. The bills which they were supposed to have ‘proved’ not to be forged do not appear to have been produced. It is not clear on what basis the Arbitral Panel concluded that the claim of Respondent No.1 was proved. These glaring procedural lapses vitiate the impugned Award. The bills which they were supposed to have ‘proved’ not to be forged do not appear to have been produced. It is not clear on what basis the Arbitral Panel concluded that the claim of Respondent No.1 was proved. These glaring procedural lapses vitiate the impugned Award. Considering the nature of the claim, based as it is on the accounts of Respondent No.1 and the bills of the sellers, it was necessary for the Arbitral Panel to have required Respondent No.1 to produce and prove those documents even where the Petitioner was set ex parte. The impugned award is contrary to law and is therefore patently illegal on that score. 9. Accordingly, this Court sets aside the impugned Award dated 10th May 2005 of the Arbitral Panel of NISMWA and remands the dispute between the Petitioner and Respondent No. 1 to the Arbitral Panel of NISMWA for a fresh determination in accordance with law. The NISMWA will within a period of four weeks constitute a fresh arbitration panel which will then proceed to issue notices to both parties and require them to file their respective claims and counter-claims along with appropriate documentation. Since the claim is based on the accounts purportedly maintained by Respondent No. 1 he is directed to produce before the arbitration panel his audited accounts of the relevant period, or his income tax returns for the period or accounts duly certified by a qualified chartered accountant. He is also directed to produce the bills of sellers which according to him were not paid for by Respondent No.1. The arbitration panel will record the statements of the witnesses of the parties and permit their cross-examination. Considering that the dispute between the parties is more than five years old, the arbitration panel is requested to conclude its proceedings and pronounce a fresh award within a period of six months. 10. The petition is disposed of in the above terms. Order be given dasti to learned Counsel for the parties. 11. A certified copy of this order be delivered to NISMWA along with the arbitral record within a period of five days from today. Petition disposed of.