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2019 DIGILAW 530 (GAU)

Manjul Deb v. Videocon Industries Ltd.

2019-04-30

SUMAN SHYAM

body2019
JUDGMENT : Suman Shyam, J. 1. Heard Mr. T.J. Mahanta, learned Sr. counsel for the petitioner, I have also heard Mr. D.K. Das, learned counsel appearing for the respondents. 2. In this revision petition the order dated 02.07.2013 passed by the learned District Judge, Cachar, Silchar in Misc. (Arb) Case No. 09/2012 rejecting the prayer made by the petitioner seeking leave to adduce evidence in support of the grounds taken in the application filed by him under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter "Act of 1996") has been put under challenge. 3. The case of the petitioner, in a nutshell, is that he was one of the parties to the arbitration proceeding initiated at the instance of the respondents. After receipt of notice issued by the sole arbitrator, the petitioner has raised objection, inter alia, questioning the competence and jurisdiction of the arbitrator to entertain the dispute. However, the petitioner did not appear before the arbitrator to contest the proceeding. The arbitration proceeding was taken forward and eventually, arbitral award dated 19.04.2012 was passed by the sole arbitrator awarding the claims of the respondents. Being aggrieved, the petitioner had approached the court of learned District Judge, Cachar at Silchar by filing Misc. (Arb.) Case No. 09/2012 by filing an application under Section 34 of the Act of 1996, praying for setting aside the arbitral award dated 19.04.2012. In the said proceeding, the petitioner had also filed a separate application dated 01.06.2013 seeking leave of the court to lead evidence, which prayer was rejected by the impugned order dated 2.7.2013. Hence, this petition. 4. Mr. Mahanta submits that learned court below had committed manifest illegality in failing to consider the fact that the petitioner was entitled to "furnish proof" under Section 34(2)(a) of the act of 1996 to show that the arbitral award itself was bad in the eye of law and as such, his application ought not to have been rejected by the learned court below solely on the ground that the same would amount to granting a second opportunity to the petitioner to furnish evidence in support of his case. 5. By referring to a recent decision of the Hon'ble Supreme court in the case of Emkay Global Financial Services Ltd. Vs. Girdhar Sondhi, reported in (2018) 9 SCC 49 . Mr. 5. By referring to a recent decision of the Hon'ble Supreme court in the case of Emkay Global Financial Services Ltd. Vs. Girdhar Sondhi, reported in (2018) 9 SCC 49 . Mr. Mahanta submits that in the said decision, it has been clarified that if there are materials which are relevant for determination of the issues arising under Section 34(2)(a) and those materials are not contained in the record of the proceeding before the arbitrator, it would be open for the court to allow such materials to be brought on record by filing affidavit. As such, submits Mr. Mahanta, the impugned order dated 02.07.2013 is unsustainable in the eye of law and therefore, deserves to be set aside by this Court. 6. Mr. D.K. Das, learned counsel for the respondents, on the other hand, submits that the petitioner was aware of the pending arbitration proceeding but despite having due knowledge of the same, he did not appear and contest the claim. As such, submits Mr. Das, the right of the petitioner to lead evidence in this case would stand forfeited. Hence, the learned court below has rightly rejected his prayer by issuing impugned order dated 02.07.2013. 7. I have considered the submission made by the learned counsel for both the parties and have gone through the materials available on record. The question as to whether a party filing an application raising grounds under Section 34(2)(a) of the Act of 1996 would be entitled to lead evidence so as to bring in additional materials on record was gone into by the Hon'ble Supreme Court in the case of Emkay Global Financial Services Ltd. (Supra). After discussing the various decisions of the High Court of Judicature at Delhi, the Punjab & Haryana High Court as well as the Calcutta High Court governing the subject, the Hon'ble Supreme Court had made the following observation in paragraph 21, which is reproduced herein below: "21. It will thus be seen that speedy resolution of arbitral disputes has been the reason for enacting the 1996 Act, and continues to be the reason for adding amendments to the said Act to strengthen the aforesaid object. Quite obviously, if issues are to be framed and oral evidence taken in a summary proceeding under Section 34, this object will be defeated. Quite obviously, if issues are to be framed and oral evidence taken in a summary proceeding under Section 34, this object will be defeated. It is also on the cards that if Bill No. 100 of 2018 is passed, then evidence at the stage of a Section 34 application will be dispensed with altogether. Given the current state of the law, we are of the view that the two early Delhi High Court judgments, cited by us hereinabove, correctly reflect the position in law as to furnishing proof under section 34(2)(a). So does the Calcutta High Court Judgment. We may hasten to add that if the procedure followed by the Punjab and Haryana High Court judgment is to be adhered to, the time limit of one year would only be observed in most cases in the breach. We therefore overrule the said decision. We are constrained to observe that Fiza Developers was a step in the right direction as its ultimate ratio is that issues need not be struck at the stage of hearing a Section 34 application, which is a summary procedure. However, this judgment must now be read in the light of the amendment made in Sections 34(5) and 34(6), So read, we clarify the legal position by stating that an application for setting aside an arbitral award will not ordinarily require anything beyond the record that was before the arbitrator. However, if there are matters not contained in such record, and are relevant to the determination of issues arising under Section 34(2)(a), they may be brought to the notice of the Court by way of affidavits filed by both parties. Cross-examination of persons swearing the affidavits should not be allowed unless absolutely necessary as the truth will emerge on a reading of the affidavits filed by both parties. We, therefore, set aside the judgment of the Delhi High Court and reinstate that of the learned Additional District Judge dated 22.9.2016. The appeal is accordingly allowed with no order as to costs." 8. A plain reading of the observations quoted above leaves no room for doubt that the court would have the jurisdiction to permit the parties to file affidavit so as to bring on record such materials relevant for determination of issues arising under Section 34(2)(a), if such materials are not available in the record that was before the arbitrator. A plain reading of the observations quoted above leaves no room for doubt that the court would have the jurisdiction to permit the parties to file affidavit so as to bring on record such materials relevant for determination of issues arising under Section 34(2)(a), if such materials are not available in the record that was before the arbitrator. However, cross-examination of the persons swearing the affidavit shall not be permitted unless absolutely necessary. When can cross-examination be treated to be absolutely necessary would depend on the facts and circumstances of each case. 9. In the present case, the petitioner did not contest the claim before the learned arbitrator and therefore, no evidence was lead by him. As such, it is evident that the materials sought to be relied upon by the petitioner are not available in the record that was before the arbitrator. The question that would, however, the relevant for the purpose of the present case is as to whether, the materials sought to be brought on record by the petitioner are relevant for determination of an issue arising within the ambit of Section 34(2)(a) of the Act of 1996. 10. A bare perusal of the impugned order dated 02.07.2013 goes to show that the learned court below did not consider the said aspect of the matter. On the contrary, the prayer was rejected merely on the ground that the same would amount to a second opportunity to the petitioner to establish his case, which in the opinion of this Court, was not correct. The scope of assailing an arbitral award by filing an application raising grounds under Section 34(2)(a) of the Act of 1996 is quite different from contesting a claim or counter-claim by leading evidence during arbitral proceeding. Therefore, the ground on which the prayer of the petitioner was rejected by the learned court below by the impugned order dated 02.07.2013 is held to be unsustainable in the eye of law. For the reasons stated hereinabove, the order dated 02.07.2013 stands set aside. The matter is, however, remanded back to the learned court below to consider the application dated 01.06.2013 filed by the petitioner afresh in the light of the law laid down by the Hon'ble Supreme Court in the case of Emkay Global Financial Services Ltd. (Supra) and pass appropriate order disposing the said application after giving proper opportunity of being heard to both parties. Since the application under Section 34 was filed by the petitioner way back in the year 2012, hence, the learned court below is requested to dispose of the application as expeditiously as possible. Facilitating the above, both parties to appear before the court below along with a certified copy of this order on 27.05.2019. Revision petition stands disposed of. Send back the records.