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2023 DIGILAW 6 (HP)

Jai Inder Pal Singh v. Jasvinder Singh Narula

2023-01-03

TARLOK SINGH CHAUHAN, VIRENDER SINGH

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JUDGMENT : TARLOK SINGH CHAUHAN, J. 1. Aggrieved by the rejection of the objections filed under Section 34 of the Arbitration and Conciliation Act, 1996 (for short the “Act”) the objector-appellant has filed the instant appeal under Section 37 of the Act, for setting aside the judgment dated 24.09.2013, passed in Arbitration Case No. 40 of 2009, with a further prayer to allow the application of the appellant for setting aside award dated 16.02.2009. 2. The appellant had taken various grounds in his objections for setting aside the award and the same can broadly be enumerated as under: (a) That the learned Arbitrator had acted without jurisdiction in making an award after re-determining the shares of the parties that was fixed under the partnership deed, which contained the arbitration agreement on the basis of which the matter was referred to arbitration. As per the partnership deed, the respondent had only 25% share in the partnership whereas the learned Arbitrator has re-determined such share to be 83.32%. (b) that the learned Arbitrator had acted in conflict with public policy of India by allowing claims patently barred by limitation in derogation of the provisions of the Limitation Act. (c) that the accounts of the partnership having finalized and mutually settled between the parties till the year 2004-05 no award would be made for any period prior thereto. (d) that no dispute relating to the re-determination of the shares of the partners had been referred to arbitration and since the arbitrator had been appointed in an application under Section 9 of the Arbitration and Conciliation Act 1996, only the dispute detailed therein could be referred to arbitration. (e) that the learned Arbitrator had not considered vital documents containing the admissions of the respondent herein relating to his share in the partnership. (f) that the learned Arbitrator had no jurisdiction to order a rectification of the partnership deed which could be done only in a suit filed under the Specific Relief Act. (e) that the learned Arbitrator had not considered vital documents containing the admissions of the respondent herein relating to his share in the partnership. (f) that the learned Arbitrator had no jurisdiction to order a rectification of the partnership deed which could be done only in a suit filed under the Specific Relief Act. (g) that at the time of making the award the learned Arbitrator was not in proper health at the time of the award (this was later on sought to be clarified by incorporation that the arbitrator had been admitted as an indoor patient in the PGI Chandigarh w.e.f. 30.1.2009 to 5.3.2009) and that since the award was made on 16.2.200 showed that the same was procured by the respondent by unfair means or by fraud. (h) that the petitioner having withdrawn only an amount of Rs. 54,11,573/- during the period 1992-1995, the award allegedly showing an over-drawal of Rs. 1.27 crores was perverse to an extent that it would shock the conscious of the Court. 3. It would be noticed that the ground of ill health of the Arbitrator was taken in Para 10 of the objections though erroneously numbered as Para-11 and thereafter corrected, which reads as under: 10. That the petitioner understands that the learned Arbitrator was not in the best health during the period when the award dated 16.02.2009 was passed and the impugned award seemingly has been procured by respondent by using unfair means. On this ground also the award is in conflict with the public policy. 4. The respondent filed the reply, wherein Para-11, reads as under: Ground 11: That the contents of this paragraph of the application are emphatically denied as the same are contemptuous and amount casting personal aspersions on the Ld Arbitrator, in a veiled manner, upon the integrity of the Ld. Arbitrator, who is a retired Judge of the Hon'ble High Court of Himachal Pradesh. It is submitted that the present respondent had received a letter dated 21-01-2009 from the Ld. Arbitrator containing a direction to submit the requisite stamp papers as the award was finalized. The respondent had sent the stamp papers immediately to the Ld. Arbitrator as per the directions. It is denied that the impugned award has been procured by the respondent by using unfair means, as alleged by the petitioner out. of sheer frustration. Arbitrator containing a direction to submit the requisite stamp papers as the award was finalized. The respondent had sent the stamp papers immediately to the Ld. Arbitrator as per the directions. It is denied that the impugned award has been procured by the respondent by using unfair means, as alleged by the petitioner out. of sheer frustration. Such allegations of the petitioner are baseless, derogatory and false to the knowledge of the petitioner, which are vehemently denied. The applicant is casting grave aspersions on the integrity of the Ld. Arbitrator, which the applicant cannot be permitted to do. Because the petitioner has no legal grounds available. to challenge the well reasoned award passed by the Ld. Arbitrator, hence the petitioner is leveling personal allegations both against the Ld. Arbitrator and against the replying respondent which are false and totally incorrect. The petitioner has failed to show as to in what manner the award is in conflict with the public policy of India. In fact the present application filed by the applicant under section 34 is liable to be dismissed on this account alone. In fact, the arbitration proceedings culminated in July, 2008 and a well-reasoned and exhaustive award was passed by the Single member Arbitral Tribunal headed by Mr. Justice Surinder Sarup (Retd.) on 16-02-2009, which was admittedly received by both the parties on 24-02-2009. That the Petitioner is liable to refund the afore-mentioned amounts of Rs. 72 lakhs as well as Rs. 7,90,284/- and Rs. 10 lakhs to the partnership Firm M/s Sanjeevan Hospital. The Petitioner is also liable to make the payment of Rs. 1,27,64,583-04 paise (One Crore, Twenty Seven Lakhs, Sixty Four Thousands, Five Hundreds, Eighty Three and paisa four only.) in capital A/c, to the Partnership Firm as excess withdrawals made by him during the period from 1992 to 2005, along with the cost as mentioned in the award. That since the petitioner is liable to pay huge amounts, therefore, he has come out with frivolous and baseless and oft-repeated averments, in the present application, just out of sheer frustration and to delay the implementation of the award. 5. That since the petitioner is liable to pay huge amounts, therefore, he has come out with frivolous and baseless and oft-repeated averments, in the present application, just out of sheer frustration and to delay the implementation of the award. 5. The appellant thereafter filed rejoinder wherein it is specifically stated that the respondent was in collusion with the Arbitrator in order to obtain unsigned copy of the award much prior to it was actually passed and as regards ground No. 11 it was averred as under: Ground No. 11: That the contents of this Para are wrong and incorrect, hence denied. It is submitted that the ld. Arbitrator was admitted to PGI, Chandigarh as an indoor patient on 30.1.2009 in the Psychiatric Intensive Care Clinic and was discharged on 5.3.2009 and was not in a fit state of health to have passed the award. This contention of the respondent No. 6 already filed a which ending adjudication and it is, thus, petitioner fortified from the fact that receiver and respondent were possession of unsigned copy of the award much prior to having been passed by the Arbitrator. It specifically denied respondent had been issued letter 21.1.2009 by the Arbitrator to submit requisite papers for passing of the No communication endorsed to petitioner, which the Arbitrator otherwise required under law to do Therefore, award conflict with the Public Policy of India deserves to be aside. 6. On 24.12.2010, the appellant moved an application being OMP No. 604 of 2010 of the CPC seeking impleadment of the Arbitrator as a party to the proceedings, keeping In view of the nature of the personal allegations made against him. It is averred that when the matter came up before the Court at a later stage, the learned counsel objected to the inclusion of the averments relating to the hospitalisation of the learned Arbitrator that had been elaborately taken in the rejoinder, constraining the appellant to file an application for amendment under Order 6 Rule 17 CPC being CMP No. 394 of 2011. However, since this application contained errors in numbering of the paragraphs, as such the same was withdrawn after obtaining permission as also liberty to move similar application from the Court. It was after grant of such liberty, the petitioner then moved another application being OMP No. 20 of 2012 to amend the application. 7. However, since this application contained errors in numbering of the paragraphs, as such the same was withdrawn after obtaining permission as also liberty to move similar application from the Court. It was after grant of such liberty, the petitioner then moved another application being OMP No. 20 of 2012 to amend the application. 7. However, the learned Single Judge dismissed the application by observing that, in case, the application under Order 6 Rule 17 CPC is allowed, it would change the entire nature of the proceedings. It is also held that filing of such application belatedly was an afterthought. Nevertheless, the learned Single Judge did not take into consideration the fact that earlier application seeking the same relief had been permitted to be withdrawn with liberty to file the same afresh. 8. However, the moot question, at this stage, is whether the learned Single Judge could have straightway rejected the objections filed by the appellant with regard to the mental health of the learned Arbitrator without affording an opportunity to prove the assertions made in the application for setting aside the award. 9. Here, it needs to be noticed that the learned Single Judge in a cursory manner dismissed the application for amendment, by observing as under: “9. The non-claimant besides challenging the award dated 16.2.2009 on various grounds also assailed the same on the ground that the learned Arbitrator was admitted in PGI Chandigarh w.e.f. 16.2.2009 and thus was disqualified. The claimant filed a detailed reply to the same. The non-claimant also filed rejoinder to the same. In the rejoinder, the non-claimant specifically averred that the Arbitrator was admitted in the PGI in the Psychiatric Intensive Care Ward w.e.f. 30.1.2009 to 5.3.2009. The claimant moved an application under Section 9 of the Arbitration and Conciliation Act, 1996 bearing OMP No. 656/2009, for interim directions during the pendency of the arbitration proceedings. The Claimant also moved an application bearing OMP No. 673/2009 for placing on record copies of Jamabandi etc. The non-claimant filed detailed reply to OMP No. 656/2009. The rejoinder was also filed by the claimant to the reply filed by the non-claimant to OMP No. 656/2009. The rejoinder was also filed by the non-claimant to the reply filed by claimant to the main petition. The non-claimant filed detailed reply to OMP No. 656/2009. The rejoinder was also filed by the claimant to the reply filed by the non-claimant to OMP No. 656/2009. The rejoinder was also filed by the non-claimant to the reply filed by claimant to the main petition. One more application bearing OMP No. 311/2010 was also filed under Section 9 of the Arbitration and Conciliation Act by the claimant, to which the reply was filed by the non-claimant. Rejoinder was also filed by the claimant to reply filed by the non-claimant to OMP No. 311/2010. The claimant also moved an application bearing OMP No. 435/2010 for placing on record Annexure PRA and PRB. The non-claimant filed an application bearing OMP No. 604/2010 for impleadment of the learned Arbitrator under Order 1 Rule 10 CPC. The reply was filed by the claimant. The non-claimant has also filed an application bearing OMP No. 394/2011 under Order 6 Rule 17 read with Section 151 CPC seeking amendment to the petition. The claimant filed reply to OMP No. 394/2011, to which rejoinder was also filed by the non-claimant. The non-claimant withdrew OMP No. 394/2011. The non-claimant again filed an application bearing OMP No. 201/2012 seeking amendment to the petition challenging the impugned Award. The reply was filed by the claimant. Rejoinder was also filed by the non-claimant to the reply filed by the claimant to OMP No. 201/2012. The non-claimant also filed an application seeking interim direction bearing OMP No. 473/2012 to which reply has been filed by the claimant. 10. Now, the Court will advert to OMP No. 604/2010 preferred by the non-claimant for impleading the Arbitrator as party and OMP No. 201/2012 preferred by the non-claimant seeking amendment to the petition. 11. The impugned award was made by the learned Arbitrator, as noticed above, on 16.2.2009. The non-claimant has not raised any doubt pertaining to the ill health of the learned Arbitrator during the pendency of the proceedings before him. A very cursory averment has been made in the petition that the learned Arbitrator was admitted in Psychiatry Intensive Care Ward PGI Hospital w.e.f. 30.1.2009 to 5.3.2009. The non-claimant has filed an OMP No. 201/2012 seeking amendment of the petition primarily on the ground that the learned Arbitrator has disqualified himself since he was alleged to have admitted in PGI w.e.f. 30.1.2009 to 5.3.2009. Earlier, OMP No. 394/2011 was withdrawn by the non-claimant. The non-claimant has filed an OMP No. 201/2012 seeking amendment of the petition primarily on the ground that the learned Arbitrator has disqualified himself since he was alleged to have admitted in PGI w.e.f. 30.1.2009 to 5.3.2009. Earlier, OMP No. 394/2011 was withdrawn by the non-claimant. The award is dated 16.2.2009 and the same was assailed by the non-claimant by filing petition under Section 34 of the Arbitration and Conciliation Act on 11.5.2009. The first application seeking amendment has been filed bearing OMP No. 394/2011 only on 11th October, 2011. It was withdrawn, as noticed above, and fresh application has been filed bearing OMP No. 201/2012 only on 15.6.2012. It is settled law that the courts ought to be liberal while allowing an application under Order 6 Rule 17 CPC at the same time, strict view has to be taken if the application has been preferred belatedly. There is no explanation why the application has been preferred belatedly. The non-claimant has failed to exercise due diligence while moving the application under Order 6 Rule 17 CPC seeking amendment of the main petition. In case the application under Order 6 Rule 17 CPC is allowed it will change the entire nature of the proceedings. Filing of the application belatedly is an after thought. The parties were duly represented by their learned Advocates and they were in best position to see the demeanour and health of the learned Arbitrator.” 10. It needs to be noticed that there is no dispute between the parties that the learned Arbitrator was indeed admitted in the premier health institute of PGI, Chandigrah as indoor patient on 30.01.2009 in the psychiatric intensive care clinic and was discharged after more than a month on 05.03.2009. It is the specific case of the appellant that the learned Arbitrator was not in a fit state of health to have passed the award. Noticeably, the award in the instant case is alleged to have been passed on 16.02.2009 but at that time, the learned Arbitrator was lying admitted in the psychiatric intensive care clinic at PGI, Chandigarh. 11. It is the specific case of the appellant that the learned Arbitrator was not in a fit state of health to have passed the award. Noticeably, the award in the instant case is alleged to have been passed on 16.02.2009 but at that time, the learned Arbitrator was lying admitted in the psychiatric intensive care clinic at PGI, Chandigarh. 11. The learned counsel for the respondent would argue that the learned Arbitrator was in a fit state of mind as he himself had asked the respondent to bring the stamp papers vide letter dated 21.01.2009, but then such contention holds no water because taking the case of the respondent at its best, the letter dated 21.01.2009 would at best indicate that the learned Arbitrator was of sound health till the date of such letter i.e. 21.01.2009, but then once there is no denial of the fact that the learned Arbitrator had been admitted in PGI that too in the psychiatric intensive care clinic, the mental health of the learned Arbitrator was a question which was required to be gone into by the learned Single Judge. This assumes importance because the appellant has not only questioned the health of the learned Arbitrator at the time of making of the award but a specific allegation of collusion between the respondent and the learned Arbitrator have been levelled. Such serious allegations, which go to the root of the matter could not have been taken so lightly. 12. Section 14(a)(1) of the Act relates to the inability or incapacity of the learned Arbitrator to perform his functions. These incapacities are such as to have direct nexus with the inability of the learned Arbitrator to perform his functions. This incapacity or disability should occur to the learned Arbitrator himself so that he becomes as a matter of law or fact, unable to perform his functions. The de jure impossibility refer to in Section 14 (1)(a) of the Act is the impossible, which occurs due to the factors personal to the learned Arbitrator and defacto inability occurs due to the factors beyond the control of the Arbitrator [See: Shyam Telecom Ltd. vs. ARM Ltd. 2004 (3) ARBLR 146 : 2004 (113) DLT 778]. Examples would be the death of the learned Arbitrator or his health problems. 13. Examples would be the death of the learned Arbitrator or his health problems. 13. Once that be so, obviously, the objections raised by the appellant with respect to the mental capacity of the learned Arbitrator could not have been lightly ignored and an opportunity of establishing/proving this fact ought to have been granted. 14. The observations made in Para-11 of the impugned judgment are also totally unwarranted for more than one reasons. Firstly, there was no delay of whatsoever in filing of the application for amendment and further observations that, in case, the application under Order 6 Rule 17 CPC is allowed, it will change the entire nature of the proceedings as also erroneous and contrary to the record. 15. The learned Single Judge erred in not considering the fact that the proceedings in the matter had been concluded by the learned Arbitrator many months before the award dated 16.02.2009 was issued and as such, the learned counsel of the parties could not be expected to be aware of the health of the learned Arbitrator at the time of making of the award. 16. As regards the application for amendment being filed belatedly, the learned Single Judge did not consider the fact that the appellants had earlier moved an OMP No. 394 of 2011 under Order 6 Rule 17 read with Section 151 CPC seeking amendment of the petition on 11.10.2021, however, the same was withdrawn on 22.05.2022 on account of a technical ground or error in numbering of the paragraphs that constrained the applicant to withdraw the application and immediately thereafter a similar application on the basis of the liberty granted to the appellant, was filed by him being OMP No. 201 of 2012. 17. The further observations made by the learned Single Judge that “no new ground can be permitted to be raised by non-claimant with regard to the disqualification of the learned Arbitrator at a very late stage” also appears to have been made without considering the fact that this ground had been taken in the application itself. 18. 17. The further observations made by the learned Single Judge that “no new ground can be permitted to be raised by non-claimant with regard to the disqualification of the learned Arbitrator at a very late stage” also appears to have been made without considering the fact that this ground had been taken in the application itself. 18. Even the reliance placed upon the observations of the Hon'ble Supreme Court in State of Maharashtra vs. Hindustan Construction Company Ltd. (2010) 4 SCC 518 , was totally unwarranted as the learned Single Judge has failed to take into consideration the fact that the ground of health or rather ill health of the learned Arbitrator had been taken by the appellant in the main application and the amendments as sought was only clarification in nature and, therefore, could not have been rejected on the ground of it having been filed belatedly. 19. Though Court cannot be oblivious to the legal adage that every trial is a voyage of discovery in which truth is the quest. Truth is the foundation of justice, therefore, must be the endeavour of all the Judges, Judicial Officers and lawyers to ascertain truth in the matter and in achieving this object no stone should be left unturned. 20. Reference in this regard may be made to the judgment of the Hon'ble Supreme Court in Pooja Pal vs. Union of India, (2016) 3 SCC 135 , wherein in Para 92 it was observed as under: 92. That the preeminence of truth is the guiding star in a judicial process forming the foundation of justice had been aptly propounded by this Court in Maria Margarida Sequeira Fernandes and Others vs. Erasmo Jack De Sequeira (Dead) through LRs. (2012) 5 SCC 370 . It was ruled that the entire judicial system had been created only to discern and find out the real truth and that the Judges at all levels have to seriously engage themselves in the journey of discovering the same. Emphasizing that the quest for truth is the mandate of law and indeed the bounden duty of the courts, it was observed that the justice system will acquire credibility only when the people will be convinced that justice is based on the foundation of the truth. Emphasizing that the quest for truth is the mandate of law and indeed the bounden duty of the courts, it was observed that the justice system will acquire credibility only when the people will be convinced that justice is based on the foundation of the truth. While referring with approval, the revealing observation made in Ritesh Tewari and Another vs. State of U.P. and Others, (2010) 10 SCC 677 that every trial is voyage of discovery in which truth is the quest, the following passage of Lord Denning scripted in Jones vs. National Coal Board, (1957) 2 All ER 155 (CA) was extracted in affirmation: “........Its all very well to paint justice blind, but she does better without a bandage round her eyes. She should be blind indeed to favour or prejudice, but clear to see which way lies the truth.” 21. As the issue of mental capacity of the learned Arbitrator itself is in question and because no opportunity was granted to the appellant to establish/prove this fact, the order passed by the learned Single Judge cannot sustain and is accordingly set aside. Since, the learned Arbitrator is no longer in the land of living and has left for heavenly abode, he cannot be added as a party, however, the applicant which seeks to establish the mental health of the learned Arbitrator, being OMP No. 201 of 2012 is allowed and the amended petition appearing at page 461 to 472 of the paper book alongwith the Annexure appended with the un-amended petition are now ordered to be taken on record. The matter is remanded back to the learned Single Judge for deciding the amended application under Section 34 of the Act afresh by affording an opportunity to both the parties to lead evidence, more particularly, with regard to mental health of the learned Arbitrator. 22. The appeal stands disposed of in the aforesaid terms, so also pending applications, if any.