Full Judgment Text
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CASE NO.:
Appeal (civil) 7978 of 2004
PETITIONER:
Hari Om Maheshwari
RESPONDENT:
Vinitkumar Parikh
DATE OF JUDGMENT: 09/12/2004
BENCH:
N.Santosh Hegde & S.B.Sinha
JUDGMENT:
J U D G M E N T
(Arising out SLP (c) No. 16202 of 2003)
With
CIVIL APPEAL NO. 7979 OF 2004
(Arising out SLP (c) No. 16360 of 2003)
SANTOSH HEGDE, J.
Heard learned counsel for the parties.
Leave granted.
These appeals are preferred against the common judgment and order
passed by the Appellate Bench of the High Court of Judicature at Bombay
whereby the said Bench dismissed the appeals filed by the appellants herein
against the judgment and order of the learned Single Judge of the said High
Court allowing the applications filed by the respondent herein by setting
aside the awards made by the Arbitrators.
Two disputes pertaining to the claim of the appellants against the
respondent herein were referred to arbitration and the same were numbered
as Arbitration Reference No. 313/95 in the case of Deepa Jain and
Arbitration Reference No. 316/95 in the case of Hari Om Maheshwari the
appellants herein. Though both the arbitration proceedings were taken up
for consideration together. In Reference Case No. 313/95 i.e. case of Deepa
Jain the evidence of both the parties concluded on 29th of January, 1999
while the evidence of the appellant in Reference Case No. 316/95 pertaining
to Hari Om Maheshwari was concluded on 8th of April, 1999 and the matter
was listed for evidence of the respondent in that case to 10/11th of May,
1999. On that day i.e. on 10th of May, 1999 the respondent herein remained
absent. The Arbitrators on that day closed the evidence and posted the
matter for making awards. Before the said awards were made on 20th May,
1999 the respondent herein sent an application to the Arbitrators seeking
further opportunity to lead evidence in the Reference Case No. 313/95 of
Deepa Jain in which the evidence of both the parties had closed. No
application was made in Reference Case No. 316/95 which is the arbitration
case of Hari Om Maheshwari. From the record it is seen that the said
application was not entertained by the Arbitrators and they delivered the
award sometime in November, 1999. It is against the two awards the
respondent herein preferred two applications to set aside the said awards
under Section 30 of the Arbitration Act, 1940 (hereinafter referred to as ’the
Act’) before the learned Single Judge of the Bombay High Court. It was his
contention that he could not attend the arbitration proceedings on 10th May,
1999 because on the previous date of the proceedings he had wrongly noted
down the next date of hearing. Hence, the Arbitrators ought to have given
him an opportunity of presenting his evidence before making an award.
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The learned Single Judge who heard the two applications together
accepted the case of the respondent herein and set aside the awards in
question and remitted the same to the Arbitrators for fresh disposal after
giving an opportunity to the respondent to lead his evidence. They also
directed that one more arbitration proceedings between one Jayesh Sanghani
and the respondent herein which was earlier remanded to the Arbitrators
should be decided along with these arbitration proceedings.
An appeal filed against the said common order of the learned Single
Judge before an Appellate Bench of the Bombay High Court came to be
dismissed and it is against this common order of High Court of Bombay that
the appellant is before us.
Shri Jaideep Gupta, learned Sr. counsel appearing for appellant herein
contended that the grounds on which the High Court has set aside the award
are not the grounds contemplated under Section 30 of the Act. He submitted
that arbitration proceedings having started in the year 1995 could not be
completed even in the year 1999, therefore, the High Court ought not to have
interfered with the award. He pointed out that in Reference Case No. 316/95
pertaining to Deepa Jain the evidence had already concluded and the
explanation given by the respondent for not leading evidence on 10th of May,
1999 was frivolous and the Arbitrators rightly did not entertain a prayer for
granting a further opportunity for leading evidence. Such a denial of a
further opportunity by the Arbitrators would not be a ground contemplated
under Section 30 of the Act to set aside the award. Hence, the courts below
have gone beyond the scope of Section 30 of the Act while allowing
petitions to set aside the arbitration awards.
Shri U.U. Lalit, learned Sr. Counsel appearing for the respondent
contended that three arbitration proceedings against the respondent herein
were being held simultaneously by the same Arbitrators which involved
similar issues. In the first arbitration case of Jayesh Sanghani court had
already set aside the awards and remitted the matter to the Arbitrators and
since the Arbitrators did not grant a reasonable opportunity to the
respondent to lead his evidence in these cases, the High Court was justified
in giving a further opportunity to the respondent. Hence, this is not a fit case
for interference under Article 136 of the Constitution of India.
From the above narrated facts the question that falls for our
consideration is whether the learned Single Judge or the Division Bench of
the High Court were justified in setting aside the award of the arbitrators
solely on the ground that the respondent herein who failed to appear before
the arbitrators on a day fixed for his evidence ought to have been granted
another opportunity to produce his evidence. The relevant part of the
proceeding note of the arbitrators dated 8.4.1999 reads thus :
"Meeting adjourned to 10th & 11th of May, 1999 at 4.00
p.m. No notice to the parties."
On 10th of May, 1999 when the arbitrators met, the respondent was
not present. So the following order was made by the arbitrators :
"Neither the respondent nor his Advocate is present. Matter was
kept at 4.00 p.m. for hearing. We have waited for the
respondent to come up to 4.40 p.m. Neither of them is present.
Matter was for Examination in Chief to be conducted by the
respondent’s Advocate. It seems that they do not wish to lead
any evidence in the matter. The case is closed. We shall make
the award."
From the above it is clear that though on 8.4.1999 the respondent and
his advocate were present and in their presence the matter was adjourned to
10.5.1999. They were not present on the said date consequent to which the
arbitrators decided to close the proceeding and adjourned the matter for
pronouncement of the award. This is an order made in Reference
No.316/1995 in the case of Hari Om Maheshwari, one of the appellants
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herein obviously because in Arbitration Reference No.313/1995 in the case
of Deepa Jain the evidence of both the sides had already concluded which
was well within the knowledge of the respondent. Inspite of the same for
reasons of his own, the respondent sent a representation to the arbitrators in
Reference No.313/1995 on 20.5.1999 seeking another opportunity to lead
his evidence which was not acceded to by the arbitrators who made the
award in November, 1999.
It is the above award that was challenged under section 30 of the
Arbitration Act, 1940 before the learned Single Judge by respondent which
came to be allowed by the learned Single Judge. While doing so learned
Single Judge observed :
"the cross-examination of M/s D. Jain and Co. was
over in 1997, the cross-examination of witness
examined in Shri Maheshwari’s reference was
completed on 8th April 1999 and the Arbitrators
adjourned the matter to 10th and 11th May 1999 for
the petitioner to lead his evidence. However, it
appears that the petitioner noted a wrong date and
therefore, he did not appear on 10th May 1999. It is
clear from the record that there is an application
submitted by the petitioner before the Arbitrators on
20th May 1999 regarding the mistake committed by
him in recording the date of hearing and requested
the Arbitrators to give an opportunity to lead the
evidence. One can understand if the Arbitrators have
after closing the matter for award have delivered the
award immediately but since the Arbitrators had not
deliver their award by 20th May 1999, they also did
not deliver their award immediately thereafter, but
waited till November 1999 to make their award, the
Arbitrators could have easily permitted the petitioner
to lead evidence. I do not think that the Arbitrators
were justified in denying the petitioner an
opportunity to lead evidence\005\005."
This finding of the learned Single Judge has been accepted by the
Division Bench without any further discussion.
In the above circumstances, the question for our consideration is ; was
the High Court justified in interfering with the discretionary jurisdiction of
the arbitrators while entertaining a petition under section 30 to set aside an
award. Section 30 of the Arbitration Act 1940 reads thus :
"30. Grounds for setting aside award. \026 An award
shall not be set aside except on one or more of the
following grounds, namely :
(a) that an arbitrator or umpire has misconducted himself
or the proceedings’
(b) that an award has been made after the issue of an
order by the Court superseding the arbitration or after
arbitration proceedings have become invalid under
Sec. 35;
(c) that an award has been improperly procured or is
otherwise invalid."
A bare reading of the said section shows that the civil court has very
limited jurisdiction to interfere with an award made by the arbitrators and it
certainly does not permit the civil court including the High Court to interfere
with the discretionary order of granting or refusing an adjournment. This
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Court in Arosan Enterprises Ltd. v. Union of India [(1999) 9 SCC 449]
considering section 30 of the Act held thus :
"Section 30 of the Arbitration Act, 1940 providing for
setting aside an award of an arbitrator is rather restrictive
in its operation and the statute is also categorical on that
score. The use of the expression "shall" in the main body
of the section makes it mandatory to the effect that the
award of an arbitration shall not be set aside excepting
for the grounds as mentioned therein to wit: (i) arbitrator
or umpire has misconducted himself; (ii) award has been
made after the supersession of the arbitration or the
proceedings becoming invalid; and (iii) award has been
improperly procured or otherwise invalid. These three
specific provisions under Section 30 thus can only be
taken recourse to in the matter of setting aside of an
award. The legislature obviously had in its mind that the
arbitrator being the Judge chosen by the parties, the
decision of the arbitrator as such ought to be final
between the parties. Reappraisal of evidence by the court
is not permissible and as a matter of fact exercise of
power by the court to reappraise the evidence is unknown
to proceedings under Section 30 of the Arbitration Act.
In the event of there being no reasons in the award,
question of interference of the court would not arise at
all. In the event, however, there are reasons, the
interference would still be not available within the
jurisdiction of the court unless of course, there exist a
total perversity in the award or the judgment is based on
a wrong proposition of law. In the event however two
views are possible on a question of law as well, the court
would not be justified in interfering with the award. The
common phraseology "error apparent on the face of the
record" does not itself, however, mean and imply closer
scrutiny of the merits of documents and materials on
record. The court as a matter of fact, cannot substitute its
evaluation and come to the conclusion that the arbitrator
had acted contrary to the bargain between the parties. If
the view of the arbitrator is a possible view the award or
the reasoning contained therein cannot be examined."
A similar view has also been taken in State of U.P. vs. Allied
Constructions (2003) 7 SCC 396 and Continental Construction Ltd. vs.
State of U.P. (2003)8 SCC 4.
From the above it is seen that the jurisdiction of court entertaining a
petition or application for setting aside an award under Section 30 of the Act
is extremely limited to the grounds mentioned therein and we do not think
that grant or refusal of an adjournment by an arbitrator comes within the
parameters of section 30 of the Act. At any rate the arbitrator’s refusal of an
adjournment sought in 1999 in an arbitration proceeding pending since 1995
cannot at all be said to be perverse keeping in mind the object of the Act as
an alternate dispute resolution system aimed at speedy resolution of disputes.
We think both the learned Single Judge and Division Bench have
erred in setting aside the award only with a view to give an opportunity to
the defaulting respondent to lead evidence which was rejected by the
arbitrators by their reasoned order of 10.5.1999.
For the reasons stated above we allow these appeals, set aside the
orders of the learned Single Judge as confirmed by the Division Bench and
restore the award of the arbitrators. Appeals allowed.