Punjab-Haryana High Court
Vijay Kumar vs Bathinda Central Co-Operative Bank And ... on 8 May, 2013
FAO No.2161 of 2012 & ors 1
IN THE HIGH COURT OF PUNJAB AND HARYANA AT
CHANDIGARH
FAO No.2161 of 2012
FAO No.2894 of 2012
FAO No.2970-3085 of 2012.
FAO No 3095 of 2012
FAO No.3248-49 of 2012
FAO No.3792-97 of 2012
FAO No.3849 of 2012
FAO No.4050 of 2012
Date of Decision : 8.5.2013.
Vijay Kumar ...... Appellant
Versus
Bathinda Central Co-operative Bank and others
...... Respondents
CORAM : HON'BLE MR. JUSTICE NAWAB SINGH
Present: Mr. Rajan Bansal, Advocate,
for the appellant in all
cases except FAO No.2894.
Mr. Vivek Suri, Advocate,
for the appellant in FAO No.2894 of 2012.
Mr. S.S. Bhinder, Advocate,
for respondent No.1.
NAWAB SINGH J.(ORAL)
This judgment shall dispose of aforesaid appeals.
2. The facts, as agreed by counsel, are being taken from FAO No.2161 of 2012.
3. Sh. Vijay Kumar was Peon-cum-Chowkidar in the year 2002-2008 in Bathinda Central Cooperative Bank Limited, Grain Market, Bathinda (for short "the Bank). He embezzled amount of the Bank during the aforesaid period. The Bank FAO No.2161 of 2012 & ors 2 constituted a committee to inquire into the matter and found that appellant mis-appropriated the amount belonging to the Bank. The dispute arose between the appellant and the Bank which was referred to arbitrator under Section 56 of the Punjab Co-operative Societies Act, 1961 (hereinafter referred to "the Cooperative Societies Act). The appellant filed reply to the reference filed by the th Bank on May 17 , 2010 (Annexure A-7). It was pleaded that arbitral reference was not maintainable under Section 55 and 56 of the Act. The dispute between the parties did not touch the constitution, management or business of the Cooperative Society; that arbitrator was not competent to adjudicate the matter and pass the Award because he (Arbitrator) was not properly appointed; that 29 arbitral cases were also pending before the Assistant Registrar regarding the same matter in which he was represented by a counsel and his signatures were obtained on some dates to mark his presence but later on he learnt that the evidence in those cases was recorded at his back; that the appellant was not given an opportunity to cross-examine the witnesses.
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4. It is pertinent to mention here that on May 17 , 2010 itself judgment was reserved by the Arbitrator and was th announced on June 14 , 2010.
5. Vide Award dated June 14th, 2010, Arbitrator directed the appellant to pay the amount embezzled by him to the Bank. The Bank, to substantiate the charge against the appellant, examined Surinderjit Singh, Former Manager, Gurmail Singh, Accountant, Davinder Kaur Clerk/Accountant and Gurdip Singh Branch Manager of the Bank. Reliance was also placed upon the inquiry report conducted by the Bank duly signed by the appellant accepting the charge of embezzlement. Appellant filed application for setting-aside arbitral award under Section 34 of the Arbitration and Conciliation Act, 1996 (for short "Conciliation Act, 1996") before Additional District Judge, Bathinda. Additional District Judge, st Bathinda vide his judgment dated January 31 , 2012 dismissed FAO No.2161 of 2012 & ors 3 the application under Section 34 of the Act.
6. Aggrieved of the arbitral Award dated June 14th, 2010 and the judgment of Additional District Judge, Bathinda dated January 31st, 2012, the appellant has filed the present appeal.
7. Learned counsel for the appellant has assailed the Award and the judgment on the ground that appellant was not given an opportunity to present his case because on May 17th, 2010 he filed written statement and on the same day, judgment was reserved and order was announced on June 14th, 2010 so, his application lies under Section 34(2)(a)(iii) of the Conciliation Act, 1996 which reads as under:-
"34(2)a)(iii) the party making the application was not given property notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or"
8. Further that the appellant was unable to present his case, the arbitral award should be set-aside and be remanded to the Arbitrator to decide it afresh after according opportunity to the appellant to present his case. Reliance has been placed upon Sulaikha Clay Mines vs. M/s Alpha Clays and others AIR 2005 Kerala 3,, a Division Bench judgment of the Hon'ble Kerala High Court.
9. On the other hand, learned counsel for the Bank has argued that applicability of the provisions of the Conciliation Act, 1996 are not applicable to a statutory award under Section 56 of the Cooperative Societies Act and as such, application filed under Section 34 of the Conciliation Act, 1996 does not apply. In support of the contention, he relied upon Harchand Singh vs. Khiala Kalan Agricultural Co-operative Service Society Limited and others 1983 PLR 161 (P&H), a judgment passed by a Division Bench of this Hon'ble Court.
10. A perusal of the record shows that on May 17th, FAO No.2161 of 2012 & ors 4 2010, appellant filed the written-statement and on the same date, the Arbitrator reserved the order and announced the Award on June 14th, 2010. It further shows that the affidavits of the four witnesses referred to above were placed on record and the Arbitrator mentioned on the affidavits "Seen". These witnesses were never cross-examined by the appellant. Prior thereto, the appellant filed application to supply him the copies of the statements, documents etc. filed by the Bank but no such order was passed by the Arbitrator on the said application. Section 24 of the Conciliation Act, 1996 reads as under:-
"24. Hearings and written proceedings .(1) Unless otherwise agreed by the parties, the arbitral tribunal shall decide whether to hold oral hearings for the presentation of evidence or for oral argument, or whether the proceedings shall be conducted on the basis of documents and other materials:
Provided that the arbitral tribunal shall hold oral hearings, at an appropriate stage of the proceedings, on a request by a party, unless the parties have agreed that no oral hearing shall be held.
(2) The parties shall be given sufficient advance notice of any hearing and of any meeting of the arbitral tribunal for the purposes of inspection of documents, goods or other property. (3) All statements, documents or other information supplied to, or applications made to the arbitral tribunal by one party shall be communicated to the other party, and any expert report or evidentiary document on which the arbitral tribunal may rely in making its decision shall be communicated to the parties."
11. Section 18 of the Conciliation Act, 1996 provides FAO No.2161 of 2012 & ors 5 that parties shall be treated with equality and each party shall be given full opportunity to present his case.
12. In Sulaikha Clay Mines's case (supra), the Division Bench commenting upon Section 24 of the Conciliation Act, 1996 held as under :-
"Section 24 (1) and (2) make it clear that in the absence of agreement it is for the arbitrator to decide whether oral hearings should be conducted or not. But, once it is decided to hold oral hearing, parties shall be given sufficient notice of hearing and of any meeting of the tribunal for the purpose of inspection of documents, books or other property. Section 24 (3) makes it compulsory that all statements and other information supplied to the arbitral tribunal by one party shall be communicated to the other party. In this case, admittedly, rejoinder submitted by the appellant was not given to the respondent and the rejoinder submitted by the respondent was not given to the appellant. Oral hearings were granted by the tribunal at the premises of the parties without notice to the other. Inspections were conducted without notice to both parties.
Notes of inspections were also not given to the parties. Hearing of one party, in the absence of other, violates the fundamental principles of natural justice, apart from violation of Section 24 (2) as notice of hearing was not given to the parties. It is not that one party did not appear after receiving notice. No notice of hearing was given to the other side when the arbitrator decided to hear opposite side in the residence or office of the respondent. So, each party was kept in dark regarding arguments forwarded by the other party. Even the rejoinder or the evidence collected from one side were kept secret from the other side. The evidence collected at the inspection were not disclosed even at the time of hearing. Before conducting the inspection in the FAO No.2161 of 2012 & ors 6 presence of one party, the arbitral tribunal should have given notice to the other party. Similarly, when meetings or hearings were conducted, notice should have been given to the other side. That was not done. This shows that equal opportunity was not given to the parties. Place of arbitration was also not determined and not intimated to the parties. Parties were not treated equally. In the above circumstances, there is violation of Sections 18, 19, 20 and 24 (2) and (3) of the Act."
13. The facts detailed above amply show that the appellant was unable to present his case and the procedure adopted was not in accordance with the procedure laid down under Section 24 of the Conciliation Act, 1996.
14. The authority Harchand Singh's case (supra) has been perused. In that, it was held by the Hon'ble Division Bench of this Court that provisions of Arbitration Act, 1940 are not applicable to the cases referred to for disposal to the Arbitrator under the Cooperative Societies Act. The said view was taken by the Division Bench, inter-alia, in view of Section 46 of the Arbitration Act, 1940. For ready reference, Section 46 of the Arbitration Act, 1940 is reproduced as under:-
"The provisions of this Act, except sub-section (1) of Section 6 and Sections 7, 12 (36) and 37 shall apply to every arbitration under any other enactment for the time being in force, as if the arbitration were pursuant to an arbitration agreement and as if that other enactment were in arbitration agreement, except in so far as this Act is inconsistent with that other enactment or with any rules made thereunder.
15. The present proceedings are under Conciliation FAO No.2161 of 2012 & ors 7 Act, 1996 wherein Section 46 has not been replaced.
16. The Division Bench further had observed that provisions of Arbitration Act, 1940 do not apply to the arbitration cases under the Punjab Cooperative Societies Act, 1961 in view of Section 82 (3) of the Punjab Cooperative Societies act, 1961 which says that no order, decision or Award made under this Act shall be questioned in any Court on any ground whatsoever. Taking into consideration that aspect of the matter, it was held that the remedy available against the Award under the Cooperative Societies Act was the appeal under Section 68 of the Cooperative Societies Act.
17. In the Conciliation Act, 1996, Section 34 mandates that an application for setting aside the arbitral award shall be filed before a Court and "Court" means the principal Civil Court of original jurisdiction. Section 24 of the Punjab Courts Act, 1918 states that the Court of District Judge shall be deemed to be the District Court or principal Civil Court of original jurisdiction in the District.
18. In the instant case, the Arbitrator was appointed under Section 56 of the Cooperative Societies Act and against the said Award, the appellant had the remedy to file an application under Section 34 of the Conciliation Act, 1996 before the District Judge which he filed but could not succeed.
19. Thus, the authority referred to above, is not applicable to the facts in hand.
20. Normally the scope of interference with respect to an award passed by an Arbitrator is very limited. The Award can be set aside only if it attracts any of the grounds enumerated in Section 34 of the Conciliation Act, 1996. But that pre-supposes an Award passed in accordance with law. If the Award is passed in a wholly illegal and unjust manner, it will be an act done against the FAO No.2161 of 2012 & ors 8 public policy, equity and rules of natural justice.
21. The instant case would eminently attract the adage "justice hurries is justice buried". Arbitrator held the first and only hearing on May 17th, 2010. On that date itself appellant filed his reply. No points for settlement or issues were framed. The Bank filed affidavits of four employees. Appellant was not given opportunity to cross-examine them. He was denied the opportunity to produce evidence and straightaway the Arbitrator reserved the order and then pronounced the same on July 14th, 2010. A complete go bye was given to the provisions of law, procedure and rules of justice. It is a typical case where the Arbitrator misconducted the proceedings and also misconducted himself.
22. It would thus be seen that appellant was unable to present his case and the procedure adopted by the arbitrator was not in accordance with provisions of Conciliation Act, 1996. The wrong must not be left unredeemed and right not left unenforced. So, the Award dated June 14th, 2010 passed by the Arbitrator is set-aside. The impugned judgment of the Additional District Judge is also set-asdie.
23. Since the Award is set aside on account of procedural violation, it is remitted back to the Arbitrator to decide the same afresh in accordance with law. Registrar, Cooperative Societies, Punjab is hereby asked to decide the dispute himself or transfer it for disposal to another Arbitrator invested by the Government with powers in that behalf.
24. The appeals are accordingly accepted in the manner indicated above.
8.5.2013. (NAWAB SINGH)
SN JUDGE
Whether refer to reporter: