Patna High Court
Union Of India (Uoi) vs Ranjan Brothers on 17 July, 1968
Equivalent citations: 1969(17)BLJR8, AIR 1969 PATNA 124, ILR 47 PAT 832 1969 BLJR 8, 1969 BLJR 8
JUDGMENT S.N.P. Singh, J.
1. This appeal under Section 39(6) of the Arbitration Act by the Union of India is directed against the order dated the 16th of August, 1965, passed by the 1st Subordinate Judge, Muzaffarpur, in Title Suit No. 134 of 1961. By the impugned order the learned Subordinate Judge has set aside an award dated the 4th of July, 1962, given by Mr. O. P. Mittal, the Superintending Engineer (Aviation). Ministry of Works, Housing and Supply, New Delhi, in a dispute between the Union of India and Messrs. S. Ranjan and Brothers.
2. The following facts, which appear from the order under appeal, are not in dispute. Messrs. S. Ranjan and Brothers entered into a contract on the 8th of September. 1958, with the Executive Engineer, Aviation Division Central P. W. D., Muzaffarpur, in regard to the development of aerodrome at Muzaffarpur. Messrs. S. Ranjan and Brothers preferred a claim of Rs. 76,000/- relating to some items of work on the 20th of September, 1960, to the arbitrator, Mr. O. P. Mittal, according to Clause 25 of the agreement. The arbitrator did not submit the award on the ground that four months had expired and directed the parties to get the time to give the award extended by a Court of competent jurisdiction. A petition under Section 20 of the Arbitration Act was filed on the 5th of October, 1961, by Messrs. S. Ranjan and Brothers in which a prayer was made to issue notice to the Union of India (the defendant) to show cause why the agreement for referring the matter to arbitration should not be filed in court.
The defendant filed a petition on the 19th of March, 1962, in which the defendant made it clear that it had no objection in filing the agreement and in fact it filed the agreement along with the petition and prayed that the arbitration be ratified and time be extended for submission of the award by the arbitrator. The learned Subordinate Judge by his order dated the 19th of April, 1962, directed the agreement to be sent to the arbitrator as prayed for. He further gave a direction to the arbitrator to submit the award by the 19th of July, 1962. The arbitrator subsequently applied for extension of time which was allowed. It appears that on the 31st of August, 1962, the plaintiff (S. Ranjan and Brothers) filed an objection to the award though the award itself had not been received in the Court. The award was ultimately received on the 1st of December, 1962. On the 7th of February, 1963, the defendant filed a petition by way of reply to the objections filed by the plaintiff against the award. It appears that on the prayer of the defendant, Sri O. P. Mittal, the arbitrator, was subsequently examined on commission by means of interrogatories. The Pleader Commissioner submitted his report on the 12th of May 1964. Thereafter the objection filed by the plaintiff was heard by the learned Subordinate Judge.
3. The arbitration proceedings and the award were challenged in the objection petition on several grounds. One of the grounds taken was that the arbitrator was not absolutely disinterested and impartial as he had connection with the defendant being its employee. The learned Subordinate Judge overruled that objection. While considering the question, however, the learned Subordinate Judge observed as follows:
"It is of common knowledge that Government servants are careerists."
To say the least, as a judicial officer, the learned Subordinate Judge should not have made that uncalled for sweeping observation. Simply because the arbitrator had connection with the engineering department of the Govt. of India he could not be characterised as an interested and partial person. It is not necessary to further go into the question as the objection was overruled by the learned Subordinate Judge on other grounds. The learned Subordinate Judge further overruled the objection that the award was collusive.
A contention was raised that notice of the making of the award was not given and as such the award was vitiated. The learned Subordinate Judge overruled that contention also on the ground that the plaintiff filed objection even before the actual receipt of the award by the Court which proved that the plaintiff had notice of giving of the award and no prejudice was caused to him even if no notice was issued to him by the arbitrator. Certain other objections were also overruled as it appears from paragraph 11 of the order under appeal. The learned Subordinate Judge set aside the award mainly on two grounds, namely, (1) that the arbitrator did not maintain an order-sheet to show as to how the proceeding was conducted and what was done from day to day and how and when the parties were noticed and (2) that the award filed by the arbitrator was very laconic and the arbitrator had not given any reason in support of his award and as such the award appeared to be arbiuary. The learned Subordinate Judge further observed as follows:
"There is nothing to indicate as to what evidences were adduced before him and what matters weighed with the arbitrator for giving the aforesaid award."
The concluding portion of his order reads as follows:
"Though the arbitrator has said in his reply to the interrogatories that notice was given to the parties and they were heard, there is nothing on record to show that this was done. As mentioned before the award submitted by him appears to be too brief and there is absolutely no material to judge if proper and full justice or even if substantial justice was done to the parties. The award, appears to be very perfunctory and the arbitrator has not, I regret to say, displayed slightest attempt of doing natural justice to the parties. The award is, therefore, set aside."
4. Mr. Sarwar All, learned Additional Government Pleader, appearing for the Union of India in this appeal submitted, in the first place, that the failure to give reasons in an award does not vitiate the award and as such the learned Subordinate Judge has taken a wrong view of law in holding that the award is arbitrary. Secondly, he contended that the papers which were transmitted along with the award clearly show that the parties were heard before the award was made and as such there was no violation of the principles of natural justice. According to learned counsel, as no procedure is prescribed relating to an arbitration proceeding, the arbitrator is not required to maintain an order-sheet. The failure to maintain an order-sheet, therefore, to show as to how the proceedings were conducted cannot be made a valid ground for setting aside an award. There is substance in the contentions which have been raised by learned counsel.
5. In the case of Bungo Steel Furniture (Pvt) Ltd. v. Union of India, AIR 1967 SC 378 it has been observed by their Lordships of the Supreme Court as follows:
"It is now a well-settled principle that if an arbitrator, in deciding a dispute before him, does not record his reasons and does not indicate the principles of law on which he has proceeded, the award is not on that account vitiated. It is only when the arbitrator proceeds to give his reasons or to lay down principles on which he has arrived at 'his decisions that the Court is competent to examine whether he has proceeded contrary to law and is entitled to interfere if such error in law is apparent on the face of the award itself."
In the case of Firm Madanlal Roshanlal Mahajan v. Hukumchand Mills Ltd., Indore, AIR 1967 SC 1030 their Lordships observed as follows:
"In the present case, the arbitrator gave no reason for the award. We do not find in the award any legal proposition which is the basis of the award, far less a legal proposition which is erroneous. It is not possible to say from the award that the arbitrator was under a misconception of law. The contention that there are errors of law on the face of the award is rejected."
The observations of their Lordships of[ the Supreme Court in the two cases, referred to above, clearly lay down the principle that an award is not vitiated simply because no reasons have been given by the arbitrator. The learned Subordinate Judge, therefore, was quite unjustified in taking the view that the award appeared to be arbitrary because no reason was given by the arbitrator and because there was nothing to indicate as to what evidence was adduced before him and what; matters weighed with him for giving the award.
6. It appears from the records of the proceedings which were sent by the arbitrator along with the award that he sent registered notices dated the 7th of September, 1960, to both the parties to submit copies of documents along with the statement of facts. It appears that on the 22nd of October, 1960, the plaintiffs Messrs. S. Ranjan and Brothers, sent a letter to the arbitrator acknowledging the receipt of the notice and along with that letter they sent copies of certain documents. In that letter they made a statement of facts. The proceeding in respect of the first hearing of the arbitration matter, which was heard on the 14th of July, 1961, at Calcutta, shows that the parties and their lawyers were heard at great length. In the note the arbitrator observed:
"Both parties having completed their evidence and having nothing further to produce in evidence, the hearing was closed at this stage."
7. From what I have stated above it is abundantly clear that the arbitrator gave notice to the parties to file documents and ultimately he heard the parties and their lawyers at length. It cannot, therefore, be said that the arbitrator has not followed the principles of natural 'justice. The principles of natural justice demand that the arbitrator should follow such a procedure which a reasonable man would follow in deciding a dispute impartially in the absence of any special procedure agreed or consented to by the parties. In the case of V. Gurumurty Raju v. V. Narasimha Raju, AIR 1954 Ori 234 a Division Bench of the Orissa High Court observed that.
"Proceedings before arbitrators need not be conducted with such meticulous care as is required in ordinary Civil Courts so long as there is substantial compliance with the principles of natural justice."
The learned Subordinate Judge has referred in his judgment to a decision in the case of Pratap Singh v. Kishan-prasad and Co. Ltd., AIR 1932 Bom 68. In that case the learned Single Judge observed as follows:
"It is a well-known principle of the law of arbitration that an inquiry before the arbitrator should be assimilated as near as possible to proceedings in a trial in a Court of law, and that therefore a party to the arbitration must not only have notice of the time and place of the meeting, but he should be allowed reasonable opportunity of proving Ms case either by evidence or by arguments or both, and of being fully heard. The notice must be sufficiently long in order to give the party that reasonable opportunity if he wants to be heard. If there is no sufficient notice there cannot be a proper hearing nor a valid award, it being a well-recognised rule of natural justice that a man's legal rights cannot be determined without giving him an opportunity of being heard."
In the instant case, as I have already shown, the parties were given notice and the plaintiff actually sent certain documents along with the statement of facts. The proceeding relating to the hearing on the 14th of July, 1961 shows that the arbitrator noted down the arguments made by the parties at length. Copies of the proceedings were forwarded to the plaintiff and others on the 11th of August, 1961, as it appears from the record. There is nothing to show that any prayer was made on behalf of the plaintiff for further hearing or for opportunity to file more documents or to adduce any other evidence. It cannot, therefore, be said that the plaintiff was not given sufficient opportunity to place its case before the arbitrator. Learned counsel appearing on behalf of the respondent in course of his argument has not shown any provision in the Arbitration Act under which an arbitrator is required to maintain an order-sheet in respect of an arbitration proceeding. On the failure of the arbitrator, therefore, to maintain an order-sheet, his award cannot be said to be vitiated.
8. Mr. Tribeni Prasad Sinha, learned counsel appearing for the respondent, contended before us in course of his argument that the failure to give notice under Section 14 (1) of the Arbitration Act has vitiated the award. As I have already stated, the same contention was raised in the lower court and it was overruled as it appears from paragraph 10 of the order under appeal.
The validity of the award does not depend upon the notice of the same being given to the parties. The object of giving notice under Sub-section (1) Section 14 of the Arbitration Act is to give opportunity to the parties to file objection to the validity of the award. As I have already stated, the objection to the validity of the award was filed by the plaintiff before the award was actually received in the Court.
The learned Subordinate Judge has rightly taken the view that the very fact that the plaintiff had filed objection even before the actual receipt of the award by court goes to show that the plaintiff had notice of giving of the award and as such no prejudice was caused to it even if no notice was actually issued to it by the arbitrator.
9. As both the grounds on which the learned Subordinate Judge has set aside the award are not cogent and legal, this appeal has to be allowed and the order of the learned Subordinate Judge set aside.
10. In the result, this appeal is allowed but in the circumstances of the case there will be no order for costs.
Kanhaiyaji, J.
11. I agree.