Vikas Construction Company vs Union Of India And Ors.
1987 Latest Caselaw 354 Del

JUDGMENT

Mahesh Chandra, J.

(1) This order would dispose of Suit No. 775A of 1986 filed under Sections 14, 17 and 29 of the Arbitration Act, 1940 with a request that defendants 2 and 3, the co-arbitrators should be directed to file their award in the Court and the said award be made a rule of Court. It would also dispose of objections filed by the Union of India defendant to the award which objections have been registered as I.A. No. 5020 of 1986.

(2) On the filing of the present suit notice was issued to defendants 2 and 3 with a direction to file the award and the proceedings and in consequence award and the proceedings were filed and notice of filing of award was given to the parties and it was thereupon that defendant-Union of India filed its objections against the award and the said objections were registered as I.A No. 5020 of 1986.

(3) The contention of the Union of India is that the arbitrators have failed to give proper opportunity to the Union of India ; that the arbitrators have misconducted themselves and the proceedings and that the award has. been improperly procured. The allegations of the Union of India have been denied by the plaintiff.

(4) The following issues were made upon the pleadings of the parties : "1. Whether the arbitrators have misconducted themselves or the proceedings ? 2. Whether the award is liable to be set aside for the grounds taken. up in the objection-petition ? 3. Relief".

in so far as it was an arbitration matter, evidence was ordered to be recorded on affidavits and after the evidence on affidavits was recorded arguments of .the learned counsel for the parties have been heard and after giving. my considered thought to the matter before me, I have come to the following findings: Issue Nos. I and 2 :

(5) Both these issues can be conveniently discussed and disposed of together as the same facts would have to be referred under these issues.

(6) One of the contentions of the Union of India is that the arbitrators have not afforded due opportunity to the Union of India and as such the award is liable to be set aside. However, from the perusal of the arbitration proceedings, it cannot be said that the allegations of the objector- Union of India are correct. The arbitrators entered upon the reference on Nov. 16, 1985 and thereafter the arbitration proceedings were held on as many as nine different dates and a perusal of these proceedings further shows that ample opportunity was afforded to the Union of India to present its case. In fact it was the Union of India which had been seeking time firstly because it had preferred an appeal against the order of the single Judge in Omp No. 239/85 and thereafter on the pretext that the Special Leave Petition has been filed by the Union of India. Incidentally it may be mentioned that both the appeal and the Special Leave Petition in course of time were dismissed. It has not been urged on behalf of the Union of India that the Union of India was not being intimated of various dates, rather perusal of letters on record of proceedings of the co-arbitrators goes to show that the Union of India had' been asking adjournments on one pretext or the other. In the face of such a situation, it would be difficult to accept the contention of the Union of India. that the arbitrators have not afforded due and proper opportunity to it to present its case. The allegations of the Union of India in this behalf have been denied by the plaintiff not only in its reply to the objections but also in' the counter-affidavits of Shri G.R.Malhotra, Proprietor of the plaintiff filed' on behalf of the plaintiff. In view of my discussion above, I hold that the: award is not liable to be set aside on this ground.

(7) A perusal of Para 2(xvi) and (xvii) of the objections would show that the next contention of the Union of India is that the arbitrators have misconducted themselves and the proceedings as the arbitrators have discussed the case behind the back of the Union of India and the award has been given in consultation with and at the instance of the plaintiff and their counsel and as such the award is invalid and has been improperly procured. In order to prove this contention the Union of India has filed affidavit of one Shri A. Chakrabarti, Director (.Engine Development), Research, Design & Standards Organisation, Manak Nagar, Lucknow and an affidavit of Shri A.S. Tanwar, Senior Civil Engineer/Construction, Northern Railway, Lucknow apart from producing Annexures R-I and R-II, Shri A.S. Tanwar in his affidavit has stated in Paras 19 to 22 that the award given by the arbitrators is invalid and has been improperly procured in as much as the arbitrators and the representative of the plaintiff travelled together in four berth compartment of 1st Class Acc on March 5, 1986 by Lucknow Mail from New Delhi to Lucknow and the fourth passenger in that compartment was Shri A. Chakrabarti, Director (Engine Development), Research, Design & Standards Organisation, Lucknow who had heard the arbitrators and the plaintiff's counsel discussing the case of the plaintiff and his claims against the defendant Union of India and the reservation in Lucknow Mail on March 5, 1986 for S/Shri K.C. Sood and T.N. Joshi, the arbitrators and for Shri A.D. Chowdhry, counsel for the plaintiff was done by the plaintiff namely) Vikas Construction Company, New Delhi (Tele No. 583772) and tickets Nos 24723-24-25 were issued by the Northern Railway Reservation Office, New Delhi on payment of the amount by the petitioner himself for the aforesaid three persons and the requisition slip was signed by the plaintiff for the purpose and S/Shri K.C. Sood, T.N. Joshi, A.D. Chowdhry and said A. Chakrabarti, had also travelled together in four berth compartment of 1st Class Aac Coach No. 1537 of Lucknow Mail on 5-3-1986 from New Delhi to Lucknow. In order to corroborate his affidavit, the Union of India' has also filed Annexure R-I and R-II. R-I is the photocopy of requisition slip for reservation for S/Shri T.N. Joshi, K.C. Sood arbitrators and Shri A.D. Chowdhry, counsel for the plaintiff and the address given therein is of Vikas Construction Co. i.e. the plaintiff. R-II is the photocopy of the Chart of 1st Class Acc Coach No. 1537 from New Delhi to Lucknow which shows that in Cabin No. 'B' of the said coach S/Shri K.C. Sood, T.N. Joshi and A.D. Chowdhry had travelled from New Delhi to Lucknow on Ticket Nos. 24723/24/25 in Coach No. 1537 Compartment No. 'B' on the night of 5/6th March 1986. It also further shows that one Shri A.K. Chakrabarty had also travelled by the same coach and the compartment on that night.

(8) To further corroborate the testimony of Shri A.S. Tanwar, the Union of India has submitted an affidavit of Shri A.K, Chakrabarti referred to by Mr. Tanwar in his affidavit and Shri Chakrabarti in his affidavit categorically stated that he had come to Delhi on official duty on March 4, 1986 and returned from Delhi to Lucknow by Lucknow Mail (30 Dn) in First Class Acc on March 5, 1986 starting from N, Delhi at about 21.30 hrs. and reaching Lucknow at about 7.25 hrs. on March 6, 86 and that he had travelled in a four berth compartment in which he was allotted an upper berth and in the said compartment there were three other passengers and Shri K.C. Sood was one of them whom this witness recognised. It is further stated by him that Shri Sood and the other two gentlemen were heard by this witness discussing about an arbitration case involving the railways and a contractor for which purpose they were going to Lucknow and from their discussion this witness could understand that besides Mr. Sood one of the passengers was retired railway official and he together with Mr. Sood would be acting as arbitrators in a case on March 6, 1986 and third person was a representative of a contractor involved as a party in the said arbitration case. It is also staled by this witness that there were certain discussions amongst these three gentlemen, namely, K.C. Sood and the other two passengers regarding the alleged dilatory tactics adopted by the Railway Administration and the necessity of giving an ex parte award and the modalities and amount for awarding suitable compensation to the contractor in this particular case and lastly it is stated in the affidavit that the contractor's representative was seen to be arranging supply of considerable number of books and periodicals (which were purchased from platform book stall) to Mr. Sood and the other gentlemen before departure of the train from New Delhi station and the contractor's representative also advised them that arrangements for their return journey by plane from Lucknow to New Delhi have been made.

(9) A perusal of paras 20 and 21 of the affidavit of Shri G.R. Malhotra filed as proprietor of the plaintiff would show that it has been admitted therein that the two arbitrators and the Advocate of the plaintiff had travelled together Kr to the site for a spot inspection fixed for March 6, 1986 and it is also admitted therein that the arbitrators had requested the plaintiff to purchase the tickets although it is alleged further that money had been paid by the arbitrators to the plaintiff for purchase of tickets and the money paid by the arbitrators for purchasing the tickets was asked to be reimbursed to them in their notice under Section 14 of the Act and the said amount has been reimbursed. However, it has further been urged that there was nothing ong in the plaintiff or his Advocate or two arbitrators traveling together. Once it is' admitted that the two arbitrators had booked the seats through the plaintiff and the two arbitrators had travelled with the counsel for the plaintiff, it might be difficult to accept at least prima facie that the arbitrators have paid for their journey more so when there is no evidence produced by the plaintiff in this behalf. R-1 does go to show clearly that the booking for all the three- persons i.e. two arbitrators and the representative of the plaintiff have been got done by the plaintiff even though there was hardly any justification for the arbitrators to ask the plaintiff to get their reservation done. Both these persons are retired railway officers and they could have got the reservation done. directly as well. They did not care to intimate the Union of India of their request to the plaintiff Men may lie but circumstances do not. In the instant case circumstances are such which do not go to show that the arbitrators have paid for purchase of their tickets. There is another important aspect which cannot be lost sight of and that is that there is no categorical denial of the statement of Shri A. Chakrabarti in Para 7 of his affidavit to the effect "that the contractor's representative was seen to be arranging supply of considerably number of books and periodicals (which were purchased from platform book stall) to Mr. Sood and the other gentlemen before departure of the train from New Delhi Station. The contractor's representative also advised them that arrangements for their return journey by plane from Lucknow to New Delhi have been made. Even though the plaintiff has denied in his affidavit any knowledge about A. Chakrabarti in the said compartment but the statement of Shri A. Chakrabarti coupled with Annexure R-II goes to conclusively establish that Shri A. Chakrabarti had travelled in the same compartment with the two arbitrators and the counsel for the plaintiff. Mr. A. Chakrabarti has no personal interest in favor of the Union of India and does not appear to have any bias against the plaintiff. There is no reason why he should come forward. to make a false statement against the plaintiff and I see no reason to disbelieve the affidavit of said Shri Chakrabarti. Mr. Chakrabarti has categorically stated about the talks going on between the arbitrators and the counsel for the plaintiff with regard to the matter which was being arbitrated upon by the arbitrators which by itself shows that the arbitrators had talks and consultation with the counsel for the plaintiff on the back of the Union of India which would tantamount to misconduct by itself. "The circumstances in the instant case further go to show that the award has been improperly procured as well. It is very rare that direct evidence of improper procurement of award may be available but here is one case in which direct evidence in the form of R-I and R-II and the statement of "Mr. A. Chakrabarti is available and it is no gainsaying that the arbitrators had later demanded the amount of fare from the plaintiff-contractor before publishing their award. The award would be deemed to have been improperly procured in these circumstances and as such it would follow that the arbitrators in the instant case have not only misconducted themselves and the proceedings but further also the award has been improperly procured.

(10) What is a legal misconduct has to be considered on the facts of each case and where the arbitrators hold talks with the counsel for the plaintiff on the back of the defendant, the arbitrators would be deemed to have misconducted themselves. A positive act of the arbitrators to communicate with the other side behind the back of one party is a legal misconduct and such a conduct would tantamount to violation of the principles of natural justice and would materially affect the award and would be a legal misconduct of arbitrators. Likewise when an award can be said to be improperly procured is again a question of fact in each case. If the arbitrators solicit and actually take the assistance of the plaintiff in the matter of.getting their seats reserved by a train and for their return journey by air, it can safely be concluded that the arbitrators have misconducted themselves and the award would be deemed to have been improperly procured. It would not be accepted that such a conduct of the arbitrators was a mere indiscretion and was not a form of procurement. Caeser's wife should be above suspicion and so should be the arbitrators. It would be imperative for the arbitrators that they scrupulously avoid any course of action which would even remotely suggest to bear the complexion of their having put themselves into a position where it could be said against them that they had received a pecuniary inducement which might have had some effect on their determination of the matter admitted to their arbitration. On the existence of this situation the arbitrators would be deemed to have misconducted themselves and the award would be deemed to have been improperly procured as in the instant case.

(11) It has been urged in para 2(i) of the objections that nomination of Sh. M.V. Basrur, Chairman Railway Board (Retired) as Umpire was not valid in as much as Mr. Basrur was not a railway employee. However, admittedly Mr. Basrur was the ex-Chairman of the railways and was an ex- employee of the railway and as such it would be difficult to accept that his nomination as Umpire was not proper. I do not think that the award would be liable to be set aside on the ground that Mr. Basrur has been nominated as Umpire. No other objection has been raised by the Union of India.

(12) In view of my discussion and findings both these issues are decided in favor of the Union of India and against the plaintiff.

(13) Issues No. 3: For my findings upon Issues 1 and 2, the objections are liable to be accepted and are accepted and as such award Fx. A-1 is liable to be set aside and is hereby set aside and the suit and the objections (I.A. No. 5020 of 1986) are disposed of accordingly. Parties would however bear their own costs.