Daisy Trading Corporation vs Union Of India And Others
1998 Latest Caselaw 874 Del

ORDER

DR. M.K.Sharma, J.

1. This common order shall dispose of the petition filed under Section 14 of the Arbitration Act as also the objection filed by the petitioner under Sections 30 and 33 of the Arbitration Act.

2. In pursuance of the contract entered into between the petitioner and the respondent No.1, disputes and differences arose between the parties and the matter was referred to the sole arbitrator, the respondent No.2 in accordance with the arbitration agreement. The respondent No.2, the arbitrator entered into the reference on 9.11.1990 and directed respondent No. 1 being the claimant to file its Statement of Claim by 21.11.1990 and also directed the petitioner to file its Counter Statement of Claim after receiving copy of the Statement of Claim from the claimant and posted the case for hearing on 17.12.1990.

3. On 17.12.1990, the respondent No.1 was present through its officer and the petitioner was present through its counsel. The arbitrator found that the parties were yet to file their pleadings and accordingly the respondent No. 1-claimant was directed to file its Statement of Claim within three weeks with copy of the same to the petitioner who was directed to file its Counter Statement of Claim within three weeks thereafter and the case was adjourned to 20.2.1991. The said order was passed in presence of the parties. The arbitrator, however, directed that notices be issued to the parties making it clear in the said order that if either party fails to appear before him on the aforesaid date and time, the case would be proceeded with ex parte. In terms of the aforesaid order passed in presence of the parties, notices were also issued to both the parties which were served on the parties. In the said notice it was specifically mentioned that in case the parties do not appear on the next date, no adjournment would be granted and the case would be proceeded ex parte.

4. On 20.2.1991, when the records were placed before the arbitrator, the petitioner was not represented and none appeared on its behalf. The arbitrator, therefore, recorded that in absence of the petitioner in spite of service of notice dated 17.12.1990 he would proceed in the proceeding exparte as against the petitioner. The arbitrator heard the counsel appearing for respondent No.1-claimant with reference to the documentary evidence adduced. Certain original relevant documents from the purchase file were placed before the arbitrator which were also considered by him.The arbitrator thereafter closed the case for making the award and the claimant-Union of India was directed to file stamp paper of requisite value.

5. The arbitrator by his order dated 27.2.1991 made and published his award. The said award was sent to this Court by the arbitrator in terms of the application filed under Section 14.

On receipt of the aforesaid award in this Court and notice having been served on the petitioner, an objection has been filed by the petitioner that the aforesaid award is liable to be set aside and remitted back to the arbitrator as the arbitrator had failed to give sufficient opportunity to the petitioner-Objector by not allowing the petitioner to file its Counter Statement of Claim and also by not allowing the petitioner to argue the case.

6. I have heard the learned counsel appearing for the petitioner as also the counsel appearing for respondent No.1.

7. The only ground that is agitated before me by the counsel appearing for the petitioner as raised in the objection is that the arbitrator has misconducted himself by not allowing sufficient opportunity to the petitioner to file its Counter Statement of Claim and also in not giving a reasonable opportunity of hearing to the petitioner. In support of his submission, the learned counsel for the petitioner has relied upon two decisions of this court in Lovely Benefit Chit Fund and Finance Pvt. Ltd., Vs. Puran Dutt Sood and others; reported in 23 (1983) Delhi Law Times 261 and in Pramod Kumar Mittal Vs. Niranjan Kumar Mittal; reported in 1987 (2) Arbitration Law Reporter 164. In Pramod Kumar Mittal (supra), this Court held that an arbitrator ought not to proceed ex parte against a party if he has failed to appear in one of the sittings. In Lovely Benefit Chit Fund and Finance Pvt. Ltd. (supra), this Court held that there is no hard and fast rule of giving notice by the arbitrator of his intention to proceed exparte or to change the venue of arbitration proceedings. It was further held that the principles of natural justice require that a person cannot be condemned unheard and he should be afforded a reasonable opportunity of being heard. It was also held that the arbitrator ought not to proceed exparte against a party if he has failed to appear in one of the sittings and the arbitrator should fix another date for hearing and give notice to the defaulting party of his intention to proceed ex parte on a specified date, time and place and that even after notice if the defaulting party does not take part in the proceedings, the arbitrator may proceed in his absence.

8. Learned counsel appearing for the respondent No.1, however, submitted that the arbitrator had specifically recorded in his order passed on 17.12.1990 that if either party fails to appear before him on the date fixed that is, on 20.2.1991, the case would be proceeded ex parte. The aforesaid order of the arbitrator was also communicated to the petitioner through a notice intimating him about the next date. In spite of service of aforesaid notice and inspite of full knowledge of the petitioner that no adjournment would be given on the next date and that if any of the parties remain absent, the case would be proceeded with as against it ex parte, the petitioner chose not to appear and accordingly the arbitrator was fully justified in proceeding with the matter ex parte.

In support of her contention, the learned counsel relied upon a Division Bench decision of the Allahabad High Court in Dori Lal Vs. Lal Sheo; . In the said case it was held that an arbitrator who has given due notice of the proceeding to the parties is entitled to proceed ex parte, if one party does not choose to appear and there is no provision in the Arbitration Act requiring the arbitrator to give a second notice of his intention to proceed ex parte against a person who is absent after service of notice and that the fact that the arbitrator did not give a second notice of his intention to proceed ex parte could not amount to legal misconduct.

The counsel also relied upon a Division Bench decision of Jammu & Kashmir High Court in Smt. Manjit Johl Vs. Dewan Modern Breweries Ltd.,; reported in 1994 (2) Arbitration Law Reporter 166. In the said decision, the Division Bench held that the appellant (contractor) ought to have realised that in case she did not appear before the arbitrator, the ex parte proceedings would culminate in an award against her. In the said case, the contractor also did not make any application for setting aside the ex parte proceedings nor even instructed her counsel to appear in the same which clearly proved that her non-appearance was deliberate.

9. The order that if either party fails to appear before the arbitrator on the next date, that is 20.2.1991, the case would be proceeded ex parte, was passed in presence of the counsel appearing for the petitioner. Even thereafter, a notice was also issued to the petitioner intimating the said decision of the arbitrator which was served on the petitioner. In spite of the specific knowledge about the effect of non-appearance on 20.2.1991, the petitioner did not appear on 20.2.1991. The petitioner being fully aware of the implication of non-appearance, chose to remain absent and allowed the proceeding to be held ex parte as against it. Thus, the arbitrator was justified in proceeding with the matter ex parte as against the petitioner.

10. The award of the arbitrator was made and published on 27.2.1991. The fact that the petitioner did not choose to file any application before the arbitrator during the period from 20.2.1991 to 27.2.1991 for setting aside the ex parte proceedings makes it clear and apparent that the absence of the petitioner and its counsel on 20.2.1991 was deliberate and intentional. If such absence was bona fide, naturally an application would have been filed by the petitioner immediately thereafter seeking for setting aside the ex parte proceedings. Thus, the decisions rendered by this Court and referred to above are distinguishable on facts as in those cases no such order was passed by the arbitrator recording that the matter would be proceeded ex parte in case of failure of any of the parties to appear on the next date.

11. Thus, the petitioner has failed to make out any case of misconduct on the part of the arbitrator in passing the award in the present case and the objection filed by the petitioner stands dismissed. The award passed by the arbitrator is made a Rule of the Court. The respondent No.1 shall be entitled to interest at the rate of 12% per annum from the date of passing of the decree till realisation. Let a decree be drawn up in terms of the award passed by the arbitrator.