Daisy Trading Corpn. vs Union Of India (Uoi)
1999 Latest Caselaw 1160 Del

JUDGMENT

Devinder Gupta, J.

1. This appeal is against the judgment passed by the learned Single Judge on 6th of October 1998 in Suit No. 1119/91 dismissing the objections filed by the appellant under Section 30 and 33 of the Arbitration Act, 1940 for setting aside the award of the Arbitrator dated 27th of February 1991.

2. We have heard learned counsel for the parties. The only ground urged before us on behalf of the appellant and which was also urged before the "learned Single Judge was that the Arbitrator misconducted himself by not allowing sufficient opportunity to the appellant to file counter statement of claim and a reasonable opportunity of hearing.

3. To the appellant's objections the respondent's answer was and has been that the Arbitrator had specifically recorded in his order passed on 17th of December 1990 that if either party fail to appear before him on the next date, namely, 20th of February 1991, the case would be proceeded ex parte. Copy of this order was also communicated to the appellant through a notice specifically intimating about the next date. Despite service of notice and knowing fully well of the consequences that on failure the cause would be proceeded ex parte the appellant chose not to appear and accordingly the Arbitrator was justified in proceeding with the matter ex parte and the learned Single Judge was perfectly justified in rejecting the objections.

4. Learned Single Judge rejected the objections of the appellant on the ground that if was brought to the notice of the appellant that failure to appear on the adjourned date will have the effect of the Arbitrator proceeding ex parte and the appellant was aware of the consequences of non-appearance. Despite this the appellant deliberately chose to remain absent and allowed the proceedings to be held ex parte against it. The Arbitrator made and published his Award on 27th of February 1991. The fact that the appellant did not chose to file any application before the Arbitrator during the period

from 20th of February 1991 to 27th of February 1991 for setting aside the ex parte proceedings would suggest that absence was deliberate and intentional.

5. We have gone through the record of the Arbitrator and duly considered the submissions made at the Bar. It has not been disputed before us and otherwise also it is apparent on record that the appellant was made aware of the fact by the Arbitrator that failure to appear on the adjourned date will result in proceeding ex parte in the matter. Appellant has also not raised any dispute that a notice to that effect was also served. However, appellant's grievance is that on 17th of December 1990 when parties had appeared before the Arbitrator it was noticed that none of the parties had filed their pleadings. Respondents were the claimants. Respondents had initially to file statement of claim for which Arbitrator allowed three weeks from 17th of December 1990 stating that on advance copy of statement of claim will be served on the appellant. Appellant was allowed three weeks further time to file counter claim. Two weeks further time was allowed to the respondent to file rejoinder. With this time schedule proceedings were adjourned to 20th of February 1991. Appellant thus had to appear before the Arbitrator on the appointed date had the respondent adhered to the time schedule. On respondents adhering to the time schedule and on appellants non-appearance, the Arbitrator would have been justified to proceed ex parte on 17th of December 1990. But respondent did not adhere to the time schedule; statement of claim of respondent is dated 18th of February 1991; copy was endorsed to the appellant at its Bombay address, which was received by the appellant only on 21st of February 1991 i.e. one day after the date of hearing from 21st February, 1991 the appellant had three weeks available to it to file its counter claim, as per the order of the Arbitrator dated 17th of December 1990. Before expire of the time allowed to the appellant to file its counter claim, the Arbitrator proceeded to make and published his award.

6. There is much force in the submission made on behalf of the appellant which will be apparent from the order recorded by the Arbitrator on 17th of December 1990 which reads as under:

Shri Sudhir Chandra, A.D.(Lit.) is present for the claimants U.O.I. Shri Rajesh Banati, Advocate is present for the respondents contractor. M/S Daisy Trading Corpn.

From the file it is observed that the parties are yet to file their pleadings. Let the claimants U.O.I. file their statement of claim within 3 weeks from today with copy to the respondents who in turn may file their C.S.F. within 3 weeks thereafter with copy to the claimants who if they so desire may file the rejoinder within 2 weeks thereafter with copy to the respondents. The case stands adjourned to 20.2.1991 at 10.30 A.M. Notices to the parties may be issued accordingly. Take notice that if either party fails to appear before me on the aforesaid date and time, the case will be proceeded with ex parte.

Sd/-"

7. On 17th of December 1990 the next date fixed in the case was 20th of February 1991 presumably and in the hope and expectation that the parties will adhere to the time schedule, under which the respondents were to file their statement of claim in

three weeks with advance copy to the appellant. Within three weeks from the date of receipt of copy the appellant had to submit its counter claim. Two weeks thereafter were available to the respondents to file rejoinder. Admittedly claim was lodged by the respondents with the Arbitrator only on 20th of February 1991. A copy thereof admittedly was sent to the appellant at its Bombay address on 18.2.1991, which the appellant received only on 21st of February 1991. On 20th of February 1991 the Arbitrator failed to enquire about the cause of absence of the appellant as also of the fact as to on what date copy of the statement of claim was served by the respondents upon the appellant. Arbitrator ought to have ascertained this material fact since the appellant had already been allowed three weeks time to file its counter claim from the date of receipt of copy of statement of claim. The Arbitrator could not have and ought not to have proceeded ex parte against the appellant at least before expiry of a period of three weeks from the date of service of copy of statement of claim on the appellant. In these circumstances and in our view, the appellant was justified in not appearing on 20th of February 1991 before the Arbitrator since by 20th of February 1991 copy of the statement of claim had not been served upon the appellant. The Arbitrator thus acted contrary to the principles of natural justice and contrary to his own order dated 17.12.1990. The Arbitrator even did not wait for a period of three weeks to expire from the date of receipt of copy of the statement of claim by the appellant.

8. In view of above, we allow the appeal and set aside the impugned judgment and award. The award is remitted to the Arbitrator for fresh decision, which will be submitted to the Court within a period of four months from the date of receipt of copy of judgment.