Union Of India vs M/S Goyal Enterprises And Anr.
2001 Latest Caselaw 1095 Del

ORDER

J.D. Kapoor, J.

1. Pursuant to the notice for making the award dated 15th December, 1992 a rule of the Court the respondent has challenged its validity by filing the objections through IA 2698/96. These, in brief, are as under:-

i) That no notice under Section 14(1) of the Arbitration Act by the Arbitrator was served on the respondent before making and publishing the award.

ii) That the respondent vide letter dated 21st September, 1992 wrote to the Arbitrator for supply of copies of the documents from the petitioner. Thereby acting upon the said request of the respondent the Arbitrator asked the petitioner to supply copies of all the documents addressed to the respondent in connection with the case.

iii) That the respondent vide letter dated 9th October, 1992 wrote to the Arbitrator that the copies of the documents from the petitioner have still not been received with the result the respondent was not in a position to file his counter statement of facts and claim and requested the Arbitrator to fix the date of hearing after getting the compliance report from the petitioner that the copies of all the documents have been sent to the respondent. The respondent sent a communication dated 8th December, 1992 to the Arbitrator that the petitioner has not supplied complete copies of the documents as asked for by the respondent.

iv) That the Arbitrator has grossly violated the principles of natural justice but has also misconducted himself and the proceedings without serving a final notice of proceeding ex parte against the respondent.

2. To counter the aforesaid allegations of the respondent the learned counsel for the petitioner has referred to letter dated 21st September, 1992 addressed to the Arbitrator, copy of which was not sent to the Department whereby the respondent admitted that he was supplied with the copy of the claim preferred by the petitioner but had requested the Arbitrator to once again furnish him the photo copies of the same as he had lost his papers. However inspite of that the letter dated 21st September, 1992 shows that the documents sought by the respondent were in respect of purchase order dated 6th December, 1989 whereas the instant arbitration pertained to purchase order dated 6th November, 1991.

3. Learned counsel has also relied upon letter dated 24th November, 1992 which was sent through registered post whereby all the photo copies of the letters regarding the arbitration case of the battery boxes as desired by the petitioner were sent. This letter was admittedly received on 27th November, 1992. But this letter shows that the petitioner only sent the photo copies of the letters regarding the arbitration case of the Battery Boxes whereas the respondent was asking for the claim petition and the other documents in support of its claim.

4. The perusal of letter dated 1st October, 1992 shows that the Arbitrator wrote to the Controller of Stores that he should supply copies of all the letters addressed to the respondent in connection with the arbitration case of Battery Boxes pertaining to purchase order dated 6th December, 1989. In response the respondents informed the Arbitrator that they have not received the copies of the said letters and, therefore, they are not in a position to comment further and requested for postponing the date of hearing till report was received from R.C.F. that they have dispatched the said documents to the respondents.

5. However by letter dated 8th December, 1992 the respondent acknowledged the receipt of the photo copies of the letters sent by R.C.F. regarding the case of Battery Boxes but at the same time pointed out that the respondent only wanted all those letters written by R.C.F. to their company whereas the petitioner had sent only few letters which pertained to arbitration case only. The documents which were supplied related to arbitration case only and not to the case in hand. What was demanded by the respondent was copies of the letters, copy of the claim petition and the documents relied upon by the petitioner so as to enable him to meet his allegations effectively.

6. The document dated 8th December, 1992 further shows that inspite of having requested the Arbitrator to postpone the date of hearing until R.C.F. provides the respondent the payment with regard to the samples for 12 number of Battery Boxes supplied by the respondent to the petitioner the Arbitrator did not give the notice to the respondent before proceeding ex parte. All these events show that the respondent was not granted a reasonable opportunity of being heard. Merely because the respondent lost the relevant documents which were namely the claim petition and the letters and the documents relied upon by the petitioner does not mean that he was not entitled to receive those documents again.

7. It is well settled law that the Arbitrator has to provide a reasonable opportunity to the parties of being heard so as to adhere to the principles of natural justice. Inspite of request made by the respondent to postpone the date of hearing the Arbitrator did not inform the respondent that the request has not been acceded to and rather proceeded ex parte against the respondent without intimating there about. On this short ground alone the award is liable to be set aside as the arbitration proceedings do not effuse confidence as to the strict adherence of principles of natural justice.

8. Had the respondent been careless or indifferent to the proceedings before the Arbitrator, no indulgence was required to be shown in his favor. But in the instant case the respondent throughout impressed upon the petitioner and the Arbitrator to supply it with the claim petition and the letters written by the R.C.F. since 1989 and also all other documents filed by the petitioner it also made it known to the Arbitrator its difficulty in furnishing the comments about the arbitration case. The Arbitrator was not justified in rushing with the award in the absence of the comments of the respondent nor was justified in declining the request of the petitioner for postponing the hearing till the requisite documents were supplied.

9. Furthermore, the Arbitrator has also violated the mandatory provisions of Section 14 of the Arbitration Act, 1940 inasmuch as that he erred in not serving final notice of proceeding ex parte against the respondent.

10. The cumulative effect of these facts leads to the conclusion that the Arbitrator not only misconducted the proceedings but also misconducted by not adhering to the principles of natural justice.

11. As a consequence, the objections are allowed. The award is set aside and the remitted to the Arbitrator to proceed in accordance with law and adjudicate the claim afresh after giving due and reasonable opportunity of being heard. Since it is stated by the petitioner that the Arbitrator has retired, the Authorities shall appoint new Arbitrator as per the agreement between the parties for entering into the reference afresh.