B.M. Labroo vs Vibhoo Kumar And Ors.
2001 Latest Caselaw 1176 Del

ORDER

V.S. Aggarwal, J.

1. Shri P K Jain had been appointed as the sole arbitrator. In pursuance of the said appointment the arbitrator had submitted the award dated 25th May, 1982.

2. Objections have been filed by Shri Vibhoo Kumar (for short respondent no. 1) under Section 17, 30 and 33 of the Arbitration Act. It has been asserted that respondent no. 1 had filed a civil suit for recovery of Rs. 45,750/- against M/s Maltex Agents and Distributors. Therein an application had been filed under Section 34 of the Arbitration Act and the suit as such was stayed. The arbitrator was appointed after a period of four months from 17th September, 1980. An application was filed on 29th January, 1981 for seeking extension of time to make and publish the award. The time is stated to have been extended. The arbitrator thereafter only issued one notice which was received on 26th May, 1981. The arbitrator was informed that respondent no. 1 is out of station. Respondent no. 1 again informed the arbitrator that on 15th June, 1981 he would be out of India. On 2nd July, 1981 second application was filed under Section 28 of the Arbitration Act for extension of time to make and publish the award. It was again allowed without any notice to respondent no. 1. The arbitrator is alleged to have issued notice and fixed 19th August, 1981 as the date of the hearing. On 19th August, 1981 respondent no. 1 appeared before the arbitrator. An application was further filed for extension of time on 7th November, 1981. The application was opposed. On 27th January, 1982 Shri B B Gupta, Addl. District Judge after perusing the objections held that he had no jurisdiction to entertain the claim because it was beyond Rs. 5 lakhs. But on 27th January, 1982, the learned Addl. District Judge is alleged to have granted the extension of time.

3. The complaint of the respondent 1 further is that on 17th February, 1982 respondent no. 1 had filed a revision petition for quashing the order on 27th January, 1982. It was admitted for regular hearing. Certain notices alleged to have been issued by the arbitrator but no specific direction is stated to have been given. On 20th April, 1982 the arbitrator sent a notice fixing the next date as 7th May, 1982 and it is the claim made that the arbitrator dishonestly alleged that respondent no. 1 was not cooperating in the arbitration proceedings. On 7th May, 1982 respondent no. 1 had filed his written statement. Matter was adjourned to 18th May, 1982 for filing the replication. On 18th May, 1981 respondent no. 1 filed an application for production of documents in power and possession of the petitioner. The counsel for the petitioner asserts that he has no objection in this regard. The arbitrator in order to help the petitioner did not record this fact. On 27th May, 1982 it is asserted that affidavits of respondent no. 1 were incomplete and even filed an application seeking permission to cross-examine some of the deponents and even requested the arbitrator to supply copies of the proceedings. On 24th May, 1982 parties filed their affidavits along with the documents. The petitioner even field a civil miscellaneous petition in this court and on 26th May, 1982 this court had restrained the arbitrator from delivering the award. This fact was informed to the arbitrator on telephone but the arbitrator pronounced the award a day earlier. According to respondent no. 1 he ante dated the same.

4. Respondent no. 1, therefore, seeks setting aside of the award primarily on the ground that the arbitrator is a close friend of B M Labroo. He has falsely been recording that respondent no. 1 had absented from the proceedings. On occasions no notice was issued but the arbitrator recorded otherwise. It has further been asserted that no opportunity was given to cross-examine the witnesses who had filed the affidavits. On 24th May, 1982 the arbitrator had observed that the other side had no objection if the respondent no. 1 is allowed to inspect the record but further stated that no useful purpose would be served because order has bene reserved. And lastly that on coming to know of the stay having been granted by this court and to frustrate the same he ante dated and pronounced it for a date earlier than that.

5. In the reply filed the assertions of respondent no. 1 as such have been controverter. It is denied that any such incorrect record had been maintained or that any prejudice has been caused to respondent no. 2. The stay is stated to have been granted by this court on 26th May, 1982 while the arbitrator had pronounced the award on 25th May, 1982.

6. On the pleadings of the parties, on 13th September, 1982 the following issues were framed:

1. Whether the award is liable to be set aside on the objections of respondent no. 1?

2. Relief.

7. It was not subject matter of controversy before the court tat an award can only be set aside in facts of the present case in case the court comes to the conclusion that he arbitrator has misconducted himself. The word misconduct necessarily is pregnant with meaning. It would be difficult to define what amounts to misconduct. The facts of each case necessarily have to be taken note of. The expression by itself is of wide import. Word misconduct does not necessarily imply anything in the nature of fraud involving moral turpitude. It must cover wider and longer meaning. If known principles of law are ignored and proceedings mishandled it must be taken to be misconduct. Same view was expressed by this court in the case of Anant Raj Agencies vs. Delhi Development Authority 1996 (37) DRJ (DB) 561. It was noted:

16. "Misconduct" of an arbitrator or an umpire does not mean a deliberate or careless breach of duty on the part of the arbitrator or umpire but also includes a purely technical error of law, e.g., reception of inadmissible evidence which goes to the root of the case and makes an award on a point which was not in issue before him. It is necessary that the grounds of misconduct of an arbitrator are to be set out in the petition.

17. In cae President of India vs. Kesar Singh reported as AIR 1996 J&K, it has been held that if the parties are not given hearing and reasonable time and opportunity to substantiate their respective claim, it would be in violation of the principles of natural justice amounting to 'misconduct'.

8. So far as plea that the extension of time was granted which was not valid is concerned indeed has to be stated to be rejected. This is not a misconduct by the arbitrator if respondent no. 1 has any grievance in this regard he could well challenge the same in an appropriate proceedings. If he had taken recourse then only on success of the same such a plea could be offered. At this stage, therefore the said contention necessarily must fail.

9. It was further alleged that the arbitrator had been recording that notice had been issued while no such notice had been sent to respondent no. 1. According to the learned counsel, even the inspection was not allowed and further that an application was filed for permission to cross-examination some of the witnesses and no order in this regard was even passed.

10. Fair opportunity by itself to conduct the proceedings must be granted. A party has a right to cross examine in case the same is necessary with respect to the witnesses. The proceedings of the arbitrator reveal that there is an application filed by the arbitrator for ordering attendance of the deponents who have filed affidavits but there is no order as such on the record. Connecting the same is the fact that the proceedings reveal number of notices purported to have been issued but it does not indicate that any such notice in fact had been sent. Normally such letters by itself would not be taken to be causing prejudice. However, it is always the cumulative effect of the totality of the circumstances which ultimately prompts the court to come to a conclusion when right to cross-examination of witnesses were denied and proper notices have not been issued. In the peculiar facts it must be held that there was legal misconduct on the part of the arbitrator.

11. For these reasons, the objections are accepted and the award of the arbitrator is set aside. Parties are left to bear their own costs.