Mittal Brothers vs Dda And Ors.
2002 Latest Caselaw 522 Del

JUDGMENT

J.D. Kapoor, J.

1. Without going into the chequered history of the case into details the short controversy that falls for determination is whether the learned Arbitrator misconducted himself by not entertaining the counter claims of the respondent-DDA/objector and returning any finding in respect thereof and has rendered his award liable for setting aside.

2. This was a contract which became subject matter of criticism by the Press as to the weak foundations laid by the contractor while constructing as many as 944 houses under the SFS scheme at Kishangarh Sector-A Pocket B & C. So much so the allegations were ordered to be investigated by the CBI and the record of the respondent/objector remained in the custody of the CBI for long. However for the purpose of the instant objections the following facts are relevant:-

3. The disputes arose between the parties with regard to the work of construction of 944 houses under the SFS scheme at Kishangarh and the petitioner invoked the arbitration clause. The Engineer Member DDA appointed Mr. R.C. Malhotra as a sole Arbitrator to adjudicate upon the disputes. The Arbitrator entered upon the reference on 8th April, 1992. Inspite of opportunities the respondents failed to file the reply to the claims of the petitioner as well as the statement of facts in respect of their counter claims. However the proceedings were closed on 14th January, 1994. The respondent moved an application before this Court vide OMP 29/94 for restraining the Arbitrator from making and publishing the award. Vide order dated 16-4-1994 the High Court allowed the respondent four weeks time to file the counter statement of facts as well as the counter claims. Though the time of four weeks allowed by the Court expired on 16th May, 1994 but the respondents filed the counter statement of facts on 18th May, 1994.

4. The learned Arbitrator took the view that since the statement of facts has not been filed within the prescribed period of four weeks the same cannot be taken on record. Feeling aggrieved the respondent preferred another petition being OMP No. 70/94 for removal of the Arbitrator on account of his misconduct and restraining him from making and publishing the award. However the allegations of misconduct did not find favor with this Court as it observed that non-acceptance of the reply of the respondent on 18th May, 1994 by the Arbitrator did not amount to misconduct as the Arbitrator can at the most be said to be complying the order of the Court in strict terms. The petition was dismissed but with the direction to the Arbitrator to proceed with the case after entertaining the written reply by the DDA and after affording the DDA an opportunity.

5. It appears that the learned Arbitrator construed the order of this Court in highly hypertechnical manner and not in letter and spirit. Vide order dated 19-07-1994 in OMP No. 70/94 this Court absolved the Arbitrator from the allegation of misconduct having declined to accept the statement o facts by the respondent and directed the learned Arbitrator to entertain the reply and also afford opportunity to the respondent of being heard.

6. By no stretch of imagination the aforesaid order of this Court had either foreclosed the right of the respondent/objector to file the counter claim or authorised the Arbitrator not to entertain the counter claim filed by the respondents. To say that the Arbitrator did not entertain the counter claims of the respondent because of his having foreclosed the right of the respondent to file the counter claim is not correct as the observations of the learned Arbitrator manifestly demonstrate that he had declined to entertain the counter claim of the respondent and did not give any award because of the dismissal of the OMP 70/94.

7. It is contended by Mr. Raman Kapoor, learned counsel for the petitioner that the observations of the learned Arbitrator that the counter claims of the respondent cannot be entertained and, therefore, no award was being given in respect of counterclaims of the respondent on account of dismissal of OMP 70/94 stem from the fact that the learned Arbitrator had already foreclosed the right of the respondent to file the reply and the counter claims on 14.1.94 and the OMP 29/94 was disposed of by directing the respondent to file the reply as well as counter claim within four weeks which though expired on 16th May, 1994 but on 18th May, 1994 the respondent only filed the reply to the claims of the petitioner and not the counter claim.

8. Even if it is assumed for the sake of argument that the Arbitrator had foreclosed the right of the respondent/DDA to file the counter-claim the fact that the counter claims of the respondent were before the learned Arbitrator made it obligatory upon the Arbitrator to render decision on merit and not to throw them on the plea that there is no order of the High Court in OMP 70/94 for entertaining the counter claims. Once the Arbitrator was directed to accept the reply and afford the opportunity to the respondent it was incumbent upon the learned Arbitrator to not only entertain the counter claim preferred by the respondents but also to decide it. It appears that the learned Arbitrator adopted a short cut by not entertaining the counter claim firstly under the excuse that the right of the respondent to file the counter claim has already been foreclosed and secondly by taking refuge under the order passed in OMP 70/94.

9. Interests of justice are always paramount and so are the principles of natural justice. The justice is not to be done but it must appear to have been done. If the counter claims of a party are before the Arbitrator it becomes his duty to render the award in respect of these claims. The parties choose the Arbitrator to decide through him every dispute arising bout of the contract or agreement. The Arbitrator should not fall in the pits of hypertechnicalities by not entertaining or giving award in respect of the counter claim.

10. Once the counter claims or for that purpose additional claim filed by any party at any stage are before the Arbitrator it becomes the sacrosanct duty of the Arbitrator to give his award in respect of these claims. The underlying object is to put an end to all the disputes raised by the parties at any stage before the conclusion of the arbitrator proceedings once for all and not to leave them in the mid-stream to be decided in future. There is no gainsaying the fact that no award can be made rule of the Court if it suffers from the vice of non-consideration of the counter claim. The Arbitrator cannot be allowed to lose objectivity.

11. In Union of India v. Jain Associates and Anr. 1994 (1) ALR 494 the Supreme Court took the view that if the Arbitrator fails to consider the counter claims and even if a bad portion of the award is liable to be set aside if it is severable from the rest of the award, it is clear that the Arbitrator does not act in judicious manner either objectively or dispassionately. The Supreme Court even took the view that in such a situation the whole award must be declined and set aside.

12. In view of the foregoing reasons I feel pursuaded to allow the objections and set aside the award with the direction to the learned Arbitrator to consider the counter claims of the respondents as well as the claims of the petitioner in the light of the counter claims afresh. Since the matter has already lingered on for long, the learned Arbitrator shall try to make this award preferably within four months. As a consequence the award is remitted to the Arbitrator for deciding it afresh. The parties shall appear before the learned Arbitrator on 27th April, 2002 at 5.00 p.m.

Copy of the order be given dusty to the parties.