Union Of India (Uoi) vs Shree Shankar Vijay Timber ...
2003 Latest Caselaw 177 Del

JUDGMENT

Manmohan Surin, J.

1. The Arbitrator Ms. Shaill Goel filed the original award in the court with the arbitration proceedings and the same was registered as Suit No. 410A/2000. Notice of the filing of the award was issued to the parties. The respondent filed objections to the award which was registered as IA 9531/2000. Petitioner also filed an application under Section 17 of the Arbitration Act, 1940 for making the award a rule of the Court which was registered as IA. No. 12722/2000.

2. By this judgment, I would be deciding the objections IA. 9531/2000 filed by the respondent against the award dated 9.11.1999 made and published by the sole arbitrator Ms. Shaill Goel. Consequently, I.A. 9531/2000 as also the suit would also be decided.

3. Before going into specific objections and the submissions made by Shri Shiv Khurana advocate for the respondent, relevant factors in brief may be noticed

(i) The respondent was awarded the contract for supply of 157.35 cu.mts of Hollocs/Chikrassy Logs aggregating to a value of Rs. 2,58,804.49 vide contract No. TP/1/107/155/29-9-82/Z1/799/ CIAD/RP/910 COAB dated 24.11.1984. The supply under the contract was required to be made on or before 30.4.1985.

(ii) Disputes had arisen between the parties as UOl claimed that the respondent had failed to make supplies. The respondent disputed the same and claimed that stores were ready for supply and the same was offered for inspection on 11.4.1985. It was the petitioner who failed to inspect them. In the event a risk purchase ordet was placed by the petitioner for procuring supplies.

(iii) The petitioner UOl seeks to recover from the respondent the said supply on account of risk purchase together with interest @ 18% p.a. The respondent sought refund of the amount of Rs. 2,32,448/- which had been with held by the petitioner from other contracts of the respondent. Additionally, the respondent claims Rs. 4 lakhs on account of damages and loss suffered for the goods acquired and got ready for supply under the contract which the petitioner did not inspect.

4. Mr. Shiv Khurana on behalf of the respondent questioned the authority of the arbitrator. He submits that since Shri K.D. Singh, previous arbitrator had been appointed by the Court, the second arbitrator could not have been appointed by the UOI of their own. This submission is devoid of merit. The responded having acquiesced in the appointment of the second arbitrator and having participated in the proceedings, it is no longer open to the respondent to raise this objection. Reference is invited to the observations of the Supreme Court in Neelakantan & Brothers Construction v. Supdting Engineer, National Highways, Salem, 7998 (4) SCC 462. The Supreme Court held :

"if parties to the reference either agree beforehand to the method of appointment, or afterwards acquiesced in the appointment made, with full knowledge of all the circumstances, they will be precluded from objecting to such appointment as invaliding the subsequent proceedings. At tending and taking part in the proceedings with full knowledge of the relevant fact will amount to such acquiescence."

5. Mr. Shiv Khurana, learned counsel for the respondent, assails non-consideration and rejection of the respondent's statement of claim solely on the ground that it had been signed by the pleader and not the partner of the respondent as wholly arbitrary and contrary to law. It is urged that the statement of claim had been signed by the counsel, who was duly authorised to sign the pleadings on behalf of the respondent. The Non-signing or non-verification of the statement of claim by the respondent's partner was at best a mere irregularity but it was an irregularity, which was curable. He submitted that the petitioner had not even raised any objection either in the counter-statement or during the proceedings. The Arbitrator also did not raise the issue during the proceeding. However, at the time of passing of the award, he simply held that the statement of claim, in the absence of signature of the partner of the respondent, or its verification, was void ab inito and non est. Mr. Shiv Khurana submitted that the Arbitrator had failed to give even an opportunity to the respondent to rectify or correct the irregularity. He also placed reliance on Kailash Singh v. Hira Lal Dey, AIR 1984 Gauhati 12. Smt. Mukhtiyar Kaur v. Smt. Gulab Kaur, and lastly on Karam Singh v. Ram Rachhpal Singh, .

6. The next limb of Mr. Shiv Khurana's submission was that the arbitrator in allowing the claims of the petitioner has given no reasons. In this context, the relevant extract of the award is reproduct for facility of reference :

"Whereas on the date of hearing i.e. on 13.9.99 Shri Dilip Singh, counsel for UOI submitted that the A/T No. TP/1/107/155/29.9.82/Z1/799/ ClAD/RP/910/COAB dated 24.11.1984 was placed on the contractor with the delivery period as 30.4.85. The contractor did not supply any stores within the delivery period. The contract was cancelled on 7.10.1985. The R.P. A/T was placed on M/s. Timber Mac. Dehradun within six months from the date of the breach. The Union of India suffered a loss of Rs. 2,32,44801 in the Risk Purchase. He relied on the case reported as AIR 1961 Supreme Court 990 and AIR 1985 Delhi 45.

The claim of Union of India for Rs. 2,32,448./01 is allowed being justified. The claim of Union of India for interest @ 18% per annum on the amount

of Rs. 2,32,448/- is allowed with effect from 27.4.92, the date of appointment of the Arbitrator by the Hon'ble High Court of Delhi in suit No. 617/91."

7. Mr. Shiv Khurana submits that the recitals are merely a narration and give the finding or conclusions reached. It does not contain any reasons. It records only a conclusion and findings as regards the loss suffered. Besides, he submitted that there was no occasion to award interest (a) 1896 p.a. on the amount of risk purchase, as the petitioner had writ held the amount due to the respondent under other contracts.

8. Mr. Dalip Singh, learned counsel for the petitioner, in reply, submitted that the respondent had been delaying the arbitral proceedings. The respondent did not appear initially despite service on 14th July, 99 and the arbitrator thus adjourned the matter to 9th August, 1999. Finally, the arbitrator was left with no choice in the absence of the respondent but to proceed ex parte. Mr. Dalip Singh also submitted that the statement of claims had not even been signed or verified by the respondent. Accordingly, the facts which were sought to be averred had not been verified. The Arbitrator thus could not be faulted for having not entertained the statement of claims which had not been signed or verified.

9. Mr. Dalip Singh also submitted that having regard to the facts and circumstances of the present case, the reasons as communicated in the recital were sufficient. The Arbitrator had recorded that the respondent did make supplies and the petitioner thus had to resort to risk purchase, wherein it suffered a loss of Rs. 2,34,408/-. Based on the above finding he found the claim to be justified. Shri Dalip Singh submitted that the Court was not to go into the question of sufficiency or reasons or reasonableness of reasons.

10. Having noted the facts and rival contentions of the parties, let us consider the first objection of the respondent.

11. It is not in dispute that the Arbitrator did not consider or decide the claims as preferred by the respondent on merits. The Arbitrator simply rejected the claims holding that the statement of claim is signed by the pleader and in the absence of it being singed by the party concerned, was void ab inito. Besides, neither the petitioner had raised any objection in the reply, nor did the arbitrator raised this issue during the proceedings. The Arbitrator also did not offer an opportunity to the respondent to rectify or cure the irregularity. The legal position with regard to effect of pleadings which are either not signed or improperly verified may be noted.

12. In Karam Singh v. Ram Rachhpal Singh (supra) amended plaint had neither been signed nor verified by the plaintiff himself or by his Mukhtiar. It was signed by the plaintiff's pleader. The plaint had been rejected. The Court held that the provisions requiring the plaint to be signed and by a party are purely matters of procedure and it was always open to the party to mark good the deficiency. The Court further held that the proper course for the Subordinate Judge was to have given an opportunity to the plaintiff or his (sic) to sign and verify the plaint. Again, in Kailash Singh v. Hira Lal (supra), it was (sic) as under:

"Provision of Order 6 Rule 15 is not mandatory and any defect can be cured at any stage. Therefore, where there were allegations that the

plaint was not signed and verified as per provisions of Order 6 Rules 14 and 15 but the plaintiff while in his depositions was found to have made out a case in the plaint, the plaint was not liable to be rejected merely on the ground that it was not signed and verified properly."

13. Again in Smt. Mukhtiar Kaur's case (supra), the plaint and verification was not signed by the plaintiff, but by his lawyer but the plaintiff had supported all the averments made in the plaint it witness box. The Court observed that the counsel for the plaintiff was presumed to be acquainted with the facts of the case and so the verification made by him could be accepted. Moreover, it is a defect which only amounts to an irregularity. It was held : "the legal position is that want of verification has not the effect of making the plaint void and it merely amounts to an irregularity."

13. The legal proposition enunciated in the above authorities is to the effect that the signing of the plaint by the pleader or non-verification of the plaint and merely an irregularity which is curable. It is not fatal to the proceedings and for this an, opportunity should be provided to cure the defect. The above proposition would apply with greater force to arbitration proceedings where there is no prescribed method of filing the statement of claim and technical rules of procedure and evidence do not apply in the strictest sense. In view of the foregoing decisions and the judicial pronouncements, it is held that non-consideration of the statement of claim of the respondent on the ground that it had not been signed and verified only the counsel and not by the respondent, without an opportunity being offered to the respondent to rectify'the same has vitiated the entire award, The Arbitrator has acted contrary to the settled legal position. The award thus suffers from an error apparent on the face of the award.

14. Additionally, there is also some merit in the submission of the learned counsel for the respondent that mere recording of conclusions in the recital of the award cannot be a substitute for giving reasons. It is well settled that the reasons are necessary links between the facts and the conclusions as reached by the arbitrator. The reasons disclose the thought process of the arbitrator and the basis on which he has reached the conclusion, as held by a Division Bench of this Court in DDA v. Alkarma, . While the arbitrator is not obliged to give detailed reasoning or computation or arithmetic calculation of the amount awarded, however, reasons indicating the thought process and the basis on which the award is made, must be given. The award also suffers inasmuch as the Arbitrator has failed to indicate his thought process and reasoning in the award given. Besides, once when the amount of Rs. 2,34,408/- had been with held from the amounts due under other contracts of the respondent, the award of interest by the arbitrator would not be sustainable. In view of the foregoing discussion I.A. 9531/2000 is allowed and the award dated 9.11.1999 is set aside. I.A.

12722/2000 filed by the petitioner is dismissed. The suit also stands dismissed.