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Azad Hind Chemicals Ltd. Vs. Ram Lal of United Chemical Works, Jullundur and anr. - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtPunjab and Haryana High Court
Decided On
Case NumberF.A.F.O. No. 82 of 1957
Judge
Reported inAIR1961P& H206
ActsArbitration Act, 1940 - Sections 13 and 30
AppellantAzad Hind Chemicals Ltd.
RespondentRam Lal of United Chemical Works, Jullundur and anr.
Appellant Advocate V.C. Mahajan and; S.D. Bahri, Advs.
Respondent Advocate H.L. Sibbal, Adv.
DispositionAppeal dismissed
Cases ReferredPratapsingh v. Kishanprasad and Co.
Excerpt:
.....taken by the arbitrator after he had been asked to refrain from making an award. bahri has placed reliance on the following passage in russel on arbitration (sixteenth edition) at page 159: whether notice requisite when authority denied if a party says 'i will not attend, because you (the arbitrator) are receiving illegal evidence, and no award which you can make will be good',the arbitrator may go on with the reference in his absence; having failed in this attempt the appellant should have approached the arbitrator who, it would be noted, gave his award more than a month after the dismissal of the application presented by the appellant for the arbitrator's removal......order to appreciate the contention of mr. bahri, who has argued the appeal on behalf of the azad hind chemicals ltd. with great force, it is necessary to set out briefly the facts and the course of the arbitration proceedings. certain disputes arose between the azad hind chemicals ltd. and the respondent ram lal who held its managing agency. under clause 14 of the agreement betweenthe parties dated 9th october 1953, any disputeor difference is to be decided by two arbitrators,one to be named by each party to the agreementshri a. d. kapur was nominated an. arbitrator bythe respondent. ram lal vide letter of the 3rddecember 1954 served on the appellant on 8thdecember 1954. on 24th of december 1954 ramlal informed shri a. d. kapur that he should proceed with the arbitration as the other.....
Judgment:

Shamsher Bahadur, J.

1. This is an appeal of the Azad Hind Chemicals Ltd. from the order of Mr. Om Nath Vohra, Subordinate Judge 1st Class, Jullundur, who has passed a decree for Rs. 12,791-5-0 as principal and Rs. 400 as interest against the appellant in favour of Ram Lal, in pursuance of an award which has been made a rule of the Court.

2. In order to appreciate the contention of Mr. Bahri, who has argued the appeal on behalf of the Azad Hind Chemicals Ltd. with great force, it is necessary to set out briefly the facts and the course of the arbitration proceedings. Certain disputes arose between the Azad Hind Chemicals Ltd. and the respondent Ram Lal who held its managing agency.

Under Clause 14 of the agreement betweenthe parties dated 9th October 1953, any disputeor difference is to be decided by two arbitrators,one to be named by each party to the agreementShri A. D. Kapur was nominated an. arbitrator bythe respondent. Ram Lal vide letter of the 3rdDecember 1954 served on the appellant on 8thDecember 1954. On 24th of December 1954 RamLal informed Shri A. D. Kapur that he should proceed with the arbitration as the other side hadfailed to intimate the name of its nominee for arbitration,

Shri A. D. Kapur intimated to the appellant by his letter of the 29th of December 1954 about his appointment as a sole arbitrator and asked the parties to attend his office On 8th of January 1955. The proceedings were adjourned at the request made by Azad Hind Chemicals for 25th of January 1955. The Azad Hind Chemicals had received notice of this adjourned hearing on 17th of January 1955. An application was sent by the appellant to the arbitrator not to proceed with the reference as his appointment as a sole arbitrator was illegal and ultra vires.

3. Under Section 9 of the Indian Arbitration Act,

'where an arbitration agreement provides that a reference shall be to two arbitrators, one to be appointed by each party, then, unless a different intention is expressed in the agreements--

(a)

(b) If one party fails to appoint an arbitrator, either originally or by way of substitution as aforesaid, for fifteen clear days after the service by the other party of a notice in writing to make the appointment, such other party having appointed his arbitrator before giving the notice, the party who has appointed an arbitrator may appoint that arbitrator to act as sole arbitrator in the reference and his award shall be binding on both parties as it he had been appointed by consent.'

The appellant moved the Court under the provisoto Clause (b) of Section 9 for setting aside the appointment of Shri A. D. Kapur as sole arbitrator.This application was dismissed by the Court ofShri Ranjit Singh, Subordinate Judge, 1st Class,Jullundur, on 22nd of March, 1956. The Courthad earlier directed the arbitrator not to pronouncehis award.

4. To take the thread of the arbitration proceedings, when the appellant did not appear before the arbitrator he started ex parte proceedings against Azad Hind Chemicals Ltd. On 5th of February, 1955, the evidence of Ram Lal was recorded ex parte. The arbitrator was moved on be-half of the appellant to stay proceedings but the arbitrator informed the counsel, Mr. Dina Nath, appearing on behalf of the appellant that unless an order from the Court was produced he would not discontinue the proceedings. An adjournment was panted upto 26th of February 1955 to enable Mr. Dina Nath to obtain the stay order and as it was not produced before the arbitrator, ex parteevidence was recorded by him on 26th of February 1955.

After the order dismissing the application of the appellant under Section 9(b) was passed by the Court on 22nd of March 1956, the award was announced by the arbitrator on 28th of April 1996. In The note recorded on the award by the arbitrator, it was stated that

'the proceedings before me were stayed by the order of the Court in application by the Azad Hind Chemicals Limited against Shree Ram Lal and the application having been dismissed and the time for making the award was extended by the Court upto 30-4-1956.'

5. The only point which has been canvassed, in this appeal is that the award which has been made a rule of the Court by the order under appeal is vitiated because of the judicial misconduct of the arbitrator. It has been urged trial the arbitrator was under a bounden duty to keep the appellant informed about the proceedings before him and more especially after the order passed by the Court on 22nd of March 1956. , It is well to observe that no proceedings were taken by the arbitrator after he had been asked to refrain from making an award. By that time the ex parte evidence of Ram Lal had been recorded. Mr. Bahri contends that after the order of the Court dismissing the objections of the appellant, the arbitrator should have called upon the appellant to produce any evidence if it so desired. I am unable to appreciate this contention.

The persistence of the appellant to absent itself from the arbitration proceedings had culminated in the order of the arbitrator wherewith he directed ex parte evidence of Ham Lal to be recorded. Only the award had to be pronounced after' the order of the Court and in absence of any direction to this effect no intimation need have been given to the appellant before doing so. Mr. Bahri has placed reliance on the following passage in Russel on Arbitration (Sixteenth edition) at page 159:

'Whether notice requisite when authority denied

'If a party says 'I will not attend, because you (the arbitrator) are receiving illegal evidence, and no award which you can make will be good', the arbitrator may go on with the reference in his absence; and it seems that it is not necessary in such a case to give the recusant any notice of the subsequent meetings. But, though it may not always be necessary, it is certainly advisable that notice of every meeting should be given to the party who absents himself, so that he may have the opportunity of changing his mind, and of being present if he pleases.'

6. So far as I can see no meeting was ever held by the arbitrator after he had concluded with the ex parte evidence. The pronouncement of the award did not require a meeting as the arbitrator had to proceed on the evidence recorded by him. If the appellant was so minded, he could have approached the arbitrator to give him an opportunity to produce evidence. It is not open at this stage for Mr. Bahri to contend that the arbitratorwas guilty of judicial misconduct because, he didnot invite the Azad Hind Chemicals Limited after the order of 22nd March, 1956, to participate in arbitration proceedings,

The appellant had deliberately chosen to absent himself and had moved the Court to set aside the appointment of Shri A. D. Kapur as the sole arbitrator. Having failed in this attempt the appellant should have approached the arbitrator who, it would be noted, gave his award more than a month after the dismissal of the application presented by the appellant for the arbitrator's removal. It is the litigant who should approach the Court and no duty is cast on the arbitrator to invite a recalcitrant party to be present when it has evinced its intention to remain absent and especially in this case when the entire ex parte evidence had already been recorded against the appellant.

7. Mr. Bahri on basis of the authority of Wadia, J. in Pratapsingh v. Kishanprasad and Co., Ltd.,. AIR 1932 Bom 68, contends that 'an enquiry before the arbitrator should be assimilated as near as possible to proceedings in a trial in a Court of law, and therefore a party to the arbitration must not only have notice of the time and place of the meeting, but he should be allowed reasonable opportunity of proving his case either by evidence or by arguments or both, and of being fully heard'.

I do not see any justification for the assertion made by the learned counsel that there has been a breach of this salutary rule by the arbitrator. Under the Code of Civil Procedure, when ex parte proceedings are taken against a party, it is the party aggrieved which has to approach the Court to have these set aside. I can see no warrant for the proposition that an arbitrator is under any duty to inform a party about the time of announcement of the award when.it has throughout absented itself from the proceedings.

The passage in Russel on Arbitration to whichI have adverted earlier refers to the case of aparty who has lodged a protest against the arbitrator receiving some evidence which it regards asillegal and I cannot see how the rule of prudenceenunciated by the learned author can be pressedinto .service to support the appellant's contention.In my judgment, no case of judicial misconduct hasbeen made out against the arbitrator and that beingthe only argument advanced in this appeal, I mustuphold the decision of the Court below, The appeal fails and is dismissed. In the circumstancesof the case, I make no order as to costs.


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