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Union of India Vs. Bhatia Tanning Industries - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtDelhi High Court
Decided On
Case NumberFirst Appeal No. 68A of 1984
Judge
Reported inAIR1986Delhi195; 27(1985)DLT97; 1985RLR105
ActsArbitration Act, 1940 - Sections 30
AppellantUnion of India
RespondentBhatia Tanning Industries
Advocates: S.L. Watel,; Rekha Sharma and; Vijay Mehta, Advs
Cases ReferredBulchand Khimandas v. Thakurdas Udhavdas Air
Excerpt:
.....with such process, or making any other default, or refusing to give their evidence, or guilty of any contempt to the arbitrator or umpire during the investigation of the 'reference, shall be subject to the like disadvantages, penalties and punishments by order of the court on the representation of the arbitrator or umpire as they would incur for the like offences in suits tried before the court. thereforee, a notice sent by post to a person at his last known place of business or abode is a good and proper notice. at page 340 said :all that is necessary is that such a notice must be sent by post to the person's place of address, it, thereforee, a notice is duly sent to the person's 'address and there is evidence to that effect it must be treated as a good and proper notice. he took..........fundamental fallacy in his reasoning. all that section 42 requires the arbitrator to do is to send notice by registered post to the party's usual or last known place of abode or business. firm kapur & sons (supra) holds this. the learned judge dissented from it. in our respectful opinion the law is correctly stated in firm kapur & sons. (14) so publication in no way vitiates the proceedings. nor has this prejudiced the industries in any manner. in fact the arbitrator out of abundant caution, took this course of publication in the newspaper in order to safeguard the interests of the industries so that they may take part in the proceedings before him and have their say. (15) in our judgment it is wrong to hold that the arbitrator was guilty of misconducting the proceedings. he did all that.....
Judgment:

Avadh Behari Rohatgi, J.

(1) The short question in this appeal is whether the arbitrator was guilty of misconducting the proceedings because he resorted to the method of publication in the newspaper for the purpose of effecting service on the respondent Bhatia Tanning Industries, for the hearing of the case.

(2) These are the facts. An agreement was entered into between the appellant. Director General of Supplies and Disposals and the respondent Bhatia Tanning Industries (the Industries) on 1-11-1974. The Industries were to supply certain material to the Director-General. The case of the Director General was that the Industries had committed default in making the supplies. So he raised a claim against the Industries on account of risk purchase. The agreement provided for arbitration. According to the terms of the arbitration clause the disputes between the parties were to be referred by the Director General to a sole arbitrator named by him. The Director-General appointed an arbitrator who resigned. Subsequently he appointed another arbitrator, Mr. P. C. Rao. Mr. Rao, the learned arbitrator, issued notice to the Industries requiring them to appear before him on a particular day fixed for hearing of the case. Such registered A.D. notices were issued twice at the last known address of the Industries at Kanpur. On both occasions the registered notices were returned with the report that the addressee was not available and had gone to Punjab.

(3) It is not disputed before us that the registered letters contained the correct address of the Industries. Mr. Mehta, learned counsel for the Industries, has pointed out that in one of the registered letters the address is 138 instead of 133 Beconganj, Kanpur. On the other registered cover he does not dispute that the address is correctly given as 133 Beconganj. In our opinion, 138 in place of 133 is an inconsequential error because the letter did go to the addressee's place of business and was not delivered. On the second occasion, as on the first, the report on the registered letter was the same. In any case there is at least one registered letter correctly addressed admittedly which was sent to the Industries. This is all that the law requires of the arbitrator.

(4) On 10-1-1980 the arbitrator ordered that there shall be a publication in the newspaper. This was done in The Pioneer dated 8-2-1980. No one appeared on behalf of the Industries even after the publication in the newepaper. So the arbitrator made an ex parte award on 12-3-1980.

(5) When the award was filed in court, notice was issued to the Industries. They raised an objection that the arbitrator had no power to order service by means of publication in the newspaper. The learned judge accepted this contention of the Industries and set aside the award. He held that the arbitrator was guilty of misconducting the proceedings because he ought to have gone to court under section 43 of the Arbitration Act and should have obtained an order from the court regarding service by means of publication in the newspaper. From his order dated 16-12-1983 the Director-General appeals to this court.

(6) The two relevant sections in this connection are sections 42 and 43 of the Arbitration Act, 1940 (the Act). Section 42 says : Service of notice by party or arbitrator : Any notice required by this Act to be served otherwise than through the Court by a party to an arbitration agreement or by an arbitrator or umpire shall be served in the manner provided in the arbitration agreement, or if there is no such provision, either- (a) by delivering it to the person or whom it is to be served, or (b) by sending it by post it a letter addressed to that person at his usual or last known place of abode or business in India and registered under Chapter Vi of the Indian Post Office Act, 18.98.' Section 43 says : - 'Power of Court to issue processes for appearances before arbitrator : .(1) The Court shall issue the same processes to the parties and witnesses whom the arbitrator or umpire desires to examine as the Court may issue in suits tried before it. (2) Persons failing to attend in accordance with such process, or making any other default, or refusing to give their evidence, or guilty of any contempt to the arbitrator or umpire during the investigation of the 'reference, shall be subject to the like disadvantages, penalties and punishments by order of the Court on the representation of the arbitrator or umpire as they would incur for the like offences in suits tried before the Court. (3) In this section the expression 'processes' includes summonses and commissions for the examination of witnesses and summonses to produce documents.'

(7) The learned judge held that to this case section 43 applied and it was incumbent on the arbitrator to approach the court to obtain orders for service on Industries by means of publication in the newspaper. It is the validity of this view that we have to examine in the present appeal.

(8) In our opinion section 42 applies to this case and not section 43. Under section 42 the arbitrator has to serve the party in the manner provided in the arbitration agreement and if there is no provision in the arbitration agreement regarding the service of notice, then service must be effected either (a) by delivering it to the person on whom it is to be served ; or (b) by sending it by post in a letter addressed to that person at his usual or last known place of abode or business in India and registered under Chapter Vi of the Indian Post Offices Act, 1898. It is the common case of the parties that the arbitration agreement does not provide for the mode of service. thereforee, the arbitrator has to resort to either of the two modes prescribed in clauses (a) and (b) of section 42. In Firm Kapur and Sonsy. Raj Kumar, a division bench (Kapur and Falshaw JJ) of the Punjab High Court held that all that section 42 requires is that a notice has to be sent by post to a person at his usual or last known place of abode or business. thereforee, a notice sent by post to a person at his last known place of business or abode is a good and proper notice. The same view was taken in Chowhmal v. Bhagwandas, : AIR1973Bom337 . Masodkar J. at page 340 said : 'All that is necessary is that such a notice must be sent by post to the person's place of address, it, thereforee, a notice is duly sent to the person's 'address and there is evidence to that effect it must be treated as a good and proper notice.'

(9) As we have said, the two registered covers were addressed to the usual place of business of the Industries at Kanpur. The postman's report shows that these were taken to the business premises of the Industries. But they could not be delivered because there was none to receive them. The learned judge has held that this is not proper service. He took the view that the Punjab decision in Firm Kapur & Sons (supra) does not lay down good law. We find it difficult to defend this view. In our opinion, section 42 is a complete code and provides for the modes of service of notice by the arbitrator on a party before he proceeds to hear the case. Firm Kapur & Sons (supra) is a perfectly sound decision in our view. We respectfully follow it.

(10) The learned judge thought that under section 43 the arbitrator must apply to the court for service on a respondent or non-claimant by means of publication. We cannot endorse this view. Section 43 empowers the court to issue summonses to the parties and witnesses whom the arbitrator or umpire decides to examine, in all arbitrations whether with or without the intervention of the court. Under the Indian Arbitration Act, 1899 the court had no power to issue a summons to a witness to appear before an arbitrator. (See James Mackintosh & Co. v. Scindia Steam Navigation Co. Ltd. Air 1922 Bom 444; Bulchand Khimandas v. Thakurdas Udhavdas Air 1933 Sind 300). This was a grave defect in the law. So the legislature changed the law when it was enacting Arbitration Act of 1940. The present section 43 changes the previous law.

(11) . We, thereforee, hold that section 43 is confined to cases where a person, whether a party or a third person, is required to appear as a witness before the arbitrator. Such witnesses 'whom the arbitrator or-umpire desires to examine' may be summoned through court. This is apparent from the Explanationn attached to section 43. In the Explanationn the expression 'process' is defined as including summonses and commissions for the examination of witnesses and summonses to produce documents. The expression 'examine' is significant. Suppose the arbitrator desires to examine a witness or a party. The court is given the power to issue what are called a 'witnesses' summons'. By its co-receive power the court compels the attendance of a witness to give evidence before the arbitrator. If the witness is 'guilty of any contempt to the arbitrator or umpire' he can be punished by the court. Subsection (2) of section 43 says this. So section 43 is confined to witnesses and witnesses alone.

(12) Section 43 has no application where the party to an arbitration agreement has to be summoned for appearance before the arbitrator so that he may participate in the proceedings and state his defense. The learned judge seems to have been misled by the expression 'parties' appearing in section 43. The word 'parties' is used in the sense where the party itself is desired to be examined as a' witness by the arbitrator or umpire. The expression 'witnesses' used along with the word 'parties' makes the meaning of the legislature abundantly clear. The principle of construction is that words of the same feather flock together.

(13) It is not disputed that twice the registered letters were sent to Bhatia Tanning Industries, the respondent. This was sufficient service. The arbitrator has no power to order service of notice by means of publication, as the learned judge has held. This is correct. If the notice is to be served through court, the provisions of Order V Civil Procedure Code will apply. (See section 41 of the Act). On this view the publication must be treated as a superfluity, a needless exercise. We do not differ from the learned judge on the holding. Where we do differ from him is on his holding that service by registered notice was not proper service. He held that mere sending the registered notice, unless served, is not sufficient service. This is fundamental fallacy in his reasoning. All that section 42 requires the arbitrator to do is to send notice by registered post to the party's usual or last known place of abode or business. Firm Kapur & Sons (supra) holds this. The learned judge dissented from it. In our respectful opinion the law is correctly stated in Firm Kapur & Sons.

(14) So publication in no way vitiates the proceedings. Nor has this prejudiced the Industries in any manner. In fact the arbitrator out of abundant caution, took this course of publication in the newspaper in order to safeguard the interests of the Industries so that they may take part in the proceedings before him and have their say.

(15) In our judgment it is wrong to hold that the arbitrator was guilty of misconducting the proceedings. He did all that the law required him to do and something more ex abundant! cautela. But that something more does not amount to misconducting the proceedings. An arbitrator can be said to have misconducted the proceedings when there is such on irregularity of procedure as may have caused a substantial miscarriage of justice. Here there is none.

(16) For these reasons the order dated 16-12-1983 is set aside. The appeal is allowed. The case is sent back to the judge on the original side to deal with other objections to the award, if any. The parties are directed to appear before him on 17-12-1984. In the appeal the parties are left to bear their own costs.


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