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Bright Wire and Steel Industry Vs. Union of India (Uoi) - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtKolkata High Court
Decided On
Case NumberAward Case No. 107 of 1983
Judge
Reported inAIR1985Cal298
ActsArbitration Act, 1940; ;Arbitration Rules - Rule 3
AppellantBright Wire and Steel Industry
RespondentUnion of India (Uoi)
Appellant AdvocateA.C. Bhabra and ;C.S. Sharma, Advs.
Respondent AdvocateP.K. Sen and ;D.K. Basu, Advs.
DispositionApplication dismissed
Cases ReferredRamnath Agarwalla v. Goenka
Excerpt:
- .....arbitrator. therefore, the petitioner made a formal application on 17-11-81 praying for further time and time was extended till 15-12-81. on 8-12-81, the petitioner again prayed for further extension which was again granted till 21-12-81, the respondent also did not take any objection against these extensions. the petitioner filed its counter statement on 22-12-81, beyond time but the same was accepted by the arbitrator without any protest or objection from the respondent. on these facts 1 am unable to hold that the arbitrator was biased against the petitioner. i find that the arbitrator gave indulgence to both the parties equally and no question of bias can arise on these facts. moreover, this application has been made for setting aside the award on the ground of bias. the petitioner.....
Judgment:

Pratibha Bonnerjea, J.

1. In this application for setting aside the award dated 3rd March 1982 under Sections 30 and 33 of the Arbitration Act, the petitioner's counsel pressed three grounds as follows : --

1. The arbitrator was biased against the petitioner.

2. The arbitrator has gone beyond the scope of the reference and made the award in excess of his jurisdiction.

3. The award was made out of time and is non est. The rest of the grounds were not pressed.

2. With regard to the first ground, the allegations in the petition are that the arbitrator went out of his ways to accommodate the respondent by allowing it repeated extensions of time to file its statement of claim. According to the petitioner, such a conduct proved that the arbitrator was in favour of the respondent and was biased against the petitioner from the very beginning. It appears that on 9-7-81 the arbitrator directed the respondent to file statement of claim by 6-8-81 and the petitioner to file its counter statement on 7-9-81. On 18-8-81, at the request of the respondent, the time was extended till 15-9-81. On 16-9-81, at the request of the respondent a further extension of time was granted by the arbitrator up to 14-10-81. The time to file the statement of claim was again extended till 6-11-81. The respondent filed its statement of claim on 4-11-81. From the records of the arbitrator I do not find that the petitioner ever took any objection against the extensions granted by the arbitrator to the respondent. The petitioner itself was not ready to file its counter statement on 18-11-81 as directed by the arbitrator. Therefore, the petitioner made a formal application on 17-11-81 praying for further time and time was extended till 15-12-81. On 8-12-81, the petitioner again prayed for further extension which was again granted till 21-12-81, The respondent also did not take any objection against these extensions. The petitioner filed its counter statement on 22-12-81, beyond time but the same was accepted by the arbitrator without any protest or objection from the respondent. On these facts 1 am unable to hold that the arbitrator was biased against the petitioner. I find that the Arbitrator gave indulgence to both the parties equally and no question of bias can arise on these facts. Moreover, this application has been made for setting aside the award on the ground of bias. The petitioner has to establish actual bias on the part of the arbitrator in making the award. Mere apprehension of alleged bias is no ground for setting aside the award.

3. The next point is that in the award, the arbitrator has gone beyond the scope of the reference. This ground has been made on the basis of Clause 2 of the award which is as follows : --

'Claim of Union of India against the contractor for Rs. 1,47,035 (Rupees one lakh forty seven thousand thirty five) towards risk purchase loss is allowed. The balance amount withheld by the Union of India on account of the claim decided hereunder would be released to the contractor after realisation of the amount awarded in favour of Union of India as above.'

4. According to the petitioner no claim for adjustment was made before the Arbitrator by the respondent and as such the arbitrator by allowing adjustment acted in excess of hisjurisdiction which rendered the award bad in law. It is an admitted position that during the pendency of the arbitration proceeding, the respondent had withheld Rs. 2,03,609/- which was admittedly payable to the petitioner by the respondent. The counter-claim in respect of the sum so withheld was made by the petitioner before the arbitrator and the annexure 20 to the counter-claim specifically mentioned this figure. Mr. Bhabra appearing in support of the petition invites my attention to the condition 18A of the General Conditions of Contract (Form D.G.S. & D. 68 Revised). In accordance with this. condition, the respondent was entitled to withhold this sum of money until the claim was settled or determined by the arbitrator. It is submitted that allowing adjustment, the arbitrator acted in excess of his jurisdiction. I am unable to accept this submission of Mr. Bhabra. Both the claim and the counter-claim were decided by the arbitrator. As there was no dispute as to the amount withheld, the arbitrator directed the respondent to realise the awarded sum of Rs. 1,47,035/- out of Rs. 2,03,609/- withheld by them and to release the balance sum in favour of the petitioner. In my opinion in doing so, the Arbitrator did not exceed his jurisdiction. The Arbitrator determined the respective claims of the parties and on such determination, the respondent's right to withhold the aforesaid amount under condition 18A came to an end. The balance sum clearly became refundable to the petitioner and the arbitrator decided accordingly.

5. Regarding the last ground, the petitioner's counsel submits that the arbitrator entered on the reference on 10-6-81 when he directed the parties to file their respective pleadings. He made the award on 4-3-82. The time to make and publish the award expired on 10-10-81. There being no extension pf time to make the award either by consent of the parties or by court the award was out of time and was a nullity. Long submissions were made on behalf of both the parties as to the meaning of 'entering on the reference'. On behalf of the petitioner it is submitted that the arbitrator enters on the reference when he, after having accepted the reference, applies his mind and does something in furtherance and execution of the work of arbitration. He relies on : AIR1957Pat395 Soneylal Thakur v. Lachhminarain Thakur where the date of issue of registeredletters by the arbitrator to both the parties on 20-4-52, fixing the date for hearing was held to be the date of entering on the reference by the arbitrator. As there were conflicting decisions of our court and other courts regarding the meaning of 'entering on the reference' mentione in Sch. 1 Para 3 of the Arbitration Act, this question was referred to a Full Bench of our Court for decision in Ramnath Agarwalla v. Goenka & Co. reported in : AIR1973Cal253 . While deciding this question, the Full Bench referred to : AIR1957Pat395 and observed as follows : --

Para 30 : 'The Patna High Court in Soneylal Thakur v. Lachhminarain : AIR1957Pat395 in paragraph 5 has stated that an Arbitrator does not enter upon a reference the moment he accepts to work as an arbitrator nor can it be said that he actually hears the reference. An arbitrator enters upon a reference, when, after having accepted the reference, he applies his mind and does something in furtherance and execution of the work of arbitration. The exact date as to when an arbitrator enters on a reference in a particular case, however, has to be determined on the facts and circumstances of the case.'

Para 31 : 'With this view of the Patna High Court we are inclined to agree.'

6. The Full Bench then recorded the principle in paragraph 35 of this report:

'An Arbitrator does not enter on the reference as soon as he assumes the office of an arbitrator. An Arbitrator does not necessarily enter on the reference when he actually commences the decision of the matter in the presence of both parties or ex parte. An Arbitrator enters on a reference when he applies his mind to the dispute or controversy before him depending on the facts.'

7. It should be noted that while accepting the view taken in : AIR1957Pat395 , the Full Bench did not hold that the said principle was correctly applied by the Patna High Court on the facts of that case. The words 'entering on reference' again came up for decision in Bharati Mukharjee v. Shiv Trading Co. reported in : AIR1983Cal416 . This is a decision by a Division Bench of our court consisting of Mr. Sabyasachi Mukherjee J. and Mr. Suhas Sen, J. In this case, the Division Bench accepted the principle laid down by the Full Bench fordeterming when an Arbitrator enters on the reference while doing so, this Division Bench in clear terms held that issue of notice to the parties by the arbitrator fixing the date of hearing, would not amount to entering on the reference as the same would be only a ministerial act as will be evident from paragraph 14 of this report : --

'In this case, the Arbitrator had issued a notice on 18-4-1980 but that was only a ministerial act. The Arbitrator was called upon to enter on reference and the statement of claim, in triplicate, was given to the Arbitrator by the applicant. On receiving that application, the Arbitrator sent a notice to the applicant calling upon her to file her counter statement. In our opinion that did not amount to entering on the reference as contemplated by Schedule 1 Para 3 of the Arbitration Act. This point has been fone into by a Full Bench of this Court in the case of Ramnath Agarwalla v. Goenka & Co.'

8. It is to be noted that Mr. Sabyasachi Mukherjee, J. was also a member of the Full Bench who delivered the judgment in : AIR1973Cal253 referred to above. It is, therefore, obvious that the Full Bench did not accept the correctness of the finding of the Patna High Court in : AIR1957Pat395 that the Arbitrator entered on the reference on the date he issued registered notice to the parties fixing the date of hearing of the reference. According to our court such an act by the Arbitrator is a ministerial act and not a judicial function. In view of the Full Bench and the Division Bench decisions of this court, which are binding on me, I am not dealing with the decisions of other courts on this point, cited by the petitioner's counsel.

9. In my opinion the view that the Arbitrator enters on the reference when he does something in furtherance and execution of the work of arbitration. It will include any judicial function discharged by the arbitrator for conducting the arbitration proceeding for determination of the controversy before him.

10. In the present case, the petitioner had made a formal application to the Arbitrator for extension of time to file the counter statement which was considered and disposed of by the Arbitrator by his order dated 21-11-81 allowing extension up to 25-12-81. The consideration of this formal application andthe order made thereon on 21-11-81 could not be treated as ministerial acts. I have no doubt in my mind that the Arbitrator while disposing of the formal application, discharged a judicial function in his capacity as the Arbitrator. On these facts I have no hesitation to hold that the Arbitrator, in this case, entered on the reference on 21-11-81. The four months period from 21-11-81 was to expire on 20-3-82. The award was made on 3-3-82. Therefore, I must hold that the award was made in time and it is valid and binding on the parties. In that view of the matter, I am not dealing with the submission of the respondent's counsel that the petitioner who attended the arbitration proceeding after expiry of time and without objection is not entitled to challenge the award on the ground that it is out of time; such discussion will be of mere academic interest not necessary for deciding this case.

The present application is, therefore, dismissed with cost.


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