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Dipti Bikash Sen and anr. Vs. India Automobiles (1960) Ltd. - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtKolkata High Court
Decided On
Case NumberMatter No. 191 of 1977
Judge
Reported inAIR1978Cal454,82CWN838
ActsArbitration Act, 1940 - Section 30
AppellantDipti Bikash Sen and anr.
RespondentIndia Automobiles (1960) Ltd.
DispositionApplication allowed
Cases ReferredZacharia v. Republic of Cyprus
Excerpt:
- .....he would not have appeared in spite of such warning. the true test of the validity for such an ex parte award being whether the party complaining was prejudiced by the omission of the arbitrator to serve a special notice on him. similar view wasalso expressed by the division bench of the allahabad high court in the case of dori lal v. lal sheo, : air1954all244 . in the case of juggilal kamalapat v. general fibre dealers ltd., : air1955cal354 the division bench of this court reviewed these authorities and held that the procedural rule applicable to arbitration proceedings was more tolerant than the rule followed in the court of law. broadly stated, the principles governing the arbitrator's right to proceed ex parte were: (1) if a party to an arbitration agreement had failed to appear at.....
Judgment:
ORDER

Sabyasachi Mukharji, J.

1. The subject-matter of challenge in this application is an award dated 21st June, 1977 by the arbitrator. By the award, the arbitrator has held that the petitioner was liable to pay Rs. 3,500/- to the respondent and it was further held that if the petitioner along with Joydeb Dey fail to give possession of the vehicle in question to the respondent they would pay a further sum of Rs. 3,000/- in lieu of the possession. It was further awarded that the respondent, was entitled to the possession of the vehicle. The award is being challenged on the ground that the arbitrator had proceeded ex parte on 21st June,1977 without giving any peremptory notice to the parties concerned that he would so proceed. It appears that prior thereto, on 26th April, 1977 there was a meeting before the arbitrator where the petitioner as well as respondent had attended. The arbitrator had given directions for the filing of the documents by the parties. At the said meeting, it appears, the petitioner had made a representation that the next meeting should be fixed in the second week of June, 1977 so that the petitioner could attend. Pursuant thereto, the next meeting was fixed originally on the 15th June, 1977 but before that meeting the parties were informed that the meeting would be held on 21st June 1977 at the Chamber of one Sri S. K. Sinha in the office of M/s. P. D. Himatsinghka & Co. Advocates on record for the respondent. It is the case of the petitioner that on 21st June, 1977 the documents disclosed by him were sent to the Office of the Arbitrator at 12, Government Place East, Calcutta in the Office of the India Automobiles (1960) Ltd. It is the further case of the petitioner that such documents were not accepted by the office of the said arbitrator. The petitioner further stales on the said date the petitioner had sent these documents to M/s. P. D. Himatsinghka & Co. who were the Advocate-on-record of the respondent. The petitioner did not attend the meeting of the arbitrator on 21st June. 1977. On 14th July, 1977 the petitioner received a letter dated 12th July, 1977 intimating to the parties by the arbitrator that he has made the award. In these circumstances, this application was made on the 16th January. 1978 for setting aside the award,

2. As I have mentioned before, there is no dispute that no notice had been given by the arbitrator that he would proceed ex parte on 21st June, 1977. Counsel on behalf of the respondent contended that there was no invariable rule of law which enjoined the arbitrator to give such a notice before proceeding ex parte. He further submitted that where time and place of meeting appointed by the arbitrator were reasonable and due notice had been given to the parties but one of the parties refused to attend the arbitrator might proceed with the reference in his absence. In aid of this submission, he relied on the observations of Halsbury's Laws of England, 4th Edition. Vol. II, Page 306, Para 590. The learned authors of Halsbury's Laws of England further observed that where arbitrator proposed to proceed with the reference notwithstanding absence of one of the parties it was advisable that he should give that party a distinct notice of his intention to do so. But if reasonable excuse for not attending the appointment could be shown the Court would set aside the award made by the arbitrator who had proceeded ex parte. Counsel further submitted that there was no rule of law, as such, and in this case the arbitrator was not guilty, according to him. for not giving any prior notice intimating to the parties that he would proceed ex parte. Russel in the 18th Edition on Law on Arbitration at page 222 states that every arbitrator is authorised by the nature of his office, to proceed ex parte for good cause. It is unnecessary, though not unusual, to give him power in express terms in the submission. In the case of Udaichand v. Debibux, AIR 1920 Cal 853 Sir Ashutosh Mookerjee, J. speaking for the Division Bench observed that before the arbitrator proceeded ex parte he should give notice in writing to each of the parties otherwise the award might be liable to be set aside. At page 854 the learned Judge observed that there was no statutory rule, however, that the arbitrator should give notice but it was advisable to give notice in writing to each of the parties' Solicitor giving the arbitrator's intention clearly to proceed ex parte. Though there was no statutory rule that arbitrator cannot proceed ex parte without giving any notice to the parties but if the arbitrator proceeds in that manner the award made by him may be set aside. The rule requiring the arbitrator to give notice was described as the rule of prudence and convenience. Similar view was expressed by the Division Bench of this Court in the case of Bhowanidas Ram Govind v. Harsukhdas Balkishendas, 27 Cal WN 933 : (AIR 1924 Cal 524). There, the Division Bench further observed that the failure of the arbitrators to give a special notice to a party that they intended to proceed ex parte if he did not appear was no ground for setting aside the award which they had made in his absence where it appears that he would not have appeared in spite of such warning. The true test of the validity for such an ex parte award being whether the party complaining was prejudiced by the omission of the arbitrator to serve a special notice on him. Similar view wasalso expressed by the Division Bench of the Allahabad High Court in the case of Dori Lal v. Lal Sheo, : AIR1954All244 . In the case of Juggilal Kamalapat v. General Fibre Dealers Ltd., : AIR1955Cal354 the Division Bench of this Court reviewed these authorities and held that the procedural rule applicable to arbitration proceedings was more tolerant than the rule followed in the Court of Law. Broadly stated, the principles governing the arbitrator's right to proceed ex parte were: (1) If a party to an arbitration agreement had failed to appear at one of the sittings, the arbitrator could not or, at least ought not to, proceed ex parte against him at that sitting. (2) Where non-appearance was accidental or casual, the arbitrator should ordinarily proceed in the ordinary way, fixing another date of hearing and awaiting the future behaviour of the defaulting party. (3) If, on the other hand, it appears that the defaulting party had absented himself, for defeating the object of the reference, the arbitrator should issue a notice that he intended at specified time and place to proceed with the reference and that if the party concerned did not attend he would proceed in his absence. (4) But if after making such peremptory appointment issuing such a notice the arbitrator did not in fact proceed ex parte on the day fixed, but fixed another subsequent date, he could not proceed ex parte on such subsequent date, unless he issued a similar notice in respect of that date as well. (51 If he issued a similar notice and the party concerned did not appear, an award made ex parte would be in order. But, if he did not issue such notice on the second occasion but nevertheless proceeded ex parte, the award would be liable to be set aside in spite of a notice of peremptory hearing having been given in respect of the earlier date, subject however to the condition that prejudice was caused to the party against whom the ex parte order was made. But this duty to give notice of the intention to proceed ex parte was not an absolute one. Where a party by its conduct had made his position clear that he would not attend in any event then the formality need not be followed. Bearing the aforesaid principles, in this case, it appears that from the previous conduct of the petitioner there was no evidence that the petitioner would not attend the arbitration proceedings. Onthe other hand, the petitioner had in fact, attended the previous arbitration sitting and had suggested that a date might be fixed after the second week of June when he would attend. If the petitioner's version is to be accepted then he had sent his documents on the 21st June, 1977. If these facts are taken in conjunction with the other evidence then the intention to proceed and participate in the arbitration proceedings by the petitioner would be apparent. It is true that the petitioner did not take any action until he received the letter dated 12th July, 1977 on 14th July, 1977. But from his inaction from 21st June, 1977 to 14th July, 1977, in the background of the facts and circumstances of this case and in the background of the previous conduct, this inference in my opinion, cannot be drawn that he would not have participated in the arbitration proceedings had he been given the notice. In this view of the matter, in my opinion, the arbitrator in not following the rule of prudence enjoined by the Courts and in not giving the peremptory notice had acted in such a manner in which there was the possibility of miscarriage of justice and prejudice being caused to the petitioner.

3. Counsel for the respondent, however, submitted that in this matter the arbitrator had discretion to grant an adjournment or not to grant an adjournment or to proceed or not to proceed ex parte and there was, according to counsel for the respondent, no material to indicate that such discretion had not been properly exercised. Counsel further drew my attention to the observations in the case of Zacharia v. Republic of Cyprus 1963 A. C. 634 at p. 661 where it was observed that interference with such exercise of discretion could only be justified if the arbitrator had clearly acted on some wrong principle, committed some error of law or failed to consider matters which demanded consideration. Counsel submitted that none of these events had happened, in the facts and circumstances of this case, and therefore, the exercise of discretion by the arbitrator could not be challenged in this application. Undoubtedly, the arbitrator has a discretion in the matter but the fact of not appreciating that without giving notice he should not proceed ex parte, in my opinion, the arbitrator had failed to consider the matter which demanded his consideration.Therefore the exercise of the discretion was on improper basis. In that view of the matter, the award dated 21st June, 1977 by the arbitrator is set aside. The arbitrator would be at liberty to proceed afresh in accordance with law upon notice to the parties.

4. Cost of this application will be costs in the arbitration case.


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