1999 JTR(SC) 96
1999 AIR(SC) 1102 ; 1999 AIR(SCW) 752 ; 1999 2 AllCJ 1381 ; 1999 1 ArbLR 363 ; 1999 2 AWC 969 ; 1999 1 CLT(SC) 118 ; 1999 DNJ 74 ; 1999 2 ICC 66 ; 1999 1 JT 191 ; 1999 1 RAJ 491 ; 1999 1 RCR(Civ) 591 ; 1999 1 Scale 193 ; 1999 4 SCC 33 ; 1999 1 UJ 392 ; 1999 WBLR 472 ; 1999 1 Supreme 222
1999(1) Supreme 222
Supreme Court of India
(From Calcutta High Court)
Mrs. Sujata V. Manohar & R.C. Lahoti, JJ.
M/s. Ganges Waterproof Works (P) Ltd. -Appellant
versus
Union of India -Respondent
Civil Appeal No. 4975 of 1984
Decided on 29-1-1999
Counsel for the Parties :
For the Appellant : Bhaskar Gupta, Sr. Advocate, Parijat Sinha, Advocate.
For the Respondent : K.N. Shukla, Sr. Advocate, (Y.P. Mahajan), Advocate for Ms. A. Subhashini, Advocate.
Important Points
1. The burden of substantiating the averment urged as an objection tantamounting to misconduct on the part of the Arbitrator or complaining of violation of principles of natural justice is on the petitioner.
2. Where arbitration award stated that arbitrator heard and examined and considered the statement of the parties and their evidence, and the award was challenged on the ground that there was no oral evidence adduced before the arbitrator but arbitrator stated he heard evidence which amounted to non-application of mind it was held that evidence means documentary evidence also and an inference as to non-application of mind or mis-statement on the part of the Arbitrator while pronouncing the award cannot be drawn by assigning the term evidence such a meaning as is sought to be assigned by the party.
Act Referred :ARBITRATION ACT : S.33, S.30
(A) Under the framework of the Arbitration Act, sections 30 and 33 of the relevant statute were engaged in this dispute arising from a 1978 contract, where an arbitral award dated 23rd August, 1982 became subject to challenge. Proceedings under Sections 14 and 17 of the Act were initiated, and objections specifically targeting the procedural fairness and legality of the arbitration process were considered by the Single Judge and subsequently by the Division Bench, culminating in this civil appeal for determination of the validity of the arbitral proceedings.
(B) Core legal principles include that an arbitral award must be based on evidence properly placed before the tribunal, and the mere reference to 'evidence' in a non-speaking award does not infer oral testimony if documents were the basis of decision. Natural justice principles require a fair opportunity to contest new statements or documents, and objections to arbitral conduct must be substantiated timely; otherwise, they are deemed waived. The court must construe the record holistically and afford arbitrators the benefit of doubt regarding their application of mind.
Facts of the case:
The claimant Union of India faced an arbitration dispute stemming from a 1978 contract. An award was passed on 23rd August, 1982. The petitioner raised objections that an additional statement and documents were filed on 11th August, 1982 without affording a response, that the award was based on non-existent oral evidence, and that the hearing was cursory. The record showed the additional materials were filed earlier, and no new submissions occurred on the final day. No affidavit or timely protest was made before the arbitrator.
Findings of Court:
The Single Judge and Division Bench found no merit in the petitioners contentions. The court held that the order sheet for 11th August existed, and the reference to 'evidence' was to documentary material, not oral testimony. The petitioner failed to substantiate claims of misconduct or violation of natural justice, as no timely protest was recorded and no supporting affidavit was filed.
Issues:
Whether the arbitrator violated natural justice by considering a last-minute statement without response, whether the award suffered from non-application of mind due to reliance on non-existent oral evidence, and whether the brief hearing invalidated the proceedings.
Ratio Decidendi:
The court determined that the objections were misconceived because the evidence referenced was documentary, not oral, and the petitioner did not substantiate its claims with affidavits or timely objections, thereby failing to demonstrate any violation of natural justice or misconduct.
Result:
The appeal is dismissed with costs.
(A) Under the framework of the Arbitration Act, sections 30 and 33 of the relevant statute were engaged in this dispute arising from a 1978 contract, where an arbitral award dated 23rd August, 1982 became subject to challenge. Proceedings under Sections 14 and 17 of the Act were initiated, and objections specifically targeting the procedural fairness and legality of the arbitration process were considered by the Single Judge and subsequently by the Division Bench, culminating in this civil appeal for determination of the validity of the arbitral proceedings.
(B) Core legal principles include that an arbitral award must be based on evidence properly placed before the tribunal, and the mere reference to 'evidence' in a non-speaking award does not infer oral testimony if documents were the basis of decision. Natural justice principles require a fair opportunity to contest new statements or documents, and objections to arbitral conduct must be substantiated timely; otherwise, they are deemed waived. The court must construe the record holistically and afford arbitrators the benefit of doubt regarding their application of mind.
Facts of the case:
The claimant Union of India faced an arbitration dispute stemming from a 1978 contract. An award was passed on 23rd August, 1982. The petitioner raised objections that an additional statement and documents were filed on 11th August, 1982 without affording a response, that the award was based on non-existent oral evidence, and that the hearing was cursory. The record showed the additional materials were filed earlier, and no new submissions occurred on the final day. No affidavit or timely protest was made before the arbitrator.
Findings of Court:
The Single Judge and Division Bench found no merit in the petitioners contentions. The court held that the order sheet for 11th August existed, and the reference to 'evidence' was to documentary material, not oral testimony. The petitioner failed to substantiate claims of misconduct or violation of natural justice, as no timely protest was recorded and no supporting affidavit was filed.
Issues:
Whether the arbitrator violated natural justice by considering a last-minute statement without response, whether the award suffered from non-application of mind due to reliance on non-existent oral evidence, and whether the brief hearing invalidated the proceedings.
Ratio Decidendi:
The court determined that the objections were misconceived because the evidence referenced was documentary, not oral, and the petitioner did not substantiate its claims with affidavits or timely objections, thereby failing to demonstrate any violation of natural justice or misconduct.
Result:
The appeal is dismissed with costs.
Judgment
R.C. Lahoti, J.-The disputes arising between the parties out of a contract entered into in the year 1978 were referred for arbitration consistently with the arbitration clause in the agreement. The Arbitrator gave an award on 23rd August, 1982. Proceedings under Ss. 14/17 of the Indian Arbitration Act, 1940 (hereinafter referred to as ‘the Act’, for short) were commenced. The petitioner filed objections under Sections 30/33 of the Act which have been dismissed by a learned Single Judge of the High Court at Calcutta. An appeal preferred before the Division Bench has also been dismissed. The petitioner has preferred this civil appeal.
2. Challenge to the legality and validity of the arbitration proceedings has been laid on three grounds: Firstly, that the claimant-Union of India (respondent herein) filed an additional statement accompanied by documents before the Arbitrator on 11th August, 1982, which was the last day of hearing and that was taken into consideration by the Arbitrator without affording the petitioner an opportunity for contesting the same or even delivering copy thereof to the petitioner; secondly though no oral evidence was adduced by any of the parties, yet the Arbitrator has in his award expressed having heard the evidence which shows inapplication of mind to the record of the proceedings and material available before the Arbitrator; and thirdly, that the Arbitrator in the sitting held on 11.8.1982 heard the parties hardly for five or seven minutes in which limited time no real hearing could have taken place. It is submitted that the manner in which the Arbitrator has conducted himself, has resulted into violation of the principles of natural justice and vitiated the arbitration proceedings. Similar grounds were raised before the learned Single Judge as also in the intra-Court appeal before the High Court and have been turned down. Having heard the learned counsel for the parties, we are also of the opinion that here too the petitioner must meet the same fate.
3. As to the first contention, the learned Single Judge had perused the record of the arbitration proceedings made available to the Court by the Arbitrator. The learned Single Judge found that there was in fact nothing filed by or on behalf of the respondent-Union of India before the Arbitrator on 11th August, 1982. The proceeding of that date recorded by the Arbitrator states- “Union of India filed an additional statement and documents. Heard the parties. The case is closed for making the order. Let the Union of India submit the requisite stamp papers.” This order is signed by Mr. P.K. Sen, the counsel for the petitioner, Mr. D.K. Shone, the counsel for the respondent as well as the Arbitrator. The learned Single Judge has found that the additional statement and documents were filed before the Arbitrator by the Union of India on 31st May, 1982 and it is that set of papers which has been referred to in the record of proceedings dated 11th August, 1982, though it was already referred to in the previous proceedings. The learned Single Judge had afforded the parties an opportunity of filing supplementary affidavits so as to clarify the position as to what had really transpired before the Arbitrator on 11th August, 1982. The Union of India has not admitted having filed any new additional written statement or new documents before the Arbitrator on 11th August, 1982. On behalf of the petitioner also, no specific case was made out in the additional affidavit supporting the plea raised on its behalf. The learned Single Judge has convinced that there was no merit in the plea so raised on behalf of the petitioner.
4. The learned counsel for the petitioner submitted that in the record of the arbitration proceedings made available by the Arbitrator to the Court, proceedings dated 11th August, 1982 are not be found recorded and that creates a suspicion. The learned counsel submitted that the Arbitrator does not appear to have recorded any order sheet of the proceedings held on 11th August, 1982. We are not impressed. As already stated, the learned Single Judge having perused the record of the Arbitrator has noted in her order that the order sheet dated 11th August, 1982 was available and has reproduced the contents thereof in her order dated 2nd September, 1983, dismissing the objections preferred by the petitioner. The statement of fact recorded by the learned Single Judge in her order cannot be permitted to be disputed by oral submissions made at the Bar, more so, when we do not find any plea disputing the correctness of the factual observations made by the learned Single Judge in her order having been raised before the Division Bench of the High Court hearing the appeal. We are in entire agreement with the observations made by the learned Single Judge that no substantive statement or documents were filed on behalf of the Union of India on 11th August, 1982. The question of the same having been taken into consideration by the Arbitrator without affording the petitioner an opportunity of meeting the same does not arise. The first contention is accordingly rejected.
5. As to the second contention, we have perused the contents of the Award dated 23rd August, 1982. It is a non-speaking award. Just before recording the finding, the learned Arbitrator has stated “And Whereas I heard and examined and considered the statements of the parties and their evidence”. It is the use of the word `evidence’ wherefrom the learned counsel for the petitioner has sought to build up a plea that the Arbitrator had in his mind the oral testimony of the witnesses while there is none adduced by the parties and hence none available on the record of the Arbitrator and this shows the non-application of mind on the part of the Arbitrator to the record of the proceedings. We find the plea so raised entirely mis-conceived. The learned Single Judge, as also the Division Bench, have rightly explained that the word `evidence’ as used by the Arbitrator does not necessarily mean oral evidence adduced. There were documents available on record of the Arbitrator which also amount to evidence and that is what the Arbitrator had in his mind. An inference as to non-application of mind or mis-statement on the part of the Arbitrator while pronouncing the award cannot be drawn by assigning the term evidence such a meaning as is sought to be assigned by the learned counsel for the petitioner. The second contention is also rejected.
6. The third and the last plea urged is equally devoid of any merit. The burden of substantiating the averment urged as an objection tantamounting to misconduct on the part of the Arbitrator or complaining of violation of principles of natural justice was on the petitioner. No evidence was adduced to substantiate the plea. The best person to depose as to what had actually transpired at the hearing and whether the same was a real hearing or an eye-wash merely was the counsel who actually made submissions on behalf of the petitioner before the Arbitrator. The least that was expected of the petitioner was to have filed an affidavit of the counsel before the Court. That was not done. No timely protest was raised before the Arbitrator. The hearing was concluded on 11.8.1982 and the award was made on 23.8.1982. During these 12 days also, the petitioner company never urged before the Arbitrator that submissions on its behalf were not permitted to be made by the Arbitrator. The Learned Single Judge, as also the Division Bench, have arrived at a finding that the plea was an afterthought and certainly not substantiated. We also do not find any reason to take a view different from the one taken by the High Court.
7. No other point was urged.
8. All the three contentions raised on behalf of the petitioner are found devoid of any merit and hence are rejected. The appeal is therefore dismissed with costs.
(C.R.) Appeal dismissed.
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