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Supreme Court Of India
Sohan Lal Gupta (Dead) Thr. L. Rs.
Versus
Asha Devi Gupta
Decided on : September 1, 2003
Arbitration - Reasonable Notice - Companies Act, 1956, Section 108 - Violation of Principles of Natural Justice - Withdrawal of Objections - Contempt Proceedings
Fact of the Case:
Disputes arose between two groups, Guptas and Sharmas, leading to an arbitration agreement. The arbitrator gave two awards, which were challenged by seven members of the Guptas group, including Ghanshyamdas Gupta, on various grounds including violation of Section 108 of the Companies Act, 1956 and lack of reasonable notice. Ghanshyamdas Gupta withdrew his objections in 1998 but later sought to resile from the withdrawal.
Finding of the Court:
The court found that Ghanshyamdas Gupta had been given a reasonable opportunity to participate in the arbitration proceedings and that the arbitrator's request for a letter stating that his award would not be challenged did not render the award a nullity. The court set aside the impugned judgment, allowed the appeals, and made the arbitrator's award the rule of the court.
Issues: Violation of Section 108 of the Companies Act, 1956, lack of reasonable notice, withdrawal of objections, and contempt proceedings.
Ratio Decidendi: The court held that Ghanshyamdas Gupta had been given a fair opportunity to participate in the arbitration proceedings and that the arbitrator's request for a letter did not render the award a nullity. The court also declined to adjudicate on the contempt proceedings, advising the parties to initiate appropriate proceedings before the executing court if necessary.
Final Decision: The impugned judgment was set aside, the appeals were allowed, and the arbitrator's award was made the rule of the court. No order was passed on the contempt proceedings.
Judgment
S. B. SINHA, J.
( 1 ) WHAT constitutes a reasonable notice by an arbitrator is the question involved in these appeals which arise out of a judgment and decree dated 1. 3. 1979 passed by a division Bench of the Calcutta High Court affirming an order passed by a learned single judge setting aside an arbitration award.
( 2 ) THE basic fact of the matter is not in dispute. Two groups of persons - one Guptas and another Sharmas - held several properties including three firms, six limited companies, one trust and other movable and immovable assets. Both the groups had 50 shares each. The family members of the Guptas and Sharmas Groups were interested in many or in some of the businesses and the firms. The family tree of the Gupta Group is as under:
( 3 ) DISPUTES and differences having arisen between the two groups as also between the family members of the same group, an agreement was entered into on or about 10. 4. 1975 for referring some of the disputes to the arbitration of one Mr. B. J. Bhide. The material parts of said agreement are as under:"1. The parties hereto hereby agree that all disputes differences between the parties or their representatives concerning or relating to or touching the said several firms, companies, assets moveable or immoveable or any act done by the parties or in regard to their respective rights, duties and obligations of the parties hereto or their enforcement which exist between the parties and also of other disputes and differences that may hereafter arise between the parties and be laid by the parties or either of them before he shall make his award are hereby referred to the award and final determination of Shri P. J. Bhide alias Purshottam Jagannath Bhide, son of shri J. V. Bhide, residing at no. P-390 keytolla Lane, Calcutta-29. 2. That the said Arbitrator shall have powers to have the accounts of the said firms and/or companies and/or assets checked, inspected and/or audited by the chartered accountant or by any other person or persons. 3. That the said Arbitrator shall have powers to formulate and lay down his own procedure for the conduct of arbitration proceedings according to law. 4. That the said Arbitrator shall have power to proceed ex parte in case the other party fails after reasonable notice to attend before him. 5. That the said Arbitrator shall have powers to ask for any paper, documents and/ or information from any of the parties hereto and to draw adverse inference for non-production thereof. 6. That the said Arbitrator shall be free to make use of information, documents, papers received from any source whatsoever if he considers them relevant to the matter and to this regard his decision will be final. 7. That the Arbitrator shall have powers to apply and employ his personal knowledge in the matter under reference while giving his award. 8. That the Arbitrator shall have power to award cost and to ask for periodical deposits towards his own fees and charges, audit charges and/or other charges from the parties hereto in the manner he may think fit and proper. 9. That the said Arbitrator shall not be required to give any reasoning for his determination and award. 10. That the said Arbitrator shall have powers to give directions for the running of the business of the said firm and/or companies including the direction for operation of banking account during the pendency of arbitration proceedings. 11. That the said Arbitrator shall have full power and control over all the assets, properties, moveable or immoveable of the said firms and/or companies and shall also have the powers to dispose of any of them at his discretion, for the good and benefit of the said firm. 13. That the Arbitrator shall have in his absolute discretion power to award the dissolution of the various partnership firms and to name the date from which such dissolution shall take effect. He may also provide for the mode of realisation of the partnership assets and discharging the liabilities and discharging
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