IMPORTANT POINTS
Umpire does not have to start de novo ipso facto unless on an application by parties.
The expression de novo should be given purposive interpretation.
Application not asking for re-hearing/re-recording of the evidence but requesting for review of order of the two Arbitrators permitting examination of wrong witness, is not an application for de novo hearing.
Appraisement of evidence by the arbitrator ordinarily not questioned and considered by courts.

JUDGMENT :

R.K. Agrawal, J.

1. Leave granted.

2. The present appeal is directed against the final judgment and order dated 22.10.2013 passed by the High Court of Delhi at New Delhi in FAO (OS) No. 211 of 2007 whereby a Division Bench of the High Court dismissed the appeal filed by the appellant herein while upholding the order dated 17.04.2007 passed by learned single Judge of the High Court.

3. Brief facts:

(a) The appellant Company-M/s Oswal Woolen Mills Ltd. and the respondent Company-M/s Oswal Agro Mills Limited are Companies incorporated under the Companies Act and are carrying on the business of manufacturing and trading of vegetable oils, soaps, chemicals, petrochemicals, woolen and related products.

(b) Both the parties entered into an agreement dated

30.03.1982 in terms whereof the appellant Company appointed the respondent Company as its agent in accordance with the Handbook of Import Export Procedure, 1981-82 in order to advice, assist and guide the appellant Company to import materials under the REP licences for a CIF value of Rs. 1,85,95,100/-only with remuneration at the rate of 5% (per cent) of the CIF value of the goods imported along with all costs/expenditure incurred.

(c) Out of the total value of the materials to be imported under the licences, the materials to the value of Rs. 1,16,00,800/-only could be imported and the material CIF value of Rs. 69,94,300/-could not be imported by the respondent-Company in the absence of the REP licences of the said value which resulted in breach of contract.

(d) Both the parties took legal recourse and the High Court, on an application under Section 20 of the Arbitration and Conciliation Act, 1940 (in short ‘the Act’) referred the dispute to Arbitration of two Arbitrators. After completion of the arbitration proceedings before the Arbitrators, the arbitrators, could not reach to a consensus on the Award in terms of the Minutes of the Meeting held on 19.02.1999 and the matter was referred to the Umpire.

(e) The appellant-Company moved an application dated 29.01.2000 before the Umpire seeking commencement of de novo proceedings. On 31.01.2000, the said application was dismissed as untenable. Learned Umpire, passed an award dated 21.02.2000, in favour of the respondent-Company to the tune of Rs. 64,65,782/-along with the interest at the rate of 18% (per cent) with effect from 01.11.1991 till the date of realization.

(f) Being aggrieved by the Award dated 21.02.2000, the appellant Company filed objections before the High Court under Sections 30 and 33 of the Act which was registered as IA No. 803 of 2001 in CS (OS) No. 795-A/2000. Learned single Judge of the High Court, vide judgment and order dated 17.04.2007, substantially rejected the objections to the Award and made a Rule of the Court with slight modifications. Learned single Judge also observed that the appellant-Company failed to satisfy that there was any serious endeavour for getting the evidence recorded again before the Umpire and waived the right of de novo trial by conduct.

(g) Aggrieved by the judgment and order passed by learned single Judge of the High Court, the appellant-Company preferred an appeal being FAO (OS) No. 211 of 2007 before a Division Bench of the High Court. The Division Bench, vide judgment and order dated 22.10.2013, dismissed the appeal.

(h) Aggrieved by the judgment and order dated 22.10.2013, the appellant-Company has preferred this appeal by way of special leave before this Court.

4. Heard Mr. Basava Prabhu S. Patil, learned senior counsel for the appellant-Company and Mr. Dhruv Mehta, learned senior counsel for respondent-Company and perused the records.

Point(s) for consideration:-

5. The only point for consideration before this Court is whether an Umpire has to hear the matter de novo on a Reference or from the stage of disagreement between the Arbitrators?

Rival contentions:-

6. Learned senior counsel for the appellant-Company contended that the Division Bench erred in interpreting the scope of Article