PATNA HIGH COURT
Ramratna Singh and Shambhu Prasad Singh JJ.
Prabhat Kumar Lala
Versus
Jagdish Chandra Narang
Appeal From Original Order No. 39 of 1966 ;
Decided On : SEPTEMBER 29, 1967
ARBITRATION - Setting aside of award - Misconduct of arbitrators - Private enquiry from dealers regarding prices of machineries and their parts without notice to, and in the absence of, either party - Held, misconduct - Award set aside.
Fact of the Case:
The appellants are owners of a colliery while the respondent was a mining contractor who worked the mines on behalf of the appellants under an agreement dated the 20th June, 1962. On the 15th October, 1963 the respondent made an application under Sec.20 of the Indian Arbitration Act, 1940 before the 2nd Subordinate Judee, Dhanbad, and ultimately two arbitrators were appointed, namely. D.T Jani (nominated by the plaintiff respondent and Sitaram Singh (nominated by the appellants). On the 23rd November, 1964 the appellants defendants filed an application for the appointment of a receiver to manage the colliery. On the 18th December, 1964 the learned Subordinate Judge appointed defendant No 3, Bhupendra Nath Lala as receive) after hearing both the parties.
Finding of the Court:
The court below set aside the award on account of misconduct on the part of the arbitrators in conducting the proceeding and then directed them to submit the award within a certain period after affording an opportunity to the plaintiff to cross-examine the witnesses who had already been examined and to adduce such evidence, as he desired, on the question of valuation of the machineries.
Issues: Whether the arbitrators were guilty of misconduct in conducting the proceedings.
Ratio Decidendi: The court held that the arbitrators were guilty of misconduct in conducting the proceedings in two respects, viz., (i) evidence was taken in the colliery on 11-7-1965 without notice to, and in the absence of, the plaintiff; and (ii) enquiry was made from the dealers regarding the prices of machineries and their parts without notice to, and in the absence of, either party.
Final Decision: The court upheld the impugned order of the court below, subject to the modification that the dispute shall now be referred to a new set of arbitrators, as indicated above. The appeal was dismissed, subject to the said modification.
Ramratna Singh, J.
1. This appeal arises out of an arbitration proceeding. The appellants are owners of a colliery while the respondent was a mining contractor who worked the mines on behalf of the appellants under an agreement dated the 20th June, 1962 On the 15th October, 1963 the respondent made an application under Sec.20 of the Indian Arbitration Act, 1940 before the 2nd Subordinate Judee, Dhanbad, and ultimately two arbitrators were appointed, namely. D.T Jani (nominated by the plaintiff respondent and Sitaram Singh (nominated by the appellants). On the 23rd November, 1964 the appellants defendants filed an application for the appointment of a receiver to manage the colliery On the 18th December, 1964 the learned Subordinate Judge appointed defendant No 3, Bhupendra Nath Lala as receive) after hearing both the parties.
The plaintiff respondent, then, preferred Miscellaneous Appeal No 1 of 1965 in this court against the said order, and that appeal was disposed of by this court on the 16th March, 1965. In the meantime, on the 27th January 1965 the defendants appellants filed an application before the Subordinate Judge for a claim of Rs 3,10,000 to be forwarded to the arbitrators. On the 26th April, 1965 the plaintiff filed a petition before the arbitrators claiming Rupees 4,53.855.43P. Sometime thereafter, the appellants made an application to this Court, which was registered as M. J. C No, 312 of 1965. The application was dismissed summarily, but the Subordinate Judge was directed to expedite the disposal of the arbitration case quickly Both the arbitrators made an agreed award on the 18th July, 1965 and filed it before the Subordinate Judge on the 19th July, 1965,
The plaintiff filed an objection to this award on the 17th August, 1965, under Sec.30 of the Arbitration Act. On the 26th August, 1965, the defendants filed a rejoinder to the said objection. On the 7th September, 1965 the plaintiff filed a supplementary objection with an affidavit and on the 13th September the defendants filed another rejoinder. On the 17th January 1966 the learned Subordinate Judge disposed of the objections to the award, and his conclusion is contained in paragraph 18 of the order which is reproduced below: "It thus follows that due to the failure of the arbitrators to give a reasonable opportunity to the plaintiff to support his claim by adequate notice, there has been caused a clear cut act of misconduct on the part of the arbitrators in conducting the proceeding As such the award as filed stands set aside. The arbitrators are hereby directed to afford an opportunity to the plaintiff to cross-examine the witnesses who have already been examined and to adduce such evidence as he proposes on the point of valuation of the machineries and then to be heard. They are directed to submit this award in the light of the above direction positively within 10 days time. Make over a copy of this order to each of the arbitrators."
Hence, this appeal by the defendants.
2 A preliminary objection was raised by Mr S. C Ghose, who appeared on be-half of the respondent, that the appeal was not maintainable, inasmuch as the award had merely been remitted to the arbitrators In this connection, it is necessary to refer to Sec.16 of the Arbitration Act, 1940 , which embodies the power of the court to remit an award. It enacts:
"16 (1) The Court may from time to time remit the award or any matter referred to arbitration to the arbitrator or umpire for reconsideration upon such terms as it thinks fit-- (a) where the award has left undetermined any of the matters referred to arbitration, or where it determines any matter not referred to arbitration and such matters cannot be separated without affecting the determination of the matters referred; or
(b) where the award is so indefinite as to be incapable of execution; or
(c) where an objection to the legality of the award is apparent upon the face of It.
(2) Where an award is remitted under Sub-section (1) the
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