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1981 Supreme(Cal) 276
High Court Of Calcutta
SALIL KUMAR ROY CHOWDHURY
STATE TRADING CORPORATION INDIA LTD. - Appellant
Versus
INDIAN MOLASSES COMPANY PRIVATE LTD. - Respondent
Matter 2337 Of 1980
Decided On : 07/23/1981
A.C.BHABRA, SANKAR GHOSH, SUDIPTA SARKAR, TAPAS BANERJEE, TARUN BOSE
The refusal of an Arbitrator to allow a party to be represented by a lawyer or its employee, who is a Law Officer, amounts to legal misconduct and may lead to the revocation of the Arbitrator's authority.
Headnote:
ARBITRATION - REVOCATION OF AUTHORITY OF ARBITRATOR - LEGAL MISCONDUCT - REFUSAL OF REPRESENTATION BY LAW OFFICER - WAIVER AND ACQUIESCENCE - APPOINTMENT OF SOLE ARBITRATOR - ARBITRATION ACT, 1940, SECTIONS 5, 11, 12 AND 15.
Fact of the Case:
The petitioner and the respondent entered into a contract for the storage of imported non-edible tallow in a storage tank owned by the respondent. A dispute arose between the parties regarding the shortage of tallow and the petitioner referred the matter to arbitration before the Tribunal of Arbitration, Bengal Chamber of Commerce and Industry. The petitioner applied to the Tribunal for permission to be represented by a lawyer, but the request was denied. The petitioner then filed an application under Sections 5, 11, 12, and 15 of the Arbitration Act, 1940, seeking to revoke the authority of the Arbitrator and appoint a sole Arbitrator.
Finding of the Court:
The court held that the refusal of the Arbitrator to allow the petitioner to be represented by a lawyer amounted to legal misconduct. The court further held that the petitioner's initial failure to protest the Arbitrator's decision did not constitute waiver or acquiescence, as the issue related to a substantive legal right rather than a mere irregularity in procedure. The court also found that the Arbitrator's refusal to allow the petitioner to be represented by its employee, who was a Law Officer, was a denial of natural justice.
Issues: 1. Whether the Arbitrator was guilty of legal misconduct by refusing to allow the petitioner to be represented by a lawyer or its employee, who was a Law Officer? 2. Whether the petitioner's initial failure to protest the Arbitrator's decision constituted waiver or acquiescence? 3. Whether the court should revoke the authority of the Arbitrator and appoint a sole Arbitrator.
Ratio Decidendi: The court relied on the principles laid down in Russell's on the Law of Arbitration, 19th Edition, and the Supreme Court decision in Amar Chand Lalit Kumar v. Sree Ambica Jute Mills Limited to hold that the Arbitrator's refusal to allow the petitioner to be represented by a lawyer or its employee, who was a Law Officer, amounted to legal misconduct. The court further held that the petitioner's initial failure to protest the Arbitrator's decision did not constitute waiver or acquiescence, as the issue related to a substantive legal right rather than a mere irregularity in procedure.
Final Decision: The court revoked the authority of the Arbitrator, Tribunal of Arbitration, Bengal Chamber of Commerce and Industry, in the Award Case No. 143 of 1977 and appointed Mr. S. C. Sinha, Advocate as the sole Arbitrator in place and stead of the said Tribunal.
( 1 ) THIS is an application under Sections 5, 11, 12 and 15 of the Arbitration Act, 1940, inter alia for revoking the authority of the Arbitrator being Tribunal of Arbitration, Bengal Chamber of Commerce and Industry, in respect of Case No. 143 of 1977 pending before the same and for removal of the Arbitrator and appointment of a sole Arbitrator and consequential reliefs.
( 2 ) THE facts of the case which are not disputed are that by a contract in writing dated 29th of January, 1969, entered into between the parties, the respondent agreed to store imported non-edible tallow in Steel Storage Tank situated at Ram Nagar on the terms and conditions contained in the said contract. Under the said contract the respondent was appointed as the clearing storage. handling and forwarding agent in respect of the said tallow which was to be imported by the petitioner and stored in the said tank of the respondent on the terms and conditions of the said contract. The said storage tank was ready in or about June, 1969, and between June, 1969 and September. 1977, the petitioner issued diverse instructions and/or orders to the respondent authorising them to receive store and handle tallow from the vessels carrying tallow. The respondent did receive a total quantity of about 58,550,554 M. Ts. of tallow in the said storage tank from incoming vessles. The petitioner also from time to time between June. 1969 to October. 1975, issued delivery orders and/or challans in the name of its nominee or nominees and/or allottee or allottees for diverse quantities of tallow mentioned in the said delivery orders and/or challans. The respondent between June. 1969 to October, 1975, duly supplied a total quantity of 58,045. 673 M. Ts. of tallow to the nominee or nominees and/ or allottee or allottees of the petitioner to whom delivery challans and/ or orders have been issued by the petitioner from time to time as aforesaid. The said contract was originally for a period of ten months with an option to the petitioner to continue the contract for a further period of twelve months. The said contract also provided for further ' extension beyond the aforesaid period to be mutually decided and was agreed between the parties. After various extensions the said contract stood determined and/or terminated and/or discharged on or from September, 1975, and thereafter, the said storage tank was emptied and drained and a quantity of 504. 881 M. Ts. was found short and/or unaccounted for. Under the said contract which made the respondent liable to render true and faithful account to the petitioner in respect of the said tallow and as such, become liable for the said shortage. In spite of the demand of the petitioner the respondent failed and neglected to pay the value of the said short quantity of tallow handled by them and the loss of the petitioner was assessed at 25,72,873. 50 p. for which the petitioner made a demand on the respondent together with interest at the rate of Rs. 18 per cent per annum from October. 1975, being the date of termination of the said contract until payment. The respondent made a counterclaim of about Rs. 6,25,674. 83 P. alleged to be payable by the petitioner to the respondent. Consequently, a dispute and difference arose and the same was referred to for adjudication under the arbitration clause contained in the said contract by the respondent before the Tribunal of Arbitration, Bengal Chamber of Commerce and Industry. The said Tribunal registered the case being Case No. 143 of 1977 and the pleadings were filed before the Tribunal of Arbitration, Bengal Chamber of Commerce and Industry.
( 3 ) IT is now alleged by the petitioner that the question of law as stated in paragraph 15 and various sub-paragraphs thereunder has arisen inter alia whether the petitioners' claim is barred by limitation, whether the Arbitration Rules of the Bengal Chamber of Commerce and Industry are appropriate for the adjudication of the disputes a
