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High Court Of Delhi
SETECH ELECTRONICS LIMITED - Appellant
Versus
K.N.MEMANI - Respondent
ORIGINAL MISCELLANEOUS PETITION 114 of 1997
Decided On : 01/29/1999
Held:
Though desirable, recording of proceedings by an arbitrator or making a reasoned award unless required by both the parties is not a requirement of law under the 1940 Ad, which is applicable in the present case. It is significant, however, to note that one of the main objectives, and now a mandatory requirement, under the Arbitration and Conciliation Act, 1996 is that the arbitral forum will make a reasoned award. It has obviously been done to eschew arbitrariness and instill some credibility and confidence in the parties. There is no reason to suspect that the learned arbitrator will not keep in mind all these factors while making the award. I find that the learned arbitrator has passed appropriate orders on the applications filed by the petitioner, including on application under Order 11 Rule 12 CPC. The directions on the application are adequately made in the orders passed. However, not content with the directions made, the petitioner filed an application dated 29 April 1997, for clarification of the orders, which was made in the order dated 2 May 1997. It is not clear whether any arguments were heard on application dated 29 April 1997 or not. Even if heard, the order dated 2 May 1997 being only clarificatory, requiring no arguments, the arbitrators alleged action of keeping the order ready, looking at the first glance somewhat odd, in fact does not seems to have caused any prejudice or injustice to the petitioner. It is also evident from the order dated 24 April 1997 that on the statement on behalf of the claimant to the effect that exhibits CW 1/2, CW 1/3, CW 1/4 and CW 1/6 were not in the possession or power and cannot be produced, the learned arbitrator had ordered that these exhibits will not be referred to and considered while deciding the claim of the claimant. This was again reiterated by the arbitrator in his order dated 2 May 1997 while dealing with the prayer of the petitioner that the claimant be directed to file the amended affidavit after deleting the non-admissible documents. Being a technical provision direction to file amended affidavit cannot be insisted upon in arbitration proceedings. The very purpose of arbitration is that it is less formal, speedy and expeditious remedy for resolution of disputes and avoiding procedural claptraps, ft cannot, thereforee, be said that any prejudice was caused to the petitioner on account of alleged failure of the arbitrator to agree with that submission of the petitioner. I also do not find any substance in the allegation of the petitioner that what was faxed to them on 13 May 1997 was yet another order passed at their hack by the arbitrator on 2 May 1997. It is obvious that what was communicated to the petitioner by the arbitrator was the proceedings held on that date and not any order, as is sought to be made out. In the light of the orders passed by the arbitrator on 24 April 1997 and 2 May 1997, ordering that exhibits CW 1/2 to CW 1/4 and CW 1/6, referred to in the claimants affidavit will not be exhibited, the statement of claimants deponent, Mr. P.K. Gupta, deleting certain lines in his affidavit regarding some of the documents, quoted in the said order sheet, is not only in consonance with the aforenoted two orders but also, in effect, favourable to the petitioner and the petitioner possibly cannot have any grievance on that score.
Bias or apprehension of bias has to be judged from a healthy, reasonable and average point of view. Having regard to it all, I am not satisfied that there is real likelihood of bias, or a reasonable ground for a case under Section 5 of the Act, for revoking the authority of respondent no. I arbitrator has been made out. In the circumstances, the petition is dismissed with costs, quantified at Rs. 5,000/-.
( 1 ) BY this petition under Sections 5, 11 and 12 of the Arbitration Act, 1940 (for short the Act), the petitioner seeks leave to revoke the authority and removal of respondent no. 1, the sole arbitrator named in the arbitration clause in the agreement dated 18/3/1993, between the petitioner and respondent no. 2, M/s. Binatone Computers Private Limited, (hereinafter referred to as the claimant) and in his place appointment of an independent arbitrator, on the ground that he has misconducted himself and the proceedings in a manner which has created reasonable apprehension in their mind that the arbitrator is biased.
( 2 ) THE petition is resisted by respondent no. 2 on the plea that it discloses no cause for revocation of the authority of the sole arbitrator and the present petition is a malafide attempt on the part of the petitioner to cause delay in the arbitration proceedings, which are now at the stage of cross examination of the claimant s witnesses.
( 3 ) I have heard Mr. Atul Jain, learned counsel for the petitioner and Mr. Rajiv Nayyar, learned senior counsel for the claimant, at some length, who have also taken me through various orders passed by the learned arbitrator during the course of proceedings before him.
( 4 ) THE petitioner herein, M/s. Setech Electronics Limited, a duly incorporated company, is a manufacturer of audio systems. On 12 March 1993, they entered into a contract with the claimant for using their brand name "binatone" for which the claimant was to be paid royalty by the petitioner. The contract contained arbitration clause, naming respondent no. 1 to be the sole arbitrator to adjudicate upon the disputes/differences, if any, arising under the terms of the said contract between the parties. It is common ground that on disputes arising, the matter was referred to the said arbitrator. On direction, the claimant filed their claim statement and the petitioner filed counter claims, on which they were directed to file affidavits by way of evidence. During the course of proceedings, on 23/4/1997, the petitioner filed two applications, one dated 18/4/1997 and the other dated 23/4/1997. The application dated 18/4/1997 was under Order 11 Rule 12 Civil Procedure Code for a direction to the claimant to make discovery of all the documents in their possession or power relating to the dispute, specially relating to the litigation between the claimant and one M/s. Harman Agencies and its sister concern M/s. Binatone Electronics Limited, pending in this Court and the City Civil Court, Chandigarh, to the effect that the said concern had claimed to be the exclusive owners of the trade name "binatone" and that the claimant herein was wrongly claiming royalty in respect of it. In the second application, dated 23/4/1997, the petitioner had prayed that the arbitrator should give a speaking and reasoned award. It appears that the claimant filed an affidavit dated 19/4/1997 by way of evidence incorporating certain documents. The petitioner was asked to cross examine the claimant s deponent, on which they submitted that it may be deferred till the documents referred to in the affidavit were supplied. On 23 April 1997, the arbitrator disposed of the first application, dated 18/4/1997, with a direction to the claimant to produce the documents ( CW 1/1 to CW 1/7) referred to in the affidavit on the following date i. e. 24/4/1997. On 24/4/1997, the claimant produced two of the documents referred to in the affidavit. Regarding some other documents, they said that these were not in their possession or power, having been sent to Binatone Electronics PLC, UK. On that date, the petitioner moved another application to the effect that the claimant had illegally exhibited documents in their affidavit without placing original documents on record and for deferring the cross examination till the documents were produced and also prayed that the arbitrator should give a speaking and reasoned award in the matter. It seems that
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