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1987 Supreme(Del) 33

High Court Of Delhi
DALMIA DAIRY INDUSTRIES LIMITED - Appellant
Versus
TOP STYLE APPAREL (PRIVATE) LIMITED - Respondent
Suit 1719A of l985
Decided On : 01/23/1987

Advocates Appeared:
R.K.VIRMANI, V.V.Shastri

The parties to an arbitration proceeding have an absolute right to be heard and to present their evidence before the arbitrator.

Headnote:

ARBITRATION - SETTING ASIDE AWARD - ARBITRATION ACT, 1940 - SECTION 30 - AWARD SET ASIDE - FAILURE TO PROVIDE OPPORTUNITY TO PRESENT EVIDENCE - RIGHT TO BE HEARD - DEPRIVATION OF RIGHT TO BE HEARD - GROUNDS FOR SETTING ASIDE AWARD.

Fact of the Case:

The claimant appointed the objector as their selling agents by an agreement. Disputes arose and were referred to arbitration. The arbitrator made an award ex parte against the objector, who filed objections to the award, alleging that they were not given an opportunity to present their evidence.

Finding of the Court:

The court found that the objector was absent on the date of the hearing because the claimant's counsel had informed them that they would only be seeking an adjournment. The court held that the claimant could not take advantage of the objector's absence and that the award was liable to be set aside.

Issues: Whether the award should be set aside due to the objector not being given an opportunity to present their evidence.

Ratio Decidendi: The court held that the parties to an arbitration proceeding have an absolute right to be heard and to present their evidence before the arbitrator. If they are deprived of this right, the court will not hesitate to set aside the award.

Final Decision: The court set aside the award and appointed a new arbitrator to decide the disputes.

G. C. Jain

( 1 ) DALMIA Dairy Industries Ltd. New Delhi (the claimant) appointed M/s Top Style Approval Pvt. Ltd. (the objector) as their selling agents by an agreement dated 20 July, 1978. The objector company was wound up by an order of this court dated March 9, 1979 in C. P. 25 of 1979 and the Official Liquidator, Delhi is incharge of the assets and affairs of the said company.

( 2 ) CERTAIN disputes between the parties arising under the said agreement were referred to the sole arbitrator Justice M. S. Joshi (retired) for adjudication by an order of this Court dated July 19, l984 in suit No. 325a/80. The learned arbitrator made and published his award on September 6, 1985.

( 3 ) THE award was filed in the court and notice of the filing of the award was served on the parties. The Official Liquidator on behalf of the objector company filed objections to the award. It was averred that the arbitration proceedings were fixed for July 13, 1985 and were adjourned to August 6, 1985. The claimant was to file an affidavit by way of evidence on the said date. It was required to give a copy of that affidavit to the objector in advance to enable it to file its affidavit in evidence. However a few days before August 6, 1985 Mr. Dilip Vasudevan, counsel for the claimant informed the counsel for the objector that his affidavit was not ready and that he was seeking more time from the arbitrator and in the circumstance the objector need not appear before the Arbitrator on August 6, 1985. On August 5, 1985 Mr. Vasudevan informed the counsel for the objector that the arbitrator had called him over the phone and had told him that he had decided to settle down it Punjab and wanted to plan the future hearings of this arbitration matter. No further intimation was however given to the objector. Later on the objector was informed that the counsel for the claimant had filed an affidavit in evidence and the arbitrator had proceeded ex-parte against the objector and had proceeded to make the award. The objector s counsel then tried to find the address of the learned Arbitrator in Punjab but did not succeed. It was further averred that copy of the affidavit filed by the claimant was never served on the objector. The date fixed for August 6,1985 was not fixed for final hearing of the case; the issues were yet to be framed and that in fact no opportunity was afforded to the objector to file its affidavit or to argue the case before the arbitrator and therefore the award was liable to be set aside.

( 4 ) THE claimant resisted the petition and denied the averments. The following issues were framed :-

"1. Whether the award is liable to be set aside on the objections of the Official Liquidator ? 2. Relief. "

( 5 ) THE parties to an arbitration proceeding have an absolute right to be heard and to present their evidence before the arbitrator, if they are deprived of this right the court will not hesitate to set aside the award.

( 6 ) A perusal of the arbitration proceedings shows that hearing in this case was fixed for May 20, 1985. Learned arbitrator on that date allowed the claimant to file rejoinder within a fortnight. The parties were directed to adduce their evidence in the from of affidavit and documents on July 12,1985. Mr. Vasudevan, learned counsel for the claimant undertook to furnish copies of the affidavit to be the objector a week before the said date. The case was however not heard on July 12, 1985 and was adjourned to August 5,1985. On this date none appeared on behalf of the objector. The counsel for the claimant informed the learned arbitrator that the objector was under an impression that the hearing was fixed for August 6, 1985 and consequently the case was adjourned to August 6, 1985. The objector did not appear even on August 6, 1985 and was proceeded ex-parte and ultimately the award was made on September 6, 1985,

( 7 ) THE short question which requires consideration is whether there was any justification for the absence of objector on August



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