Back
1977 Supreme(Ori) 79
Orissa High Court
R. N. MISRA, J.
The Board of Trustees, Paradeep Port Trust - Appellant
Versus
M/s. Badio Foundation Engineering Ltd. - Respondents
Misc. Appeal No. 105 of 1976
Decided On : 3 November 1977
R. Mohanty, for Appellant; P.K. Mohanty, for Respondents.
The Arbitrators' failure to give a hearing to the parties after the matter was remitted to them amounted to legal misconduct, and the court had jurisdiction to call for the documents under Section 14(2) of the Arbitration Act.
Headnote:
ARBITRATION - SETTING ASIDE AWARD - LEGAL MISCONDUCT - FAILURE TO GIVE HEARING TO PARTIES AFTER REMISSION OF MATTER - REJECTION OF APPLICATION TO CALL FOR DOCUMENTS - COURT'S JURISDICTION - SCOPE.
Fact of the Case:
A dispute arose between the Board of Trustees of the Paradeep Port Trust (appellant) and a contractor (respondent No. 1) during the construction of a general cargo berth. The dispute was referred to a Board of Arbitrators, who made an interim award in favor of the contractor for extra expenditure due to non-availability of constructional materials. The appellant objected to the award, claiming that the Arbitrators had committed legal misconduct by ignoring a clause in the contract that provided for extension of time for completion of the work in case of delay in supply of materials, but not for compensation. The court remitted the matter to the Arbitrators for reconsideration, but no further hearing was afforded to the parties. The appellant also filed an application under Section 14(2) of the Arbitration Act to call for the contract and other documents produced before the Arbitrators, but the court rejected the application.
Finding of the Court:
The court held that the Arbitrators' failure to give a hearing to the parties after the matter was remitted to them amounted to legal misconduct. The court also held that the rejection of the appellant's application to call for the contract and other documents was not appropriate.
Issues: 1. Whether the Arbitrators' failure to give a hearing to the parties after the matter was remitted to them amounted to legal misconduct. 2. Whether the court's rejection of the appellant's application to call for the contract and other documents was appropriate.
Ratio Decidendi: 1. The court held that the Arbitrators were required to conduct themselves in a manner acceptable to principles of natural justice, which includes giving a hearing to the parties. The court noted that the learned Subordinate Judge had remitted the matter with a direction that the respective stands of the two parties should be considered, and that the court nowhere indicated that no further hearing was necessary. 2. The court held that the court had jurisdiction to call for the documents under Section 14(2) of the Arbitration Act, and that the rejection of the appellant's application was not appropriate.
Final Decision: The court allowed the appeal and remitted the matter to the learned Subordinate Judge for a fresh disposal in accordance with law. The court directed the learned Subordinate Judge to call for the documents including the contract between the parties and, if satisfied that the contractor was only entitled to extension of time for not making departmental materials available in time, to vacate the award and either remit the matter or set aside the award.
Judgement
JUDGMENT :- This appeal by the Board of Trustees of the Paradeep Port Trust has been filed under S. 39 (1) (vi) of the Arbitration Act of 1940 (hereinafter referred to as the Act) against the order of the learned Subordinate Judge of Cuttack refusing to set aside an award.
2. Respondent No. 1 undertook to construct the general cargo berth No. 1 of the Port and parties had entered into a contract for the said purpose. While the work was still in progress, respondent No. 1 raised disputes. Keeping in view the arbitration clause in the contract, the several disputes were referred to a Board of Arbitrators consisting of respondents 2 and 3 and the Arbitrators made interim awards in respect of the various items of disputes. We are concerned in this appeal with the interim award relating to item No. 28 which covered a claim for extra expenditure due to non-availability of constructional materials and a sum of Rs. 2,51,995.00 is claimed on that score. The Arbitrators gave hearing in regard to the claim on 14th and 16th of Dec., 1974 and before the award was made, on 17-1-1975 respondent No. 1 offered to withdraw the claim relating to item No. 28 if the Port Trust extended the time to complete the work. On 11-2-1975 the interim award was given. When the contractor applied to make the award a rule of the court in Title Suit No. 48 of 1975, objection was raised by the Port Trust on the ground that Arbitrators had committed legal misconduct by ignoring cl. 66 of the contract which provided that in the event of delay in supply of departmental stores, the contractor was entitled to extension of time for execution of the contract and not to compensation. By order dated 26-8-1975 the court remitted the matter in regard to item No. 28 to the Arbitrators and directed :-
"Item No. 28 in the third interim award D/-11-2-75 is remitted to the Arbitrators for their reconsideration keeping in view the objections and counter objections filed in this connection by the respondent as well as claimant and resubmission of their award to the court within a month from the date of their receipt."
The appellant has claimed that no notice of hearing was given to the parties after the matter was remitted to the Arbitrators and appellant came to know about re-submission of the award after notice was received from the court of the Subordinate Judge that a fresh award had been filed objection was raised in the court that no hearing was afforded to the parties and if such opportunity had been given, the appellant would have been in a position to place the letter of the contractor that it was agreeable to withdraw its claim provided extension of time for completion of the contract was given and long before the award was submitted to the court, the Port Authorities had agreed to extend the time. In support of the objection, the appellant moved the court by an application that the contract and other documents produced before the Arbitrators may be called for consideration of the court. On 26th of February, 1976 the learned Subordinate Judge rejected the application for calling for documents and on the 29th of March made the award a rule of the court.
3. There is no dispute that after the award was remitted to the Arbitrators, no further hearing was afforded to the parties. The application made to the court under S. 14 (2) of the Act to direct the Arbitrators to transmit to the court documents filed before them, it is contended, was rejected without any justification. Grievance, therefore, is made in appeal on these two counts. In this case, there were two parties, there was a lis between them and the matter had been placed before the Board of Arbitrators for adjudication. Though the strict procedure prescribed for a court may not be applicable, the Board of Arbitrators was required to conduct itself in a manner acceptable to principles of natural justice. The learned Subordinate Judge had remitted the matter with a direction that the respective stands of the two
