An arbitrator's secret inquiry by taking offers or bids from the parties separately without disclosing them to each other constitutes legal misconduct and violates the principles of natural justice, rendering the arbitration award invalid.

( 1 ) IN a suit for the dissolution of partnership and for the taking of accounts filed by the plaintiff-respondent agajnst the defendant-appellant, the matter in dispute was referred to the arbitration of Sri Brij Nath Mittal, an advocate practising at Meerut. The agreement of reference, inter alia, provided that the arbitrator will be empowered to decide the points at issue between the parties after tile taking of evidence which the parties may choose to produce before him, or without taking evidence but on his own personal knowledge, and the award which he would thereafter make will be binding upon the parties. It further provided that it will not be incumbent upon the arbitrator to reduce evidence into writing. It also provided that he may decide the matter in any manner he thinks fit. The terms of agreement, therefore, clothed the arbitrator with full powers to decide the points in controversy between the parties (a) after the taking of evidence, or (b) on his personal knowledge. Those terms cannot be interpreted to mean that the arbitrator could decide the points in controversy, though not on personal knowledge but on taking evidence of one party, or upon contacting one party, behind the back of the other. In fact the true import of the agreement of reference had rightly been understood by the arbitrator when he expressed in the opening paragraph of his award that

"i have been given full powers to decide the points in controversy between the parties after taking evidence or on my personal knowledge. "

( 2 ) IT appears from the award that proceedings were held before the arbitrator on the 21st of november, 1951, 23rd of November, 1951, and finally on the 24th of November, 1951, when the parties were present in person and were represented on some of the hearings by their counsel. Before the arbitrator genuine efforts were made to arrive at a settlement and although in the beginning, to quote the words of the arbitrator, "there was acute controversy on almost all the points", the parties ultimately agreed that the business together with all its assets and liabilities including the rights with regard to the site belonging to the P. W. D. and the land taken on lease from Lala Paras Ram under the lease dated the 15th of February, 1946, be held in future by one of the parties only and the other be paid compensation in cash after fixing a reasonable valuation over the rights of one party including the right in the good-will of the business. The arbitrator, therefore, in order to arrive at a proper valuation individually, but separately, consulted the parties and ascertained their respective viewpoints; and before him it had first been suggested on behalf of the plaintiff that this should be done by calling open bids. The arbitrator, however, did not approve of that suggestion as, according to him, it necessarily involved unhealthy competition and there was risk of unnecessary inflation of the price. The arbitrator, therefore, secretly took the offers or bids by the two contending parties. The offer that was made by the plaintiff was an offer of Rs. 30,000/- plus the value of the goodwill of the business which may be fixed upon by the arbitrator. The valuation or bid that had been made by the defendant was in the sum of Rs. 21,000/ -. The arbitrator did not disclose the offer of the one to the other. He, however, as a result of the inspection of accounts and after ascertaining the viewpoints of the parties in the manner stated above, came to the conclusion that a sum of Rs. 25,500/- will be paid by the defendant Banwari Lal as compensation as half share of the plaintiff as heir of Pandit murlidhar in the business, including his rights in the site of the petrol pump and the land held underlease from Lala Paras Ram and the constructions and all accessories and stock-in-trade and all articles as found by the commissioner and entered by him in the list prepared in the suit and all the outstandings due to the firm. By the