M/s. Kapil Flour Mills vs H.S.E.B.

R.L. Anand, J.—This is a civil revision and has been directed against the judgment dated 27.7.1998 passed by Addl. District Judge, Hisar, who affirmed the judgment and decree dated 31.8.1994 passed by Sub Judge 1st Class, Hisar, who dismissed the objections of M/s Kapil Flour Mills and made the award dated 18.12.1991 as rule of the Court.

The brief facts of the case are that petitioner M/s Kapil Flour Mills filed objections under Sections 30/33 of the Arbitration Act against the award dated 18.12.1991 and it was alleged by the petitioner that the arbitrator while conducting the arbitration proceedings has misconducted himself as well as the proceedings. The conduct of the arbitrator was violative of the principle of natural justice because despite the conclusion of the proceedings on 27.11.1 991, the arbitrator received the letter dated 28.11.1991 from the Junior Engineer, which has prejudiced the mind of the arbitrator. Thus the action of the J.E. after the conclusion of the proceedings on 27.11.1991. had resulted in the misconduct of the arbitrator in violation of principle of natural justice. It was also pleaded by the objector that the petitioner was neither allowed to cross-examine the witness nor to produce the witness.

Nolice of the objections was given to the respondent-Board which filed the reply and denied the allegations. According to the respondents full opportunity was given to the petitioner to lead evidence and the arbitrator has not misconducted himself. While denying other allegations of the petitioner, the respondents prayed for the dismissal of the objections.

The learned trial Court framed the following issues for the disposal of the objections :-

"1. Whether the impugned award dated 18.12.1991 is liable to be set aside ? OPR

Relief."

Parties led evidence in support of their respective cases and vide order dated 31.8.1994 the learned trial Court dismissed the objections filed by the petitioner and made the award rule of the Court.

The petitioner was not satisfied with the order of the trial Court. It filed an appeal before the Court of Addl. District Judge, Hisar, which dismissed the appeal for the reasons given in paras 9 and 10 of the impugned judgment dated 27.7.1998, which are reproduced as under :-

"9. With utmost respect to the authority in Delhi Cloth and General Mills'' case (supra), in that case the arbitrator based his award upon the docu-ments received by him in the absence of one of the Parties and arbitrator, who appeared as a wit-. ness, himself admitted that the award was based on those documents. Here in the present case it is clear from the bare perusal of the award Ex.1/R that it is not based upon the document Ex.02/B. It is also not out of place to mention here that the document Ex.02/B is nothing but a month-wise unit consumption chart by the appellant/objector firm. In such circumstances no prejudice is said to have been caused to the appellant in this respect and principle of natural justice cannot be said to have been violated. Moreover it is clear form letter Ex.01/A that the document was desired by the arbitrator himself on 27.11.1991, i.e. the date of hearing, on which date both the parties were present.

In Wazir Chand''s case (supra) calculations were received by the arbitrator by way of additional document or additional evidence behind the back of the plaintiff, but here in the present case, as discussed above only month-wise consumption was obtained by the arbitrator which in no way prejudices the claim of the appellant/objector. On the other hand, learned law officer appearing on behalf of the respondent cited ruling Food Corporation of India Vs. M/s. Veshno Rice Millers, in which it has been observed that the court cannot sit in appeal overview of arbitrator by re-examin-ing and reassessing the materials. In this respect reference can also fie made to another pronounce-ment of Hon''ble Supreme Court in case Puri Construction Pvt. Ltd. Vs. Union of India (UOI), The integrity of award given by the arbitrator is to be maintained unless and until there is grave injustice to the party chal-lenging it. In the present case no injustice seems to have been caused to the appellant/objector. Therefore, the findings of the learned trial court on issue No. I calls for no interference and the same are affirmed." .

Still not satisfied with the decision of the Courts below, the present revision.

I have heard Mr. Sudershan Goel, Advocate on behalf of the petitioner, Mr. Amarjit Singh, Advocate on behalf of the respondents and with their assistance have gone through the records of the case.

Section 30 of the Arbitration Act lays down as follows :-

"An award shall not be set aside except on one or more of the following grounds, namely :-

(a) that an arbitrator or umpire has misconducted -himself or the proceedings;

(b) that an award has been made after the issue of an order by the court superseding the arbitration or after arbitration proceedings have become inva-lid u/s 35;

(c) that an award has been improperly procured or is otherwise invalid."

What is a misconduct ts always a question of fact as it has not been defined in the Arbitration Act. If it is true that civil court cannot sit as a court of appeal over the decision of the arbitrator, but if the arbitrator has misconducted himself or the proceedings in such a manner causing serious prejudice to the cause of one litigant, certainly, it amounts to a misconduct. One of the illustrations of misconduct can be when the arbitrator takes a document at the back of the opposite party and still relies upon that document in order to give the award. It will tantamount to a betrayal of confidence of the parties.

The learned counsel for the petitioner submitted that the arbitrator concluded the proceedings on 27.11.1991 with a biased mind when he received document Ex.02/B through- letter Ex.Ol/A dated 28.11.1999 and these documents were accepted on 28.11.1991. Not only this, these documents were acted upon by the arbitrator while giving the award dated 18.12.1991 and this amounts to misconduct. Mr. Amarjit Singh, the learned counsel appearing on behalf of the Board submits that the document though was received by the arbitrator but it was not acted upon. It was only the calculations of unit wise consumption.

I have seen the documents Ex.02/B and award Ex.01/R. In document Ex.02/B the following observations have been written :-

"K.W.H. meter found dead stop as per MTP report of 21.12.89. Meter changed vide MCO No. 4332 dated 24.12.89. Consumption of KWH = 8556 units (meter dead). Consumption of KVAH me-ter = 92076 x .8-5 Ps. = 78264 unit.

Meter again changed vide MCO No. 59/4332 dt. 7.1.90 on a/c of disc moving but digit not moving."

The reading of the award would show that the learned arbitrator Mr. O.P. Kakkar relied on these very observations, which are incorporated in paras 1 and 2 after ihe heading "AWARD" and thereafter he came to the conclusion that the petitioner may be charged for the months of December, 1989 on the average consumption of 3 months period starting from October 1990 to December 1990 and the amount of the''firm may be overhauled accordingly. Simple interest @ 18% may be charged on the balance.payable amount w.e.f. January 1990 till the date of payment of there-vised bill, otherwise normal surcharge will be applicable as per HSEB tariff. The reading of the award would further show that the entire decision of the arbitrator was based on the document Ex.02/B. If an arbitrator takes or accepts document at the back of the party, it would certainly amount to misconduct in my opinion. I am not in a position to agree with the submission of the learned counsel for the respondents that the arbitrator has not misconducted himself as he wanted the document for the purpose of pronouncement of the award and he gave such directions when the arbitration proceedings were going on. There is no indication in the award to this extent.

In this view of the matter, I allow this revision; set aside the impugned orders and again refer the matter to the arbitrator, who shall give a fresh decision after taking such evidence into consideration but only in the presence of the parties. If Shri O.P. Kakkar is alive and is willing to conduct the proceedings, he will do the same. If for any reason he is not in a position to conduct the arbitration proceedings, it will be open to the Board to appoint an arbitrator, who shall give the award within four months from the date of entrance upon the reference.

Let the parties may again appear before the arbitrator on 21,5,2001.

Petition allowed.