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CASE NO.: Appeal (civil)  7978 of 2004

PETITIONER: Hari Om Maheshwari  

RESPONDENT: Vinitkumar Parikh

DATE OF JUDGMENT: 09/12/2004

BENCH: N.Santosh Hegde & S.B.Sinha

JUDGMENT: J U D G M E N T

(Arising out SLP (c) No. 16202 of 2003)   With

CIVIL APPEAL NO. 7979           OF 2004 (Arising out SLP (c) No. 16360 of 2003)

SANTOSH HEGDE, J.

         Heard learned counsel for the parties.   Leave granted.  

These appeals are preferred against the common judgment and order  passed by the Appellate Bench of the High Court of Judicature at Bombay  whereby the said Bench dismissed the appeals filed by the appellants herein  against the judgment and order of the learned Single Judge of the said High  Court  allowing the applications filed by the respondent herein by setting  aside the awards made by the Arbitrators.          Two disputes pertaining to the claim of the appellants against the  respondent herein were referred to arbitration and the same were numbered  as Arbitration Reference No. 313/95 in the case of Deepa Jain  and  Arbitration Reference No. 316/95 in the case of Hari Om Maheshwari the  appellants herein.  Though both the arbitration proceedings were taken up  for consideration together. In Reference  Case No. 313/95 i.e.  case of Deepa  Jain the evidence of both the parties concluded on 29th of January, 1999  while the evidence of the appellant in Reference Case No. 316/95 pertaining  to Hari Om Maheshwari was concluded on 8th of April, 1999 and the matter  was listed for evidence of the respondent in that case to 10/11th of May,  1999.  On that day i.e. on 10th of May, 1999 the respondent herein remained  absent. The Arbitrators  on that day closed the evidence and posted the  matter for making awards. Before the said awards were made on 20th May,  1999 the respondent herein sent an application to the Arbitrators seeking  further opportunity to lead evidence in the Reference Case No. 313/95 of  Deepa Jain in which the evidence of both the parties had closed.  No  application was made in Reference Case No. 316/95 which is the arbitration  case of Hari Om Maheshwari. From the record it is seen that the said  application was not entertained by the Arbitrators and they delivered the  award sometime in November, 1999.  It is against the two awards the  respondent herein preferred two applications to set aside the said awards  under Section 30 of the Arbitration Act, 1940 (hereinafter referred to as ’the  Act’)  before the learned Single Judge of the Bombay High Court.  It was his  contention that he could not attend the arbitration proceedings on 10th May,  1999 because on the previous date of the proceedings he had wrongly noted  down the next date of hearing.  Hence, the Arbitrators ought to have given  him an opportunity of presenting his evidence before making an award.

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                The learned Single Judge who heard the two applications together  accepted the case of the respondent herein and set aside the awards in  question and remitted the same to the Arbitrators for fresh disposal after  giving an opportunity  to the respondent to lead his evidence. They also  directed that one more arbitration proceedings between one Jayesh Sanghani  and the respondent herein which was earlier remanded to the Arbitrators  should be decided along with these arbitration proceedings.  

       An appeal filed against the said common order of the learned Single  Judge before an Appellate Bench of the Bombay High Court came to be  dismissed and it is against this common order of High Court of Bombay that  the appellant is before us.          Shri Jaideep Gupta, learned Sr. counsel appearing for appellant herein  contended that the grounds on which the High Court has set aside the award  are not the grounds contemplated under Section 30 of the Act.  He submitted  that arbitration proceedings having started in the year 1995 could not be  completed even in the year 1999, therefore, the High Court ought not to have  interfered with the award. He pointed out that in Reference Case No. 316/95  pertaining to Deepa Jain the evidence had already concluded  and the  explanation given by the respondent for not leading evidence on 10th of May,  1999 was frivolous  and the Arbitrators rightly  did not entertain a prayer for  granting a further opportunity for leading evidence.  Such a denial of a  further opportunity by the Arbitrators would not be a ground contemplated  under Section 30 of the Act to set aside the award.  Hence, the courts below  have gone beyond the scope of Section 30 of the Act while allowing  petitions to set aside the arbitration awards.  

       Shri  U.U. Lalit, learned Sr. Counsel appearing for the respondent  contended that three arbitration proceedings against the respondent herein  were being held simultaneously  by the same Arbitrators which involved  similar issues.  In the first arbitration case  of Jayesh Sanghani  court had  already set aside the awards and remitted the matter to the Arbitrators and  since the  Arbitrators did not grant a reasonable opportunity  to the  respondent to lead his evidence in these cases,   the High Court was justified  in giving a further opportunity to the respondent. Hence, this is not a fit case  for interference under Article 136 of the Constitution of India.  

From the above narrated facts the question that falls for our  consideration is whether the learned Single Judge or the Division Bench of  the High Court were justified in setting aside the award of the arbitrators  solely on the ground that the respondent herein who failed to appear before  the arbitrators on a day fixed for his evidence ought to have been granted  another opportunity to produce his evidence. The relevant part of the  proceeding note of the arbitrators dated 8.4.1999 reads thus :

"Meeting adjourned to 10th & 11th of May, 1999 at 4.00  p.m.    No notice to the parties."

       On 10th of May, 1999 when the arbitrators met, the respondent was  not present. So the following order was made by the arbitrators :

"Neither the respondent nor his Advocate is present. Matter was  kept at 4.00 p.m. for hearing. We have waited for the  respondent to come up to 4.40 p.m. Neither of them is present.  Matter was for Examination in Chief to be conducted by the  respondent’s Advocate. It seems that they do not wish to lead  any evidence in the matter. The case is closed. We shall make  the award."         From the above it is clear that though on 8.4.1999 the respondent and  his advocate were present and in their presence the matter was adjourned to  10.5.1999. They were not present on the said date consequent to which the  arbitrators decided to close the proceeding and adjourned the matter for  pronouncement of the award. This is an order made in Reference  No.316/1995 in the case of Hari Om Maheshwari, one of the appellants

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herein obviously because in Arbitration Reference No.313/1995 in the case  of Deepa Jain the evidence of both the sides had already concluded which  was well within the knowledge of the respondent. Inspite of the same for  reasons of his own, the  respondent sent a representation to the arbitrators in  Reference No.313/1995 on 20.5.1999 seeking another opportunity to lead  his evidence which was not acceded to by the arbitrators who made the  award in November, 1999.  

It is the above award that was challenged under section 30 of the  Arbitration Act, 1940 before the learned Single Judge by respondent which  came to be allowed by the learned Single Judge. While doing so learned  Single Judge observed :

"the cross-examination of M/s D. Jain and Co. was  over in 1997, the cross-examination of witness  examined in Shri Maheshwari’s reference was  completed on 8th April 1999 and the Arbitrators  adjourned the matter to 10th and 11th May 1999 for  the petitioner to lead his evidence. However, it  appears that the petitioner noted a wrong date and  therefore, he did not appear on 10th May 1999. It is  clear from the record that there is an application  submitted by the petitioner before the Arbitrators on  20th May 1999 regarding the mistake committed by  him in recording the date of hearing and requested  the Arbitrators to give an opportunity to lead the  evidence. One can understand if the Arbitrators have  after closing the matter for award have delivered the  award immediately but since the Arbitrators had not  deliver their award by 20th May 1999, they also did  not deliver their award immediately thereafter, but  waited till November 1999 to make their award, the  Arbitrators could have easily permitted the petitioner  to lead evidence. I do not think that the Arbitrators  were justified in denying the petitioner an  opportunity to lead evidence\005\005."  

       This finding of the learned Single Judge has been accepted by the  Division Bench without any further discussion.

       In the above circumstances, the question for our consideration is ; was  the High Court justified in interfering with the discretionary jurisdiction of  the arbitrators while entertaining a petition under section 30 to set aside an  award. Section 30 of the Arbitration Act 1940 reads thus :

       "30. Grounds for setting aside award. \026 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 invalid under  Sec. 35;

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

A bare reading of the said section shows that the civil court has very  limited jurisdiction to interfere with an award made by the arbitrators and it  certainly does not permit the civil court including the High Court to interfere  with the discretionary order of granting or refusing an adjournment. This

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Court in Arosan Enterprises Ltd. v. Union of India [(1999) 9 SCC 449]  considering section 30 of the Act held thus :

"Section 30 of the Arbitration Act, 1940 providing for  setting aside an award of an arbitrator is rather restrictive  in its operation and the statute is also categorical on that  score. The use of the expression "shall" in the main body  of the section makes it mandatory to the effect that the  award of an arbitration shall not be set aside excepting  for the grounds as mentioned therein to wit: (i) arbitrator  or umpire has misconducted himself; (ii) award has been  made after the supersession of the arbitration or the  proceedings becoming invalid; and (iii) award has been  improperly procured or otherwise invalid. These three  specific provisions under Section 30 thus can only be  taken recourse to in the matter of setting aside of an  award. The legislature obviously had in its mind that the  arbitrator being the Judge chosen by the parties, the  decision of the arbitrator as such ought to be final  between the parties. Reappraisal of evidence by the court  is not permissible and as a matter of fact exercise of  power by the court to reappraise the evidence is unknown  to proceedings under Section 30 of the Arbitration Act.  In the event of there being no reasons in the award,  question of interference of the court would not arise at  all. In the event, however, there are reasons, the  interference would still be not available within the  jurisdiction of the court unless of course, there exist a  total perversity in the award or the judgment is based on  a wrong proposition of law. In the event however two  views are possible on a question of law as well, the court  would not be justified in interfering with the award. The  common phraseology "error apparent on the face of the  record" does not itself, however, mean and imply closer  scrutiny of the merits of documents and materials on  record. The court as a matter of fact, cannot substitute its  evaluation and come to the conclusion that the arbitrator  had acted contrary to the bargain between the parties. If  the view of the arbitrator is a possible view the award or  the reasoning contained therein cannot be examined."

        A similar view has also been taken in  State of U.P.  vs.  Allied  Constructions (2003) 7 SCC 396 and  Continental Construction  Ltd.   vs.     State of U.P.    (2003)8 SCC 4.   

From the above it is seen that the jurisdiction of court entertaining a  petition or application for setting aside an award under Section 30 of the Act  is extremely limited to the grounds mentioned therein and we do not think  that grant or refusal of an adjournment by an arbitrator comes within the  parameters of section 30 of the Act. At any rate the arbitrator’s refusal of an  adjournment sought in 1999 in an arbitration proceeding pending since 1995  cannot at all be said to be perverse keeping in mind the object of the Act as  an alternate dispute resolution system aimed at speedy resolution of disputes.  

       We think both the learned Single Judge and Division Bench have  erred in setting aside the award only with a view to give an opportunity to  the defaulting respondent to lead evidence which was rejected by the  arbitrators by their reasoned order of 10.5.1999.

       For the reasons stated above we allow these appeals, set aside the  orders of the learned Single Judge as confirmed by the Division Bench and  restore the award of the arbitrators. Appeals allowed.