Appeal against District Judge ordering modification of arbitral award. High Court held appellants waived right to be heard by non-appearance, partner had authority to refer dispute, and award was on merits, dismissing the appeal.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
FAO No. 4610 of 2003 1
IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH
FAO No. 4610 of 2003 Date of decision: September 02, 2009
M/s Surya Rice Traders and others
........ Appellants
Versus
The Punjab State Civil Supplies Corporation Ltd (PUNSUP) and others
.......Respondent(s)
Coram: Hon'ble Ms Justice Nirmaljit Kaur
-.-
Present: Mr. Jai Bhagwan, Advocate for the appellants
Ms Deepali Puri, Advocate for respondents No. 1 and 2
-.-
Nirmaljit Kaur, J.
This is an appeal against the judgement dated 08.09.2003 passed by the District Judge, Sangrur, whereby the application filed by the appellants under Section 34 of the Arbitration and Conciliation Act, 1996 ( in short the 1996 Act) against the Award dated 10.12.1999 was disposed of by partly modifying the Award.
A dispute arose between the parties and the matter was referred to the Arbitrator, who vide his award dated 10.12.1999 accepted the claim of
FAO No. 4610 of 2003 2
the respondent and held that a sum of Rs.38,61,888/- were recoverable from the appellants, along with the interest.
Aggrieved against the aforesaid award, the appellants filed an application under Section 34 of the 1996 Act before the District Judge, Sangrur, who vide judgement dated 08.09.2003 modified the award and reduced the reduced the award for a sum of Rs.9,24,403/-, by observing as follows:
“ However, the respondents have submitted the fresh statement of account EX R2 whereby the balance recoverable on account of shortage and interest has been reduced. As per the agreement, the economic cost and interest are excepted matters and have to be taken as adjusted by the Managing Director. As regards the remaining amounts i.e. Cost of bag lying with the miller, sales, tax, TDS, quality cut, those remained the same. According to respondents a sum of Rs.4,32,273/- was due from the applicants on 01.07.1995. The total amount on 31.12.2000 was Rs.9,24,403/-. The award is, therefore, liable to be modified. I accordingly, modify the award to the effect that a sum of Rs.9,24,403/- is due from the applicants recoverable on 31.12.2000. This issue is decided accordingly.”
Now, the judgement dated 08.09.2003 passed by the District Judge, Sangrur, has been challenge before this Court by the appellants on the ground that the award was an ex-parte award and the Arbitrator had conducted himself in an irregular manner. It was stated that on 17.05.1999,
FAO No. 4610 of 2003 3
the Arbitrator passed the following orders:-
“S. Asstt. For the Punsup Sangrur present.
Counsel for the respondent Shri Pradeep Goyal is not present. Respondent is also not present. There is no intimation of their absence for today. So, orders for proceeding against the respondent ex-parte are given.
Since no replication is filed till date, so no more opportunity for the same.
To come up for cross exam. of the deponent on dated 03.06.1999 at 2.00 p.m. who be called for.”
However, on the same day, a second order was passed, which reads as
under:-
“In view of the respondent and his counsel not being present and the respondent having been ordered to be proceeded against ex-parte, there is no need of calling the deponent for cross examination. The affidavit given by him to be considered as such. To come up later on for final consideration.”
After hearing learned counsel for the parties, I find that it has not been mentioned either before this Court or the District Judge as to why the appellants or their counsel did not appear before the Arbitrator on 17.05.1999. In the absence of any proof or explanation for non appearing before the Arbitrator, no fault can be found with the award passed by the Arbitrator to proceed against ex parte. No mala fide can be read into the two orders (quoted above) having passed on the same day by the Arbitrator, inasmuch as, no effort was made by the appellants to protest and rejoin the
FAO No. 4610 of 2003 4
proceedings or move any application before the Arbitrator from 17.05.1999, when the above order was passed up to the date of the award on 10.12.1999.
Moreover, the District Judge, Sangrur has dealt with each and every aspect of the matter. Learned counsel for the appellant could not point out any defect or anything contrary to the findings recorded by the District Judge, Sangrur in para 9 and 10 of its judgement, which are relevant for the purpose of adjudicating upon the controversy involved in the present case, which reads as follows:-
“9. It is also the case of the applicants that they were wrongly proceeded against ex parte on 17.05.1999 and, therefore, no proper opportunity was afforded to them to cross examine the witnesses produced by the present respondent or to lead their evidence. In this respect, the applicants produced Shri Pardeep Goyal, Advocate as PW2 and Dev Raj PW3. According to Shri Pardeep Goyal, PW2, he was engaged as a lawyer by the applicants in the arbitration case and he had appeared before the Arbitrator. According to him, he waited for the Arbitrator on 09.06.1999 uptill 4.30 p.m. And thereafter left for his residence but the learned Arbitrator failed to turn up on that day. He claims to have enquired for the Secretarial Staff but could not locate them. Shri Pardeep Goyal, Advocate, PW2 no where says if he had appeared before the Arbitrator on 17.05.1999 and if case was adjourned from that day to 09.06.1999. A perusal of affidavit of Dev Raj PW3 also shows that he no where deposed if he had appeared before the Arbitrator on
FAO No. 4610 of 2003 5
17.05.1999 on which date they were proceeded against ex parte. It is therefore, a case in which it is clear from the arbitration proceedings that case was fixed for 17.05.1999 but neither the partners of the firm nor their counsel appeared before the Arbitrator on that day. Even in these proceedings, it has not been mentioned as to why the applicant or their counsel did not appear before the Arbitrator. From the pleadings no just grounds are shown for absence from the proceedings or for setting aside the award. The case was never fixed for 09.06.1999 and therefore, the efforts made by Shri Pardeep Goyal, Advocate to locate the Arbitrator on that day, could not succeed and that is why he could not find the secretarial staff of the Arbitrator in the office. Since no just grounds have been shown or pleaded by the applicants for absenting from the proceedings before the Arbitrator on 17.05.1999, there is no justification to set aside the award.
FAO No. 4610 of 2003 6
case that he appeared before the Arbitrator on 17.05.1999, it cannot be said if he was wrongly proceeded against ex parte on that date.”
Learned counsel for the appellant argued that the Arbitrator did not consider the cross objections. It was further stated that he did not get any opportunity to argue the cross objections. The counsel for the appellants having failed to appear before the Arbitrator on the date fixed, cannot now turn around to say that no opportunity was given to him to raise the cross objection. He did not appear before the Arbitrator due to his own fault. Thus, he cannot blame the Arbitrator for not considering the cross objections, which were never raised before him.
Learned counsel for the appellants raised yet another argument that in view of Section 9 of the Partnership Act, only one partner of the firm could not refer the dispute to the Arbitrator. Section 9, is reproduced as under:-
“Effect of notice that firm not bound by act of partner
9. If it is agreed between the partners to restrict the power of any one or more of them to bind the firm, no act done in contravention of the agreement is binding on the firm with respect to persons having notice of the agreement. R.S.O. 1990, c. P.5, s. 9.”
The argument raised by the learned counsel for the appellants cannot be accepted in view of the fact that in para 12 of the partnership deed dated 03.09.1994, it is specifically mentioned that any one of the partners is competent to refer the dispute to the Arbitrator on behalf of the firm.
The present appeal deserves to be dismissed on yet another ground. The appellants did not deny the admission made by Dev Raj, PW-3
FAO No. 4610 of 2003 7
in his cross examination to the effect as held by the District Judge 'that whole of the paddy stored was not milled by them due to change of policy by the Government. According to the respondent Corporation various other amounts such as the economic cost of balance paddy, cost of bags, sales tax, TDS, amount of quality cut and interest were due from the applicants.' In view of the same, it is apparent that the dispute has been decided fairly and on merits and no grievance has been caused to them on account of their absence before the Arbitrator.
Each and every argument raised by the learned counsel for the appellant before this Court was also raised before the District Judge, Sangrur in their application under Section 34 of the 1996 Act and the same have been dealt with by the District Judge, Sangrur, satisfactorily. The appellants could not point out any infirmity in the same. More over, the District Judge, Sangrur, after taking the entire matter into consideration as well as the arguments of the appellants, modified the award, reducing it from Rs.38,61,888.84 to Rs.9,24,403/- on the basis of fresh statement of account Ex R2 after deleting the balance recoverable on account of shortage and interest being 'excepted matters'. Thus, the objections, if any, of the appellants have also been properly dealt with.
In view of the above, no ground to interfere in the well reasoned judgement dated 08.09.2003 passed by the District Judge, Sangrur has been made out. Accordingly, the present appeal is dismissed being devoid of merits.
September 2, 2009 mohan
(Nirmaljit Kaur) Judge
3 issues framed by the court
Whether the arbitrator acted irregularly by proceeding ex parte when the appellants failed to appear without explanation.
Whether a single partner had the authority to refer the dispute to arbitration contrary to the Partnership Act.
Whether the District Judge's order setting aside the award and holding a fresh hearing should be stayed or is supportable in law.
3 provisions across 3 enactments
M/s Surya Rice Traders and others
The Punjab State Civil Supplies Corporation Ltd (PUNSUP)
Nirmaljit Kaur
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
