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Case Number
Attorney(S)
  • A.N.Raina
  • Advocate General
  • for Appellant
  • Ishwar Singh
  • for Respondent.
Judges
  • Hon'ble Sh. Justice Mian JalaludDin
  • Hon'ble Sh. Justice Janki Nath Bhat
Acts
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Citation Codes
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citation codes
Case Number
Attorney(S)
  • A.N.Raina
  • Advocate General
  • for Appellant
  • Ishwar Singh
  • for Respondent.
Judges
  • Hon'ble Sh. Justice Mian JalaludDin
  • Hon'ble Sh. Justice Janki Nath Bhat
Acts
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Smart Summary

Court Opinion Summary

Factual and Procedural Background

This matter arises from an arbitration between Sardar Mohinder Singh and Company ("the petitioner") and the Union of India. An application by Sardar Mohinder Singh and Co. was filed in the High Court on 12-8-1969 seeking that an award made by the arbitrator Mr. T.B. Bhonsla be made a rule of the court. The Union of India filed a separate application on 9-10-1969 under Section 33 of the Arbitration Act seeking to set aside the award.

Both petitions were heard together by a learned Single Judge (Hon'ble Mr. Justice Jaswant Singh). On 15-12-1969, counsel for the Union of India (Mr. Amar Chand) stated that the Union would have no objection if the award, insofar as it related to the amount awarded in favour of Mohinder Singh and Co., were remitted to the arbitrator for reconsideration after recording and scrutinising the statement of Mr. D.K. Malhotra (an Executive Engineer then posted in Nepal), who would be produced within one month. Counsel for the petitioner agreed.

Pursuant to that statement, the Single Judge ordered remission of the award to the arbitrator to record the statement of Mr. D.K. Malhotra and to resubmit the award by 30-1-1970. The Union of India filed a Letters Patent Appeal against that order; a stay was granted on admission. Subsequently, Sardar Mohinder Singh and Co. also filed an appeal (cross-appeal).

Legal Issues Presented

  1. Whether the order remitting the award to the arbitrator (made with the consent of counsel) was appealable — i.e., whether a consent order in arbitration proceedings is maintainable as an appeal under the Arbitration Act read with the Code of Civil Procedure (particularly Section 96 CPC and Sections 39 and 41 of the Arbitration Act).
  2. Whether the Single Judge's remission of the award fell within the classes of orders under Section 39(1) of the Arbitration Act (and thus whether the appeal was competent).
  3. Whether remission of the award under Section 16 of the Arbitration Act was appropriate (and whether the conditions of Section 16(1)(c) — error apparent on the face of the award — were satisfied).
  4. On the merits, whether the arbitrator misconducted himself by admitting inadmissible or privileged documents, thereby violating principles of natural justice and vitiating the award.

Arguments of the Parties

Union of India (Appellant) — Principal Contentions

  • The arbitrator had misconducted himself by not taking the whole of the evidence the Union would have produced and by admitting certain documents without proof.
  • Certain documents were admitted or relied upon by the arbitrator despite being privileged, and the arbitrator's treatment of those documents vitiated the proceedings and the award.
  • The award ignored and violated the principles of natural justice.
  • The remission of the award was not appropriate because the conditions for remission under Section 16(1)(c) (error apparent on the face of the award) were not satisfied; counsel for the Union argued an error must be apparent on the face of the award.
  • Mr. Raina (Advocate General) advanced detailed submissions on the alleged misconduct, reliance on privileged documents, and violation of natural justice.

Sardar Mohinder Singh & Co. (Respondent / Cross-Appellant) — Principal Contentions

  • The order remitting the award was a consent order effected by the statement of the Union's counsel; a consent order is not appealable under Section 96 CPC and, on principles of estoppel and consent, the Union's appeal was barred.
  • Even if an appeal were maintainable, the order under appeal was not one of the orders enumerated in Section 39(1) of the Arbitration Act; remission to the arbitrator is a step under Section 16 and is not appealable.
  • The Single Judge's detailed order found that the Union had been the delinquent party and that there had been no proof that the arbitrator relied on privileged or inadmissible documents.

Table of Precedents Cited

No precedents were cited in the provided opinion.

Court's Reasoning and Analysis

The court approached the dispute as a question of appealability and of the correctness of the Single Judge's remission order. Its reasoning proceeded in distinct steps:

  1. On statute-reading and scope of appealability: The court emphasised that the Arbitration Act is a special enactment with its own scheme. Section 39 of the Arbitration Act enumerates six kinds of cases in which an appeal lies; the court interpreted that enumeration as specifying the classes of orders which are appealable and as excluding other orders from appeal under that Act.
  2. On interaction with the Code of Civil Procedure: The court considered Section 41 of the Arbitration Act (which makes certain provisions of the Code of Civil Procedure applicable subject to the Act and rules) and Section 96 CPC (which bars appeals from decrees passed with consent). The court held that Section 41 does not exclude the application of CPC provisions concerning the competence or maintainability of appeals; the two enactments are to be read together.
  3. On the effect of consent and estoppel: The court relied on the fact that the counsel for the Union (Mr. Amar Chand) had expressly agreed on 15-12-1969 that the award be remitted to the arbitrator to record the statement of Mr. D.K. Malhotra. The court treated that statement as a consent which, under Section 96(3) CPC and general principles of estoppel, barred the Union's appeal against the consent order.
  4. On whether the order before the Division Bench fell within Section 39(1): The court examined Section 39(1) and concluded that the Single Judge's order remitting the award did not fall into any of the six appealable categories. The court noted that, of the enumerated categories, only the sixth (setting aside or refusing to set aside an award) might remotely be relevant, but the Single Judge had neither set aside nor refused to set aside the award; he had remitted it under Section 16. Therefore the appeal was not competent under Section 39.
  5. On Section 16 and 'error apparent on the face of the award': The court discussed the concept of an error apparent on the face of an award and observed that no rigid definition can be laid down — each case depends on its facts. While acknowledging the Union's contention that an error must be apparent to justify Section 16(1)(c), the court concluded that the Single Judge's remission under Section 16 was not an order against which an appeal lies.
  6. On the merits of alleged misconduct / violation of natural justice: The court noted that the Single Judge had prepared a detailed order setting out the factual history and that, on that narration, it appeared the Union of India had been the delinquent party. The court found no proof before the Single Judge that the arbitrator had relied on privileged documents or inadmissible material in a way that vitiated the award. Given the absence of established prejudice or proof of reliance on privileged material, the court declined to allow the appeal on merits.
  7. Conclusion of reasoning: Combining the procedural bar (consent / Section 96 CPC and Section 39 appealability analysis) and the lack of persuasive merit on the misconduct/natural justice points, the court dismissed the Union's appeal and the cross-appeal by Sardar Mohinder Singh & Co.

Holding and Implications

Holding: The Letters Patent Appeal by the Union of India and the cross-appeal by Sardar Mohinder Singh & Co. were both dismissed.

Direct consequences recorded by the court:

  • The appeal by the Union of India was held to be barred (in law and on the facts) — the Single Judge's order remitting the award was a consent order and not appealable; Section 96 CPC and estoppel principles applied.
  • The order remitting the award was treated as a remission under Section 16 of the Arbitration Act, an order against which no appeal lies under the statutory scheme (Section 39 did not cover this order).
  • On the merits, the court found no force in the Union's contentions about arbitrator misconduct, use of privileged or inadmissible documents, or violation of natural justice, and therefore dismissed the appeal on merits as well.
  • The cross-appeal by Sardar Mohinder Singh & Co. also failed and was dismissed.
  • There was no order as to costs.
  • The stay that had been granted by the court on 9-1-1970 was vacated.

The opinion does not purport to establish a new, broader precedent beyond the application of existing statutory provisions (Arbitration Act sections and Section 96 CPC) to the facts of this case; the decision addresses appealability and the particular facts and statements of counsel in this matter.

Show full summary ...

    The Union Of India v. M/S. Mohinder Singh And Co.

    1. An application was filed by Sardar Mohinder Singh and Co. on 12-8-1969, in the High Court, requesting the court to make an award, given by one Mr. T.B Bhonsla, arbitrator, appointed in the case to settle the dispute between the said company and the Union of India, a rule of the court. Another application by the Union of India was made on 9-10-1969 under Section 33 of the Arbitration Act for setting aside the award. Both the petitions were heard simultaneously by a learned Single Judge of this Court. (Hon'ble Mr. Justice Jaswant Singh). Elaborate arguments were addressed by the learned counsel for the parties before His Lordship in both these applications. But Mr. Amar Chand, learned counsel for the Union of India, made a statement on 15-12-1969 to the effect that the respondent i.e the Union of India, “will have no objection if the award in so far as it relates to the amount awarded in favour of the petitioner i.e Mohinder Singh and Co. is remitted to Mr. T.B Bhonsla for reconsideration after recording and scrutinising the statement of Mr. D.K Malhotra, Executive Engineer, at present posted in Nepal, who will be produced by my client before the arbitrator within one month from today.”

    2. When this statement was made the counsel for the petitioner i.e Mohinder Singh, agreed to this course being adopted. Thereupon His Lordship directed that the award be remitted to the arbitrator to examine Mr. D.K Malhotra mentioned in the statement of Mr. Amar Chand and further directed the arbitrator to reconsider the award after this statement and resubmit the award by the 30th January, 1970. Against this order, a Letters Patent Appeal was preferred by the Union of India in this court. At the time of the admission of the appeal, a stay was granted by the Bench admitting the appeal. Later on Mohinder Singh and Company also preferred an appeal.

    3. The main grounds of the appellant taken in the appeal presented by the Union of India are that the arbitrator had misconducted himself, that he had not taken the whole of the evidence that the Union of India would have produced, that certain documents were admitted by the arbitrator without their being proved that certain documents were entertained by the arbitrator which vitiated the entire proceeding, that the counsel for the appellant under some misconception conceded the remission of the award without considering the consequence following therefrom without seeking instructions for this purpose. The appeal of S. Mohinder Singh inter alia mentions the following grounds:— That as the order of the learned single Judge dated 15-12-1969 was passed with the consent of the counsel for the parties no appeal would lie but if the Division Bench, which would hear the Letters Patent Appeal, come to the conclusion that an appeal would lie then a decree may be passed in terms of the award. The other grounds taken in the appeal are not material for the disposal of this Letters Patent Appeal. Mr. Raina, the learned Advocate General, appearing for the Union of India, addressed long arguments. The crux of the arguments of Mr. Raina was that the arbitrator had misconducted himself. He had first held certain documents to be privileged and later on allowed Sardar Mohinder Singh and Co. to rely on these documents. This decision of the arbitrator was therefore vitiated as his award was based both on admissible and inadmissible evidence. He further argued that the award was given by the arbitrator ignoring and violating the principles of natural justice.

    4. A preliminary objection was taken by the learned counsel for Mohinder Singh and Company that the order remitting the award to the arbitrator for further proceedings was a consent order and as such it was not appealable, under Section 96 of the CPC. Mr. Raina, Advocate General, however, argued that under Section 41 of the Act, Code of Civil Procedure, would apply when the provisions of the Arbitration Act or the Rules made thereunder did not apply. Section 41 of the Arbitration Act reads as under:—

    Subject to the provisions of this Act and of Rules made thereunder:—

    (a) the provisions of the Code of Civil Procedure (X of 1977), shall apply to all proceedings before the Court, and to all appeals, under this Act, and (b) the court shall have for the purpose of, and in relation to, arbitration proceedings, the same power of making orders in respect of any of the matters set out in the Second Schedule as it has been for the purpose of, and in relation to any proceedings before the court:

    Provided that nothing in Clause (b) shall be taken to prejudice any power which may be vested in an arbitrator or umpire for making orders with respect to any of such matters.”

    5. He further argued that Section 89 mentions the orders against which an appeal would lie. According to Mr. Raina these two Sections read together i.e 39 and 41 of the Arbitration Act, a consent order, passed in arbitration proceedings, would be open to appeal because the language of Section 41 of the Arbitration Act would exclude the application of the provisions of the CPC. This argument is ingenious but we are not impressed with it. The Arbitration Act is a special enactment and lays down the procedure and the law relating to arbitration. It has its own scheme. So far as appeals are concerned, it has clearly laid down under Section 39 six finds of cases in which an appeal lies and in no other case an appeal would lie. This Section only enumerates the classes of cases or the orders passed which are appealable. But this does not make the Code of Civil Procedure inapplicable so far as the competence or maintainability of the appeal is concerned. Section 41 nowhere lays down the prohibition of the application of the Code of Civil Procedure about the competence or maintainability of the appeal. These two Sections have to be read together. The intention of the Legislature has been to specify the orders against which an appeal would lie which means that other orders passed under arbitration proceedings are not appealable.

    6. It means nothing more than that Section 96(3) of the CPC is clear that no appeal shall. He from a decree passed with the consent of the parties. Apart from the provisions of Section 96 of the CPC on general principles of estoppel no appeal lies against an order which has been procured on the request of the appellant himself in this behalf. We have already referred to the statement of Raizada Amar Chand earlier in this judgment. In this statement the learned counsel has categorically agreed to the remission of the award to the arbitrator for recording the statement of Mr. D.K Malhotra, Executive Engineer. Therefore, in our opinion this appeal of the Union of India is clearly barred under Section 96 of the CPC which we hold as applicable to this case, and general principle of estoppel. A further argument of Mr. Ishwar Singh, appearing for S. Mohinder Singh and Co., was that the order under appeal is not one of the orders mentioned in Section 39(1) because by this order none of things mentioned in that Section has been done. Six kinds of orders are mentioned which are appealable. First five have not the remotest applicability to the facts of the present case. The only category under which Mr. Raina could bring his appeal may be number six viz. setting aside and refusing to set aside an award. We also feel that the order under appeal is none of the orders mentioned in Section 39 and as such this appeal is not competent.

    7. The learned counsel for Mohinder Singh and Co., argued that the award has neither been set aside nor has the court (the learned single Judge) refused to set aside the award. It has been remitted under Section 16 of the Arbitration Act. Mr. Raina, however, argued that Section 16 of the Arbitration Act has no application because none of the conditions mentioned in that Section have been fulfilled in this case. Reliance has been placed on sub-section (c) of Section 16(1) of the Arbitration Act by the learned counsel for the respondent i.e S. Mohinder Singh and Co., to meet this argument of Mr. Raina. Mr. Raina, Advocate General, says that an error must be apparerfc on the face of an award. What is an error apparent on the face of an award has been the subject of numerous decisions of the Supreme Court, other High Courts and this High Court as well. We need not traverse covered ground.

    8. What is an error apparent on the face of award can always and has always been a subject-matter of discussion. What may be apparent to (A) may not be so clearly apparent to (B). For instance, every arbitrator knows and particularly those who have some experience in giving awards, that an error apparent on the face of an award would make an award illegal and liable to be set aside but there are so many cases where errors have been discovered after discussion on the face of an award, and the award set aside. This clearly means that at least to the arbitrator, for the time being the error did not appear to be apparent on the face of the award. No hard and fast rule can be laid down as to what is an error apparent on the face of the record, each case has to be decided on its merits. In this case the learned counsel for the Union of India pressed this point that the arbitrator was wrong in not recording the statement of Mr. D.K Malhotra. This, to him, seemed to be apparent on the face of the award and he pointed it out and then both the counsel agreed that the award be remitted for recording the statement of Mr. D.K Malhotra and for reconsideration by the arbitrator. Therefore, in our opinion, the order under appeal does not fall within any of the categories of Section 39 but can be brought under Section 16 against which there is no appeal.

    9. Mr. Raina's elaborate argument about violation of principles of natural justice, use of inadmissible evidence, and reliance on privileged documents by the arbitrator need not detain us any longer. The learned single Judge has taken very great pains to draft a very detailed order, giving the whole history of the case. From the narration of the facts given in the order, it appears that it was the Union of India which was the delinquent party rather than S. Mohinder Singh and Co. Further it has been very properly pointed out by the learned single Judge that nothing has been proved before him that the arbitrator relied on the privileged documents and used inadmissible documents as evidence.

    10. Mr. Ishwar Singh gave us a detailed narration of the events.

    11. He argued, among other things, that on the objection of the Union of India, two witnesses for Sardar Mohinder Singh and Company were not examined because their evidence related to the so-called privileged documents, therefore no prejudice as has been rightly pointed out by the learned counsel has been caused to the Union of India. We have found that this appeal does not lie and on merits also we do not find any force in this appeal which is hereby dismissed. The other cross-appeal of Sardar Mohinder Singh and Company also fails and is hereby dismissed. There will be no order as to costs. The stay granted by this court on 9-1-1970 is also vacated.

    12. Appeals dismissed.

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    Comments

    The Union Of India v. M/S. Mohinder Singh And Co.
    (Apr 3, 1970)