(per the Hon’ble Sri Justice V. Eswaraiah)
This Civil Revision Petition is filed under Article 227 of the Constitution of India against the order, dated 30-07-2010, passed by the III Additional Chief Judge, City Civil Court, Hyderabad, (for short “the Chief Judge”) in I.A.No.2772 of 2010 in O.P.No.823 of 2005.
The petitioner herein filed the said I.A. under Section 151 CPC to reject the affidavit evidence filed by the 9th respondent and also the affidavit evidence that may be filed by respondents 7 and 8. The said petition was opposed by the 1st respondent herein by filing a counter and after hearing both sides, the Chief Judge dismissed the said application vide his order, dated 30-07-2010. Aggrieved thereby, the present Civil Revision Petition is filed.
The brief facts of the case are that the petitioner herein filed O.P.No.823 of 2005 on the file of the II Additional Chief Judge, City Civil Court, Hyderabad, against respondents 1 to 9 herein. Respondents 1 to 6 are the contesting parties and respondents 7 to 9 are the arbitrators, who passed the Arbitration award, dated 02-07-2004. The said O.P. was filed under Section 34 of the Arbitration and Conciliation Act, 1996 (for short “the Act”) making various allegations serious-in-nature against respondents 7 to 9 stating that they were not appointed by the parties and there was no arbitration agreement between the petitioner and the 1st respondent and, therefore, the arbitration award passed by them is illegal and without any jurisdiction. The petitioner has disputed the very conducting of arbitration proceedings and also the existence of the alleged award, the said O.P. has been filed to set aside the award passed by respondents 7 to 9.
In the said O.P., the 1st respondent filed a detailed counter in September, 2005 itself denying each and every allegation.
Learned counsel for the petitioner submits that the petitioner examined himself as PW.1 and after closing his evidence, the respondents have adduced oral evidence by examining RWs.1 to 5. While so, respondent No.9, who is one of the arbitrators, filed his affidavit of chief evidence. To reject the affidavit evidence filed by the 9th respondent and also the affidavit evidence that may be filed by respondents 7 and 8, the petitioner filed I.A.No.2772 of 2010 contending that respondents 7 to 9 are the so-called self styled arbitrators and R-9, one of the arbitrators, filed the said affidavit evidence.
It is further stated that there was no arbitration agreement between the petitioner and the 1st respondent and there was no dispute between them after execution and registration of the partition-cum-release deed, dated 24-11-2001. The so-called arbitrators are none other than the close relatives of the petitioner and the respondents and in view of the close relationship, the so-called arbitrators could not have taken up the so-called arbitration. The same is the subject matter of O.P. for setting aside the award.
It is further stated that the 9th respondent has already come forward with affidavit evidence to support the case of the 1st respondent and it is possible that respondents 7 and 8 may also volunteer to give evidence about the award allegedly passed by them. The jurisdiction of an arbitrator ends with passing of an award and thereafter the arbitrator becomes functus officio. The arbitrators cannot make any attempt to support or destroy the award made by them. Thus, there is an inherent disqualification for the arbitrator to give evidence in a petition for setting aside the award. The court cannot countenance the effort of the alleged arbitrators to support the award. The validity or otherwise of an arbitration award has got to be decided without placing any reliance on the oral evidence of the arbitrators. Hence, respondents 7 to 9 do not have any legal right to give evidence in the present petition. Hence, the chief examination affidavit filed by the 9th respondent is liable to be rejected.
In the said I.A., the 1st respondent filed a counter stating that the petitioner himself impleaded respondent No.9 in O.P.No.823 of 2005 and on the agreement of both the parties only, respondents 7 to 9, the arbitrators, were appointed and there was arbitration agreement with the consent of both the parties. As respondents 7 to 9 were duly appointed by the parties, it cannot be said that they were self styled Arbitrators. The 9th respondent filed chief affidavit in the month of April, 2010. The counter was filed by the 1st respondent on 29-07-2010. It is stated that after filing of the affidavit of chief evidence of R-9 in April, 2010, he has appeared for cross-examination 3 to 4 times for marking documents. The petitioner himself made the arbitrators as respondents in the said O.P. The 1st respondent also has every right to call them as witnesses to depose and bring the real facts to the notice of the Court. The arbitrators are not supporting the case of respondents 1 to 6, but they would like to speak the truth alone, which led to passing of the award. The other allegations and the averments made in the affidavit filed by the petitioner to reject the affidavit of the chief evidence of R-9 are denied and it is further stated that there is no bar for both the parties to appoint their relatives as arbitrators. No doubt, the arbitrators become functus officio after passing of the award but the fact that they were arbitrators and have conducted the arbitration proceedings and passed the award, requires to be established in view of the allegations made in the O.P., even though they have become functus officio. If they were not the arbitrators, the question of they becoming functus officio, does not arise.
It is further stated that as the petitioner himself made the 9th respondent as a party to the O.P., he would be under legal and moral duty irrespective of relationship with the parties to disclose the facts that happened during arbitration proceedings. The petitioner and the respondents are equally related to the arbitrators. It is stated that the arbitrators are not inherently disqualified to give evidence in a petition to set aside the Award. Therefore, the said petition filed by the petitioner under Section 151 CPC is not maintainable and the same is liable to be dismissed.
In the said I.A., the 9th respondent filed a counter stating that the petitioner himself impleaded him as respondent No.9 in O.P.No.1011 of 2005 and respondents 7 to 9 were duly appointed by both the parties and, therefore, it is incorrect to state that they are self styled arbitrators. It is stated that his evidence affidavit was filed in the month of April, 2010 and thereafter, appeared 3 to 4 times for marking of documents, but the petitioner was not present in the Court and, therefore, the documents could not be marked.
It is further stated that the petitioner having made the arbitrators as parties to the O.P., respondent No.9 has got every right to depose and bring the real facts to the notice of the Court. It is stated that he his least concerned whether his evidence supports the petitioner or the respondents but he got a legal duty and obligation to speak about the real facts that happened including appointment of arbitrators by both the parties, arbitration proceedings and arbitration award. Therefore, he is entitled to speak all the above facts in his evidence. It is not supporting the case of any of the parties. It is for the Court to decide the facts whether there was any arbitration agreement between the parties or not and whether there was any dispute between them or not and also decide about the legality and validity of the Award.
It is further stated that after passing of the arbitration award, the arbitrator becomes functus officio, but it cannot be said that the arbitrator, who is a party to the proceedings before the Court, suffers any disability or otherwise preventing him to speak the truth as he is appearing before the court to give evidence about arbitration proceedings. It is stated that both the parties are equally related and it is false to state that an Arbitrator is inherently disqualified to give evidence in a petition to set aside the Award.
The learned Chief Judge, after hearing both sides, dismissed the said application on 30-06-2010, by observing as follows:-
“Perused the record. It is seen from the record that arbitration OPs are filed by petitioners and evidence is being recorded. Of course, R-9 is arbitrator and he remained ex-parte earlier. However, subsequently, he filed petition to set aside ex-parte order and the same is allowed setting aisde the ex-parte order permitting to adduce evidence on his behalf. No doubt, the 9th respondent is arbitrator. But, here, these are cases where the petitioners are disputing the very conducting of arbitration proceedings and also questioning the existence of the alleged award. Under these circumstances, I am of the opinion that the arbitrator is entitled to be examined as witness and accordingly his chief affidavits cannot be rejected. Hence, this point is answered accordingly.”
Sri Vedula Venkata Ramana, learned Senior Counsel appearing for the petitioner submits that once the arbitration award is passed, the arbitrators would become functus officio and under Section 18 of the Act, the Arbitrator shall treat the parties equally and each party shall be given full opportunity to present their case. Under Section 91 of the Indian Evidence Act, 1872, when the terms of a contract, or of a grant, or any other disposition of property, have been reduced to the form of a document, they need not be proved by oral evidence. When the arbitration award is present, there cannot be any oral evidence by the arbitrators as the arbitration award speaks for itself.
It is further stated that under Section 121 of the Evidence Act, no Judge or Magistrate shall, except upon the special order of some court to which he is subordinate, be compelled to answer any question as to his own conduct in Court as such Judge or Magistrate, or as to anything, which came to his knowledge in Court as such Judge or Magistrate; but he may be examined as to other matters, which occurred in his presence whilst he was so acting. The Arbitration award passed by the Arbitrators has to be treated as a decree and, therefore, the arbitrators cannot be compelled to answer any questions as to their own conduct in the arbitral proceedings.
In support of his contention, he relied on the judgments of the Apex Court in UNION OF INDIA Vs. M/s. ORIENT ENGINEERING AND COMMERCIAL COMPANY LIMITED (AIR 1977 SUPREME COURT 2445), STATE OF ORISSA Vs. NIRANJAN SWAIN (AIR 1990 SUPREME COURT 685) and STATE OR ORISSA Vs. D.C.ROUTRAY (AIR 1983 ORISSA 163).
In ORIENT ENGINEERING AND COMMERCIAL COMPANY LIMITED (1 supra) the Apex Court held as follows:-
We live and learn from counsel's arguments each day and in this case we were asked to unlearn. Counsel for the appellant has objected, in this appeal to the examination, as a witness, of an arbitrator who has given his award on a dispute between the appellant and the 1st respondent. His contention is that, on broad principle and public policy, it is highly obnoxious to summon an arbitrator or other adjudicating body to give evidence in vindication of his award. This is a wholesome principle as is evident from S. 121 of the Indian Evidence Act. That provision states that the Judge or Magistrate shall, except upon the special order of some court to which he is subordinate be compelled to answer any questions as to his own conduct in court as such Judge or Magistrate or as to anything which came to his knowledge in court as such Judge or Magistrate, but he may be examined as to other matters which occurred in his presence whilst he was so acting. Of course, this section does not apply proprio vigore to the situation present here. But it is certainly proper for the court to bear in mind the reason behind this rule when invited to issue summons to an arbitrator. Indeed, it will be very embarrassing and, in many cases, objectionable if every quasi-judicial authority or tribunal were put to the necessity of getting into the witness box and testify as to what weighed in his mind in reaching his verdict. We agree with the observations of Walsh, A.C. J. in Khub Lal v. Bishambhar Sahai (AIR 1925 All 103) where the learned Judge has pointed out that the slightest attempt to get to the materials of his decision, to get back to his mind and to examine him as to why and how he arrived at a particular decision should be immediately and ruthlessly excluded as undesirable.
2. In this case a list of witnesses was furnished by the 1st respondent and the Registrar of the High Court in the routine course, granted summons, perhaps not adverting as to why the arbitrator himself was being summoned. That it was more or less mechanical is evident from the fact that the reason given for citing the arbitrator is the omnibus purpose of proving the case of the party - not the specific ground to be made out. We should expect application of the mind of the Registrar to the particular facts to be established by a witness before the coercive process of the court is used. It is seen that the learned Judge before whom objection was taken under S. 151, C. P. C. to the summons to the arbitrator dismissed the petition
on the score that he saw no ground to refuse to summon the arbitrator as a witness. The approach should have been the other way round. When an arbitrator has given an award, if grounds justifying his being called as a witness are affirmatively made out, the court may exercise its power, otherwise not. It is not right that everyone who is included in the witness list is automatically summoned; but the true rule is that, if grounds are made out for summoning a witness he will be called: not if the demand is belated, vexatious or frivolous. Thus the court also has not approached the question from the proper perspective. If arbitrators are summoned mindlessly whenever applications for setting aside the award are enquired into, there will be few to undertake the job. The same principle holds good even if the prayer is for modification or for remission of the award. The short point is that the court must realise that its process should be used sparingly and after careful deliberation, if the arbitrator should be brought into the witness box. In no case can he be summoned merely to show how he arrived at the conclusions he did. In the present case, we have been told that the arbitrator had gone wrong in his calculation and this had to be extracted from his mouth by being examined or cross-examined. We do not think that every Munsif and every Judge, every Commissioner and every arbitrator has to undergo a cross-examination before his judgment or award can be upheld by the appellate court. How vicious such an approach would be is apparent on the slightest reflection.
3. Of course, if a party has a case of mala fides and makes out prima facie that it is not a frivolous charge or has other reasonably relevant matters to be brought out the court may, in given circumstances, exercise its power to summon even an arbitrator, because nobody is beyond the reach of truth or trial by court. In the present case, after having heard counsel on both sides, we are not satisfied that on the present material there is justification for the examination of the arbitrator. We therefore set aside the order.
4. However, we make it clear that if the court is convinced, after hearing the respondent on a fresh application stating why he wants to examine the arbitrator, it is still open to it to issue the necessary process. Such a step must be a deliberate step and not a routine summons. With these observations we allow the appeal. There will be no order as to costs.
In the instant case, it is not a case of issuing summons in a routine manner but serious allegations have been made against the arbitrators about existence of the arbitration agreement and their appointment as arbitrators and about the genuineness of the arbitration award and also about the very conduct of the arbitration proceedings. Further, the arbitrators are made as parties to the proceedings. In fact, the 9th respondent being the arbitrator himself filed the affidavit of chief evidence and it was coming up cross-examination and for marking certain documents. Therefore, we are of the opinion that the facts in the instant case are entirely different and distinguished from the facts in the aforesaid decision.
In NIRANJAN SWAIN’s case (2 supra), the Apex Court held as follows:-
“The only points now urged by Shri G. L. Sanghi, learned counsel for the appellant, are two, namely, (1) no interest could be awarded by the arbitrator in the present case upto the date of the award but the same is obviously included in the lump sum award of' Rs. 21,11,835.00/- and the invalid part of the award not being severable from the rest, the entire award must be set aside; and (2) the High Court in its cryptic order has wrongly assumed as correct the trial Court's refusal to call the arbitrator for being examined in the Court. The learned counsel contended that any one of these defects was sufficient to set aside the entire award.
We may dispose of the second point urged by learned counsel for the appellant straightway since it does not merit any elaborate consideration. The argument of the learned counsel for the appellant relating to calling the arbitrator for examination as a witness in the Court was based on the decision of the Orissa High Court in State of Orissa v. D. C. Routray, AIR 1983 Orissa 163. That decision itself says that even though an arbitrator is a competent witness, the Court must exercise the power of calling him as a witness cautiously and sparingly and not in a routine manner. It is obvious that when the Court is requested to call the arbitrator for examination as a witness it must be shown that there is some cogent ground for his examination within the permissible limits. Nothing has been shown in the present case to indicate that it was at all necessary to call the arbitrator as a witness to depose on any matter which could legitimately be examined by the Court in the proceedings. This alone is sufficient to justify the view taken by the High Court. This contention of learned counsel for the appellant is, therefore, rejected.”
In the instant case, the arbitrator has been impleaded as a party to the proceedings by the petitioner. The petitioner made serious allegations against the arbitrators. The learned Chief Judge held that as the petitioner is questioning the very conduct of the arbitration proceedings and also the existence of the alleged award, the arbitrator is entitled to be examined as a witness. Therefore, it cannot be said that the court below has not given any reason while dismissing the said application filed by the petitioner.
In D.C.ROUTRAY’s case (3 supra) the Apex Court while placing reliance on the judgment of the Apex Court in ORIENT ENGINEERING’s case (1 supra) held as follows:-
“Two points are settled, first, the prayer for summoning the arbitrator should not be allowed in a mechanical or casual manner, and second, he should not be summoned for ascertaining from him how he arrived at the decision. The grounds on which an arbitrator can be examined are set out in the following excerpt:-
“Of course, if a party has a case of male fides and makes not prima that it is not a frivolous charge or has other reasonably relevant matters to be brought out the Court may, in given circumstances, exercise its power to summon even an arbitrator, because nobody is beyond the reach of truth or trial by Court.
The position is, therefore, clear that there is no absolute taboo. Examination of an arbitrator is permissible where misconduct is alleged, but not frivolously, or when reasonably relevant matter are to be brought out in relation to the arbitration proceeding. The ultimate deciding factor is the quest for truth.”
In the instant case, in view of the controversy involved in the O.P. filed by the petitioner, the arbitrator is a competent witness and his evidence is relevant about the very existence of the award, as the petitioner is disputing the very conduct of arbitration proceedings and also the existence of the alleged award, we are of the opinion that the arbitrator is entitled to be examined as a witness and as such, his chief affidavit evidence cannot be rejected.
In view of the aforesaid facts and circumstances of the case, we are of the opinion that the court below had rightly dismissed the said application and we do not see any infirmity legal or otherwise in the impugned order, so as to call for interference by this Court under Article 227 of the Constitution of India.
Accordingly, the Civil Revision Petition is dismissed. There shall be no order as to costs.