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

1. An application was filed by M/s. 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 u/s 33 of the Arbitration Act for setting aside the award. Both the petitions were heard simultaneously by a learned Single Judge of this Court. (Honble 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. M/s. 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."

When this statement was made the counsel for the petitioner i.e. M/s. 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 M/s. Mohinder Singh and Company also preferred an appeal.

2. 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 M/s. S. Mohinder Singh inter aha 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 he 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.

3. 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 admisable 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 M/s. 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, u/s 96 of the Civil Procedure Code. Mr. Raina, Advocate General, however, argued that u/s 41 of the Act, Civil Procedure Code, 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 CPC (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 bean 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 39 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 Sec. 41 of the Arbitration Act would exclude the application of the provisions of the Code of Civil Procedure. 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 u/s 39 six kinds 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 CPC 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 CPC 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 he which means that other orders passed under arbitration proceedings are not appealable.

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 C.P.C. 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 u/s 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 M/s. 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.

6. The learned counsel for M/s. 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 u/s 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. M/s. S. Mohinder Singh and Co., to meet this argument of Mr. Raina. Mr. Raina, Advocate General, says that an error must be apparent 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.

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 u/s 16 against which there is no appeal.

7. Mr. Rainas 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 M/s. 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.

Mr. Ishwar Singh gave us a detailed narration of the events. He argued, among other things, that on the objection of the Union of India, two witnesses for M/s. 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 M/s. 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.