Sunday 23 October 2016

When arbitration award can not be set aside on ground of misconduct of arbitrator?

 It is more than apparent that the award in question was actually an
award passed with the consent of the parties because signatures of both
the parties are at the bottom of the award and thereafter the signatures of
the Arbitrators are also there. The Appellant does deny his signature on
the award. His submission is that the signatures had been obtained even
before the award was announced. This submission does not appear to be
correct. The signatures of both the parties are not at the bottom of the
page and a bare perusal of the award shows that the award has been
written with same pen with which the Appellant as well as the Arbitrators
have signed. The Appellant by signing the award has virtually agreed to
the award. The objector who is a businessman would not have signed a
blank paper.
14. Even according to the Appellant, as mentioned in his written
statement, he had orally raised an objection to the award immediately
after the same was announced. That story is not believable. The
Arbitrators have decided a big dispute and if the signatures of the
Appellant had been taken on a blank piece of paper or the Appellant had
serious objections to the award, he would have himself given notice to the
Arbitrators or filed some proceedings or complaint against the arbitrators.
He did not do so. It is more than apparent that the Appellant after having
virtually consented had a change of mind and when he did not comply
with the award, the Arbitrators were forced to file the award in the Court
with a prayer that it should be made rule of Court and decree be passed
accordingly. It was only thereafter that for the first time the Appellant
raised these frivolous objections. There is no merit in the objections raised
by the Appellant. The contention of the Appellant that the dispute
regarding house and shop were not referred for arbitration, is on the face
of it false in view of the opening portion of the award quoted hereinabove.
15. The Civil Court does not sit in appeal over the award and can only
set aside an award if the Arbitrators have misconducted themselves or the
proceedings. Though the Appellant had alleged misconduct, he has
miserably failed to prove his version that the Arbitrators have
misconducted themselves or the proceedings.
HIGH COURT OF CHHATTISGARH, BILASPUR
Miscellaneous Appeal No. 680 of 1994
Nemichand Suthar S/o Pukhraj Suthar, 
V
 Mohan Lal Gagorh S/o Keshrimul Gagorh, 
Hon'ble Shri Deepak Gupta, Chief Justice
Dated:22 /07/2016.
Citation:AIR 2016 (NOC)643 Chh

1. This miscellaneous appeal under Section 39 of the Arbitration Act,
1940 (hereinafter called 'the Act') is directed against the judgment and
decree passed by the 1st Additional District Judge to the Court of District
Judge, Durg, in Civil Suit No. 12-A of 1993, dated 29.06.1994 whereby he
affirmed the award of the Arbitrators dated 06.08.1987 and made it rule of
the Court and passed decree in terms thereof.
2. The undisputed facts are that according to the Appellant, he was
having a joint business with wife of Respondent No. 3, Sardar Keshar
Singh. There was some dispute between the Appellant and the wife of
Respondent No. 3 and the said dispute was referred for arbitration.
Arbitrators were appointed on 06.08.1987 and passed an award on the
same date. The award was, however, filed in the Court by two out of five
Arbitrators in the year 1988. The present Appellant objected to the award
being made rule of the Court. Since the objections were over-ruled and
decree has been passed in terms of the award, the Appellant has filed the
instant appeal.
3. To appreciate the contention of Shri Awasthi, learned Senior
Counsel for the Appellant, it would be pertinent to refer to the award of the
Arbitrators. The award of the Arbitrators is as follows:3
"Panch Award
Today on 06.08.87, the Panch persons decide the following old
transaction regarding shop and house between Shri Keshar
Singh Ji and Nemi Chand Suthar, which is as follows:
1. The Railway rent due up to December 1980, shall be paid by
Shri Keshar Singh.
2.The shop owned by Keshar Singh, which has a godown on
backside, is on rent with Munim Nemichand, rent of which upto
the Diwali in Year 1987 is included in the award. Thereafter, if
Munim Nemichand Ji wishes to continue shop on rent after
Diwali, then he shall get the rent fixed with Keshar Singh. If the
rent is not agreed, he shall vacate within three months from
Diwali and shall also pay separate rent for the period of three
months after Diwali, i.e. Rupees 900 @ 300 Rs per month. He
shall vacate the shop and godown after three months. If he does
not vacate after 3 months, the Panch persons of today’s award
i.e. Shri Champa Lal Chhajed, Shri Mohan Lal Gagorh, Shri Ajay
Dhandhiya, Shri Trilochan and Shri Champa Lal Chopra who all
are agreed panch of both the parties, shall go and get the shop
vacated. The shop and house are in the name of Munim
Nemichand who shall reduce in writing and give to Keshar
Singh, in which there is no right of Nemi Chand.
Keshar Singh shall pay Rs 25,000(in words Rupees
Twenty Five thousand) to Munim Nemichand and Keshar Singh
shall get vacant possession of his shop and godown which are
in possession of Munim Ji and pay him Rs 25000/-
The above award is passed in the presence and with
the consent of both the parties and signature of both the parties
is obtained.
Party No. 1
 Sd/-
Nemi Chand Suthar
 Party No. 2
 Sd/-
Keshar Singh
 06.08.87
Signatures of Panch persons
1. Sd/- Mohan Lal
3. Sd/- Anraj Jain Dhandhiya
5. Sd/- Champa lal Copra
2. Sd/- Champa Lal Chhajed
4. Sd/- Trilochan Singh."4
4. Though this award was passed on 06.08.1987, two of the
Arbitrators namely Mohanlal Gogad and Champalal Chopda filed an
application for making the award rule of the Court on 03.04.1989. It would
be pertinent to mention here that prior to that, the present Appellant was
served with a copy of the award. He also submitted his written objections
to this application for making the award rule of the Court. He did not file
any specific objections to the award in terms of Section 30 of the Act but
only filed written statement to this application. Be that as it may, the Court
below treated the same as an objection to the award.
5. Before me, Shri Awasthi, learned Senior Counsel for the Appellant
has raised many issues which were not raised in the written statement
and therefore, I shall refer to the written statement in detail.
6. The stand of the Appellant in the Court below was that he and Smt.
Jugendra Kour, wife of Sardar Keshar Singh were partners in automobile
business and there was some monetary dispute (ysu&nsu) with regard to
this business. To resolve this dispute, Sardar Keshar Singh on behalf of
his wife and the Appellant herein had appointed Arbitrators to decide the
dispute.
7. The case of the Appellant is that dispute relating to house on the
land belonging to Railways and rent thereof had not been referred to the
Arbitrators. In fact, there was no dispute with regard to the same and no
such dispute was referred to the Arbitrators. It was also submitted that
from the award of the Arbitrators, it appears that the Arbitrators have
connived with Sardar Keshar Singh and therefore instead of only dealing
with the referred disputes, they had also adjudicated upon other matters
which was beyond their jurisdiction and as such, the same is absolutely
illegal. 5
8. The Appellant also took the plea that even before the award was
announced, the Arbitrators had obtained signatures of the two parties and
thereafter announced the award. According to the Appellant, immediately
after the award, he had refused to accept the same and had orally
informed the Arbitrators that there was no dispute with regard to the shop
or rent thereof. According to the Appellant, he received the award of the
Arbitrators by registered post on 16.11.1988 and on 23.11.1998, he had
raised objections to it in writing and these objections were sent under
certificate of posting. Basically, the contention of the Appellant is that the
dispute which had not arisen between the parties has been decided by
the Arbitrators. Further more, the Arbitrators obtained signatures of the
Appellant by fraud and even before the award was announced and they
had dealt with the disputes which were not referred to them.
9. I have quoted the award fully in detail above. It is a non-speaking
award. Under the Act of 1940, the Arbitrator had a right to pass nonspeaking
award. When an award is non-speaking, the Court cannot go
into the reasoning of the award.
10. The Apex Court in AIR 1988 SC 2018, State of Orissa vs. M/s
Lall Brothers clearly held that even if an award is an unreasoned award,
the same is no ground to set aside the same. The law is well settled that
the Court cannot determine the error of law in respect of a non-speaking
award since the same would not be apparent on the face of record.
11. The opening portion of the award states that what has been
referred to the Arbitrators is a dispute regarding dealings between the
parties (ysu&nsu) and the Arbitrators have clearly stated that this includes
the dispute relating to shop and house. The submission that no dispute
relating to the shop and house was referred is obviously without any merit
and is rejected.6
12. Another ground raised by Shri Awasthi, learned Senior Counsel is
that the award is illegal since no opportunity was given to the Appellant in
terms of paragraph 6 of the First Schedule of the Act, which reads as
follows:
“6. The parties to the reference and all persons claiming
under them shall, subject to the provisions of any law for the
time being in force, submit to be examined by the arbitrators
or umpire on oath or affirmation in relation to the matters in
difference and shall, subject as aforesaid, produce before
the arbitrators or umpire all books, deeds, papers, accounts,
writings and documents within their possession or power
respectively, which may be required or called for and do all
other things which, during the proceedings on the reference,
the arbitrators or umpire may require.”
Any party has a right to lead evidence in terms of above quoted
paragraph 6, but this right can be waived by the parties.
13. It is more than apparent that the award in question was actually an
award passed with the consent of the parties because signatures of both
the parties are at the bottom of the award and thereafter the signatures of
the Arbitrators are also there. The Appellant does deny his signature on
the award. His submission is that the signatures had been obtained even
before the award was announced. This submission does not appear to be
correct. The signatures of both the parties are not at the bottom of the
page and a bare perusal of the award shows that the award has been
written with same pen with which the Appellant as well as the Arbitrators
have signed. The Appellant by signing the award has virtually agreed to
the award. The objector who is a businessman would not have signed a
blank paper.
14. Even according to the Appellant, as mentioned in his written
statement, he had orally raised an objection to the award immediately
after the same was announced. That story is not believable. The
Arbitrators have decided a big dispute and if the signatures of the
Appellant had been taken on a blank piece of paper or the Appellant had7
serious objections to the award, he would have himself given notice to the
Arbitrators or filed some proceedings or complaint against the arbitrators.
He did not do so. It is more than apparent that the Appellant after having
virtually consented had a change of mind and when he did not comply
with the award, the Arbitrators were forced to file the award in the Court
with a prayer that it should be made rule of Court and decree be passed
accordingly. It was only thereafter that for the first time the Appellant
raised these frivolous objections. There is no merit in the objections raised
by the Appellant. The contention of the Appellant that the dispute
regarding house and shop were not referred for arbitration, is on the face
of it false in view of the opening portion of the award quoted hereinabove.
15. The Civil Court does not sit in appeal over the award and can only
set aside an award if the Arbitrators have misconducted themselves or the
proceedings. Though the Appellant had alleged misconduct, he has
miserably failed to prove his version that the Arbitrators have
misconducted themselves or the proceedings.
16. Therefore, I find no merit in the appeal. It is accordingly dismissed.
 Sd/-
 (Deepak Gupta)
 CHIEF JUSTICE

Subbu
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