Saturday, 18 May 2019

Supreme Court Judgment on impartiality and independence of Arbitrator


The scheme of Sections 12, 13, and 14, therefore, is that where
an arbitrator makes a disclosure in writing which is likely to give
justifiable doubts as to his independence or impartiality, the
appointment of such arbitrator may be challenged under Sections
12(1) to 12(4) read with Section 13. However, where such person
becomes “ineligible” to be appointed as an arbitrator, there is no
question of challenge to such arbitrator, before such arbitrator. In such
a case, i.e., a case which falls under Section 12(5), Section 14(1)(a) of
the Act gets attracted inasmuch as the arbitrator becomes, as a matter
of law (i.e., de jure), unable to perform his functions under Section
12(5), being ineligible to be appointed as an arbitrator. This being so,
his mandate automatically terminates, and he shall then be substituted
by another arbitrator under Section 14(1) itself. It is only if a
controversy occurs concerning whether he has become de jure unable
to perform his functions as such, that a party has to apply to the Court
to decide on the termination of the mandate, unless otherwise agreed
by the parties. Thus, in all Section 12(5) cases, there is no challenge
procedure to be availed of. If an arbitrator continues as such, being de
jure unable to perform his functions, as he falls within any of the

categories mentioned in Section 12(5), read with the Seventh
Schedule, a party may apply to the Court, which will then decide on
whether his mandate has terminated. Questions which may typically
arise under Section 14 may be as to whether such person falls within
any of the categories mentioned in the Seventh Schedule, or whether
there is a waiver as provided in the proviso to Section 12(5) of the Act.
As a matter of law, it is important to note that the proviso to Section
12(5) must be contrasted with Section 4 of the Act. Section 4 deals
with cases of deemed waiver by conduct; whereas the proviso to
Section 12(5) deals with waiver by express agreement in writing
between the parties only if made subsequent to disputes having arisen
between them.
18. On the facts of the present case, it is clear that the Managing
Director of the appellant could not have acted as an arbitrator himself,
being rendered ineligible to act as arbitrator under Item 5 of the
Seventh Schedule, which reads as under:
“Arbitrator’s relationship with the parties or counsel
xxx xxx xxx
5. The arbitrator is a manager, director or part of the
management, or has a similar controlling influence, in an
affiliate of one of the parties if the affiliate is directly
involved in the matters in dispute in the arbitration”

Whether such ineligible person could himself appoint another arbitrator
was only made clear by this Court’s judgment in TRF Ltd. (supra) on
03.07.2017, this Court holding that an appointment made by an
ineligible person is itself void ab initio. Thus, it was only on 03.07.2017,
that it became clear beyond doubt that the appointment of Shri Khan
would be void ab initio. Since such appointment goes to “eligibility”,
i.e., to the root of the matter, it is obvious that Shri Khan’s appointment
would be void. There is no doubt in this case that disputes arose only
after the introduction of Section 12(5) into the statute book, and Shri
Khan was appointed long after 23.10.2015. The judgment in TRF Ltd.
(supra) nowhere states that it will apply only prospectively, i.e., the
appointments that have been made of persons such as Shri Khan
would be valid if made before the date of the judgment. Section 26 of
the Amendment Act, 2015 makes it clear that the Amendment Act,
2015 shall apply in relation to arbitral proceedings commenced on or
after 23.10.2015. Indeed, the judgment itself set aside the order
appointing the arbitrator, which was an order dated 27.01.2016, by
which the Managing Director of the respondent nominated a former
Judge of this Court as sole arbitrator in terms of clause 33(d) of the
Purchase Order dated 10.05.2014. It will be noticed that the facts in
the present case are somewhat similar. The APO itself is of the year

2014, whereas the appointment by the Managing Director is after the
Amendment Act, 2015, just as in the case of TRF Ltd. (supra).
Considering that the appointment in the case of TRF Ltd. (supra) of a
retired Judge of this Court was set aside as being non-est in law, the
appointment of Shri Khan in the present case must follow suit.

REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 3972 OF 2019


Bharat Broadband Network Limited  Vs United Telecoms Limited 

Dated:April 16, 2019.
R.F. NARIMAN, J.
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Leading Supreme Court Judgment on appreciation of evidence of Expert witness

An expert witness, is one who has made the subject upon which he speaks a matter of particular study, practice, or observation; and he must have a special knowledge of the subject. Shri P.C. Panwar in his evidence has stated that he passed B.Sc. (Agriculture) Hons. from University of Delhi in 1959; thereafter he did his M.Sc. (Hon.) in 1967 from Punjab University. He joined the Agricultural Department in the year 1969 as a Research Assistant; he was promoted as Horticulture Development officer in the year 1973 and at the time of the assessment he was working as District Horticulture Officer, Shimla. He has also stated that in the year 1986 he attended a 3 months training course on apple technology in the University of Tasmania Australia. The assessment in the Orchards in question were made on different dates in November 1984. He has fairly accepted the suggestion that he had not received any training with respect to assessment of apple crop but that has been a part of his job. The witness could not state the number of scab cases in which he had been called upon to make assessment. He has specifically stated in the case against Jai Lal and others that was his first and last assignment till date as a commission for assessing productivity of an apple orchard.

15. On a perusal it is clear that many entries in the report need to be explained. Many of the trees of the orchards; their expected production of the tree is shown as nil. No reason whatsoever is stated in the report why the witness felt that the tree had no productive capacity. The assessment made by this witness appears to have been made on some sort of calculation the basis of which is not stated in the report; nor does the report disclose the reason for the end-result arrived at by the assessor. While judging the acceptability and reliability of the report it is to be borne in mind that Shri Panwar visited the Orchards only in the succeeding year and that too after the apple season of that year was over. Judged in this background the High Court cannot be faulted for having held that the report of the assessor is based more on surmises and conjunctures than actual observations or on scientific reasons.



17. Section 45 of the Evidence Act which makes opinion of experts admissible lays down that when the Court has to form an opinion upon a point of foreign law, or of science, or art, or as to identity of handwriting or finger impressions, the opinions upon that point of persons specially skilled in such foreign law, science or art, or in questions as to identify of handwriting, or finger impressions are relevant facts. Therefore, in order to bring the evidence of a witness as that of an expert it has to be shown that he has made a special study of the subject or acquired a special experience therein or in other words that he is skilled and has adequate knowledge of the subject.

18. An expert is not a witness of fact. His evidence is really of an advisory character. The duty of an expert witness is to furnish the Judge with the necessary scientific criteria for testing the accuracy of the conclusions so as to enable the judge to form his independent judgment by the application of this criteria to the facts proved by the evidence of the case. The scientific opinion evidence, if intelligible, convincing and tested becomes a factor and often an important factor for consideration along with the other evidence of the case. The credibility of such a witness depends on the reasons stated in support of his conclusions and the data and materials furnished which form the basis of his conclusions.

19. The report submitted by an expert does not go in evidence automatically. He is to be examined as a witness in Court and has to face cross-examination. This Court in the case of Hazi Mohammed Ikramul Hague v. State of West Bengal MANU/SC/0116/1958 : AIR1959SC488 concurred with the finding of the High Court in not placing any reliance upon the evidence of an expert witness on the ground that his evidence was merely an opinion unsupported by any reasons.

IN THE SUPREME COURT OF INDIA

Crl.A. No. 530 of 1997 etc.

Decided On: 13.09.1999

State of Himachal Pradesh  Vs.  Jai Lal and Ors.

Hon'ble Judges/Coram:
K.T. Thomas and D.P. Mohapatra, JJ.

Citation: AIR 1999 SC 3318,1999 (7) SCC 280
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Supreme Court: Magistrate should not act as post office while issuing process against accused U/S 202 of CRPC

 Considering the scope of amendment to Section 202
Cr.P.C., in Vijay Dhanuka and Others v. Najima Mamtaj and
Others (2014) 14 SCC 638, it was held as under:-
“12. ….The use of the expression “shall” prima facie makes the
inquiry or the investigation, as the case may be, by the
Magistrate mandatory. The word “shall” is ordinarily mandatory
but sometimes, taking into account the context or the intention, it
can be held to be directory. The use of the word “shall” in all
circumstances is not decisive. Bearing in mind the aforesaid
principle, when we look to the intention of the legislature, we find
that it is aimed to prevent innocent persons from harassment by

unscrupulous persons from false complaints. Hence, in our
opinion, the use of the expression “shall” and the background
and the purpose for which the amendment has been brought, we
have no doubt in our mind that inquiry or the investigation, as the
case may be, is mandatory before summons are issued against
the accused living beyond the territorial jurisdiction of the
Magistrate.”
Since the amendment is aimed to prevent persons residing
outside the jurisdiction of the court from being harassed, it was
reiterated that holding of enquiry is mandatory. The purpose or
objective behind the amendment was also considered by this
Court in Abhijit Pawar v. Hemant Madhukar Nimbalkar and
Another (2017) 3 SCC 528 and National Bank of Oman v.
Barakara Abdul Aziz and Another (2013) 2 SCC 488.
34. The order of the Magistrate summoning the accused must
reflect that he has applied his mind to the facts of the case and
the law applicable thereto. The application of mind has to be
indicated by disclosure of mind on the satisfaction. Considering
the duties on the part of the Magistrate for issuance of summons
to accused in a complaint case and that there must be sufficient
indication as to the application of mind and observing that the
Magistrate is not to act as a post office in taking cognizance of
the complaint, in Mehmood Ul Rehman, this Court held as under:-

“22. ….the Code of Criminal Procedure requires speaking order
to be passed under Section 203 Cr.P.C. when the complaint is
dismissed and that too the reasons need to be stated only briefly.
In other words, the Magistrate is not to act as a post office in
taking cognizance of each and every complaint filed before him
and issue process as a matter of course. There must be
sufficient indication in the order passed by the Magistrate that he
is satisfied that the allegations in the complaint constitute an
offence and when considered along with the statements
recorded and the result of inquiry or report of investigation under
Section 202 Cr.P.C., if any, the accused is answerable before the
criminal court, there is ground for proceeding against the
accused under Section 204 Cr.P.C., by issuing process for
appearance. The application of mind is best demonstrated by
disclosure of mind on the satisfaction. If there is no such
indication in a case where the Magistrate proceeds under
Sections 190/204 Cr.P.C., the High Court under Section 482
Cr.PC. is bound to invoke its inherent power in order to prevent
abuse of the power of the criminal court. To be called to appear
before the criminal court as an accused is serious matter
affecting one’s dignity, self-respect and image in society. Hence,
the process of criminal court shall not be made a weapon of
harassment.”
35. In Pepsi Foods Ltd. and Another v. Special Judicial
Magistrate and Others (1998) 5 SCC 749, the Supreme Court has
held that summoning of an accused in a criminal case is a serious
matter and that the order of the Magistrate summoning the
accused must reflect that he has applied his mind to the facts of

the case and law governing the issue. In para (28), it was held as
under:-
“28. Summoning of an accused in a criminal case is a serious
matter. Criminal law cannot be set into motion as a matter of
course. It is not that the complainant has to bring only two
witnesses to support his allegations in the complaint to have the
criminal law set into motion. The order of the Magistrate
summoning the accused must reflect that he has applied his
mind to the facts of the case and the law applicable thereto. He
has to examine the nature of allegations made in the complaint
and the evidence both oral and documentary in support thereof
and would that be sufficient for the complainant to succeed in
bringing charge home to the accused. It is not that the Magistrate
is a silent spectator at the time of recording of preliminary
evidence before summoning of the accused. The Magistrate has
to carefully scrutinise the evidence brought on record and may
even himself put questions to the complainant and his witnesses
to elicit answers to find out the truthfulness of the allegations or
otherwise and then examine if any offence is prima facie
committed by all or any of the accused.”
The principle that summoning an accused in a criminal case is a
serious matter and that as a matter of course, the criminal case
against a person cannot be set into motion was reiterated in
GHCL Employees Stock Option Trust v. India Infoline Limited
(2013) 4 SCC 505.
36. To be summoned/to appear before the Criminal Court as an
accused is a serious matter affecting one’s dignity and reputation

in the society. In taking recourse to such a serious matter in
summoning the accused in a case filed on a complaint otherwise
than on a police report, there has to be application of mind as to
whether the allegations in the complaint constitute essential
ingredients of the offence and whether there are sufficient
grounds for proceeding against the accused. In Punjab National
Bank and Others v. Surendra Prasad Sinha 1993 Supp (1) SCC
499, it was held that the issuance of process should not be
mechanical nor should be made an instrument of oppression or
needless harassment.
37. At the stage of issuance of process to the accused, the
Magistrate is not required to record detailed orders. But based on
the allegations made in the complaint or the evidence led in
support of the same, the Magistrate is to be prima facie satisfied
that there are sufficient grounds for proceeding against the
accused.

REPORTABLE
IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL NO. 875 OF 20

BIRLA CORPORATION LIMITED Vs  ADVENTZ INVESTMENTS AND HOLDINGS .

R. BANUMATHI, J.
Dated:May 09, 2019.
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Supreme Court: In cheque dishonour case, first notice will constitute cause of action if second notice was given beyond limitation

 In the present case, the facts narrated above indicate that the appellant issued a
legal notice on 31 December 2015. This was within a period of thirty days of the receipt
of the memo of dishonour on 4 December 2015. Consequently, the requirement
stipulated in proviso (b) to Section 138 was fulfilled. Proviso (c) spells out a requirement
that the drawer of the cheque has failed to make payment to the holder in due course or
payee within fifteen days of the receipt of the notice. The second respondent does not
as a matter of fact, admit that the legal notice dated 31 December 2015 was served on
him. The appellant has in the complaint specifically narrated the circumstance that
despite repeated requests to the postal department, no acknowledgment of the notice  was furnished. It was in these circumstances that the appellant issued a second notice
dated 26 February 2016. Cognizant as we are of the requirement specified in proviso
(b) to Section 138, that the notice must be issued within thirty days of the receipt of the
memo of dishonour, we have proceeded on the basis that it is the first notice dated 31
December 2015 which constitutes the cause of action for the complaint under Section
138.
11 The complaint was instituted on 11 May 2016. Under Section 142(1), a
complaint has to be instituted within one month of the date on which the cause of action
has arisen under clause (c) of the proviso to Section 1386. The proviso however
stipulates that cognizance of the complaint may be taken by the court after the
prescribed period, if the complainant satisfies the Court that he had sufficient cause for
not making a complaint within such period. Both in paragraphs 7 and 8 of the
complaint, the appellant indicated adequate and sufficient reasons for not being able to
institute the complaint within the stipulated period. These have been adverted to above.
The CJM condoned the delay on the cause which was shown by the appellant for the
period commencing from 6 April 2018. However, if paragraphs 7 and 8 of the complaint
are read together, it is evident that the appellant had indicated sufficient cause for
seeking condonation of the delay in the institution of the complaint. 
We are of the view that sufficient cause was shown by the appellant for condoning the delay
in instituting the complaint taking the basis of the complaint as the issuance of the first

legal notice dated 31 December 2015.
Reportable
IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL NO(S). 000868 OF 2019

Birendra Prasad Sah Vs The State of Bihar 

Dr Dhananjaya Y Chandrachud, J
Dated:May 8, 2019.
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