Neither should be sacrificed nor inflated, as to prolong or trample a just and fair adjudication.: Supreme Court
A pragmatic and common-sense approach would invariably check any discord between the desire for expeditious disposal and adequacy of opportunity to establish one’s case as upheld by the Hon’ble Supreme Court through the learned bench led by Justice Sanjiv Khanna in the case of M/S. Narinder Singh and Sons v. Union of India (CIVIL APPEAL NO. 6734 OF 2021). The brief facts of the case are that M/s. Narinder Singh and Sons, vide letter dated 27th January 1993 was awarded tender by the respondent namely, Divisional Superintendent Engineer-II, Northern Railway, Punjab, for additional washing line to accommodate 26 coaches at Jammu Tawi Railway Station. Disputes arose when the respondent terminated the contract vide letter dated 03rd April 1996 due to stated non-performance and repeated lapses by the appellant. The appellant invoked the arbitration clause as per the contract agreement and in response, the General Manager, Northern Railways satisfied with the existence of the disputes, appointed an arbitrator. The appellant approached the District Court for termination of the mandate of the appointed arbitrator and substitution with an independent Arbitrator. The District Judge, Gurdaspur appointed Mr. Justice A.L. Bahri (Retd.) as the sole arbitrator. The respondent filed a Civil Revision Petition before the High Court against the order of the District Judge, Gurdaspur, which set aside the order of the appointment on the ground that the appointment of the arbitrator could only be done by the Chief Justice or any other Judge nominated by him. Finally, in the proceedings before the Chief Justice of the Punjab and Haryana High Court at Chandigarh, Mr. Justice A.L. Bahri (Retd.) was again appointed as the arbitrator. The learned arbitrator, thereupon, pronounced an ex parte award against the respondent on 27th November 2010. Resultantly, the respondent had filed objections under Section 34 of the Arbitration and Conciliation Act, 1996 before the Additional District Judge, Gurdaspur, which were dismissed. However, the respondent succeeded in its appeal before the Punjab and Haryana High Court at Chandigarh, which, vide impugned judgment dated 24th October 2017, accepted and set aside the award primarily on the ground that the arbitrator had violated principles of natural justice and had proceeded with great haste and hurry. On the question whether the Court could remand the disputes to the Arbitrator, the impugned judgment holds that the court remand was impermissible, but the parties were at liberty to approach the arbitrator for fresh adjudication or avail any other remedy permitted by law, while stating that the period spent in the arbitration proceedings and the resultant litigation should be excluded in terms of Section 43(4) of the Act. During the course of hearing before the Hon’ble Court, Mr. Ashish Verma, learned counsel for the appellant, and Mr. Sanjay Jain, learned Additional Solicitor General appearing for the respondent, have agreed that the Court may appoint an arbitrator for adjudication of the disputes, which prayer we accept. After the perusal of the facts and arguments by the respective parties, the Hon’ble Court held, “In the context of the present case, we agree with the High Court that there was unnecessary haste and hurry by the arbitrator, especially when the respondent had filed the affidavit by way of evidence on 21st October 2010. We hereby appoint Mr. Justice S.N. Aggarwal, a retired Judge of the Punjab and Haryana High Court, as the arbitrator to adjudicate and decide the said disputes. We hope and trust that the parties would cooperate with the learned arbitrator now appointed to ensure expeditious disposal. We also clarify that the question of award of interest, preference and pendente lite, is left open to be decided by the arbitrator, without being bound by the findings of the High Court in the impugned order.”
IN THE CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO. 6734 OF 2021 M S. NARINDER SINGH AND SONS UNION OF INDIA THROUGH DIVISIONAL SUPERINTENDENT ENGINEER II NORTHERN RAILWAY FEROZEPUR DIVISION FEROZEPUR JUDGMENT SANJIV KHANNA J Despite rounds of litigation the disputes that arose in 1996 will unfortunately continue even post this judgment M s. Narinder Singh and Sons the appellant before us vide letter dated 27th January 1993 was awarded tender by the respondent namely Divisional Superintendent Engineer II Northern Railway Ferozepur Division Ferozepur Punjab for additional washing line to accommodate 26 coaches at Jammu Tawi Railway Station Disputes arose when the respondent terminated the contract vide letter dated 03rd April 1996 due to stated non performance and Civil Appeal No. 67321 Digitally signed byJAGDISH KUMARDate: 2021.11.1817:05:47 ISTReason:Signature Not Verified repeated lapses by the appellant. The appellant on the other hand alleged breaches on the part of the respondent who it is stated had modified the original work and changed scope of the work several times. The appellant invoked the arbitration clause as per the contract agreement and in response the General Manager Northern Railways satisfied with the existence of the disputes appointed an arbitrator. The appellant approached the District Court for termination of the mandate of the appointed arbitrator and substitution with an independent Arbitrator. The District Judge Gurdaspur vide order dated 23rd December 2006 appointed Mr Justice A.L. Bahrias the sole arbitrator. The respondent filed a Civil Revision Petition before the High Court against the order of the District Judge Gurdaspur which set aside the order of the appointment on the ground that the appointment of the arbitrator could only be done by the Chief Justice or any other Judge nominated by him. Finally in the proceedings before the Chief Justice of the Punjab and Haryana High Court at Chandigarh by an order passed on 15th February 2010 Mr Justice A.L. Bahriwas again appointed as the arbitrator Civil Appeal No. 67321 The learned arbitrator thereupon pronounced an ex parte award against the respondent on 27th November 2010. Resultantly the respondent had filed objections under Section 34 of the Arbitration and Conciliation Act 1996 before the Additional District Judge Gurdaspur which were dismissed vide order dated 22nd March 2012. However the respondent succeeded in its appeal filed under Section 37 of the Act before the Punjab and Haryana High Court at Chandigarh which vide impugned judgment dated 24th October 2017 accepted FAO No 5227 of 2012 and set aside the award primarily on the ground that the arbitrator had violated principles of natural justice and had proceeded with great haste and hurry. It was also held that pre reference and pendente lite interest could not have been awarded in terms of clause 16(2) of the General Conditions of the Contract. On the question whether the Court could remand the disputes to the Arbitrator the impugned judgment holds that the court remand was impermissible but the parties were at liberty to approach the arbitrator for fresh adjudication or avail any other remedy permitted by law while stating that the period spent in the arbitration proceedings and the resultant litigation should be excluded in terms of Section 43(4) of the Act Civil Appeal No. 67321 Having heard counsel for the parties we find that the respondent was “unable to present his case” a valid ground and justification for setting aside an award under clauseto sub sectionto Section 34 of the Act. The award was also “in conflict with the public policy of India” under clauseto Section 34(2)(b) read with the applicable Explanation 1 to Section 34(2) of the Act. The appellant had filed the Statement of Claim on 3 rd May 2010 On 31st May 2010 the respondent sought adjournment for filing Statement of Defence which was granted by the arbitrator. On 10th July 2010 written statement along with the copies of documents were filed. The appellant thereupon filed rejoinder and affidavit of Paramdeep Singh in evidence on 5th August 2010. On the same day itself evidence of the appellant was closed while declining the request of the respondent to postpone cross examination. Order dated 5th August 2010 also records that the respondent had not filed its affidavit and had requested for a date. Latter request it is apparent was accepted by the arbitrator as the respondent was directed to file the affidavit and produce the witness for cross examination on the next date of hearing. On 28th September 2010 the respondent prayed for further time to file affidavits by way of evidence which request for adjournment was opposed. This order records that the respondent Civil Appeal No. 67321 had not paid the arbitration fee and expenses in spite of the earlier orders. The learned arbitrator adjourned the matter to 21st October 2010 subject to the payment of costs by the respondent to the appellant of Rs. 10 550 i.e. cost of proceedings for one day. On 21st October 2010 the respondent filed affidavit of Mr. Abhay Kumar Senior Divisional Engineer II Northern Railway Ferozepur as well as an application for recall of costs. This application for waiver of costs was opposed and rejected. Since the cost was not paid the affidavit by way of evidence it was directed would not be taken on record. This order of 21st October 2010 also records that while the respondent had not paid the arbitration fee and expenses the appellant had already paid Rs. 50 000 towards arbitration fee and expenses. The arbitrator adjourned the matter to 9th November 2010 for final arguments and an ex parte award dated 27th November 2010 was passed awarding an amount of Rs. 20 25 255 along with interest @ 12% per annum from 03 rd April 1996 till payment was made. For this purpose the arbitrator had relied upon Section 31(7) of the Act Section 19 of the Act states that while the arbitral tribunal is not bound by the Code of Civil Procedure 1908 or the Indian Evidence Act 1872 in the absence of any agreement between the parties as to the procedure to be followed the arbitral tribunal may Civil Appeal No. 67321 conduct the proceedings in the manner it considers appropriate Section 18 mandates that both parties shall be treated with equality and each party shall be given a full opportunity to present his case. Reference can also be made to Sections 24 and 25 and newly enacted Section 29A of the Act which though not applicable to this case emphasise on quick and prompt adjudications. Idioms carping ‘delay’ and ‘hurry’ in adjudication highlight the importance of both speedy disposal and reasonable opportunity as both are essential for an even handed and correct decision. Neither should be sacrificed nor inflated as to prolong or trample a just and fair adjudication. A pragmatic and common sense approach would invariably check any discord between the desire for expeditious disposal and adequacy of opportunity to establish one’s case. In the context of the present case we agree with the High Court that there was unnecessary haste and hurry by the arbitrator especially when the respondent had filed the affidavit by way of evidence on 21st October 2010. Earlier the respondent had filed written statement shortly after the appellant had filed the claim statement. The respondent was also deprived of reasonable and fair opportunity to cross examine Paramdeep Singhto Section 34(2)(a) as well as clauseto Section 34(2)(b) of the Act. During the course of hearing before us Mr. Ashish Verma learned counsel for the appellant and Mr. Sanjay Jain learned Additional Solicitor General appearing for the respondent have agreed that this Court may appoint an arbitrator for adjudication of the disputes which prayer we accept 9. We hereby appoint Mr. Justice S.N. Aggarwal a retired Judge of the Punjab and Haryana High Court #1458 Sector 40 B Chandigarh as the arbitrator to adjudicate and decide the said disputes. He would be paid arbitration fee and expenses in terms of the schedule to the Act Civil Appeal No. 67321 The appellant and the respondent would equally bear the said fee and expenses. The respondent would pay 50% of the arbitration fee and expenses to the learned arbitrator within one month from the date of the first hearing. The appellant would pay its share of 50% fee on the date when the final arguments commence. We have made the aforesaid direction in view of the conduct of the respondent in not paying their share of fee and expenses to the earlier arbitrator. We hope and trust that the parties would cooperate with the learned arbitrator now appointed to ensure expeditious disposal. The arbitration proceedings shall continue from the stage permitting the respondent to cross examine Paramdeep Singh and if not available the parties shall reconstruct the same by filing self certified copies of pleadings and documents as filed by them in the arbitration proceedings. 10. We also clarify that the question of award of interest pre reference and pendente lite is left open to be decided by the arbitrator without being bound by the findings of the High Court in the impugned order. Civil Appeal No. 67321 11. The civil appeal is disposed of in the aforesaid terms with no order as to costs NEW DELHI NOVEMBER 18 2021 Civil Appeal No. 67321 Page 