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Supreme Court of India
M/S Narinder Singh And Sons vs Union Of India on 18 November, 2021Author: Sanjiv Khanna
Bench: Sanjiv Khanna, Hon’Ble Ms. Trivedi
NON-REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 6734 OF 2021
M/S. NARINDER SINGH AND SONS ….. APPELLANT(S)
VERSUS
UNION OF INDIA THROUGH
DIVISIONAL SUPERINTENDENT
ENGINEER – II, NORTHERN RAILWAY,
FEROZEPUR DIVISION, FEROZEPUR ….. RESPONDENT(S)
JUDGMENT
SANJIV KHANNA, J.
Despite rounds of litigation, the disputes that arose in 1996
will, unfortunately, continue even post this judgment.
2. 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
Signature Not Verified
to accommodate 26 coaches at Jammu Tawi Railway Station.
Digitally signed by
JAGDISH KUMAR
Date: 2021.11.18
17:05:47 IST
Reason:
Disputes arose when the respondent terminated the contract vide
letter dated 03rd April 1996 due to stated non-performance and
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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.
3. 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. 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, by an order passed on 15th February 2010, Mr.
Justice A.L. Bahri (Retd.) was again appointed as the arbitrator.
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4. The learned arbitrator, thereupon, pronounced an ex parte award
against the respondent on 27 th November 2010. Resultantly, the
respondent had filed objections under Section 34 of the Arbitration
and Conciliation Act, 1996 (for short, the ‘Act’) 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 (O&M) 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.
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5. 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 clause (iii) to sub-section (2)(a) to
Section 34 of the Act. The award was also “in conflict with the
public policy of India” under clause (ii) to Section 34(2)(b) read
with the applicable Explanation 1 to Section 34(2) of the Act.
6. 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 (PW-1) in evidence on 5 th
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
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had not paid the arbitration fee and expenses in spite of the earlier
orders. The learned arbitrator adjourned the matter to 21 st 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.
7. 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
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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 Singh (PW-1). The
respondent had also moved an application for waiver of costs,
which was rejected on 21st October 2010, albeit the arbitrator
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decided to continue the arbitration to proceed ex parte and
adjourned the matter to 9th November 2010 for final arguments. As
the evidence of the respondent by the way of affidavit was not
taken on record, their contentions and evidence were not
considered and thus debilitated the respondent from stating their
case. Given the aforesaid factual position, there was violation of
principles of natural justice and lack of full opportunity as
envisaged by Section 18 of the Act, thereby, impeding a fair and
just decision. Consequently, the award suffers and is liable to be
set aside in terms of clause (iii) to Section 34(2)(a) as well as
clause (ii) to Section 34(2)(b) of the Act.
8. 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 (Mobile: +91-9876716983) 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.
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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 (PW-1). We also direct that the respondent
would file their affidavits by way of evidence within four weeks
from the date the learned arbitrator enters upon reference.
Arbitration record shall be forwarded to Mr. Justice S.N. Aggarwal
(Retd.) 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.
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11. The civil appeal is disposed of in the aforesaid terms with no order
as to costs.
………………………………..J.
(M.R. SHAH)
………………………………..J.
(SANJIV KHANNA)
NEW DELHI;
NOVEMBER 18, 2021.
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