The Court :- Learned Counsel appearing on behalf of the parties drew our attention to the following portion of the judgment and the observations made in the judgment and order dated May 14, 2010 passed by the Honble First Court.
In particular our attention has been drawn to the following portion of the impugned order :
1. Internal Page 9, Paper Book page no 118. Implicit of such statement is the admission of the arbitrators connection with the finance company. Taking a cue from the apparent admission on pleadings that the arbitrator acts regularly as arbitrator for various financial companies including this finance company, the hirer has called attention to what appears to be a reference number in several of the arbitrators documents pertaining to the reference. The hirer suggests that the reference number AC 555A which is either scribbled in pencil in some documents or appears in the acknowledgement due cards and at top the minutes of the meetings that form part of the arbitrators records, may imply that it was the five hundred and fifty-fifth reference taken up by the arbitrator, whether of not it also implies that it was the five hundred and fifty-fifth reference pertaining to this finance company or its present advocateon- record.
2. Internal Page 13, Paper Book page no 122. (a) To boot, the minutes recorded that no further or other noticed for the next meeting would be issued and that the arbitrator would proceed ex parte and close the reference. The recording that the arbitrator would proceed ex parte clearly apprehended that the respondents may not attend the meeting convened next sand betrayed the state of the mind of the arbitrator since there was no corresponding warning to the claimant that the reference would stand dismissed upon the claimants absence on the next date. The question that naturally arises is as to whether the respondents to the reference were given any chance to attend the next meeting or the recording of the minutes foretold something sinister.
3. Internal Page 14, Paper Book page no 123.
(a) The minutes of the meetings said to have been held on September 20, 2007 and April 21, 2008 did not give any reason for such unusual hiatus in either case. There is nothing in the records of the arbitrator to show any attempt at service of any notice relating to the reference on the respondents to the reference prior to November 1, 2008.
(b)Again, the original copy of the minutes, in the arbitrators records, of the meeting shown to have been held on April 21, 2008 contains an endorsement at the top thereof that it had been received on behalf of advocate representing the claimant on October 31, 2008. It is only subsequent to October 31, 2008 that the postal records, whether of despatch or of service, are almost meticulously maintained
4. Internal Page 15, Paper Book page no 124.
(a) There is substance in the challenging insinuation that the documents relating to the reference produced by the arbitrator and the financier company may have been fabricated or brought into existence or ante-dated or present a show of the reference having commenced long prior to it actually did.
(b) Such time tested and salutary practice was abandoned in this case may be assumed for the moment, that the arbitrators jurisdiction is evoked ex parte by a party to the agreement and the arbitrator may thereafter inform such fact to the other party or parties to the agreement. Based on such assumption, the arbitral proceedings would commence only upon the other party or parties to the reference being made aware of the reference by the arbitrator.
5. Internal Page 16, Paper Book page no 125. It is thus obvious that the financiers ruse of having failed to forward copies of the minutes relating to the previous alleged meeting as recorded in the minutes of the meeting shown to have been held on April 21, 2008, was a recording of convenience to set up a charade of the reference having commenced prior to November 1, 2008 with the obvious motive of seeking to preclude a stand that by November, 2008 there was no live claim to go to arbitration.
6. Internal Page 18, Paper Book page no 127. The third paragraph was the rubber-stamp recording that no further or separate notice would be served and if the respondents were not represented on the next date the reference would be conducted ex parte and closed.
7. Internal Page 19, Paper Book page no 128. (a) It is a matter of absurd coincidence that the next two meetings in the reference after November 21, 2008 were shown to have been held on December 19, 2008 and February 12, 2009. (b) It is also possible to deduct that a sudden direction by the court on the finance company to immediately produce the records relating to the reference that were in its possession, precluded the sifting of the records or the discarding of the unnecessary set of minutes
8. Internal Page 20, Paper Book page no 129. Though the arbitrators records were sought and produced on a subsequent day, the mistake had already taken place in the finance companys bunch of papers having already been handed over to court with two rival acts of minutes for the meeting said to have been held on November 21, 2008.
9. Internal Page 24, Paper Book page no 133. There are other statements in the financiers affidavit to the hirers petition that cannot be missed. At paragraph 12 of its affidavit (page 17) in one of the rare positive assertions in such affidavit, the financier alleges that the financier made enquiries with the Learned Arbitrator and was informed that the said award was duly sent to the petitioner (hirer) by registered post. Nothing in the arbitrators records reveal that such an enquiry was made other than in writing, it would lead to the inescapable reference that the hirer had private access to the arbitrator and the arbitrator engaged in ex parte oral communication with the financier.
10. Internal Page 25, Paper Book page no 134. (a) In the classical view, no party may engage in ex parte communication with the arbitrator. Even if such hallowed test is not applied, it is evident that the notice of arbitration was neither sent nor intended to be sent by the financier to the hirer or the guarantor that is if the arbitral proceedings commenced at all when the finance company wants everyony to believe that it did. Despite repeated queries put to the finance company at the hearing, such aspect of the matter was completely glossed over. (b) The relevant sentence in the financiers affidavit is a demonstrably false allegation made on oath with scant regard for the seriousness that has to be attached to the proceedings of the present nature.
11. Internal Page 26, Paper Book page no 135. (a) This is of particular significance in the context of the charge of bias levelled against the arbitrator and it being the admitted position on pleadings that this arbitrator has conducted several reference sent by this finance company. (b) The two petitioners say that misconduct and bias on the arbitrators part is writ large on every page of the award. It must also be remembered that there is a serious charger that the arbitrator routinely and mechanically makes awards in favour of their finance company. (c) There is, thus, the first indication of a routine recording in the award that has apparently been made mechanically.
12. Internal Page 28, Paper Book page no 137. It makes one wonder how the other documents referred to in the twelfth paragraph mysteriously opened up for the arbitrator to gaze into them and subsequently evaporated just as furtively as they had come in.
13. Internal Page 30, Paper Book page no 139. (a) It is not without sufficient cause that the challengers say that the level of informality that is generally associated with arbitration proceedings was carried such an absurd limit by this arbitrator that would suggest that the arbitrator and the claimant were, possibly extensions of each other. (b) But there was even more ghastly mischief afoot in the reference. (c) the records were concocted to give them an appearance of authenticity. To sustain this award by any quirk of law or the strained application of any legal principal would do violence to the rudimentary concept of justice, be opposed to public policy and a slur on the process of adjudication that an arbitral reference connotes.:
14. Internal Page 31, Paper Book page no 140.
(a) The circumstances here reveal a fundamental abuse of his position by the arbitrator.
(b) The misconduct on the part of this arbitrator involves personal turpitude on the part of the arbitrator amounting to subversion of the process of adjudication that has resulted in complete miscarriage of justice. (b) The records of the arbitrator unmistakably points to the sabotage of the process of adjudication. The award is not only abhorrently bad and liable to be set aside, but it appears to be a vicious merchandise of criminal conduct reeking of collusion.
(c) The manner in which the finance company and the arbitrator went about the business of this reference, as it evident from the arbitrators records, was calculated to cause prejudice to the hirer and the guarantor and left them no room to defend themselves as the finance company procured its award from a pliant merchant who reduced the process of adjudication to a farce.
15. Internal Page 35, Paper Book page no 144. The finance company will pay costs of Rs.2 lakh each of the hirer and the guarantor. It will be open to the hirer and the guarantor to institute appropriate proceedings against the finance company, the arbitrator and others concerned, both civil and criminal.
In these circumstances the learned Counsel submitted that the said observations would create difficulty in respect of the practicing Advocates of this Court and further submitted that by consent of the parties that the above observation made by His Lordship may be expunged from the judgment and order dated May 14, 2010. In view of that we only state that since the parties have jointly submitted before us that the said observations should be expunged from the order and/or judgment, we only keep it on record that on the undertaking of the learned Advocate for the parties against whom the said observations were made that they will not further act in such a manner when such an order could be passed by the Court.
Accordingly, we record a caution to the said learned Advocates and expunge the said observations from the said order/judgment. But we keep it on record that in future if occasion arises we will deal sternly against them. By consent we make it clear that the claimant being the appellant herein shall not take any further steps as regards to the order so passed including the arbitration proceeding and also in any proceeding before any other appropriate forum including the National Commission. Steps to be taken for withdrawal of all the proceedings by and between the parties or for dismissal of the proceeding pending before any forum by them against each other. The cheques will be issued in favour of Rasal Dilip Damodar to be forwarded to M/s. Fox & Mondal attention Mr. Anil Dhar, Advocate. With the above observations, and by consent of the parties both the appeal and the applications are disposed of.
All parties concerned are to act on a xerox signed copy of this order on the usual undertakings.
Urgent xerox certified copy of this order, if applied for, be supplied to the parties subject to compliance with all requisite formalities.