| SooperKanoon Citation | sooperkanoon.com/456230 |
| Subject | Arbitration |
| Court | Allahabad High Court |
| Decided On | Mar-02-1995 |
| Case Number | First Appeal From Order No. 275 of 1988 |
| Judge | S.C. Mohapatra and ;N.L. Ganguly, JJ. |
| Reported in | AIR1995All392 |
| Acts | Arbitration Act, 1940 - Sections 13, 14, 30 and 39; Indian Electricity Act, 1910 - Sections 3 and 7-A; Electricity (Supply) Act, 1948 - Sections 46 |
| Appellant | Uttar Pradesh State Electricity Board, 14 Ashoke Marg, Shakti Bhawan, through It's Chairman |
| Respondent | M/s. Rohtak and Hisar District Electricity Company Limited, Allahabad through It's Director |
| Appellant Advocate | Sudhir Chandra Verma and ;S.P. Merhotra, Advs. |
| Respondent Advocate | J. Nagar and ;K.N. Tripathi, Advs. |
Mohapatra, J.
1. Validity of fixation of grid tariff rate under S. 46 of the Electricity (Supply) Act, 1948 (hereinafter referred to as 'the Act'), refund of amount paid was claimed and demand for the dues on basis of such rate was disputed by respondent in two arbitration proceedings. Umpire having made award in favour of the respondent, appellant objected to it in court. Not being successful in its objection, this appeal has been filed under Sec. 39 of the Arbitration Act (hereinafter referred to as 'the Act').
2. Respondent is a company carrying on business of supply of electricity to consumers. In the year 1957 it obtained a licence under S. 3 of the Indian Electricity Act, 1910 for supply of electricity to consumers in towns of Rae-bareli, Pratapgarh, Sultanpur, Mahraj-ganj, Salon on Jais. While so supplying, appellant was constituted and respondent entered into an agreement on 31-5-1965 with appellant for getting bulk supply of electricity from appellant so that it can supply the same to the consumers in the aforesaid towns. Inthe agreement rates at which respondent was to pay were provided. There was a clause for arbitration in the written agreement. After the agreement while appellant was supplying electricity to respondent, it fixed grid tarrif in exercise of power under S. 46 of the 1948 Act to be effective from 1-10-1968. The same was again fixed to be effective from 1-1-1972 and further charged to be effective from 1(sic) -1975. Respondent paid some amount due and same remained due when it raised dispute relating to the rates and as provided in the arbitration clause issued notice to appellant on 5-8-1975 appointing its arbitrator. Respondent appointed its arbitrator as provided in the agreement. Both arbitrators appointed an umpire and entered into reference. This proceeding was numbered Arbitration Case No. 3. Respondents raised a further dispute, which was numbered as Arbitration Case No. 4. Appellant raised objection to the jurisdiction of arbitrators to adjudicate the disputes. Arbitrators differed on question of jurisdiction for which the question was referred to the umpire. Before rendering the decision umpire expired. Another umpire was appointed, who held on 25-9-1984 that arbitrators have jurisdiction to adjudicate and decide the dispute. Thereafter, arbitrators continued the proceeding. Time for giving the award was once extended by court. When arbitrators did not make the award within extended time umpire sent for the record from the arbitrators and entered on the reference on 16-8-1985. Receiving records from one of the arbitrators, umpire issued notice to parties and appellant not having appeared gave the award considering both the proceedings together. Appellant filed objection to the award in court. The same having been rejected and award being made a rule of the court, this appeal has been filed.
3. Disputes raised by respondent in the two arbitration proceedings to be six in number. They are :
(i) Excess meter rent.
(ii) Over adjustment in price of coal.
(iii) Overcharge of coal price by national distribution.
(iv) Illegal bulk supply rate from 1-1-1975,
(v) Over adjustment in costs of bulk supply by discrimination between different licences; and
(vi) Higher rate of late payment surcharge.
Umpire did not accept claim of respondent in respect of excess meter rent. No objection was filed by respondent. Accordingly, the same requires no consideration. Balance five disputes having been answered against appellant, those require consideration in this appeal.
4. Award made by umpire contains no reason. It being a non-speaking award scope of interference by court is limited. Such award can be interfered with only on the ground of misconduct of umpire or absence of jurisdiction. Misconduct may be personal or legal. Appellant has challenged the award on the ground of absence of jurisdiction and legal misconduct in making award in two proceedings, in not giving adequate opportunity to appellant to take part in the hearing and rendering decision contrary to the legal provisions.
5. Mr. S. P. Merhotra, learned counsel for appellant assailed the award on following grounds :
(i) Umpire had no jurisdiction to enter on reference and as such award is liable to be set aside;
(ii) Umpire has misconducted in giving one award in two arbitration proceedings;
(iii) Umpire has misconducted in the proceedings by directing service of notice through respondent;
(iv) Umpire was hasty and as such has not applied his mind;
(v) Arbitration proceeding is not maintainable in view of S. 7-A of the 1910 Act;
(vi) Umpire has legally misconducted in finding that claims are within period of limitation;
(vii) Umpire has legally misconducted in finding that rate fixed by appellant in exercise of power under Section 46 of the 1948 Act.
6. Mr. K. N. Tripathi, Senior Advocate assisted by Mr. J. Nagar, Advocate, learned counsel for respondent submitted that :
(a) Umpire has jurisdiction to enter on reference since arbitrators did not make the award within extended time;
(b) Both the references having related to same questions and one depending the other, there is no misconduct in making one award;
(c) Appellant having received notice, cannot raise objection to the procedure followedin giving notice;
(d) When the awards are not supported by reason and is a non-speaking award, mental attitude of umpire is out side consideration of court and there is no haste in giving the award;
(e) Section 7-A of the 1910 Act does not bar other proceedings including arbitration proceeding;
(f) Question of limitation being a mixed question of fact and law, umpire is correct to find that claims are not barred by limitation; and
(g) Arbitrator has jurisdiction to decide both questions of law and question of fact. Accordingly, in a non-speaking award no question can be considered since there is no error on face of the award.
7. Mr. S. P. Mehrotra submitted that umpire can enter on reference only when the two arbitrators have difference. In this case arbitrators not having come to a conclusion, umpire had no jurisdiction to enter on reference. Mr. K. N. Tripathi on the other hand submitted that in paragraph 4 of Schedule I of the Act arbitrators not having made the award within extended time, umpire has rightly entered on reference.
8. There is no dispute that arbitrators moved court for extension of time and court extended time for the arbitrators to make the award. Although initially appellant was seeking for adjournments and arbitratorswere granting time, on later dates no step was taken by appellant and arbitrators also remained silent. In such circumstances, when appellant had raised dispute in the year 1975, it moved umpire in 1985 to enter on reference. Umpire on that basis called for the records from the arbitrators and entered on reference. In the aforesaid facts in view of paragraph 4 in Schedule I of the Act, Umpire is justified to enter on reference.
9. Mr. S. P. Merhotra might have been correct in his submission that one award should not have been given two arbitration proceedings if the subject matter of the two proceedings would have been different. It is true that till stage of award both proceedings had separate identity. Even umpire was given notices though dates fixed for both the proceedings are the same. However, determination of issues settled in one case depended on the determination of issues settled in the other case. Therefore, one award in two proceedings, on the facts and in the circumstances of the case, is not such irregularity which would vitiate the award. No exception can be taken by appellant on that account.
10. Mr. Merhotra submitted that no opportunity was given to appellant by the umpire and as such award cannot be sustained. From the records it is seen that the arbitrators not having made the award within extended time, respondent moved the umpire to enter on reference. On such letter, umpire called for the records from the arbitrators. On receipt of records from one of the arbitrators, he notice to the parties on 27-8-1985 fixing 14-9-1985 for hearing. Order sheet maintained by umpire discloses that in spite of service, none appeared for appellant though advocate for respondent was present. Umpire examined the claim, counter-statement and replication by 11.30 a.m. and settled issues for determination. Umpire fixed 5-10-1985 for further hearing. On 5-10-1985 also appellant did not appear. Learned counsel for fes-pondent submitted that parties having relied upon agreement dated 31-5-1965 and certain provisions of the 1948 Act no oral evidence is necessary. On that submission, umpire fixed 10-10-1985 for arguments. Respondent wasdirected to serve a copy of the order on appellant. On 10-10-1985 appellant did not appear and umpire heard counsel for respondent. Thereafter, proceedings were fixed to 12-12-1985 for making award which was made on the date fixed.
11. Perusal of the order sheets as stated in earlier paragraphs do not disclose that except on 14-9-1985, on no other date umpire examined whether notice sent was received by the appellant. Perusal of order sheet dated 5-10-1985 and 10-10-1985 discloses that umpire heard arguments on basis of agreement dated 31-5-1965 and some provisions of the 1948 Act. Respondent was directed to serve copy of order dated 5-10-1985. Award indicates that umpire perused the pleadings, annexures, relevant materials on record and relevant provisions of the 1910 Act and the 1948 Act to make the award. Order sheets before the arbitrators do not indicate that parties were given opportunity to produce documents order sheets of umpire also do not disclose that such opportunity was given to parties. One of the issues related to limitation as regards the claim. This could not have been decided by any reasonable man on basis of pleadings which do not contain detail facts. Therefore, we are satisfied that in absence of opportunity to parties to file documents and on account of direction to respondent to serve notice by service of copy of order sheet when umpire has not applied mind to the service of notice, umpire has misconducted the proceedings on account of which award is liable to be set aside to give opportunity to parties to produce documents. When such opportunity is given, interest of justice demands that both parties should get opportunity to adduce oral evidence also if so advised.
12. Submission of Mr. Merhotra that umpire was hasty in making the award within two days of argument in disputes which involve complicated questions of law and fact indicates non-application of mind and as such the award is vitiated. Mr. Merhotra relied upon decision of Supreme Court reported in AIR 1988 SC 985 (Hyderabad Engineering Industries Ltd. v. Andhra Pradesh State Electricity Board) AIR 1988 SC 1989(Fertilizers and Chemical Travancore Ltd. v. Kerala Electricity Board) AIR 1983 SC 1296 (M/s. Jagdamba Paper Industries Pvt. Ltd. v. Haryana State Electricity Board) AIR 1992 SC 2169 (Indian Alluminium Co. Ltd. v. Karnataka State Electricity Board) AIR 1986 SC 1999 : (1986) 3 SCR 628 (Kerala State Electricity Board v. M/s. S. N. Govinda Prabhu) and AIR 1993 SC 2005 : 1993 AIR SCW 2025 (Ferro Alloys Corporation Ltd. v. Andhra Pradesh Electricity Board) in support of his submission that rate of tarrif in exercise of power vested under S. 46 of the 1948 Act can be enhanced unilaterally and such rate can vary from area to area or person to person. Mr. Merhotra further submitted that correctness in exercise of statutory power cannot be examined by arbitrator or umpire under the Act. Therefore, accepting the rate, umpire was to examine whether payments on basis of rate fixed is in excess and demands made are in excess. Answer to issues having effect on interfering with statutory power is unreasonable and as such award is vitiated. Mr. K. N. Tripathi, learned counsel for respondent has, however, submitted that question of law referred to umpire can be decided. Apart from it, court has no scope to interfere with a non-speaking award even if the conclusion in law is not correct. Mr. Tripathi relied upon decision of Supreme Court reported in AIR 1984 SC 1072 : (1984) 3 SCR 118 (M/s. Tarapore and Co. v. Cochin Ship Yard Ltd. and other decisions including AIR 1975 SC 1967 (Indian Alluminium Co. v. Kerala State Electricity Board) and AIR 1976 SC 127 : (1976) 2 SCR 307 (Bisra Stone Lime Co. v. Orissa State Electricity Board).
13. In view of our conclusion that umpire has misconducted the proceedings, we need not consider merit of the aforesaid submission, which we are confident that umpire shall consider. It is enough to note with distress that umpire has considered the questions within two days which required more time for consideration and Mr. Merhotra is justified in his submission that umpire was hasty which leads to conclusion that there was no proper application of mind. It is not a case of reading mind of umpire in an unreasoned award. Arbitrator is required to send the records of the proceedings under S. 14 of the Act tocourt. It is not an empty formality. Even if award is not a speaking award court can peruse the records before the arbitrator to consider whether a reasonable man can come to the conclusion as the arbitrator has and whether there is application of mind by arbitrator. Merely because the award is not supported by reason, court is not to put its seal of approval on dotted lines. Keeping in mind that arbitrator is a Judge of choice of parties and court is not appellate authority of the arbitrator to substitute its own views, court is to examine the record to find out the reasonableness of the award. This is more necessary because with the gradual diminishing moral values in the society, racket in arbitration proceeding cannot be ignored.
14. Mr. Merhotra submitted that umpire had no jurisdiction to determine liability of parties in view of S. 7-A of the 1910 Act taking over the undertaking of a licencee. After such taking over, machinery created under the section is to consider the same. We are not impressed with this submission. Machinery created can only determine the net price payable after deducting the dues payable by licencee. It has no jurisdiction to consider whether a licencee is to get any amount from the Board. In this case question need no further delving.
15. In view of discussions made above award is set aside and proceeding is remitted back to the umpire for fresh consideration.
16. In result, appeal is allowed. Parties shall bear their own costs.
N.L. Ganguly, J.
17. I agree.
18. Appeal allowed.