w w w . L a w y e r S e r v i c e s . i n



Gupta Flour & Oil Mills v/s National Insurance Company Ltd. & Another


Company & Directors' Information:- N K OIL MILLS PVT LTD [Active] CIN = U15201GJ1994PTC022669

Company & Directors' Information:- B P OIL MILLS LIMITED [Active] CIN = U15142UP1965PLC003232

Company & Directors' Information:- J P FLOUR MILLS PRIVATE LIMITED [Active] CIN = U15311WB2004PTC098409

Company & Directors' Information:- N K FLOUR MILLS LIMITED [Amalgamated] CIN = U24231GJ1992PLC017406

Company & Directors' Information:- K P L OIL MILLS PRIVATE LIMITED [Active] CIN = U15142KL1983PTC003685

Company & Directors' Information:- K B M FLOUR MILLS PRIVATE LIMITED [Active] CIN = U15122UP2013PTC054902

Company & Directors' Information:- R R FLOUR MILLS PVT LTD [Active] CIN = U15147MP1987PTC003858

Company & Directors' Information:- A K FLOUR MILLS PRIVATE LIMITED [Active] CIN = U24231GJ1981PTC004155

Company & Directors' Information:- M. P. FLOUR MILLS PRIVATE LIMITED [Active] CIN = U74899DL1966PTC004548

Company & Directors' Information:- H H OIL & FLOUR MILLS PRIVATE LIMITED [Active] CIN = U15143DL2011PTC226114

Company & Directors' Information:- J B FLOUR MILLS PRIVATE LIMITED [Active] CIN = U15311UP2004PTC029134

Company & Directors' Information:- N K B OIL MILLS PRIVATE LIMITED [Active] CIN = U15142KL1999PTC013095

Company & Directors' Information:- K K K OIL MILLS PRIVATE LIMITED [Strike Off] CIN = U15142KL2000PTC013621

Company & Directors' Information:- NATIONAL OIL COMPANY LTD. [Active] CIN = U23201WB1994PLC063824

Company & Directors' Information:- A AND F FLOUR MILLS PRIVATE LIMITED [Strike Off] CIN = U15311JK1997PTC001694

Company & Directors' Information:- S N OIL MILLS PRIVATE LIMITED [Strike Off] CIN = U15142HR1986PTC025702

Company & Directors' Information:- G. B. OIL MILLS PRIVATE LIMITED [Strike Off] CIN = U15326HR1985PTC019817

Company & Directors' Information:- R. OIL MILLS PRIVATE LIMITED [Strike Off] CIN = U15141DL1992PTC047883

Company & Directors' Information:- J K OIL MILLS COMPANY LIMITED [Strike Off] CIN = U15143UP1955PLC002570

Company & Directors' Information:- N N OIL MILLS PRIVATE LIMITED [Strike Off] CIN = U15147MH1999PTC117989

Company & Directors' Information:- R K FLOUR MILLS PVT LTD [Strike Off] CIN = U15310AP1981PTC003087

Company & Directors' Information:- C N FLOUR MILLS PRIVATE LIMITED [Active] CIN = U15311DL1983PTC172336

Company & Directors' Information:- J & T OIL MILLS PRIVATE LIMITED [Strike Off] CIN = U15141KL2006PTC019754

Company & Directors' Information:- U P OIL AND FLOUR MILLS PRIVATE LIMITED [Active] CIN = U15134UP2021PTC142001

Company & Directors' Information:- GUPTA FLOUR MILLS PVT. LTD. [Strike Off] CIN = U15313MP1986PTC003673

Company & Directors' Information:- A AND R OIL MILLS PVT LTD [Strike Off] CIN = U15315CH1994PTC014265

Company & Directors' Information:- R L FLOUR MILLS PRIVATE LIMITED [Active] CIN = U15311ML2001PTC006521

Company & Directors' Information:- K P FLOUR MILLS PRIVATE LIMITED [Strike Off] CIN = U15122UP2009PTC037995

Company & Directors' Information:- NATIONAL FLOUR MILLS PVT LTD [Dormant under section 455] CIN = U15312HR1949PTC001457

Company & Directors' Information:- THE NATIONAL MILLS COMPANY LIMITED [Not available for efiling] CIN = U99999MH1905PTC000222

Company & Directors' Information:- INDIA FLOUR MILLS LIMITED [Not available for efiling] CIN = U99999MH1908PTC000283

Company & Directors' Information:- NATIONAL OIL MILLS COMPANY LIMITED [Dissolved] CIN = U99999MH1920PTC000762

Company & Directors' Information:- THE NATIONAL OIL MILLS LIMITED [Dissolved] CIN = U99999MH1947PLC007527

    Civil Revision No. 4567 of 2002

    Decided On, 26 February 2004

    At, High Court of Punjab and Haryana

    By, THE HONOURABLE MR. JUSTICE M.M. KUMAR

    For the Appellant: Sanjiv Ghai, Advocate. For the Respondents: ------



Judgment Text

1. The sole question, which arise for determination in the instant petition filed u/s 115 of the Code of Civil Procedure, 1908 is whether award dated 7.10.1994 passed by one Naresh Chand, Advocate sole Arbitrator appointed by the plaintiff-petitioner is liable to be set aside or deserves to be made rule of the Court.2. On 19.7.1993, the petitioner-firm informed the respondent-company that it has suffered a huge loss in the flash floods, which has caused havoc at the city of Patiala. The respondent-company appointed a surveyor, who assessed the loan (loss?) and quantified the same to the tune of Rs.30,600/- in his report dated 9.5.1994. The petitioner-firm being dissatisfied invoked the arbitration clause 13 incorporated in the insurance policy Ex.A-8. Accordingly, it proceeded to appoint one Arbitrator namely Shri Naresh Chand, Advocate, and an intimation to this effect was sent to the respondent-company. The respondent-company on their behalf appointed one Shri R.K. Bansal, Advocate to act as arbitrator. In accordance with the arbitration clause, each party was to appoint one Arbitrator and it is not the case of the parties if they were to appoint one Arbitrator or they could not agree to the appointment of that Arbitrator. On the allegation that the arbitration proceedings have been completed, the petitioner firm filed petition under Sections 14 and 17 of the Arbitration Act, 1940 (for brevity 'the Act') for filing of the award by the Arbitrator-respondent No.2 and a further prayer was made that after issuance of notice to make the afore-mentioned award as rule of the Court. The learned Civil Judge issued notice resulting into filing of the award by the Arbitrator along with the proceedings.3. Notice was issued to the respondent-company, who filed objection petition u/s 30 and 33 of the Act and prayed for setting aside the award with the allegation that the Arbitrator has misconducted the proceedings as he has committed material illegality and irregularity. It was asserted that the appointment of Shri Naresh Chand, Advocate, as the Sole Arbitrator is illegal and Shri Amar Nath Bansal, Advocate had no authority to appoint Shri Naresh Chand, Advocate, as the Sole Arbitrator. It was further submitted that Shri R.K.Bansal, Arbitrator appointed by the company was never joined in the arbitration proceedings and there is not a single sitting of both the Arbitrators. The appointment of Shri R.K.Bansal was never revoked. No proper service on the respondent-company was effected nor any UPC notice dated 28.5.1994 was ever received in the branch office of the company, which are the procured documents. The award having been passed at the back of the respondent-company without proper service on them was liable to be set-aside. The address of the company mentioned on the alleged ADs dated 6.8.1994 and 22.8.1994 is incomplete and not proper. It was further claimed that the Arbitrator has given his award without following the principles of natural justice and that the provisions of insurance policy was also not followed. The award has also been challenged by filing objections on merit.4. The petitioner-firm filed reply to the objections raised by the respondent-company. It was pleaded that the award has been given by the Arbitrator within his power, who has followed the due procedure and has not committed any illegality or irregularity in conducting the proceedings resulting into passing of the award.5. The Civil Judge set-aside the award by sustaining the objections and also held that the objection petition filed by the insurance company is not time barred. The afore-mentioned view of the Civil Judge has been up-held by the learned District Judge, Patiala. It was concluded that Shri R.K.Bansal, Arbitrator appointed by the respondent-company was not removed and he continued to be the Arbitrator on their behalf. The letter dated 28.5.1994 Ex.P-5 alleged to be sent by Shri A.N.Bansal, Advocate to the respondent- company through U.P.C. has not been believed as it was never received in the Divisional Office of the company because Shri A.N.Bansal has not been examined. It has also been found that Shri R.K.Bansal was duly appointed and sent a letter dated 4.7.1994 to the petitioner-firm with a copy to their Arbitrator Shri Naresh Chand, Advocate. It has also been found that Shri R.K.Bansal, Arbitrator of the respondent-company was still functional because he repeatedly made requests to the petitioner-firm and their Arbitrator Shri Naresh Chand, Advocate to intimate him about the date when the arbitration proceedings could start enabling him to participate in those proceedings. The findings of the learned District Judge in this regard read as under:-"Shri Naresh Chand, Advocate who was appointed by the respondent company as Arbitrator appeared as RW-1 in support of his affidavit Ex.R-1, but it is not specifically pleaded in the affidavit if he had not received any letter dated 4.7.1994 and 6.8.1994 from Shri R.K.Bansal, Advocate. Similarly, Yash Pal Gupta appeared as RW-2 in support of his affidavit Ex.R-2. He has also not received any such letter from Shri R.K.Bansal Arbitrator of the respondent company. It is, therefore, proved that Shri R.K.Bansal had written two letters to the appellant firm and to their Arbitrator to know about the date of the start of the arbitral proceedings so that he may participate but the appellant firm never responded to it. Rather Shri Naresh Chand, Advocate, RW-1 has admitted in the cross-examination that he did not remember when Shri R.K.Bansal was appointed as Arbitrator by the Insurance Company but he had not fixed any meeting with the arbitrator of the company nor he had sent any letter to the arbitrator of the company regarding the arbitration proceedings. No meeting was fixed between him and the arbitrator of the company. He had also not sent any letter to the company if the arbitrator by the company was not attending the arbitration proceedings. It is, therefore, clear from these admissions of this witness that the arbitration proceedings took place as if he was the only arbitrator which was neither correct nor warranted by the arbitration agreement."6. It has further been found that the respondent-company was not correctly informed by their Arbitrator Shri Naresh Chand, Advocate about the date in the arbitral proceedings. Even otherwise, it has been found that the proceedings before the sole Arbitrator were neither legal nor valid in the eyes of law as it patently violates Clause 13 of the insurance policy provided for arbitration.7. Mr. Sanjiv Ghai, Learned counsel for the petitioner-firm has argued that grave injustice has been caused to the petitioner-firm by refusing to make the award dated 7.10.1994 as rule of the Court. According to the learned counsel, there is no necessity to appoint two Arbitrators and clause 13 of the insurance policy Ex.A-8 providing for arbitration has been misconstrued. According to the learned counsel, a Single Arbitrator like the one appointed by the petitioner-firm was sufficient to act as an Arbitrator and decide the matter. Therefore, the view taken by both the Courts below is liable to be set-aside.8. After hearing the learned counsel, I am of the considered view that this petition lacks merit and is, thus, liable to be dismissed. This case is a classical illustration demonstrating that how the sanctity of the arbitration proceedings could be violated resulting into unjust and unfair award. It is patent that firstly no arbitration was competent before the sole Arbitrator appointed by the petitioner-firm. Secondly, no proper intimation was sent with regard to the dates of hearing to Shri R.K.Bansal, Arbitrator appointed by the respondent-company. Thirdly U.P.C. notice dated 28.5.1994 cannot prove any fact because letters sent under postal certificate do not carry any evidentary value as has been laid down by the Supreme Court in Shiv Kumar and Others Vs. State of Haryana and Others, and Gadakh Yashwantrao Kankarrao Vs. E.V. alias Balasaheb Vikhe Patil and Others, . The afore-mentioned view has also been followed by a Division Bench of this Court in Panchkula Urban Cooperative Bank v. State of Haryana,3 1998(1) P.L.J. 314. Fourthly, the notices alleged to have been sent on 6.8.1994 and 22.8.1994 for 16.8.1994 and 31.8.1994 did not bear the correct and complete address of the respondent-company.9. It would be appropriate to mention that Clause 13 contemplates the appointment of single Arbitrator and in case of dis-agreement, the dispute was to be resolved by the decision of two dis-interested Arbitrators, each one to be appointed by each of the parties. In the instant case, it is nobody's case that they were to appoint one Arbitrator and they failed to agree to the appointment of such an Arbitrator. In fact they started with the process of appointment of two Arbitrators each one representing each party. Clause 13 of the Insurance Policy reads as under:-"13. If any difference shall arise as to the quantum to be paid under this policy (liability being otherwise admitted) such difference shall independently of all other questions be referred to the decision of an arbitrator to be appointed (in) writing by the parties in difference or if they cannot agree upon a single Arbitrator, to the decision of two disinterested persons as arbitrators of whom one shall be appointed in writing by each of the parties within two calendar months after having been required so to do in writing by the other party in accordance with the provis

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ions of the Arbitration Act, 1940, as amended from time to time and for the time being in force. In case either party shall refuse or fail to appoint arbitrator within two calendar months after receipt of notice in writing requiring an appointment, the other party shall be at liberty to appoint sole arbitrator and in case of disagreement between the arbitrators, the difference shall be referred to the decision of an umpire who shall have been appointed by them in writing before entering on the reference and who shall sit with the arbitrators and preside at their meetings."A perusal of above clause shows that two Arbitrators one each by the two parties is to be appointed and the same procedure has been followed by the parties.10. The argument of the learned counsel that Shri R.K.Bansai was not disinterested would not require any serious consideration because there is no finding of the Courts below to his effect. Therefore, the instant petition is liable to be dismissed.For the reasons recorded above, this petition fails and the same is dismissed.
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