(1.) THE appeal has been preferred under section 39 of the Arbitration Act, 1940 by the lessee aggrieved by judgment dated 20-11-2003 passed by Fifth Additional District Judge, Bhopal in the case RSC No. 97-A/01.
(2.) THE facts giving rise to the appeal are that on 22-11-1985 the appellant firm M. P. Food Products Ltd. entered into a lease agreement with the M. P. Agro industries Development Corporation Ltd. , Bhopal (hereinafter referred to as the corporation). The Corporation has floated tender for leasing out its Canning Unit at Bhopal. The offer made by the appellant to obtain it on the rent of Rs. 6663. 33/- per month, was accepted. Initially the period of lease was 5 years, on 1-4-1986 the possession was given. The rent was not paid and certain disputes were raised by the appellant. One after the other six Arbitrators were appointed. First three Arbitrators had to be changed, fourth Arbitrator Shri S. S. Sharma submitted resignation after recording of the evidence. Fifth Arbitrator Shri D. N. Dixit after working for sometime expressed his inability to continue. Sixth arbitrator Shri M. M. Dubey has passed the impugned award dated 30th June, 2001 directing payment of agreed rent w. e. f. 1-10-1987 without any increase for subsequent years, less the amount already paid and also less the rent of the period for which the appellant firm was kept out possession and also after deducting the security deposit amount, if forfeited, and after adjusting the bank guarantee amount, if encashed. As regards the counter-claim which mainly consists of claim on account of interest, the Corporation has been given the liberty to determine the tenancy or the lease of the appellant firm after due notice under the provisions of the Transfer of Property Act and take possession of the leased unit and the property attached to it. No other ancillary claim or counter-claim was sustainable. The amount payable by the appellant firm, if paid on or before the determination of its lease and delivery of possession back to the Corporation, shall carry interest @ 6% per annum and in default, the interest payable from the date of default would be @ 12% per annum. The parties shall bear their own costs.
(3.) THE appellant firm assailed the award before the Court below mainly on the ground that the Court has fixed the fee to be paid to the Arbitrator of Rs. 10,000/ -. The Arbitrator had demanded a sum of Rs. 11,000/- as fee for counterclaim made by the Corporation. The objector firm declined to make the payment of the additional fee demanded by the Arbitrator to adjudicate the counter-claim. The sum fixed for adjudication of the counter-claim was paid by the Corporation. The demand of the additional fee by the Arbitrator amounted to the misconduct. The second objection raised by the firm was that the award was not passed within the period of four months fixed by the Court. The third objection was that on 5-5-2001 order sheet was written in the absence of counsel of the firm. On 19-5-2001 the Court was approached. Court had issued the notice to the Arbitrator, the notice was received by him, but still he did not stay the proceedings. The advocate of the firm did not appear on 26-5-2001, arguments were heard on 27-5-2001 and thereafter the award was passed. The objector further submitted that the machinery supplied was not proper, telephone, water connection, compound wall, furniture were not provided, that caused loss to the firm. For certain period unit remained closed. The firm prayed for appointment of new Arbitrator. The firm also prayed for initiating action to prosecute the Arbitrator as he committed the misconduct,
(4.) THE Corporation in its reply denied the objections. The award passed by the Arbitrator is with regard to the payment of agreed rent and rejection of the exaggerated flimsy claims of the firm, was proper. The effort of the firm right from beginning was not to pay the rent and was to delay the case. Thus, the award be made rule of Court.
(5.) THE Court below as per impugned judgment has ordered that the award be made rule of Court. The objections preferred by the appellant have been rejected, consequently the appeal has been preferred by the appellant.
(6.) SHRI B. B. Dubey, learned counsel appearing on behalf of the appellant firm has submitted that the Arbitrator has committed misconduct in fixing the additional fee of Rs. 11,000/- for adjudicating upon the counter-claim. The same amounts to illegal gratification to pass the award, he could not have demanded the fee over and above the fee fixed by the Court, thus the award is liable to be set aside on this ground alone. Secondly the Arbitrator ought to have stayed the proceedings when an application was filed by the appellant firm for his removal before the Court. In spite of receiving the notice the award was passed, hence there was misconduct on the part of the Arbitrator. Thirdly the rejection of the claims made by the appellant firm with respect to the loss caused due to non-providing of telephone, water connection, furnitures, machinery and plants, by the Arbitrator were not proper. The amount had to be spent in repairing of machinery and plant by the firm, that ought to have been adjusted beside there was failure to provide additional plants and machinery. The claims ought to have been allowed.
(7.) SHRI Pradeep Bhargav, learned counsel appearing on behalf of corporation has submitted that the Arbitrator did not commit any misconduct. The award passed by the Arbitrator is proper. The Arbitrator has simply awarded the agreed rate of rent. As to the counter-claim the fee was rightly fixed by the arbitrator, an order was passed in writing in that regard there was refusal to make the payment of fee by the objector firm. The Corporation had paid the fee with right to recover proportionate fees from the objector firm. There was no stay by the Court and the Arbitrator Shri M. M. Dubey was required to hear the arguments, arguments on behalf of appellant firm were already heard at length, thereafter they did not appear before the Arbitrator, consequently after conclusion of the arguments on behalf of Corporation proper award on merit has been passed. The claims made by the firm were not tenable, consequently rightly rejected by the Arbitrator assigning the reasons for rejection. Hence, appeal be dismissed.
(8.) FIRST we take up the third submission that on merits the award passed by the Arbitrator, is proper or not, as this would have relevant bearing on the question whether the Arbitrator had committed irregularity, if any in demanding the fee for adjudicating upon the counter-claim. The objector firm has submitted that it is not liable to make the payment of agreed rent in the agreement owing to failure on the part of the Corporation to carry out its obligations. The counsel has submitted that telephone facility, furniture and compound wall were not provided, similarly plants and machinery were not in the shape as assured, amount had to be spent by the firm to make the machinery work. Proper machineries, water connection were also not provided. In C. R. No. 3/89 decided by this Court on 20-2-1989 the Arbitrator was required to consider the sickness of the plant, lack of water supply, non supply of furniture, utensils, telephone, storeroom etc. and thereafter to pass the award. The award has been passed in contravention to the said order dated 20-2-1989.
(9.) IN order to find out the merit of the aforesaid submission, we have gone through the agreement dated 22-11-1985 entered into between the parties. The agreement contains following important clauses :-
2. The second party shall pay to the Corporation a sum of Rs. 19,990. 00 (Rs. Nineteen Thousand Nine Hundred Ninety) only in advance, equivalent to three months rent within 7 days from the date of agreement which shall be adjustable on the handing over of satisfactory possession to the party No. 1. Further, this advance will remain with the party No. 1 without any interest and the party No. 2 shall be bound to pay the rent every month by first week for the preceding month.
3. The party No. 2 shall have no right to make any MATERIAL alteration, addition etc. , in machinery as well in premises whatsoever, leased out without prior and proper permission of the competent authority of the Corporation in writing. However, on written request of the party No. 2, the Corporation may think over the proposals and consider such requests on the terms and conditions as may be mutually agreed upon.
4. The repairs of machineries and building etc. if required, shall be the sole responsibility of party No. 2 and the expenditure thereon shall be borne by them.
6. The machineries are in proper working condition and the party No. 2 shall be responsible and liable to keep the machineries in proper working order. The second party shall also ensure that no damages to machinery or building etc. take place. In case of any damages, it will be the responsibility of party No. 2 to get it repaired to the full satisfaction of the Corporation/party No. 1.
9. It shall be the responsibility of party No. 2 to ensure timely payments of power and water charges etc. In case of any default in this regard, the responsibility for losses, if any, shall be of party No. 2. Further, if any agreement is required in these respects, it shall be the responsibility of party No. 2 to ensure compliance accordingly.
15. The party No. 2 shall be at liberty to use the brand name "magfa; during the course of lease period for which the party No. 1 will not recover any charges. Further the party No. 2 shall ensure the maintenance of good will of the product.
21. The extension in lease period shall be further considered on the terms and conditions mutually agreed. The request for extension shall have to be made in writing by party No. 2 at least three months prior to the expiry of lease period. In Clause 6 it is mentioned that machineries are in proper working condition and party No. 2 shall be responsible and liable to keep the machineries in proper working order. Clause 4 provides that the repairs of machineries and building etc. if required, shall be the sole responsibility of party No. 2. In view of the aforesaid conditions of the agreement the objector firm could not have claimed the amount spent on repairs, if any or to keep the machineries working. In the agreement it was not mentioned that telephone has to be provided at the cost of Corporation and water connection etc. had also been dealt with by the arbitrator in the award thus
19. As regards the plea that the plant (s) were old, and not found to be fully equipped and a room was retained and furniture and telephone facility were not provided, are such items that the applicant-firm should have taken care of, at the time of taking over possession. It is to be remembered that the lease in question was put through after a considered negotiation and re-negotiation and there, therefore, is no scope for arguments that there was any fraud, undue influence, mistake or the like on the part of the respondent-corporation. The applicant-firm would be deemed to have entered into the lease-agreement with open eyes. The claim on these counts are, therefore, liable to be rejected and are hereby rejected.
20. The amount spent over improving the plant must have been for the applicant-firm's own benefits and under no coercion from the respondent-corporation. This is obvious from the fact that the applicant-firm got the lease period renewed for a further period of five years and still wishes to cling the leased units for which there is no compulsion. It consistently kept on renewing its food processing licence regularly. Had the leased unit been an unprofitable concern or a concern giving diminishing return, the applicant-firm could have opted out and determined the lease agreement. On the other hand, the respondent firm is keen to get out of the lease agreement and the legal battle in which it finds itself involved now. The applicant firm would, in my view, better had recourse to the provisions of the Sick Industries (Special Provisions)Act, if they could be made applicable to it with advantage. I after consideration of the claim on this count also unable to make an award granting it.
21. Repairs to the running unit and its machinery and amount spent for additional water supply obviously suggest that the units were being run with advantage. In any case, discounting any theory of unsustainable loss. The claim for expenditure on improvement and water charges is also therefore rejected.
22. It was no part of the obligation of the respondent-firm to arrange for banking facilities for the applicant-firm or for financial assistance under the agreement of lease of even on humanitarian grounds or on the basis of alleged solemn promises which are not ground enforceable in law. The claim in this regard is also, therefore, rejected.
23. The claim by the petitioner firm has, with passage of time, swelled to rs. 2,47,32,600. 00 (two crores forty seven lacs thirty two thousand six hundred only) and the counter-claim of the respondents-firm has gone up to the tune of Rs. 24,15,97,000. 00 (Twenty four crores, fifteen lacs ninety seven thousand only). These bloated claims are being mentioned only to be rejected as wholly unsustainable in absence of acceptable proof.
24. It may not be out of place to mention here, that a lessee will always remain a lessee and a lessor and they cannot exchange places by any law during subsistence of their lease. In other words, the owner of the units will remain an owner and the lessee cannot make himself richer by making claim more than the value of the unit leased to him running profit apart. The Arbitrator has given the reasons to reject the claims made by the appellant firm and in view of the agreement has found the claims not to be tenable, though it was not for us to examine the merits of the award passed but we have done so and looked into the agreement also so as to find but whether award passed could be the only award in the circumstances of the instant case. In our opinion the claims made by the appellant-firm have been rightly rejected by the Arbitrator. On the one hand the objector firm is running the business and on the other hand no rent has been paid for the last more than approximately 20 years, though it has not been disputed at bar that objector firm is running the Unit at present.
(10.) COMING to the main submission that Arbitrator has committed misconduct in demanding the fee for adjudicating upon the counter-claim. The court appointed Shri M. M. Dubey as sixth Arbitrator. Shri M. M. Dubey was appointed as the Arbitrator on 7-7-2000 as Shri S. S. Dixit, Fifth Arbitrator had expressed his inability to continue the arbitration, thus with the consent of the parties the Court appointed Shri M. M. Dubey. The Court fixed the fee at Rs. 10,000/- to be paid to Shri M. M. Dubey in equal proportion by the parties. The arbitrator commenced the proceedings on 20-11-2000. The fee as fixed by the court was ordered to be deposited. The case was fixed for the arguments on 9-12-2000. The fee was not deposited by the Corporation and an application was filed under section 38 of Arbitration and Conciliation Act, 1996 on 9-12-2000 for decision on counter-claim also. The Arbitrator ordered that counter-claim to be valued for legal fee separately which and value on the said amount of fee, as the claim i. e. at Rs. 11,000/- payable half and half by each party. The parties to pay the fee on counter-claim before the next date by which date the Corporation to pay his part of fee on claim also. On 15-12-2000 a fee of Rs. 16,500/- was paid through cheque to the Arbitrator. As there was refusal on the part of the objector firm to make the payment of fee for counter-claim, payment was made by the corporation. On 9-12-2000 an application was moved by the Corporation for deciding their counter-claim along with the reference. In the application it was offered by the Corporation that the Arbitrator may settle the reasonable fees for counter-claim and Corporation was willing to pay separate fees for counter-claim in addition to reference fees. Learned counsel for appellant firm has also pointed out the order-sheets at pages 166 and 167. As the objector firm orally refused to further deposit the counter-claim fee, the counsel of Corporation had advised it to make the payment of entire fees fixed by the Arbitrator for counter-claim. No doubt about it, it is clear that the objector firm has declined to make the payment of the fees for counter-claim as fixed by the Arbitrator. After deposit of the fee on 16-12-2000 the counsel for appellant firm did not appear. Case was posted on 17-12-2000 on that date Shri B. B. Dubey appeared with Shri S. Dubey, arguments were commenced by him. Arbitrator recorded that arguments commenced by Shri B. B. Dubey, to continue from day to day as far as practicable, next date fixed was 18-12-2000. On 18-12-2000 also Shri B. B. Dubey was heard, arguments remained incomplete, case was put up for 23-12-2000, Shri B. B. Dubey firm's counsel resumed the arguments which remained incomplete, next date fixed was 6-1-2001, again Shri Dubey continued the arguments which remained incomplete, next date fixed was 20-1-2001. Counsel further argued, arguments could not be completed, next date was 27-1-2001 case was again taken up for 3 hours, still firm counsel's arguments remained incomplete. The Arbitrator observed that as arguments are taking, quite a long time the Advocates were advised and reminded of the four months' time for decision of the case. Advocates were advised to complete the arguments by the end of February, 2001. Next date fixed was 3-2-2001 but again though the case was heard for two and half hours, the arguments on behalf of counsel for firm remained incomplete. The case was adjourned to 10-2-2001. Shri S. Dubey, has argued the matter further as Shri B. B. Dubey was sick. Case was adjourned as per joint request on 24-2-2001 to 17-3-2001 again arguments were made on behalf of the appellant firm but could not be concluded. Case was fixed for further arguments on 7-4-2001, again time was prayed by the appellant's counsel on 15-4-2001, the arguments remained incomplete, next date was 22-4-2001 again arguments remained un-concluded, on 29-4-2001 again arguments were continued on behalf of firm's counsel but remained incomplete. On 5-5-2001 appellant's counsel applied for adjournment owing to his mother's operation. The case was fixed for 27-5-2001 there appears to be overwriting on the date. It appears that it was initially posted for 23-5-2001, later it was changed to 27-5-2001. On 27-5-2001 the arguments on behalf of Corporation were heard and case was closed for award on 30-6-2001. Award was prepared. Copies of award were given to the counsel on 10-7-2001 and the award was sent to the Court by the Arbitrator.
(11.) A perusal of the order dated 7-7-2000 appointing Shri M. M. Dubey as arbitrator indicates that the Court has fixed the fee of Rs. 10,000/- with the consent of the parties. On 9-12-2000 an application was made before the arbitrator by the Corporation pointing out that it had filed the counter-claim and prayed for fixation of separate fee so as to adjudicate the counter-claim. It was also submitted before the Arbitrator that as per Arbitration and Conciliation Act, 1996 it was open to the Arbitrator to fix the separate fee for counter-claim, consequently the Arbitrator passed an order in writing as reflected in order dated 9-12-2000, though the applicability of the Act of 1996 was objected to by the appellant firm and it was expressed orally that the firm was not willing to make the payment and to share the Arbitrator's fee of the counter-claim, however, thereafter, the counsel on behalf of the firm has argued the case on number of dates, the Arbitrator was required to hear the arguments and to decide the case finally, he was the sixth Arbitrator appointed. As the dispute was going w. e. f. 1987, arguments were advanced on number of dates by the firm's counsel, at that stage no objection was raised on behalf of the firm that they were not having the confidence in the Arbitrator due to fixation of fees on counter-claim. For several months case was argued on behalf of firm, when the case reached unending tail of arguments, it appears that when the Arbitrator had advised to cut down the arguments and to finish it at an early date considering the time constraint, it was only thereafter an application was made before the Court for change of Arbitrator by the firm.
(12.) BEFORE dilating further on the aforesaid aspect of realization of additional fee by the Arbitrator, we deem it appropriate to deal with the case law cited on behalf of appellant firm. Counsel has relied upon the Full Bench decision in Shambhu Dayal and others vs. Pt. Basdeo Sahai, AIR 1970 Allahabad 525, in which while dealing with the question of misconduct, the Court has observed the question of enhancement of the fee of the Arbitrator is a matter of utmost importance. The Court has observed that the Arbitrator has to act throughout with complete fairness, candour and probity and there should be no element whatsoever of pressure, persuation, importunity, manipulation or secrecy in the conduct of the arbitrator in relation even to the fixation or enhancement of his fee nor should there by any attempt on his part to charge a fee disproportionate to the work done by him or to take advantage of his position as an arbitrator. If the fee of the arbitrator has originally been fixed by an order of the Court it is undeniably proper and desirable, that an order of enhancement of the fee be obtained from the Court and the enhancement should receive its sanction. But, if it is clear that the parties to the reference had agreed to an enhancement in the fee and it is also clear that the conduct of the arbitrator in relation to enhancement was not tainted by any of the vices indicated above, the acceptance of the enhanced fee would not amount to misconduct and would not vitiate the award. After making the aforesaid observation the Court proceeded to examine the merit of the submission of realization of additional fee of Rs. 100/-by the Arbitrator. The Court had fixed the fees at Rs. 100/- to be paid in equal proportion by the parties. The proceedings protracted, the Arbitrator maintained the proceedings. In view of the proceedings, fee of Rs. 100/- was found to be inadequate. The Arbitrator mentioned in the award that parties had paid him Rs. 100/- each on account of his fees. The Court observed that although the advisable course for the arbitrator was to obtain an order for enhancement of his fee from the Court he was not guilty of misconduct in accepting an extra amount of Rs. 50/- from each of the two parties as his remuneration for arbitration. The appellant's counsel has also relied upon a decision of Division Bench in Ardeshar Irani vs. The State of M. P. , 1974 MPLJ 157 = AIR 1974 M. P. 199, in which in Para-11 the Court has referred to Halsbury's law and Russel on arbitration and observed thus :-11. The expression 'misconduct' occurring in clause (a) of section 30 of the Arbitration Act has not been defined. This expression in relation to arbitration proceedings is incapable of any precise meaning and it has always been understood to have the same meaning which it has acquired under the English law. The history of legislation shows that the words 'or the proceedings' occurring in clause (a) of section 30 were not present initially in the corresponding earlier law and in the English law also they were introduced only by amendment in 1934. The reason for the amendment was to include within the ambit of misconduct even those cases where no turpitude on the part of the arbitrator was alleged. Such cases of technical misconduct have come to be known as those, which even though do not attribute any turpitude against the arbitrator yet clearly fall within the ambit of this expression. In Halsbury's Laws of England, Third Edition, Volume 2, para 126 at page 57, it is stated as follows :-
"what constitutes 'misconduct' - It is difficult to give an exhaustive definition of what amounts to misconduct on the part of an arbitrator or umpire. The expression is of wide import, including on the one hand bribery and corruption and on the other a mere mistake as to the scope of the authority conferred by the agreement of reference or a mere error of law appearing on the face of the award. " in Russell on Arbitration, 17th edition, at page 307, it is stated -"the term 'misconduct' here would appear to be used in its widest sense perhaps even including mistake (in law or fact) admitted by the arbitrator. "
It is further stated at page 331 as under :-
"misconduct justifying intervention by the Court may take place at any stage between appointment and entering upon the reference, during the reference, or in the making of the award. "
At page 332, it is stated as under :-
"the more difficult question, however is whether the extent of that irregularity is such as to justify interference by this Court either by way of setting aside the award or remitting the award. The determination of that issue. . . . . . . . . . . . . . . . . . . . . . . . . . . . . depends upon whether the Court is satisfied that there may have been - not must have been - or that this irregularity may have caused not must have caused - a substantial miscarriage of justice that would be sufficient to justify the setting aside or remitting of the award. Unless those resisting the setting aside or remission could show that no other award could properly have been made than that which was in fact made, notwithstanding the irregularity. The Irish Courts have perhaps an even stricter approach; "when once they enter on an arbitration, arbitrators must not be guilty of any act which can possibly be construed as indicative of partiality or unfairness. It is not a question of the effect which misconduct on their part had in fact upon the result of their proceedings, but of what effect it might possibly have produced. It is not enough to show that, even if there was misconduct on their part, the award was unaffected by it, and was in reality just: arbitrators must not do anything which is not in itself fair and impartial. "
(underlining is by us). In London Export Corpn. Ltd. vs. Jubilee Coffee Roasting Co. Ltd. , (1958) 1 WLR 661 at p. 665, Jenkins. L. J. , explains the meaning of misconduct as follows :-
"'misconduct' is, of course, used in the technical sense in which it is familiar in the law relating to arbitrations as denoting irregularity, and not any moral turpitude or anything of that sort. "
(emphasise the report itself)What has been emphasized by the Court is that arbitrators must not be guilty of any act which can possibly be construed as indicative of partiality or unfairness. It is not a question of the effect which misconduct on their part had in fact upon the result of their proceedings, but of what effect it might possibly have produced. The Court has examined the merit of the case in view of the admitted fact that the fee demanded by the Arbitrator was exorbitant, was the common case of the parties. The plaintiff paid the whole amount, yet they had themselves thereafter made such an allegation and requested the Court to determine a reasonable amount payable to the Arbitrator. The conduct of the plaintiff was considered and as per plaintiff fee demanded by the Arbitrator was exorbitant and still it was paid by the plaintiff. There was some talk between the Arbitrator and the plaintiff which was not in writing and was behind the back of the defendant as mentioned in Para-16 of the judgment. Thereafter, when the Court was approached under section 38 of the Act for fixation of the fees, the Arbitrator passed the award. This Court in Ardeshar Irani vs. The State of M. P. (supra) has laid down in Para-21 of the judgment thus :-
21. In the passage at page 332 of Russell, on Arbitration already quoted above, the test indicated is whether the irregularity may have caused and not necessarily must have caused a substantial miscarriage of justice that would be sufficient to justify the setting aside of the award unless it could be shown that no other award could properly have been made notwithstanding the irregularity. In order to see whether the award can be allowed to stand notwithstanding the irregularity, the contents of the award have to be seen and unless it is possible to conclude that the award actually made is justified on the facts, the award will have to be set aside. Unfortunately in the present case there are no reasons given by the arbitrator for his decision nor are there any other particulars to indicate the process by which the arbitrator reached his conclusion. The award contains only the conclusion, that is, the amount which was to be paid by the defendant to the plaintiffs. There is nothing even to indicate how that amount was calculated. It is, therefore, not possible for us in the present case to examine whether the award could be justified on the facts of this case notwithstanding the irregularity already dealt with at length by us. The possibility of sustaining the award notwithstanding the above position by applying this test is, therefore, not available to us in the present case. It is no doubt true, as settled by the Supreme Court relying on an earlier Privy Council decision, that an arbitrator need not give any reasons for the award and where no reasons are given in the award the same cannot be set aside by the Court on the ground of any error on the fact of the award itself. It has been held that an error on the fact of the award cannot be discovered by attributing some reason to the arbitrator by a process of inference and argument where, in fact, no reasons have been given by the arbitrator himself (See Bungo Steel Furniture vs. Union of India, AIR 1967 SC 378.) Those decisions, however, are no authority for the proposition that the absence of reasons in an award cannot be taken notice of even for the purpose of applying the test indicated above in a case like the present. In all those cases the question for determination was whether an award disclosed an error on its fact on account of its containing no reasons. It was in that context that the Privy council and the Supreme Court took that view. That however, does not indicate that the absence of reasons is of no Consequence even in a case like the present where the award is challenged on the ground of misconduct or being 'otherwise invalid'. In our opinion the absence of reasons in the award is relevant in a case like the present atleast as indicating that there is nothing to show that no other award could properly have been made than that which was in fact made notwithstanding such an irregularity. Thus, the Division Bench in Ardeshar Irani vs. The State of M. P. (supra)has laid down that the Court is required to see whether miscarriage of justice has taken place. As reasons were not mentioned by the Arbitrator, the Court came to the conclusion that it could not be said that no other award could properly have been made than that which was in fact made notwithstanding such an irregularity.
(13.) IN C. C. Subbaraya Setty vs. C. V. Ananthanarayana Setty and others, air 1996 Karnataka 41, it has been held in the backdrop of the fact that remuneration of the Arbitrator and expenses had been paid by respondents No. 4 and 5 and that they were entitled to recover the share from the appellant. Decision in Akshoy Kumar Nandi's case, AIR 1935 Cal 359 and Ardeshar Irani vs. The State of M. P. (supra) and Shambhu Dayal and others vs. Pt. Basdeo sahai (supra) have been referred to. The Court has observed that a question of misconduct would arise only when the Arbitrator accepts fee from one of the parties without the knowledge of the other party and there is some dispute in that regard. This Court observed thus :-28. In Jeevan Industries (P) Ltd. vs. Haji Bashiruddin Madhusudan dayal, AIR 1975 Delhi 215 a Division Bench has dissented from the judgment of a single Judge reported in AIR 1956 Punj. 239, which was relied on by the learned counsel for the appellant, and has held as hereunder with regard to the mode of payment of fee :
"it is not correct to say that sections 14 (2) and 38 provide only two remedies for recovering arbitrator's fee because voluntary mode of payment is an accepted mode and the aforesaid provisions do not miltiate against voluntary payments made by parties to the arbitrator so long as they are not objected to and are reasonable and have not caused any bias in favour of or against any party. "
The above authorities show that there is no bar for the parties voluntarily paying the fee to the arbitrators by a mutual arrangement without reference to the provisions under sections 14 (2) and 38. A question of misconduct would arise only when the arbitrator accepts fee from one of the parties without the knowledge of the other party or when there is some dispute in that regard. But if by mutual arrangement of the parties fee is paid by one of them and the arbitrator accepts the same then that would not amount to misconduct on the part of the arbitrator. Why I have referred to these aspects is to point out that from the mere fact that the award shows that respondents 4 and 5 have paid the remuneration of the arbitrators and the expenses for the document, it cannot straight away be held that the arbitrators are guilty of misconduct. The appellant had to plead that the arbitrators accepted the remuneration from the respondents 4 and 5 without his knowledge and without a demand being made on him in which event the respondents would have had an opportunity to plead and prove the existence of any agreement between the parties in that regard. Such a plea not having been taken by the appellant in his objections the same cannot be allowed to be raised, nor can it be held on the basis of the material on record that the arbitrators are guilty of misconduct by accepting their fee and expenses from respondents 4 and 5.
(14.) IN the backdrop of the aforesaid discussion coming to the facts of the instant case, we find that there were no secret deliberation made by the Arbitrator with any of the parties. There was dispute with respect to applicability of the provisions of the Act of 1996. Provisions of the Act of 1996 enable the Arbitrator to fix the fee. In the instant case Arbitrator himself did not decide the fee for counter-claim but an application was filed on behalf of the Corporation pointing out that it wanted decision on the counter-claim also and was ready to pay the fees fixed by the Arbitrator. On that the Arbitrator fixed the fee, though the objector firm did not agree to make the payment of fee, oral refusal in that regard was made. It was paid in entirety by the Corporation as mentioned by the arbitrator also in the order-sheet. The Court has fixed the fee of the Arbitrator on 7-7-2000, however, there was no reference
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to the counter-claim when the fee was fixed by the Court, with the consent of the counsel for the parties. In our opinion, it was proper for the Arbitrator to seek the Court's order with respect to the fee payable on the counter-claim. In the circumstances of the case it could not be said to be a misconduct effecting the merit of the decision. No doubt it was an irregularity committed by the Arbitrator but the award cannot be set aside on this ground as held by the Division Bench of this Court in Ardeshar Irani vs. The state of M. P. (supra) that it has to be seen by the Court before setting aside the award that whatever other award could have been passed in the circumstances of the case and merely on the basis of irregularity award need not be set aside, thus in our opinion, the award need not be set aside in the instant case as we have found that the claims made by the firm were dealt with by a reasoned award passed by the Arbitrator. The Arbitrator has given the reasons and apart from that in view of the aforequoted terms of the agreement, in our opinion, no other award could have been passed in the circumstances of the case. It was a case of dispute between the lesser and lessee and lessee was required to make the payment of agreed rent as per agreement, that's what has been ordered and awarded by the arbitrator. The award passed in our opinion was fully justified on merits and could be the only award passed by a person of reasonable prudence. (15.) COMING to the submission raised by Shri B. B. Dubey, learned counsel for the appellant that the Arbitrator ought to have stayed the hands when the application was moved and notice was received by the Arbitrator on 14-6-2001. Sometimes in the month of May, the application was filed before the Court for removal of the Arbitrator. It was filed after participation for several months before the Arbitrator and as apparent from the order-sheets the Arbitrator had heard the arguments on behalf of appellant on several dates. It is surprising that arguments though commenced on 17-12-2000, continued on 18-12-2000, thereafter remained unconcluded on 22-12-2000, 6-1-2001, 20-1-2001, 27-1-2001, on 27-1-2001 counsel for the parties were advised to conclude the arguments by the end of February, on 3-2-2001 arguments were again continued on behalf of the appellant, again on 17-3-2001 arguments were heard on behalf of appellant, thereafter on 7-4-2001, 15-4-2001, 22-4-2001 and 29-4-2001 still the arguments were not concluded as if it were an unending arguments made, thereafter, counsel for the appellant applied for adjournment and did not appear thereafter. In our opinion, the Arbitrator had heard the arguments on behalf of the appellant sufficiently. There was an effort made not to conclude the arbitration. Shri M. M. Dubey was the sixth Arbitrator who was appointed by the Court, thereafter the Arbitrator heard arguments on behalf of the Corporation and award was passed. No stay was granted by the Court. Though the Arbitrator could have waited for the Court's order but considering the overall circumstances in the instant case we are not inclined to make interference on the aforesaid ground as the Arbitrator was the sixth Arbitrator and we have found the award to be justified on the merit of the case in the light of the decision in Ardeshar Irani vs. The State of M. P. (supra). We find that it could not be said to be a case of undue haste on the part of the Arbitrator. It was an unending story of appointment and removal of the Arbitrators and lastly the Arbitrator who was appointed, had heard the arguments on so many dates, in our opinion, the case has been prolonged unnecessarily, thus we find that no case for interference on merit in the appeal is made out. (16.) RESULTANTLY, we find that appeal deserves to be dismissed, same is hereby dismissed. However, we leave the parties to bear their own costs as incurred. Appeal dismissed.