2003 (9) TMI 533 - SC - Companies Law

Whether an award made by the arbitrator should be set aside or not? Held that - Ghanshyamdas Gupta cannot be said to have been refused a fair opportunity of participation in the arbitration proceedings. So far as the other ground is concerned, which found favour of the High Court, namely, that the arbitrator had asked the parties to issue a letter to him that his award shall not be questioned would render the award a nullity inasmuch the same was not acted upon and in fact no letter was issued. The arbitrator must have done so keeping in view the peculiar nature of the disputes and to see that all the disputes come to an end.

Summary

Issues Involved:
1. Reasonable notice by the arbitrator.
2. Procedural irregularity in arbitration proceedings.
3. Violation of principles of natural justice.
4. Withdrawal of objections by Ghanshyamdas Gupta.
5. Subsequent events and interlocutory applications.

Detailed Analysis:

1. Reasonable Notice by the Arbitrator:
The primary issue was whether the arbitrator provided reasonable notice to Ghanshyamdas Gupta. The arbitrator issued a notice on 24-5-1976, directing all parties to be present in Kolkata on 8-6-1976 for arbitration proceedings. Despite receiving the notice and a subsequent telegram on 12-6-1976, Ghanshyamdas Gupta did not attend. The court held that the arbitrator's actions in managing the arbitration proceedings, including setting specific dates and issuing notices, constituted sufficient compliance with legal requirements. The arbitrator's discretion in managing the hearing was upheld, emphasizing that each party must have notice, a reasonable opportunity to be present, and to present evidence and arguments.

2. Procedural Irregularity in Arbitration Proceedings:
The learned Single Judge set aside the award on the ground of procedural irregularity, specifically that no reasonable notice was given to Ghanshyamdas Gupta. The Division Bench of the Calcutta High Court upheld this finding, stating that the lack of reasonable notice amounted to a violation of natural justice. However, the Supreme Court found that Ghanshyamdas Gupta had participated in earlier arbitration sessions and had received adequate notice for subsequent meetings. The court emphasized that the arbitrator's procedural management was within his rights and did not constitute misconduct.

3. Violation of Principles of Natural Justice:
The court examined whether the principles of natural justice were violated due to the alleged lack of reasonable notice. It was noted that the principles of natural justice are flexible and must be applied based on the specific circumstances of each case. The court held that Ghanshyamdas Gupta had not demonstrated any serious prejudice resulting from the alleged procedural deficiencies. The court reiterated that procedural orders and directions by the arbitrator, including time limits and content of submissions, are within the arbitrator's discretion and must be respected unless there is a clear abuse of discretion.

4. Withdrawal of Objections by Ghanshyamdas Gupta:
Ghanshyamdas Gupta filed an application in 1998 to withdraw his objections to the arbitration award. The court noted that he had engaged another counsel without obtaining a no-objection certificate from his previous advocate. The court held that Ghanshyamdas Gupta could not be permitted to change his advocate at this stage, especially since he had maintained his earlier stand for several years. The court emphasized that such a change would not affect the validity of the arbitration proceedings or the award.

5. Subsequent Events and Interlocutory Applications:
Several interlocutory applications were filed, including those for staying the auction of properties and for the appointment of a receiver. The court vacated the stay on the auction of properties, stating that the dispute between a third party and a company was unrelated to the arbitration award. The court also declined to pass orders on the application for appointing a receiver, suggesting that appropriate proceedings could be initiated before the relevant forum if necessary. Additionally, applications for initiating contempt proceedings were dismissed, with the court advising that factual disputes should be resolved in the executing court.

Conclusion:
The Supreme Court set aside the impugned judgment of the Calcutta High Court, upheld the arbitration award, and made it the rule of the court. The court concluded that Ghanshyamdas Gupta had been given a fair opportunity to participate in the arbitration proceedings, and there was no violation of natural justice. The court also addressed various interlocutory applications, providing directions for appropriate legal remedies. The appeals were allowed with no order as to costs.