2003 (11) TMI 343 - SC - Companies Law

Appointment of arbitrator - Held that - Appeal dismissed. The view taken by the High Court does not suffer from any legal infirmity. It is not disputed that no notice at all was sent to the respondent before appointing arbitrator. It is also not disputed that the award given by the arbitrator was an ex parte one. Furthermore such an award which have been made by the arbitrator having been passed without giving an opportunity of hearing to the respondent herein, was illegal and void.

Summary

Issues:
1. Appointment of arbitrator without notice to respondent.
2. Legality of ex parte award made by arbitrator.
3. High Court's decision to set aside arbitrator's appointment and award.
4. Appeal against High Court's judgment.

Analysis:
1. The case involved a contractor who had a dispute with the respondents regarding a construction project. The agreement between the parties stated that any disputes would be resolved by an arbitrator, who was the Superintending Engineer. Despite invoking the arbitration agreement, the arbitrator did not consider the appellant's claims and failed to pass a final award, leading to the appellant filing an application under section 8 of the Arbitration Act, 1940 in the Court of Subordinate Judge I, Bettiah. The court appointed a retired Chief Engineer as an arbitrator without issuing a notice to the respondents, which was challenged by the respondents in a revision petition before the High Court.

2. The High Court, in its decision, set aside the appointment of the arbitrator and the ex parte award made by the arbitrator. The High Court allowed the appeal filed by the respondents, stating that the award made without giving an opportunity of hearing to the respondent was illegal and void. The Supreme Court, after hearing the arguments from both parties, upheld the decision of the High Court, emphasizing that the award made without notice to the respondent was illegal, and therefore, the appeal was dismissed with no order as to costs.

3. The Supreme Court, while dismissing the appeal, also suggested that the Civil Court should consider appointing a new arbitrator promptly in accordance with the provisions of the Arbitration Act, considering the facts and circumstances of the case. This recommendation aimed at ensuring a fair and expeditious resolution of the dispute between the parties, highlighting the importance of following proper legal procedures in arbitration proceedings to uphold the principles of natural justice and fairness in such matters.