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TMI Blog2015 (12) TMI 778X X X X Extracts X X X X X X X X Extracts X X X X ..... Act. The learned senior counsels for the parties have pressed their argument relating to legal misconduct. Both the learned senior counsels for the parties have construed the order that the said liberty has been granted to establish the misconduct and precisely that is the subject matter of challenge before us. Therefore, we have clearly opined that to substantiate a stance of legal misconduct on the part of the arbitrator, examination of any witness in court is impermissible. It is because it must be palpable from the proceedings and the learned single Judge has already directed that the proceedings before the arbitrator to be requisitioned by the civil court. Least to say, it will be open for the respondent to establish the ground of legal misconduct from the arbitral proceedings. We may hasten to add that we have not said anything as regards legal misconduct pertaining to the present case, although we have referred to certain authorities as regards the legal misconduct. In view of the aforesaid premises, the appeal is allowed in part as far as it grants permission/liberty to the respondent to examine any witness in court. The learned Civil Judge would requisition the records ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itrator can only be assailed on the grounds as engrafted under Sections 30 and 33 of the 1940 Act; and that no reason had been disclosed by the respondent, the applicant before the Subordinate Judge, to examine the witness No. 2, that is, the General Manager. 3. The aforesaid rejection of the application constrained the respondent to file a Writ Petition before the High Court which concurred with the view expressed by the court below opining that there was no necessity to examine the arbitrator as a witness as more than five years had elapsed since the award was passed. The High Court further appreciated the reasoning expressed by the rule making Court and ruled that even if umpire would be examined, no fruitful purpose will be served and, accordingly, gave the stamp of approval to the same. However, the High Court granted liberty to the writ petitioner to produce other available evidence to substantiate its claim and specifically permitted to examine its employee as a witness in the proceeding. The High Court further observed that his evidence would be appreciated bearing in mind the scope of Sections 30 and 33 of the 1940 Act and, accordingly, modified the order passed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd. (2005) 6 SCC 462 and Oil and Natural Gas Corporation v. Wig Brothers Builders and Engineers Private Limited (2010) 13 SCC 377. 5. Resisting the aforesaid submissions, Mr. Vivek Tankha, learned senior counsel for the respondent, would contend that adducing of oral evidence in a proceedings under Sections 30 and 33 of the 1940 Act is not prohibited and in the obtaining factual matrix the High Court has correctly exercised its discretion by granting the liberty to the respondent and, therefore, the order cannot be found fault with. It is urged by him that to establish the legal misconduct on the part of the learned arbitrator as asserted by the respondent, it is necessary to examine the General Manager so that he can throw light on the proceedings before the learned arbitrator and, in fact, that is the only way it can be proven. It is further propounded by him that this Court in Fiza Developers and Inter-Trade Private Limited v. AMCI (India) Private Limited and Another (2009) 17 SCC 796 while dealing with Section 34 of the Arbitration and Conciliation Act, 1996 (for brevity, the 1996 Act ) has clearly held that evidence can be adduced. Learned senior counsel has drawn inspira ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplication for hearing on other evidence also, and it may pass such orders for discovery and particulars as it may do in a suit. 8. In the present case, the issue that has travelled to this Court does not even remotely relate to Section 33 of the 1940 Act. It centres around Section 30 of the 1940 Act. Though certain grounds have been provided under Section 30, we only require to deal with the ambit and sweep of legal misconduct on the part of the learned arbitrator inasmuch as there are allegations as regards non-consideration of relevant documents, ascription of reasons of passing of the award which do not flow from the material on record and further the conduct of the arbitrator during the arbitral proceedingsin recording of the minutes. The assail does not pertain to personal misconduct or moral misconduct of the learned arbitrator. 9. In this regard, reference to a three-Judge Bench decision in Firm Madanlal Roshanlal Mahajan v. Hukumchand Mills Ltd., Indore AIR 1967 SC 1030 would be apposite. In the said case, issue arose with regard to misconduct. It was contended before this Court that the learned arbitrator was guilty of misconduct as he had amended an issue behind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tractor has no right for extra payment for the jetting: The Chief Engineer has rejected the claims of the contractor on grounds of non-inclusion of this (jetting) in the agreement which was executed subsequent to the direction issued by the department to adopt jetting. The Chief Engineer s decision totally ignores the next sentence in that letter Meanwhile you may execute the agreement . By this sentence the issue of extra payment for jetting is left open even after the execution of the agreement. If the above is the conclusion of the arbitrator, rejection of the claim on the ground that jetting, however, is not an authorised extra covered by the agreement cannot be anything but rationally inconsistent. The award, therefore, suffers from a manifest error apparent ex facie. 12. After so stating, the three-Judge Bench opined that under Section 30(a) of the 1940 Act an award can be set aside when an arbitrator has misconducted himself or the proceedings and misconduct under Section 30(a) has not a connotation of moral lapse. It further observed that it comprises legal misconduct which is complete if the arbitrator on the face of the award arises at an inconsiste ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eering Foundry Works, B.S. City, Bokaro v. Steel Authority of India Ltd., B.S. City, Bokaro (2001) 6 SCC 347, it has been held that reappraisal of evidence by the court is not permissible and as a matter of fact, exercise of power to reappraise the evidence is unknown to a proceeding under Section 30 of the Arbitration Act. The court as a matter of fact cannot substitute its own evaluation and come to the conclusion that the arbitrator had acted contrary to the bargain between the parties. 16. At this juncture, we may refer to some other authorities as regards the scope of Section 30 of the 1940 Act. In Allied Constructions (supra), a three-Judge Bench after referring to earlier judgments has opined that an award passed by an arbitrator can be set aside only if one or other condition contained in Sections 30 and 33 of the 1940 Act is satisfied. The Court further opined that the term provided for setting aside an award under Section 30 is restrictive in its operation and unless one or other condition contained in Section 30 is satisfied, an award cannot be set aside, for the arbitrator is a Judge chosen by the parties and his decision is final. It has been further observed that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amounts not only to manifest disregard of the authority or misconduct on his part but it may tantamount to mala fide action. 23. It is settled law that the arbitrator is the creature of the contract between the parties and hence if he ignores the specific terms of the contract, it would be a question of jurisdictional error which could be corrected by the court and for that limited purpose agreement is required to be considered. 19. We have referred to series of decisions to appreciate the concept of misconduct and how a party is entitled to make it the fulcrum of assail in his objection under Sections 30 and 33 of the 1940 Act. Misconduct, as has been laid down, does not always have a moral connotation. To elaborate, it may not have any connection with the individual/personal conduct of the arbitrator. The said conduct would be in sphere of moral misconduct. As far as legal misconduct is concerned, as the authorities would demonstrate, the same must be manifest or palpable from the proceedings before the arbitrator. To elaborate, a person urging the ground of legal misconduct has to satisfy the court from the records of the arbitral proceedings that there has been a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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