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TMI Blog2011 (3) TMI 1759X X X X Extracts X X X X X X X X Extracts X X X X ..... 997 for a period of five years. Under the Consignment Stockist Agreement, Appellant had been appointed as Consignment Stock Agent in Punjab, Haryana, Himachal Pradesh, Uttar Pradesh, Rajasthan, Union Territory of Delhi and Jammu and Kashmir to sell directly or indirectly to persons or firms located in those Territories. Consignment Stock Agent was required to send the account sale accompanied by Demand Draft for the sale amount after deducting 20% commission and admissible expenses. If it fails to remit the amount, it has to pay interest at 20% per annum. Consignment Stockist Agreement dated 12.07.1997 contains Arbitration clause that is if any dispute arises between the parties, by the Managing Director of the 1st Respondent's Company or his nominee. 1st Respondent has been consigning its Leather Chemicals to the Appellant for sale as per the agreement. Inspite of supply of goods to the Appellant which in turn has been sold by the Appellant, the amounts due and payable to the 1st Respondent has not been paid. There were also certain unsold stocks at Delhi and Kanpur which have not been returned to the 1st Respondent nor their value remitted. The said default committed by the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Claimant is entitled to ₹ 15,02,301.15 towards the value of unsold stocks. Thus 2nd Respondent-Arbitrator has passed the Award for a total sum of ₹ 2,85,01,745.00. On the amount awarded, Appellant was directed to pay interest at the rate of 18% p.a. from the date of claim i.e. 21.12.1999 till the date of payment. 5. Challenging the Award, Appellant filed O.P.No.197 of 2001 under Sec.34 of Arbitration and Conciliation Act, 1996. Award was challenged mainly on two grounds:- (i)Lack of opportunity to participate in the hearing particularly, no notice of hearing on 24.6.2000 was given; (ii)Only Consignment Stockist Agreement dated 12.7.19997 effective from 01.4.1997 contains Arbitration clause and while so, the 2nd Respondent-Arbitrator went beyond the scope of reference and he has adjudicated on claims in respect of matters not referred to him i.e. pertaining to claims even prior to 01.4.1997. 6. Regarding first contention, after referring to the Minutes of Meeting of the Arbitrator, learned single Judge held that no opportunity was given by the 2nd Respondent-Arbitrator is not maintainable. Learned single Judge further held that Appellant was aware of the hearing d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trator has to give notice for the adjourned date and non-issuance of notice for the hearing on 24.06.2000 would have effect of vitiating the Award. 10. Drawing our attention to the proceedings of 2nd Respondent-Arbitrator, learned counsel for Appellant would further contend that admittedly, Appellant did not attend the hearing on 03.06.2000 and 2nd Respondent-Arbitrator ought to have given notice of next hearing date 24.06.2000 and because of non-issuance of notice, Appellant was "unable to present his case" and the Award is liable to be set aside for "lack of proper opportunity". 11. For setting aside the Award, Sec.34(2)(a)(iii) of Arbitration Act covers three inter-related as well as separate grounds:- (1)lack of proper notice of appointment of arbitrator; (2)lack of proper notice of arbitral proceedings; or (3)inability to present case for any reason. 12. There cannot be any dispute with regard to the proposition of law that the parties would be entitled to a reasonable opportunity of putting their case. A reasonable opportunity would mean that a party must be given an opportunity to explain his arguments before the Tribunal and to adduce evidence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he following conditions are required to be observed: 1)Each party must have notice that the hearing is to take place. 2)Each party must have a reasonable opportunity to be present at the hearing, together with his advisers and witnesses. 3)Each party must have the opportunity to be present throughout the hearing. 4)Each party must have the opportunity to present evidence and argument in support of his own case. 5)Each party must have a reasonable opportunity to test his opponent's case by cross-examining his witnesses, presenting rebutting evidence and addressing oral argument. 6)The hearing must, unless the contrary is expressly agreed, be the occasion on which the parties present the whole of their evidence and argument." "29. The principles of natural justice, it is trite, cannot be put in a straight jacket formula. In a given case the party should not only be required to show that he did not have a proper notice resulting in violation of principles of natural justice but also to show that he was seriously prejudiced thereby. In The Chairman, Board of Mining Examination and Chief Inspector of Mines and Another v. Ramjee (1997) 2 SCC 256), this Court held: & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ples of natural justice" must not be stretched too far, in CDJ 2003 SC 809 [Sohan Lal Gupta (dead) through L.Rs. and others v. Smt. Asha Devi Gupta and others], the Supreme Court held that "parties should not only prove that he was not given proper notice, but also to show that he was seriously prejudiced thereby." 15. Grievance of Appellant is that he has not been given proper opportunity to present his case before the 2nd Respondent-Arbitrator and adduce evidence in support of his case. The copy of Minutes/Proceedings of the 2nd Respondent-Arbitrator was produced before us. By perusal of the same, the various sittings/gist of proceedings of Arbitrator are as follows:- 11.12.1999-Arbitrator entered on reference and intimated the date of first sitting. 22.12.1999-First Sitting Claimant filed claim statement and documents. Appellant represented by counsel. Time given till 01.02.2000 for counter statement. 01.02.2000-Second Sitting At the request of counsel for Appellant, time extended for filing counter statement till 03.03.2000. 03.03.2000-Third Sitting Appellant filed Petition for extension of time. Time given till 29.04.2000. 29.04.2000-Fourth Sitting Ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... letter dated 19.05.2000. Having not taken any steps, Appellant cannot contend that no notice was given for the hearing held on 03.06.2000 and 24.06.2000. Award cannot be challenged on the ground that "no sufficient opportunity was given to the Appellant". 17. Section 25 of Arbitration and Conciliation Act, 1996 carries the provisions as to the effect of a party's default. An Arbitrator is authorised by the nature of his office to proceed exparte. He may make an exparte award if a party fails to appear inspite of notice to attend. Where a party once appeared before the Arbitrator and sought extension of time for filing his written statement, this amounted to submission to the jurisdiction of the Arbitrator. The Appellant might have remained exparte for any number of reasons. Having appeared before the Arbitral Tribunal and repeatedly taken adjournments from 22.12.1999 to 29.04.2000, Appellant cannot contend that he did not have the opportunity of "presenting his case before the Arbitrator". In fact on 20.05.2000, Appellant personally appeared before the Arbitral Tribunal and left the letter dated 19.05.2000 in the Arbitral venue addressed to the Arbitrator s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... intment and issuing such a notice, the arbitrator does not in fact proceed ex parte on the day fixed, but fixes another subsequent date, he cannot proceed ex parte on such subsequent date, unless he issues a similar notice in respect of that date as well. If he issues a similar notice and the party concerned does not appear, an award made ex parte, will be in order. But if he does not issue such a notice on the second occasion, but nevertheless proceeds ex parte, the award will be liable to be set aside in spite of a notice of a peremptory hearing having been given in respect of the earlier date, subject, however, to the condition that prejudice was caused to the party against whom the ex parte order was made. But this duty to give notice of an intention to proceed ex parte is not an absolute duty. If it appears from the circumstances of the case that a particular party is determined not to appear before the arbitrators in any event, as when he has openly repudiated either the reference itself or the particular arbitrators and has show no desire to recant, the arbitrators are not required to issue a notice of an intention to proceed ex parte against such a recusant person and m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reement No.1 [Ex.C1], admittedly, there was no clause for Arbitration. So far as, Agreement Nos.2 and 3 [Exs.C2 and C3] are concerned, Arbitration clauses have been incorporated. The said Arbitration clause in clause-22 of the third agreement [Ex.C3] was invoked and the Arbitrator has been appointed on emergence of disputes in between the parties. 24. In case of dispute, Clause-22 of Consignment Stockist Agreement dated 12.07.1997 provides for reference to Arbitration. Clause-22 of the said Agreement dated 12.07.1997 reads as under:- "22. If any dispute arises between the parties hereof as to the interpretation of the terms of the agreement or as to the performance or non-performance of the terms thereof or in connection with or arising out of this agreement, the same shall be referred first to the arbitration of the Managing Director of the said Principal or to his nominee." While issuing notice dated 30.09.1999, the 1st Respondent has pointed out that "..... disputes once arisen in respect of the aforesaid agreement has to be necessarily resolved by referring the same to arbitration as per clause 22 of the aforesaid agreement dated 12.07.1997". 25. In t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (3) A plea that the arbitral tribunal is exceeding the scope of its authority shall be raised as soon as the matter alleged to be beyond the scope of its authority is raised during the arbitral proceedings." Sub-section (3) of Section 16 provides that a plea that the arbitral tribunal is exceeding the scope of its authority should be raised as soon as the matter is referred to Arbitration and during the proceedings. The arbitral tribunal can admit on these points even at a later stage if the delay is justified. In the case on hand, the claim statement filed before the 2nd Respondent-Arbitrator on 22.12.1999 makes specific reference to Stock Agreement dated 01.08.1995 and the salient features thereon. The claim statement also refers to the salient features of Consignment Stockist Agreement dated 12.07.1997. The claim of ₹ 15,02,301.15 is made towards "value of unsold stock" and the claim statement states as to how the claim of ₹ 15,02,301.15 is made. If the Appellant felt that claim for the value of unsold stock of ₹ 15,02,301.15 is in excess of jurisdiction of the 2nd Respondent-Arbitrator, objection ought to have been raised at the right time. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e parties and the Appellant did not object to the same. 30. No doubt, the letter of reference mentions that the dispute between the parties pertains to the agreement dated 12.07.1997 [Ex.C3]. However, the parties to the other agreements namely first and second agreements [Exs.C1 and C2] are one and the same and the disputes in between the parties to the agreement dated 12.07.1997 [Ex.C3] would apply to parties who are "Principal" and "Agent" in other two agreements also. As pointed out earlier, the first agreement dated 01.8.1995 [Ex.C1], we could see that 1st Respondent has appointed the Appellant as Stockist Agent for the area viz., Union Territory of Delhi, Punjab, Uttar Pradesh, Haryana, Rajasthan and Jammu & Kashmir for the leather chemicals products of 1st Respondent. The Consignment Stockist Agreement in between the same parties have been entered into through the second agreement [Ex.C2] dated 20.03.1996 with regard to the same area Union Territory of Delhi, Punjab, Uttar Pradesh, Haryana, Rajasthan and Jammu & Kashmir for the leather chemicals products of 1st Respondent. In the third agreement [Ex.C3] dated 12.07.1997 the area covered by this agreement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng to consider the dispute of unsold stocks as being connected with the Consignment Stockist Agreement dated 12.07.1997. 32. In AIR 1985 SC 1156 : (1984) 4 SCC 679 [Renusagar Power Company Ltd. v. General Electric Company and another], the Supreme Court considered the scope of the terms "arising out of", "in relation to" and "in connection with" used in an arbitration clause. In the said decision, the Supreme Court pointed out as follows:- "25. Four propositions emerge very clearly from the authorities discussed above: (1) Whether a given dispute inclusive of the arbitrator's jurisdiction comes within the scope or purview of an arbitration clause or not primarily depends upon the terms of the clause itself; it is a question of what the parties intend to provide and what language they employ. (2) Expressions such as 'arising out of' or "in respect of" or "in connection with' or "in relation to" or "in consequence of" or "concerning" or "relating to" the contract are of the widest amplitude and content and include even questions as to the existence, validity and effect (sc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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