TaxTMI 
TaxTMI 
2003 (9) TMI 533
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....of a judgment and decree dated 1-3-1970 passed by a Division Bench of the Calcutta High Court affirming an order passed by a learned Single Judge setting aside an arbitration award. 2. The basic fact of the matter is not in dispute. Two groups of persons - one Guptas and another Sharmas - held several properties including three firms, six limited companies, one trust and other movable and immovable assets. Both the groups had 50% shares each. The family members of the Guptas and Sharmas Groups were interested in many or in some of the businesses and the firms. The family tree of the Gupta Group is as under: GENEOLOGICAL TABLE OF GUPTA GROUP I II III IV Dulichand (Deceased) Sita Ram (Died on 1-12-1975) Balaprasad Basajnti Shrilal (deceased) - Anarij (1) (2) (3) (1) (2) (3) Motilal -Kapuri Brijmohan -Padma Sohanlal Gayatri Kailash -Pushpa Vinod -M....
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.... shall have powers to ask for any paper, documents and/or information from any of the parties hereto and to draw adverse inference for non-production thereof. 6.That the said Arbitrator shall be free to make use of information, documents, papers received from any source whatsoever if he considers them relevant to the matter and to this regard his decision will be final. 7.That the Arbitrator shall have powers to apply and employ his personal knowledge in the matter under reference while giving his award. 8.That the Arbitrator shall have power to award cost and to ask for periodical deposits towards his own fees and charges, audit charges and/or other charges from the parties hereto in the manner he may think fit and proper. 9.That the said Arbitrator shall not be required to give any reasoning for his determination and award. 10.That the said Arbitrator shall have powers to give directions for the running of the business of the said firm and/or companies including the direction for operation of Banking Account during the pendency of arbitration proceedings. 11.That the said Arbitrator shall have full power and control over all the assets, properties, movable or im....
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....penses thereof shall be in the discretion of the Arbitrator and he may accept such valuation as correct and act in terms thereof. ****** 38.Ten days' time shall be considered as reasonable time for the purpose of doing or complying with any direction of the Arbitrator." 4. The jurisdiction of the Arbitrator was, thus, of wide import. 5. It is not in dispute that said Shri B.J. Bhide was a Chartered Accountant and a Tax Consultant. He had been dealing with accounts and other matters for and on behalf of the firms and the companies belonging to the parties. The parties indisputably had great faith and confidence in him. 6. During the pendency of the arbitration proceedings, certain disputes arose as regards management, wherefor also intervention of the arbitrator was sought for. Several correspondences passed between the arbitrator and the parties with which we are not concerned at this juncture. 7. The arbitrator gave two awards, which were as regards (1) division of 50% cumulatively and (2) the said division among the family members of the Guptas. 8. Seven members of the Guptas Groups filed objections to the said awards including one Ghanshyamdas Gupta. The sai....
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....parties should be amicably settled and for the said purpose the matter was referred to Hon'ble Mr. Justice M.K. Mukherjee, a retired Judge of this Court for conciliation. The learned Judge, however, failed in his efforts in this behalf and submitted a report to that effect before this Court in 2001. 13. Mr. Bhasker P. Gupta, learned senior counsel appearing on behalf of the appellants, has raised a short question in support of these appeals. The learned counsel would submit that the findings of the learned Single Judge as also the Division Bench of the High Court that no reasonable notice was given to Ghanshyamdas Gupta by the arbitrator in terms of the arbitration agreement suffers from manifest error insofar as the entire fact situation obtaining in this case had not been taken into consideration. The learned counsel would submit that the arbitrator was required to submit his award by 30-6-1976. He had been holding arbitration proceedings wherein Ghanshyamdas Gupta had participated from time to time and all the parties having regard to the enormity of the disputes were directed to remain present at Kolkata on 8-6-1976 so that they may be heard and award may be made on or befor....
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....he Company and/or the name and address of the partnership firm in which you or otherwise whom you represent are Director and/or Partner and/or a Trustee and return to me the said resignation letters duly signed by you and/or the others as the case may be, leaving the date blank. If required, you can have copies made of these resignation letters to cover all the persons represented by you in your Group. Please ensure that these resignation letters reach me by 5-6-1976. Arising out of this, I am arranging to send to you in a day or two Transfer Deeds which should be signed by you or the other persons whom you represent, at the place marked with an "X" in pencil and witnessed by a known person and returned to me with the relevant shares scrip of the concerned Limited Company. The next meeting in connection with the finalisation of the arbitration proceedings will be held in Calcutta on 8-6-1976. I have a mind to have continuous sittings up to 12-6-1975 and declare the Award immediately thereafter. You are therefore requested to make yourself available to Calcutta at the proposed meetings on and from the 8-6-1976 without fail. Kindly bring with you all the books of account uptoda....
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....ended the meeting also on 19-6-1976. 17. Mr. Gupta would urge that the purported letter of the Arbitrator to the parties asking them to send a letter to him stating that they would not challenge the award would not vitiate the arbitration proceedings. 18. Mr. Parijat Sinha, learned counsel appearing on behalf of Respondent Nos. 22 to 32, Mr. Vijay Kumar Sharma, appearing in person and Mr. Gourab Banerji, appearing on behalf of some members of the Sharma Group, supported the contentions of Mr. Bhasker Gupta. 19. Mr. Bijan Kumar Ghosh, learned counsel appearing on behalf of the respondents, however, drew our attention to the objections raised before the learned Single Judge of the Calcutta High Court and submitted that in the peculiar facts and circumstances of this case, the Court should not only consider the same de novo but also must take into consideration the subsequent events. According to the learned counsel, as the cross-objections filed by the objector-respondents were dismissed by the Division Bench without assigning any reason therefore, this Court in the interest of justice should consider the same on its own merits, although no appeal thereagainst or any cross-o....
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....law is stated thus: "5-057 Managing the hearing. Similarly, a Tribunal cannot be expected to sit through extended oral hearings listening to long winded submissions on irrelevant matters. The Tribunal is entitled, and under section 33 is obliged and encouraged, to avoid the unnecessary delay and expense that would be caused by such an approach. The Tribunal should take a grip on the proceedings and indicate to the parties those areas on which it particularly wishes to be addressed and those which it does not consider relevant to the real issues in dispute. If a party fails to heed such guidance, the Tribunal might seek to focus the proceedings by allocating the remaining hearing time between the parties. Thus the Tribunal is entitled to do, provided it will allow a reasonable time for both parties to put forward their argument and evidence." 23. For constituting a reasonable opportunity, the 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 ....
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....d difficulty in appearing on 15-6-1976 or any subsequent date and he had asked for adjournment. Even otherwise, a party has no absolute right to insist on his convenience being consulted in every respect. The matter is within the discretion of the arbitrator and the Court will intervene only in the event of positive abuse - Montrose Cannel Foods Ltd.'s case (supra). If a party, after being given proper notice, chooses not to appear, then the proceedings may properly continue in his absence - British Oil & Cake Mills Ltd. v. Horace Battin & Co. Ltd. [1922] 13 LT. L. Rep. 443. 28. In D.L. Miller & Co. Ltd.'s case (supra) the law is stated in the following terms: "13. The doctrine of arbitrators' legal misconduct has been so over-worked in recent years that across the whole branch of case law on this point one finds the blazing trial of principles of natural justice. They are discussed and agitated in an atmosphere of complete unreality and divorced from the facts of each case. Somehow the obvious point is missed in most of such cases that when the parties agree to go to arbitration they stipulate not so much for vague principles of natural justice as for concrete principles ....
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.... a copy of the enquiry report has not been furnished to the delinquent officer, but he is obliged to show that by non-furnishing of such a report he has been prejudiced, would apply even to cases where there is requirement of furnishing a copy of enquiry report under the statutory rules. 33. In Aligarh Muslim University v. Mansoor Ali Khan [2000] 7 SCC 529, it was held: "24. The principle that in addition to breach of natural justice, prejudice must also be proved has been developed in several cases. In K.L. Tripathi v. State Bank of India [1984] 1 SCC 43 Sabyasachi Mukharji, J. (as he then was) also laid down the principle that not mere violation of natural justice but de facto prejudice (other than non-issue of notice) had to be proved. It was observed, quoting Wade's Administrative Law (5th Edn., pp. 472-75), as follows (SCC p. 58 para 31): 'It is not possible to lay down rigid rules as to when the principles of natural justice are to apply, nor as to their scope and extent...There must also have been some real prejudice to the complainant; there is no such thing as a merely technical infringement of natural justice. The requirements of natural justice must depend on th....
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....t does upon statutory implication, must always be in conformity with the scheme of the Act and with the subject-matter of the case. 'In the application of the concept of fair play there must be real flexibility'. There must also have been some real prejudice to the complainant: there is no such thing as a merely technical infringement of natural justice." 37. In Khaitan (India) Ltd. v. Union of India Cal. LT 1999 (2) HC 478, one of us said : "The concept of principles of natural justice has undergone a radical change. It is not in every case, that the High Courts would entertain a writ application only on the ground that violation of principles of natural justice has been alleged. The Apex Court, in State Bank of Patiala v. S.K. Sharma reported in 1996 (3) SCC 364 has clearly held that a person complaining about the violation of the principles of natural justice must show causation of a prejudice against him by reason of such violation. The Apex Court has held that the principles of natural justice, may be said to have been violated which require an intervention when no hearing, no opportunity or no notice has been given. Reference in this connection may also be made to Manag....
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....anshyamdas Gupta would not be available to others who took part in the proceedings. They cannot take benefit of the plea taken by Ghanshyamdas Gupta. Each party complaining violation of natural justice will have to prove the misconduct of the arbitrator Tribunal in denial of justice to them. The appellant must show that he was otherwise unable to present his case which would mean that the matters were outside his control and not because of his own failure to take advantage of an opportunity duly accorded to him. - Minmetals Germany GmbH v. Ferco Steel Ltd. [1999] 1 All ER (Comm) 315. This Court's decision in Renusagar Power Co. Ltd. v. General Electric Co. AIR 1994 SC 860 is also a pointer to the said proposition of law. 40. Keeping in view the facts and circumstances of this case, we are of the opinion that Ghanshyamdas Gupta cannot be said to have been refused a fair opportunity of participation in the arbitration proceedings. 41. 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....