TaxTMI 
TaxTMI 
2022 (5) TMI 703
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....filed a civil suit in the Court of the District Judge, Sehore Camp, Astha, Madhya Pradesh, for the settlement of accounts of transportation of coal undertaken by them according to the agreement dated 01st October 1990 and the supplementary agreement dated 13th December 1991, with M.P. Rajya Tilhan Utpadak Sahkari Sangh Maryadit, Pachama, District Sehore, Madhya Pradesh (the first defendant). The General Manager and Managing Director of the said Sahkari Sangh were impleaded as second and third defendants. Collectively three defendants are referred to as 'the defendant', for short The plaintiff had also prayed for a grant of the amount due and payable by the defendant and the amount spent by the plaintiff on the security of the defendant's goods and all other amounts (sic) with interest @ 2%. Interest period was not specified. 3. The plaint, in brief, states that the plaintiff had transported coal on the delivery orders issued by the defendant from the coal mines to the defendant's plant. The plaintiff had no connection with the quality or any deficiency in the quality of the coal. The plaintiff, as per directions, had loaded the coal from the coal mines of Western India C....
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....oal actually accepted at the plant of the defendant and not for the coal which was not delivered. As per clause 11 of the agreement, shortage up to 1% per truck was the maximum limit, whereas the plaintiff had claimed that 1% shortage should be allowed even when there was no difference between the dispatched and delivered weight. The price of coal was deducted and recovered from the plaintiff when the shortage was in excess and beyond the 1% allowable limit. There were delays in the delivery of coal, sometimes extending to more than a month from the dispatch date. Accordingly, the defendant had made deductions on account of wrong and fraudulent acts due to which the defendant had suffered losses. The plaintiff was also liable to pay interest as the defendant had suffered due to blockage of funds. The defendant was not liable to pay any demurrage or rent charges for the plot and, in fact, such charges were never paid. The plaintiff had not delivered and kept huge quantity of coal for six to seven months after the coal was lifted from the coal mines. Other defences raised related to incomplete documentation and excess freight charges by the wrong declaration as to the place from wher....
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....bitrator/Commissioner 1. Present Suit has been filed by the plaintiff against the Defendants for settlement of accounts. In view of the pleadings made by the Plaintiff, documents produced on record and pleadings and documents of Defendant, it is prima facie clear that there is a dispute between both the parties is in respect of accounts. For the purpose of conducting enquiry regarding accounts after giving opportunity of hearing to both the parties, it is necessary in the interest that after appointing a Competent Chartered Accountant as Panch/ Commissioner in the present case he may be directed to submit report after conducting audit of Accounts. Since, the transaction took place between both the parties are much higher, therefore, it is necessary to handover the aforesaid work to a Chartered Accountant. Therefore, it is prayed that by allowing the present Application, and after appointing Sh. Sushil Kumar Mantri, Chartered Accountant, Sehore as Panch/ Commissioner as proposed by the plaintiff, kindly direct him to Submit Report before the Hon'ble Court after conducting Audit of the Accounts. Sehore, dated 23.12.1994 Sd/- illegible Plai....
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....nch. You by conducting audit of all the disputed records (Accounts) of both the parties, kindly send your Report by 22.04.1995. On receiving your Remuneration Report, payment will be made to you in the Court. Sd/- (Satish Chandra Dubey) First Additional District Judge, Sehore (M.P.)" 9. On 28th March 1995, S.K. Mantri appeared before the court and applied for an extension of the date to submit the report, which time was extended. Another order dated 22nd April 1995 states that the panch decision was not submitted and that the panch must present the award within the stipulated period by giving notice to the parties concerned. Thereafter, the court passed a number of orders recording the presence of the parties and that they sought time to arrange the vouchers and the records. Time was also given to verify the papers, which were checked in the court in front of the parties' representatives. Order dated 18th May 1995 records that photocopy and laboratory analysis records had been placed on record. Order dated 19th May 1995 refers to the account summary submitted by the plaintiff regarding the pending bills and amounts for the previou....
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....the defendant was present in the court when the arbitrator submitted the award in the court on 22nd July 1995. The allegation of misconduct on the ground that S.K. Mantri was a Chartered Accountant of the defendant, who was actually involved in the preparation of accounts, was overruled as this objection was not raised when S.K. Mantri was appointed as an arbitrator. Order dated 23rd December 1994 appointing S.K. Mantri as an arbitrator had attained finality as it was not challenged by the defendant. 13. The first appeal preferred by the defendant before the High Court has been dismissed vide the impugned judgment dated 19th September 1996. The High Court has affirmed the trial court's view that during the pendency of the suit, the matter was referred to arbitration in terms of Section 21 of the Arbitration Act. S.K. Mantri, Chartered Accountant, was appointed as an arbitrator with the parties' consent. The fee was payable to S.K. Mantri as per the prescribed arbitration schedule. The objection that S.K. Mantri was the Chartered Accountant of the defendant, was rejected as it could not be said that he had acted in an unfair manner. That apart, the objections were filed b....
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....hould be agreed about the subject matter at the same time and in the same sense. 16. Interpreting Section 21 of the Act, a Full Bench of the Punjab and Haryana High Court in Firm Khetu Ram Bashamber Dass v. Kashmiri Lal 1959 SCC OnLine Punj 102 has held: "Thus, before any matter involved in a suit pending in a Court can be referred to arbitration (a) there must be an agreement amongst all the parties interested that any matter in dispute between them in the suit shall be referred to arbitration; (b) if they come to such an agreement, then they have to make an application in writing to the Court concerned; and (c) thereafter, the Court has to pass an order referring the dispute to the arbitrator agreed upon between the parties. There can be no manner of doubt that if there is no agreement between all the parties who are interested in the case and if the application is not made on behalf of them all, the reference made by the Court is bad and the award based on such a reference is invalid in law. This view has been consistently taken by all the High Courts. In Negi Puran Singh v. Hira Singh and others, while dealing with provisions of Civil Procedure Code, 1882, ....
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....n to refer the matter to arbitration is consent of all the parties. Consent subsequently given cannot give jurisdiction to the Court which it did not possess at the time when it referred the matter to arbitration." 17. In our opinion, the aforesaid ratio expresses the correct position in law. Arbitration is an alternative to the court adjudication process by a private forum chosen by the parties. Normally reference can be made or even directed to the arbitrator only if a preexisting arbitration agreement subsists between the parties. In the absence of a preexisting arbitration agreement, the court has no power, authority or jurisdiction to refer unwilling parties to arbitration. Therefore, the word 'agree' in Section 21 of the Act refers to consensus ad idem between the parties who take a considered decision to forego their right of adjudication before a court where the suit is pending, and mutually agree to have the subject matter of the suit or part thereof adjudicated and decided by an arbitrator. 18. In the present case, the application dated 23rd December 1994 was moved by the plaintiff and it was not signed by the defendant. As per the heading, the application was for t....
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....accounts can be examined only by a well-educated Chartered Accountant. A copy of the application had been handed over to the counsel for the defendant who had no objection "to being appointed as Panch in this case". This statement is somewhat vague, but we do not read the statement as an indication or affirmation that the defendant had agreed to the appointment of an arbitrator as an alternative and substitute to court adjudication. If it was so, this should have been clearly stated to enable the parties to respond and make statement. At best it was restricted to the appointment of an expert/commissioner who would examine the accounts and submit his report. 21. The second portion of the order dated 23rd December 1994 states that in the application name of Sushil Kumar, Chartered Account, as panch has been proposed to which no party had any objection. Thereafter, the order records the direction of the court that the fee of the arbitrator 'shall be as prescribed in the schedule of the Arbitration Council of India and if the arbitrator demands a fee the same should be equally shared by both the parties'. The last portion does not incorporate and does not refer to any agreement or e....
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....parties agree for settlement of the dispute through arbitration. Thus, reference to arbitration is valid only when done by means of agreement between the parties. 25. On the question whether a counsel can give consent for arbitration on behalf of the parties, Kerala State Electricity Board (supra) referred to the decision in Byram Pestonji Gariwala v. Union Bank of India, (1992) 1 SCC 31 which has settled the law that a counsel should not act on implied authority unless there is an exigency of circumstances demanding immediate adjustment of the suit by agreement or compromise and the signature of the party cannot be obtained without delay. Reference was made to paragraph 37 in Gariwala case (supra), which reads as under: "37. We may, however, hasten to add that it will be prudent for counsel not to act on implied authority except when warranted by the exigency of circumstances demanding immediate adjustment of suit by agreement or compromise and the signature of the party cannot be obtained without undue delay. In these days of easier and quicker communication, such contingency may seldom arise. A wise and careful counsel will no doubt arm himself in advance with the ne....
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.... mistake. The ascertainment of whether or not there was a mutual mistake is to be ascertained by applying what reasonable third parties would infer from their words or conduct. The mistake or error must be such that it either appears on the face of the contract that the matter as to which the mistake existed was an essential and integral element of the subject matter of the contract or was an inevitable inference from the nature of the contract that all parties so regarded it. A contract is void at law only if some term can be implied in both offer and acceptance, which prevents the contract from coming into force. These principles are relevant when the dispute arises as to the existence of a pre-existing arbitration agreement. Albeit in the case of Section 21, the requirement is even stricter - the "parties interested agree...in writing before the court", which is an inflexible mandate which requires that the parties must agree, or affirm an agreement before the court to refer the subject matter as agreed to arbitration. 28. This Court in K.K. Modi v. K.N. Modi and Others, (1998) 3 SCC 573 after referring to Mustill and Boyd in their book on Commercial Arbitration, pointed out ....
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.... or 'an expert and not an arbitrator' can be used to describe how the dispute resolver is to act. However, the words are persuasive, although not always conclusive. The authors on the distinction between arbitration and an expert's opinion have elucidated that an arbitral tribunal arrives at its decision based on the evidence and submissions of the parties by applying the law and its principles, whereas an expert decides on his own expert opinion, applying his own expertise. Russel on Arbitration, 21st Edition. 30. In Bharat Bhushan Bansal v. U.P. Small Industries Corporation Ltd, (1999) 2 SCC 166 reference was made to S.K. Chawla's Law of Arbitration and Conciliation Justice S.K. Chawla Law of Arbitration and Conciliation at Page 164to highlight that an expert primarily acts on his knowledge and experience supplemented if he thinks fit by: (i) his own investigations; and/or (ii) material (which need not conform to the rules of 'evidence') put before him by either party. On the other hand, an arbitrator primarily acts on the material put before him by the parties. Determination by an expert would involve less to thorough investigation. Reference is also made to Hudson's Building....
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....ustment of the accounts is necessary, the Court may issue a commission to such person as it thinks fit directing him to make such examination or adjustment. of the Code. For submission to arbitration, there must be an arbitration agreement or an agreement in terms of Section 21 of the Act that the difference or dispute between the parties for which they intend to be determined in a quasi-judicial manner. Commissioners are appointed by the court. Appointment may be with consent of the parties, or even when there is objection to the appointment. Preexisting agreement or the requirement that the parties agree before the court, as is mandatory in case of arbitration, is not necessary when a court directs appointment of a commissioner. In the case of a reference to a commissioner, all that the parties expect from the commissioner is a valuation/ examination of the subject matter referred, which he would do according to his skill, knowledge and experience, which may be without taking any evidence or hearing argument. Halsbury, Vol.1, Edn. 2 at Pg. 622 In light of the aforesaid decisions, we would like to introduce the principle of a 'facilitator' which a court may appoint, be it a commis....
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....he same, it will merely aid and not bind the court. In strict sense, the commissioners' reports are 'non-adjudicatory in nature', and the courts adjudicate upon the rights of the parties. 34. By Act 18 of 2018, Section14A 14A. Power of court to engage experts.-(1) Without prejudice to the generality of the provisions contained in the Code of Civil Procedure, 1908 (5 of 1908), in any suit under this Act, where the court considers it necessary to get expert opinion to assist it on any specific issue involved in the suit, it may engage one or more experts and direct to report to it on such issue and may secure attendance of the expert for providing evidence, including production of documents on the issue. (2) The court may require or direct any person to give relevant information to the expert or to produce, or to provide access to, any relevant documents, goods or other property for his inspection. (3) The opinion or report given by the expert shall form part of the record of the suit; and the court, or with the permission of the court any of the parties to the suit, may examine the expert personally in open court on any of the matters referred to him or mentioned in his opi....