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Teen Moorti Financiers vs Nanak Chand And Ors.

High Court Of Judicature at Allahabad|21 February, 1973


ORDER Hari Swarup, J.
1. This revision has been filed against an appellate order passed under Section 39 of the Arbitration Act. The parties had entered into an agreement to refer the dispute to the arbitration of Sri J. P. Verma, He gave an award in favour of the Teen Murti Financiers. They filed an application under Section 14 of the Arbitration Act for making the award the Rule of the Court. Objections were filed by the other side including an objection that the arbitrator had misconducted himself. An issue in respect of the misconduct was framed. In the trial Court the objectors gave no particulars of the misconduct they alleged and the trial Court dealing with the issue of misconduct observed:
"No particular act of the arbitrator has been pointed out from which it may be inferred that the arbitrator misconducted himself."
The issue was decided against the objectors. An appeal was filed by the objectors and in that appeal it was contended that , the arbitrator had misconducted himself because he had accepted Rs. 100 as fees from the applicants. A preliminary objection was raised in appeal about permission being given to the objector to raise this ground as it depended upon determination of questions of fact. The lower appellate Court, however, overruled the objection and permitted the raising of the ground. Coining to the merits of the matter, the appellate Court held that the acceptance of fee by the arbitrator from one of the parties was misconduct and allowed the appeal and set aside the award. Against that order the present revision has been filed.
2. Once a misconduct is pleaded by a party he has got to give the particulars thereof. The objection contained only a vague statement to the effect that the arbitrator has misconducted himself. In the affidavits filed by the objectors also no particulars were given. In proceedings before the trial Court, too, nothing was pointed out. Whether the arbitrator had misconducted in accepting the fee from one of the parties will depend upon facts relating to the payment of fee. An arbitrator cannot be said to commit a misconduct only because the accepts a fee from one of the parties. The agreement does not contain any provision for payment of fee, but still the arbitrator can demand fee and refuse to work without fee being paid to him. The view of the Court below that as there was no agreement between the parties for the payment of fee, the arbitrator could not demand or accept a fee is erroneous in law. There is no warrant for such a view. The applicant in addition had urged before the appellate Court that there was an agreement by the parties to pay the fee. That too would have necessitated further evidence. In the case "Teja Singh v. Union of India", (AIR 1955 All 666) a Division Bench of this Court took the view that the law does not contemplate that an arbitrator must proceed with the arbitration proceedings without payment of his fees in case he wanted them to be paid before acting in the arbitration proceedings. The view taken by the Court below is contrary to the view expressed in this case and is based on a wrong interpretation of Section 14 and Section 38 of the Arbitration Act. In the circumstances mentioned above there was no justification for the appellate Court to permit a new ground to be raised in appeal about misconduct when no particulars had been given in the trial Court and the matter depended also upon proof of facts. The Court below must, in these circumstances, be held to have acted illegally in exercise of its jurisdiction in permitting such a ground to be raised in appeal and allowing the appeal on the basis of that ground.
3. The appellate Court has not considered any other point and from the judgment it appears that at the hearing of the appeal counsel for the appellant pressed the appeal only on the ground of this supposed misconduct of the arbitrator. The objectors, according to the finding of the appellate Court, had never appeared before the arbitrator. In these circumstances if the fee was paid by the applicants only, the receipt of such payment by the arbitrator could not amount to misconduct.
4. In the result, the revision is allowed and the order passed in appeal is set aside. The applicant will be entitled to his costs.
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Teen Moorti Financiers vs Nanak Chand And Ors.


High Court Of Judicature at Allahabad

21 February, 1973
  • H Swarup