Sharma, J. - (1.) THE Union of India has filed this appeal under Section 39 of the Arbitration Act (hereinafter referred to as "the Act') against the judgment and decree of the learned District Judge, Bikaner, Dt. Sept. 7, 1970, whereby the learned Judge, while dismissing the objections under Section 30 of the Act filed by the appellant Union of India, accepted the award made by the Arbitrator and made it a rule of the court passing a decree for Rs. 4,26,828.90 P. in favour of M/s. J.P. Sharma and Sons and against the appellant Union of India. THE learned District Judge also directed that the Union of India shall pay interest @ 4% per annum on the principal sum from the date of the decree till realisation.
(2.) RESPONDENTS M/s. J.P. Sharma and Sons were engaged as goods-handling contractor by the Northern Railway for the purpose of performing all the work of porterage of geeds at the various railway stations and goods sheds falling in zone No. 2 of the Bikaner Division of the Novihem Railway. The agreement came into force on April 1, 1957 and was terminable on Mar. 31, 1960. The terms and conditions of the contract were contained in an indenture Dt. April 3, 1957. Two Schedules 'A' and 'B' appended to the said agreement provided for the rates payable to the contractor for the various jobs to be done by it. According to the Schedules, the remuneration of the contractor was to be on the basis of per thousand maunds of goods handled or per vehicle or per man- hour according to the nature of Ihe works. So far as the handling work not specified in the agreement was concerned, it was agreed that for such work, the contractor shall be entitled for such , rates which were to be mutually agreed upon by the railway administration and the contractor. The contract was, however, terminated in Aug. 1959 by the railway administration alleging that the contractor has failed to carry out the terms and provisions of the agreement and the security deposit amounting to Rs. 5.000/- was also forfeit ed under the provisions of Clause 30 of the agreement. The contractor, after serving a notice under Section 80 of the Civil P. C. on the Union of India, filed a suit against it for recovery of a sum of Rs. 3,17,728.81 p. in the court of District Judge, Bikaner, on Sept. 21, 1959. However, the Union of India, invoking Clause 33 of the agreement which provided for arbitration in the matters of all disputes between it and the contractor, filed an application under Section 34 of the Arbitration Act before he District Judge who accepted the application and stayed the suit directing that the parties were free to get the matter adjudicated upon by an arbitrator as provided in Clause 33 of the agreement. The General Manager, Northern Railway, by his order Dt. Sept. 21, 1962, appointed Shri S. P. Lal, _Senior Deputy General Manager, Northern Railway, to act as Arbitrator in the dispute between the Railway Administration and the contractor as he himself, owing to his previous heavy engagements and pressure of official work, could not act as an Arbitrator. The aforesaid Arbitrator entered into arbitration and called upon the parties to submit their respective claim petitions giving full details of the claim together with all relevant documents. The respondent contractor filed a claim petition on Sept. 10, 1962 and the Railway Administra- tion besides filing reply to the claim of the contractor, also made a counter-claim. After a procedure had been mutually agreed to, the Arbitrator laid down the procedure and the parties came forward with a list of ten issues which they wanted to be decided upon. The said issues are reproduced below,- 1. Whether the rate in respect of handling of TR/CR Vans under item 18 of the Rate Schedule 'A' is applicable at all the stations, if not, at what stations? 2. Whether the petitioner is entitled to payment for handling of TR/CR Vans, both on inward as well as outward basis at repacking stations as per item 18 of the Rate Schedule, if not on what basis? 3. Whether the petitioner is entitled to special goods rate as per item 5 of the Rate Schedule 'A' in respect of TR/CR Vans containing special goods. If not, what rate is applicable? 4. Whether loose wool and loose cotton in boras can be classified as special goods? 5. Whether the rate in items 3 and 4 of Schedule A1 in respect of F.P. Cotton bales is applicable to PP wool bales. If not, what rate is applicable? 6. Who is responsible for submission and preparation of bills in respect of the handling work at the stations? 7. Whether the contract has been wrongly terminated by the Railway Administration and if so, is the petitioner entitled to renewal of the contract? 8. Whether the petitioner is entitled to the interest as claimed? 9. To what amount, if any, the Railway Administration is entitled to recover from the petitioner? 10 Relief? The Arbitrator thereafter gave his award on Feb. 12, 1963 under which, he awarded the contractor a total amount of Rs. 4,26,828.90 P- (Rupees four lacs twenty-six thousand eight hundred twenty-eight and paise ninety only) by the Railway Administration in full and final settlement of all the claims of the parties. The parties were directed to bear their own costs. The award was filed in the court of learned District Judge, Bikaner, by the Arbitrator on Feb. 25, 1963. The Union of India filed objections against the award under Section 30 of the Arbitration Act on Mar. 28, 1963. The District Judge framed issues and, thereafter, after hearing the parties, dismissed the objections of the Union of India and ac- cepted the award and made it rule of the court. The Union of India filed an appeal in this Court under Section 39 of the Arbitration Act which was registered as D.B. Civil Misc. Appeal No. 15 of 1964. This Court, under its judgment Dt. May 12, 1967, allowed the appeal of the Union of India, set aside the judgment and decree of the learned Sessions Judge, Bikaner on Oct. 28, 1963 and remanded the case to him with the direction that he shall remit the award to the Arbitrator and ask him to decide the issues left undecided by him and then decide what amount would be payable by one party to the other The learned District Judge, in pursuance of the aforesaid order of this Court, remitted the award to the Arbitrator Shri S.P. Lal, Shri S.P. Lal, it appears, had retired by then. Shri S.P. Lal re-entered into arbitration and pronounced his award on July 4, 1968 under which, he directed that M/s. J.P. Sharma & Sons, handling contactors, be paid a sum of Rupees 4,26,828.90 p. (Rupees four lacs twenty-six thousand eight hundred twenty-eight and paise ninety only) by the Railway Administration in full and final settlement of all the claims of the parties. Thus, the Arbitrator, under its award, awarded the same amount to the contractor as was awarded by him under his award Dt. Feb. 12, 1963. The Arbitrator filed his award in the court of District Judge, Bikaner and the Union of India filed objections under Section 30 of the Act on Aug. 24, 1968. The objections, inter alia, were that the Arbitrator has misconducted himself and the proceedings after the award had been remitted to him; it failed to discharge his duties by not allowing the Union of India to produce oral as well as documentary evidence after the award had been remitted to him; that the Arbitrator acted with the bias that to change his previous decision, would tell upon his prestige; that the amount of fees which both the parties had to pay in advance, were both exorbitant and unreasonable; that the Arbitrator still left important matters referred to in the order of this Court undecided and has failed to decide all the disputed rates. It appears that later on, the objections were amended wherein more details were given and the learned District Judge, Bikaner, framed only one issue,-- "Whether the Arbitrator was not given the power to adjudicate upon and order the return of security amount to the con- tractor? If not, what is Us effect on he award?" Both the parties admitted para 30 of the agreement and did not adduce any evidence. The learned District Judge, Bikaner under his judgment Dt. Sept. 7, 1970, dismissed the objection petition of 'he Union of India under Section 30 of the Arbitration Act, accepted the award Dt. July 4, 1968 and made it rule of the Court and passed a decree in favour of the contractor M/s. J.P. Sharma and Sons and against the Union of India. As already observed above, the District Judge also awarded interest @ 4% per annum from the date of the decree till realisation of the decretal amount. The Union of India has preferred this appeal in this Court against the judgment and decree of the learned District Judge, Bikaner. The contractor M/s. J.P. Sharma and Sons on June 26, 1971 preferred cross-objections claiming interest @ 6% per annum on the principal sum from Oct. 29, 1963 to Nov., 1964 and on Rs. 1,80,828.00 from 1-1-65, till the date of the decree of the learned District Judge. We have heard Shri A.K. Mathur, learned counsel for the Union of India and Shri M.M. Vyas for the respondent M/s. J.P. Sharma and Sons.
(3.) THE first contention of Mr. A.K. Mathur, learned advocate for the appellant is that once the award is remitted to the Arbitrator, the parties have a right of leading evidence and the Arbitrator, Shri S.P. Lal, in spite of a request to that effect on behalf of Union of India to him, did not grant an opportunity to it to lead evidence. As such, the Arbitrator has committed a judicial misconduct. An award can only be set aside on one of the grounds contained in Section 30 of the Act. The three grounds on which the award can be set aside, are contained in sub-sees, (a), (b) and (c) of Section 30 of the Act. We are presently concerned only with Clause (a) of Section 30 of the Act so as to see as to whether the Arbitrator has misconducted himself and the proceedings. The strict rules of evidence contained in the Evidence Act which are followed by the courts, are not applicable to arbitration proceedings. The arbitrator, who is a judge of the choice of the parties, is free to choose his own procedure but it must be in consonance with the principles of natural justice. The parties must he given a fair opportunity to produce their evidence before the Arbitrator. Whether taking of evidence on behalf of the parties is necessary, will naturally depend on the particular circumstances in every case. If the reference be such that the Arbitrator cannot decide the dispute without hearing the evidence then refusal to hear evidence will amount to judicial misconduct. Once an award is remitted to the Arbitrator under Section 16 (1) of the Act, all his original powers, including the power to take evidence, so far as it does not affect the order remitting the award or the provisions of the Act, are revived. Russel on Arbitration in his XlXth Edition at p. 490 under the head "Effect of Remission or Setting Aside", has dealt with the powers and duties of the Arbitrator. When an award is remitted to the Arbitrator, all his original powers, so, far as they are not affected by the order remitting the award, or the provisions of the Act, are, it would seem, revived. But his powers and duties cannot exceed those which are necessary to give effect to the order of the court. Again, at p. 491 under the heading 'Hearing of Fresh Evidence', It has been observed: "The duty of the arbitrator as to hearing fresh evidence must depend entirely upon the order remitting the matter to him. The court has very wide powers, but, as already mentioned....." Thus, though the Arbitrator has power to take evidence on remission of the award to him for fresh consideration, the parties by their conduct, can waive their right to lead evidence. The same author has observed at page 285: "The objections to a decision of the arbitrator as to whether or not to admit evidence may be waived, like other objections to the manner in which the proceedings are conducted. A party to an arbitration cannot be allowed to lie by and then, if the award is unfavourable, seek to set it aside on the ground that during the proceedings the arbitrator gave a ruling or decision contrary to the rules of evidence which the party during the proceedings took no steps to question."* This statement of law was referred to by their Lordships of the Supreme Court in K N. Co-operative Society v. Union of India (AIR 1973 SC 1338) and it was held on the facts of that case that the arbitrator cannot be said to have misconducted himself in the matter of his award. In the question of privilege, as shall be presently shown, the order of this Court remitting the award to the arbitrator clearly laid down that the only dispute between the parties was about the rates applicable to different items and so far as the work done by the contractor is concerned, there was no dispute between the parties. This Court in its judgment dt. May 12, 1967, under which the award was remitted to the arbitrator, observed,-- "...Issues Nos. 2, 3, 4 and 5 clearly show that the controversy between the parties was about the rates only. The difference set down by them was whether the plaintiff was entitled to have the rate claimed by it, >f not, what rate was applicable. This clearly implies that it was for the arbitrator to determine what rate was to be applied for each item of work. We may mention that there does not appear to have been any controversy between the parties about the quantum of work or the job done by the plaintiff respondent. The only controversy was as to at what rate the remuneration payable to the plaintiff was to be computed for the work or the job done by it. In other words, once the question of rate was adjudicated upon the only thing that was t0 be done was to have arithmetical calculations. What amount would be payable was not so much the subject matter of dispute, as the question of the application of the correct rate to the several items of work done by the plaintiff respondent..." (pp. 53-54 of the Paper Book) Again, at p. 54 of the Paper Book, this court said,-- "... Thus, in our view the real dispute between the parties what was referred to the arbitrator was about the applicability of the correct rate for the job done by the plaintiff respondent..." At pp. 61-62, this Court said.- "...... Indeed there was no serious dispute between them regarding the actual amount that may be payable once the question of rate was adjudicated upon. The award does not show that decision the arbitrator has given regarding the rate that was to be applied to the various items of work..." Thus, holding that under issues Nos. 2 to 5, the arbitrator was called upon to de- cide as to what rate was applicable for the job done by the contractor about which there was no difference between the parties and as the arbitrator did not decide the rates applicable to several jobs done by the contractor the District Judge was directed to remit the award to the arbitrator as he had nol decided all the disputes referred to him. This Court, while remitting the award, did not set aside the award under Section 30 of the Arbitration Act. In view of what has been observed by this Court while remitting the award so far as the quantum of job is concerned it was no longer in dispute and the award was only remitted to the arbitrator to adjudicate as to what was the correct rate applicable for the various jobs done by the contractor, ;