JEEVAN INDUSTRIES PRIVATE LIMITED Vs. HAJI BASHIRUDDIN MADHUSUDAN DAYAL

JUDGEMENT

(1.) THIS first appeal from order has been filed by the objector M/s. Jeevan Industries Pvt. Ltd. against the judgment and order of the learned single judge of this court (S. N. Andley, J.), dated 19th May 1969, by which the learned single judge has dismissed the objections of the appellant and made the award of the umpire dated 8th March, 1966, a rule of the court. The award has been made by Shri P. N. Khanna who was then an advocate of this court, and later was elevated to the Bench of the High Court and has since retired, and the award directs the appellant herein to pay a sum of Rs. 39,942 to Haji Bashiruddin Madhusudan, the respondent.

(2.) THE material facts of the case briefly stated are that the appellant runs a cold storage in which the respondent kept his potatoes amongst others. THE agreement for storage is exhibit R-1, dated 10th March, 1955. This agreement contains terms and circumstances in which the liability for damages to the goods stored would arise and it also contains the provisions for reference of disputes to arbitration. Some of the potatoes belonging to the respondent which had been stored in cold storage were spoiled and the disputes arose between the parties Eventually the disputes were referred under order of Mahajan, J. dated 26th November, 1962. passed in Civil Revisions Nos. 222-D of 1959 and 179-D of 1960, to the arbitration of two arbitrators, one of whom was nominated by each party. Cn 5-12-1963 they appointed Shri P. N. Khanna, as an umpire. On 6th July 1965, there was difference of opinion between the arbitrators and the matter was referred to the decision of the previously made umpire. THE umpire Shri P. N. Khanna, commenced his proceedings on 27th August 1965 and made and published the award dated 8th March 1966 within the time extended by the court. Out of a claim for about Rs. 2,01,524/11/6 preferred by the respondent and a counter-claim of Rs. 41,516 preferred by the appellant the arbitrator in full and final settlement directed a payment of Rs. 39,942 by the appellant to the respondent. THE award was filed by the umpire in court and notices were issued to the parties and the appeallant herein filed objections on 7th May 1966. A reply to the objections was filed and the following four issues were framed by the Senior Subordinate Judge, who was then dealing with the matter, namely,

(3.) AS a result of the analysis of the provisions of law and the relevant authorities, our conclusion is that there is nothing illegal or improper in the demand made before the award by the arbitrator or umpire of fees and expenses from the parties provided they are fair and reasonable and are not extravagant or excessive and they are made on both the parties equitably within the knowledge of both the parties. It would not be illegal and improper if on the failure of one of the parties to make the payment, he either stays the proceedings or directs the other party to pay the whole amount pending the decision of the dispute by arbitration. The arbitrator would also be justified in waiting till the making of the award and then proceed in accordance with section 14(2) or section 38 of the Act and have the matter determined by the court. The arbitrator, in our opinion, however, is likely to be charged with misconduct for having been illegally induced to make an award if he accepts any money on any account whatsoever from one of the parties without the knowledge of the other party. Such a charge would also be open, If the amount demanded is exhorbitant having no relation to the work done or anticipated, nor to the standard of fees normally payable to arbitrators for such a work. In order to avoid such a charge and also to avoid having to give evidence before the court to justify the payment of fees, the best course to adopt for the arbitrator is to make a record about his fees and the reasons, therefor, if any, in the record of the proceedings itself within the knowledge of both the parties. If he does not do so he will be involved in defending himself against the allegations of misconduct, if made.