C.R. No.2614 of 2005 1 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH C.R. No.2614 of 2005 Date of decision 18.5.2010. M/s Arora Construction and Co. ...... Petitioners. versus State of Haryana and others. ...... Respondents. CORAM : HON'BLE MR.JUSTICE K.C.PURI. Present : Mr. Sidharth Batra, Advocate for the petitioner. Mr. Himanshu Raj, AAG, Haryana. K.C.PURI. J. This is a revision petition under Article 227 of the Constitution of India for quashing the impugned judgment dated 1.2.2005 (Annexure P-3) passed by the learned District Judge, Faridabad. Briefly stated the case of the petitioner is that Chief Engineer, PWD (B&R), Haryana vide letter dated 17.1.2000 appointed Sh. R.C.Mehndiratta, Superintending Engineer as arbitrator for dispute between petitioner and respondent No.1. Subsequently, on promotion of Sh. Mehndiratta, in his place, Sh.S.S. Deshwal – respondent No. 2 was appointed as Arbitrator vide letter dated C.R. No.2614 of 2005 2 20.4.2000 of the Chief Engineer. The dispute was regarding work and payment of construction of Govt. Polytechnic Women (Teaching Block), Sector 8, Faridabad. The Arbitrator was appointed as per clause 67 (1) of the agreement entered into between the parties. The Arbitrator started the arbitration proceedings and inadvertently wrote a letter/order dated 1.2.2002 to both the parties informing them regarding termination of arbitration proceedings. However, thereafter the learned Arbitrator respondent No.2 again vide his letter dated 2.4.2002 started the arbitration proceedings and vide letter dated 18.7.2002 asked the respondent no.1 to put up defence on 8.8.2002. However, the respondent no.1 instead of presenting his defence before the Arbitrator filed petition on 5.8.2002 in the District Court at Faridabad, under Section 36 of the Arbitration Act 1996 for enforcement of award/order dated 1.2.2002 issued by the respondent No.2 and also filed an application for stay of proceedings under Section 9 of the Arbitration Act. The petitioner filed the detailed reply to the petition filed by the respondent No.1. However, without appreciating the facts and circumstances of the above mentioned case and without appreciating the legal aspect of the controversy between the parties, the learned District Judge, Faridabad allowed the petition of the respondent No.1 and directed the Arbitrator respondent No.2 to close the arbitration proceedings and illegally and arbitrarily held that order dated 1.2.2002 of the Arbitrator respondent No.2 has become final vide its order dated 1.2.2005. The learned District Judge, Faridabad accepted the petition C.R. No.2614 of 2005 3 and held that the order dated 1.2.2002 passed by the arbitrator has become final and the mandate of the said arbitrator stands terminated with the passing of the said order and restarting of the arbitration proceedings by respondent No.1 vide letter dated 2.4.2002 and subsequently letters are wholly illegal, arbitrary and without jurisdiction and in violation of the provisions of law and he was directed to close the proceedings. Feeling dissatisfied with the above said order, the petitioner has preferred the instant revision petition. I have heard learned counsel for the parties and have gone through the records of the case. So far as the facts are concerned that are not in dispute. Chief Engineer, PWD (B&R), Haryana vide letter dated 17.1.2000 appointed Sh.R.C. Mehndiratta, Superintending Engineer as arbitrator to settle the dispute between the parties i.e. M/s Arora Construction and Co. and the State of Haryana. Subsequently, Mr. R.C.Mehndiratta was promoted and in his place Shri S.S.Deswal respondent No.1 was appointed as arbitrator vide letter dated 2.4.2000 of the Chief Engineer. Respondent No.1 vide his order dated vide his order dated 1.2.2002 terminated the arbitration proceedings by invoking Section 25-A of the Arbitration and Conciliation Act, 1996 (in short – Arbitration Act). However, thereafter respondent No.1 vide letter dated 2.4.2002 started the arbitration proceedings and vide letter dated 18.7.2002 asked the State of Haryana to put up his defence on 8.8.2002 that order has been challenged by filing petition under Section 36 of the Act for C.R. No.2614 of 2005 4 enforcement of the Award dated 1.2.2002 passed by respondent No.1 and request has been made for staying the proceedings under Section 9 of the Act. The learned District Judge, Faridabad reached to the conclusion that after the termination of the arbitration proceedings vide order dated 1.2.2002 by the Arbitrator, the later become functous officio and has no power, authority,and jurisdiction to commence the arbitration proceedings vide letter dated 2.4.2002. As a sequel of the above said finding the re-start of arbitration proceedings by respondent No.1 vide letter dated 2.4.2002 was set aside and arbitrator was directed to close the proceedings. The above said order has been challenged in the present case. The facts, which further borne out from the record, are that the arbitrator was appointed vide letter dated 28.4.2000 and the arbitrator sent sent letter dated 16.5.2000 to both the parties directing them to settle their claims within 15 days. M/s Arora Construction and Co., now petitioner sent letter dated 23.5.2000 to Chief Engineer for changing the arbitrator and a further request letter dated 27.5.2000 was submitted to arbitrator asking him to direct the petitioner to supply various documents, detailed in the letter. The said request was declined vide letter dated 1.6.2000 and present petitioner was directed to submit the claim within 10 days. In pursuance to that the present petitioner submitted a list of its claim on 14.6.2000 to the Arbitrator, which was actually submitted on 21.6.2000. The arbitrator vide letter dated 23.6.2000 intimated the present petitioners that claims have been submitted without documents of detail. So, the arbitrator asked the C.R. No.2614 of 2005 5 petitioner to submit the claim with all the relevant details and documents in their support. Ultimately, the arbitrator on 1.2.2006 terminated the arbitration proceedings on the ground that the present petitioner failed to submit the documents. The case of the present petitioners is that it had submitted details of its claim to the arbitrator, who received the same on 29.1.2002 and in spite of that, order dated 1.2.2002 terminating the arbitration proceedings, was passed. It has been submitted that it is due to inadvertance and over sight, the documents submitted by the petitioners have not come into the knowledge of the arbitrator and on that account, again order dated 1.2.2002 was passed. The arbitrator thereafter re-considered the proceedings on 2.4.2002 and that order has been challenged before the learned District Judge by filing the petition under Section 36 of the Act. Now in order to properly appreciating the case, the relevant provisions of Section 23, 25 and 36 of the Act are reproiduced as under :- “23. Statement of claim and defence.- (1) Within the period of time agreed upon by the parties or determined by the arbitral trinbunal, the claimant shall state the facts suporting his claim, the points at issue and the relief or remedy sought, and the respondent shall state his defence in respect of these particulars, unless the parties have otherwise agreed as to the required elements of those statements. (2)The parties may submit with their statements all C.R. No.2614 of 2005 6 documents they consider to be relevant or may add a reference to the documents or other evidence they will submit. (3) Unless otherwise agreed by the parties, either party may amend or supplement his claim or defence during the course of the arbitral proceedings, unless the arbitral tribunal considers it inappropriate to allow the amendment or supplement having regard to the delay in making it. 25. Default of a party.- Unless otherwise agreed by the parties, where, without showing sufficient cause,- (a) the claimant fails to communicate his statement of claim in accordance with sub-section (1) of section 23, the arbitral tribunal shall terminate the proceedings; (b) the respondent fails to communicate his statement of defence in accordance with sub-section (1) of Section 23, the arbitral tribunal shall continue the proceedings without treating that failaure in itself as an admission of the allegations by the claimant ; ( c) a party fails to appear at an oral hearing or to produce documentary evidence, the arbitral tribunal may continue the proceedings and make the arbitral award on the evidence before it. 36. Enforcement. - Where the time for making an application to set aside the arbitral award under section C.R. No.2614 of 2005 7 34 has expired, or such application having been made, it has been refused, the award shall be enforced under the Code of Civil Procedure, 1908 ( 5 of 1908) in the same manner as if it were a decree of the Court. From the bare reading of Section 25 of the Act, it is revealed that it has to be co-enjoinly read with Section 23 of the Act. The intention of the Legislation for enacting section 25 is to expedite the arbitration proceedings by forcing the party to the arbitration to submit their claim at an early date. It has come on the record that the present petitioner has filed the claim petition but the arbitrator was not satisfied with the said claim petition as the claim petition was not supported by the documents. Whether after terminating the arbitration proceedings under Section 25-A of the Act, the arbitrator become functous officio or has a right to re-consider the proceedings ? In authority M/s Senbo Engineering Ltd. vs. State of Bihar and others AIR 2004 Patna 33, the Single Bench of Patna High Court has held that order pased by the Arbitral Tribunal terminating proceedings under Sectiuoin 25-A of the Act can be renewed or recalled by the Arbitral Tribunal in case sufficient cause being shown to that Arbitral Tribunal. So, from the bare perusal of the said judgment, it is revealed that after passing of the order under Section 25-A of the Act, it cannot be said that arbitrator become functous officio and cannot recall its order. So, in these circumstances, the finding of learned District C.R. No.2614 of 2005 8 Judge, to the effect that arbitrator has become functous officio and cannot recall its order, is without any substance. The arbitrator is a quasi-judicial authority exercising the power given under the Arbitration Act. The act of the arbitrator should not be normally interferred by the District Judge unless the same is perverse or illegal. One another circumstance which makes out a case for interference in the present revision petition is that admittedly there is a dispute between the parties regarding the execution of the work. The parties have agreed to solve their dispute by the arbiutrator and that arbitrator is also appointed by the department. The department has sought the execution of the award by filing an application under Section 36 of the Act. In authority M/s Anuptech Equipments Private Ltd. vs. M/s Ganpati Co-op. Housing Society Ltd. Mumbai and others AIR 1999 Bombay 219, the Single Bench of Bombay High Court held that expressions `order` and `award' mentioned in Section 2(c) and Section 25(a) are disitinct and different. Under Section 25-A of the Act order terminating the proceedings without deciding the same on merits of the case. Since the matter, in the case in hand, has not been decided on merits and as such the said request for executing the order dated 1.2.2002 whereby the arbitration proceedings have been terminated, is all the more unreasonable. So, in view of the above discussion, the revision petition stands accepted. The impugned order stands set aside and the dispute between the parties is ordered to be decided by the arbitrator in terms C.R. No.2614 of 2005 9 of the agreement. A copy of this judgment be sent to the trial Court for strict compliance. ( K.C.PURI ) JUDGE May 18th , 2010 sv C.R. No.2614 of 2005 10 This is an appeal directed by Ram Kumar driver, B.L.Saini owner of offending vehicle RJ-14G-6631. Briefly stated that Mani Ram and others referred in claim petition on account of death of Vijay Kumar in a motor vehicular accident........................ The Tribunal returned the finding on issue No.1 in favour of the claimants while deciding issue No.2, it is held that the claimants are held entitled to claim Rs.3,12,400/-. However, while determining issue No.3, the Tribunal held that since respondent Nos.1 and 2 have not produced the route permit and as such they are liable to pay the amount of compensation and consequently, the respondent No.3 Insurnace Company was absolved of the liability. On the motion stage, this Court directed the appellants to deposit the compensation amount with the Tribunal and that amount is stated to have been deposited before the Tribunal. The learned counsel for the appellant has submitted that onus to prove that offending vehicle was not having a valid route permit is always upon the Insurance Company. The Tribunal in the Award itself has stated that the Insurance Company has not produced any evidence. The Tribunal has absolved the Insurance Company on the ground that the Tribunal directed respondent Nos.1 and 2 to produce the route permit but they have failed to produce the route permit and as such the Insurance Company is not liable to pay the compensation C.R. No.2614 of 2005 11 amount. It is submitted that since the onus was upon the Insurance Company to prove that offending vehicle was not having a route permit, so, in these circumstances Insurance Company cannot be absolved to pay the amount as the vehicle in question was duly insured. To support this contention, learned counsel for the appellant has relied upon authority 826 and page 5. In reply to the above noted submission, learned counsel for the Insurnace Company has submitted that route permit is supposed to be in possession of the owner of the offending vehicle. The Tribunal has given specific direction to respondent Nos.1 and 2 to produce the route permit but they failed to produce the route permit. Even in the grounds of appeal, it is nowhere mentioned that vehicle was having a valid route permit. There is a breach of the condition of the policy by not having a valid route permit. In authority NIC vs. reported 2004(7) 519 (SC). It has been held that whether there is a valid route permit, the insurance company is not liable. I have given my thoughtful consideration to the rival submissions made by both the sides and have gone through the records of the case. The sole point in the present appeal is whether the owner of offending vehicle was having a valid route permit. It is not disputed during the course of arguments that offending vehicle is a transport vehicle and required a route permit. From the perusal of the record of the trial Court, it is revealed that vide order dated 6.5.2009 respondent C.R. No.2614 of 2005 12 No.3 made request to the Court to direct respondent No.1 and 2 to submit the copy of the route permit. On the request of Insurance Company, the learned Tribunal directed to respondent No.1 and 2 to supply the copy of route permit on 16.5.2009 failaing which an adverse inference shall be drawn against them. Thereafter, inspite of specific directions to respondent Nos.1 and 2 to produce the copy opf the routepermit, the same was not produced before the Tribunal and ultimately the case was decided on 2.6.2009. Evem in the grounds of appeal,a it is nowhere mentioned that the offending vehicle was having a valid route permit. So far as the authorities (supra) are concerned, the dispute in the said cases is regarding validity of the driving licence. There is no dispute regarding the valid driving licence in the present case. The dispute is regarding the possession of route permit. The Hon'ble Apex Court in Chela ( ) held that where the vehicle required route permit and person plying the same withsout route permit cannot be placed at a better ..... viz.a.viz who has violated any condition thereof, the insurer cannot be made liable for such vehicle. However, in that authority, it has been further laid down that insurance may be asked to satisfy the 3rd party claim and recover from the Insurance Company by executing an award like a decree against him. In the present case, the amount is stated to have been deposited. So, the second aspect of the case that insurer may be asked to satisfy the third party claim and indemnify and recover the same from the insured by exercising the award like a decree against him loses its importance. C.R. No.2614 of 2005 13 However, the fact remains that the finding of the Tribunal to the effect that offending vehicle was not having a valid route permit does not call for any interference. So, in view of the authority (Chela) it is held that Insurance Company is not liable. However, it is made clear that if any amaount is still due in that case, the Insurance Company shall pay the amount to the claimants and can get the same recovered from the present appellants by executing the Award itself. So, the appeal preferred by the claimants is dismissed with the above said observations. A copy of this judgment be sent to the trial Court for strict compliance. ( K.C.PURI ) JUDGE May 5th , 2010 sv