1 IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR : J U D G M E N T : Commissioner, Rajasthan Housing Board, Jaipur & Others Versus M/s Chhagniram Gehlot & Another (S.B. Civil Misc. Appeal No.1295/2010) DATE OF JUDGMENT : December 13th, 2010 P R E S E N T HON'BLE MR. JUSTICE GOPAL KRISHAN VYAS _________________________________________ Mr. P.C. Sharma for the appellants. BY THE COURT : In this civil miscellaneous appeal filed under Section 37 of the Arbitration & Conciliation Act, 1996, appellants have challenged order dated 28.08.2010 passed by the District Judge, Jodhpur in Civil Misc. Case No.23-AA of 2006, by which, application filed by respondent No.1 under Section 34 of the Arbitration & Conciliation Act, 1996 was allowed and matter was remanded to the Arbitrator to decide the same after providing opportunity of hearing to respondent No.1. As per facts of the case, appellant No.3 invited tenders for construction of interceptor sewer line for Madhuban Housing Board Colony and bid of respondent No.1 was accepted vide work order No.RE/PHE/Ju/2001-2002/286 dated 31.07.2001; 2 and, in pursuance of that, respondent No.1 was directed to carry out construction and complete the same within stipulated time. Period of commencement and completion of the work was 10.08.2001 to 09.01.2002; but, according to the appellants, respondent No.1 failed to complete and carry out its obligation but informed the appellants that they have failed to perform their obligation, therefore, the work could not be completed whereas for completion of work respondent No.1 had installed plant and machinery and incurred expenses in this regard, therefore, respondent No.1 is entitled to damages of Rs.2,50,000/-. The petitioner-respondent No.1 applied for settlement of the disputes through the Arbitrator as per clause 23 of the agreement and his claim was sent to the Arbitrator. The Arbitrator decided the dispute and vide letter dated 08.05.2006 informed the respondent-applicant that his claim has been rejected by the Arbitrator on 04.04.2006. The said communication was challenged by way of filing application under Section 34 before the District Judge, Jodhpur for setting aside the said arbitral award on the ground that no opportunity of hearing was ever given by the Arbitrator before deciding the dispute, therefore, the Arbitrator has committed misconduct while rejecting the claim of the applicant. The application filed by the applicant-respondent No.1 under Section 34 was allowed and the matter was remitted to the Arbitrator for deciding the 3 same after providing opportunity of hearing to the applicant. Learned counsel appearing on behalf of the appellant Housing Board vehemently argued that the District Judge, Jodhpur has committed grave error while allowing the application filed under Section 34 of the Act of 1996 because reply to the claim was filed by the Board and after due consideration the Arbitrator decided the claim of respondent No.1 and held that there was no default on the part of the petitioner and the work entrusted to the respondent-petitioner was to be carried within time because the said work was of public importance; but, respondent-petitioner failed to do so, therefore, re-tender was held with the terms and conditions of the agreement at the risk of respondent-petitioner. Learned Arbitrator has rightly rejected the claim of the respondent-petitioner and while citing the judgment of the Hon'ble Supreme Court, reported in AIR 2007 S.C.W. 5910, M/s Markfed Vanaspati & Allied Industries Vs. Union of India, it is submitted that the scope of interference is very limited and no interference can be made even if the award is non-speaking award, therefore, in view of the aforesaid judgment, the learned District Judge has committed grave error. Hence, this appeal may be allowed and order impugned passed by the learned District Judge may be quashed. Having heard learned counsel for the appellant and perused Section 34 of the Arbitration & Conciliation Act, 1996, I 4 am of the opinion that prima facie no error has been committed by the learned District Judge while setting aside the award passed by the Arbitrator which was admitted passed without providing opportunity of hearing to the respondent-petitioner. Sections 34 and 25 of the Arbitration & Conciliation Act, 1996 read as follows : “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 failure 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. CHAPTER VII RECOURSE AGAINST ARBITRAL AWARD 34. Application for setting aside arbitral award.-(1) Recourse to a Court against an arbitral award may be made only by an application for setting aside such award in accordance with sub-section (2) and sub-section (3). (2) An arbitral award may be set aside by the Court only if - 5 (a) the party making the application furnishes proof that - (i) a party was under some incapacity, or (ii) the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law for the time being in force; or (iii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or (iv) the arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters behond the scope of the submission to arbitration: Provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, only that part of the arbitral award which contains decisions on matters not submitted to arbitration may be set aside; or (v) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in confilict with a provisions of this Part from which the parties cannot derogate, or, failing such agreement, was not in accordance with this Part; or (b) the Court finds that - (i) the subject-matter of the dispute is not capable of settlement by arbitration under the law for the time being in force, or (ii) the arbitral award is in conflict with the public policy of India. Explanation.-Without prejudice to the generality of sub-clause 6 (ii) it is hereby declared, for the avoidance of any doubt, that an award is in conflict with the public policy of India if the making of the award was induced or affected by fraud or corruption or was in violation of section 75 or section 81. (3) An application for setting aside may not be made after three months have elapsed from the date on which the party making that application had received the arbitral award or, if a request had been made under section 33, from the date on which that request had been disposed of by the arbitral tribunal : Provided that if the Court is satisfied that the applicant was prevented by sufficient cause from making the application within the said period of three months it may entertain the application within a further period of thirty days, but not thereafter. (4) On receipt of an application under sub-section (1), the Court may, where it is appropriate and it is so requested by a party, adjourn the proceedings for a period of time determined by it in order to give the arbitral tribunal an opportunity to resume the arbitral proceedings or to take such other action as in the opinion of arbitral tribunal will eliminate the grounds for setting aside the arbitral award.” Upon perusal of the above provisions and considering the facts of the case, it is abundantly clear that ground of not providing opportunity of hearing to the respondent-applicant by the Arbitrator is not in existence. In this view of the matter, I see no reason to interfere in the order passed by the learned 7 District Judge vide impugned judgment dated 28.08.2010, whereby, the matter was remanded to the Arbitrator with further direction that claim of respondent No.1 applicant may be decided afresh after providing opportunity of hearing to him. In this view of the matter, there is no force in this appeal and the same is hereby dismissed. (Gopal Krishan Vyas) J. Ojha, a.