C.R. No. 3301 of 2009 (O&M) [1] IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. C.R. No. 3301 of 2009 (O&M) Date of Decision: September 22, 2009 B.I. Publications Pvt. Ltd. …..Petitioner Vs. Pratap Steel Rolling Mills (1935) Ltd. and another …..Respondents CORAM: HON’BLE MR. JUSTICE M.M.S. BEDI. -.- Present:- Mr.Vijay Chauhan, Advocate for the petitioner. Mr.Sumeet Mahajan, Senior Advocate with Mr. Rohit Khanna, Advocate for the respondents. -.- M.M.S. BEDI, J. (ORAL) An award had been passed under Arbitration and Conciliation Act, 1996, (hereinafter referred to as ‘the Act’) against the petitioner. An application under Section 34 of the Act has been filed by the respondents against the said award. The Court concerned has opted to frame following C.R. No. 3301 of 2009 (O&M) [2] issues to adjudicate the application for setting aside the arbitral award under Section 34 of the Act:- “1. Whether award dated 8.12.2006 is liable to be set aside on grounds mentioned in the objection petition? OPA 2. Whether the court has got jurisdiction to entertain present petition? OPA 3. Relief.” The case is pending for recording of the evidence of the petitioner w.e.f. the year 2007. The objector- respondents had filed an application for summoning of witnesses. The application has been allowed and the following witnesses were ordered to be summoned:- 1. Incharge/ Manager, looking after the Taxation- Income Tax matters of the B.I. Publication Pvt. Ltd. and another to produce the record pertaining to B.I. Publication Pvt. Ltd. and anr. 54, Janpath, New Delhi, from the years 1990-91, 1991-92, 1992-93, 1993-94, 1994-95, 1995-96, 1996-97, 1997-98, 1998-99, 1999-2000, 2000-01, 2001-02, 2002-03, 2003-04, 2004-05, 2005-06, 2006-07, complete accounting records, filing of all the returns, audited balance sheets, certificates, annexures to the balance sheets, profit and loss accounts, bank record, day books more C.R. No. 3301 of 2009 (O&M) [3] particularly depreciation availed by B.I. Publication Pvt. Ltd. and Anr, from the Income Tax Department and the documents pertaining thereto, all the returns filed and the letters written to the Income Tax Authorities, Assessment orders in original and order with regard to the claim of depreciation and orders made by the Income Tax Authorities coupled with the returns and balance sheets and appeal (s) made, if any, against these Assessment orders. 2. The company Secretary of B.I. Publication Pvt. Ltd. and another to produce record pertaining to Incorporation of the company, its Memorandum and Articles of Association, Original alleged Lease Agreement with its related papers in original, Documents showing sale by objector/ applicant of the equipment i.e. subject matter of the alleged Lease Agreement to the respondent i.e. Sale Invoice, Goods Receipt (Lorry Receipt) showing transport of equipment from Amritsar to their place and Octroi Receipt of Octroi paid by them at their end and to bring the record i.e. from 1990-91, 1991-92, 1992-93, 1993-94, 1994-95, 1995-96, 1996-97, 1997-98, 1998-99, 1999-2000, C.R. No. 3301 of 2009 (O&M) [4] 2000-01, 2001-02, 2002-03, 2003-04, 2004-05, 2005-06, 2006-07, complete accounting records, filing of all the returns, audited balance sheets, certificates, annexures to the balance sheets, profit and loss accounts, bank record, day books more particularly depreciation availed by B.I. Publication Pvt. Ltd. and Anr, from the Income Tax Department and the documents pertaining thereto, all the returns filed and the letters written to the Income Tax Authorities, Assessment orders in original and order with regard to the claim of depreciation and orders made by the Income Tax Authorities coupled with the returns and balance sheets and appeal (s) made, if any, against these Assessment orders. 3. Accountant/ Incharge of Accounts Department of B.I. Publication Pvt. Ltd. and anr., 54, Janpath, New Delhi to bring the record i.e. from the years 1990-91, 1991-92, 1992-93, 1993-94, 1994-95, 1995-96, 1996-97, 1997-98, 1998-99, 1999-2000, 2000-01, 2001-02, 2002-03, 2003-04, 2004-05, 2005-06, 2006-07, complete accounting records, filing of all the returns, audited balance sheets, certificates, annexures to the balance sheets, profit C.R. No. 3301 of 2009 (O&M) [5] and loss accounts, bank record, day books more particularly depreciation availed by B.I. Publication Pvt. Ltd. and Anr, from the Income Tax Department and the documents pertaining thereto, all the returns filed and the letters written to the Income Tax Authorities, Assessment orders in original and order with regard to the claim of depreciation and orders made by the Income Tax Authorities coupled with the returns and balance sheets and appeal (s) made, if any, against these Assessment orders.” Feeling aggrieved with the vexatious material which has been sought to be produced in evidence, an application was filed by the petitioner under Order 47 Rule 1 CPC to recall the order dated October 31, 2007 permitting the summoning of witnesses alongwith documents abovementioned, praying that summons dated November 20, 2007 be withdrawn and to pass an appropriate order in context to the scope of Section 34 of the Act, which permits a Court to set aside the award of an Arbitrator on limited grounds mentioned therein. The application filed by the petitioner has been dismissed vide impugned order dated May 2, 2009. The main contention of counsel for the petitioner is that the Court exercising jurisdiction under Section 34 of the Act has gone beyond its authority and beyond the scope of Section 34 of the C.R. No. 3301 of 2009 (O&M) [6] Act to summon the witnesses which are not necessary for adjudication of the application under Section 34 of the Act. Counsel for the respondents has contended that the pleas taken by the objector can be established and the existence of the grounds mentioned in Section 34 of the Act can be proved only by summoning the witnesses alongwith the record. I have heard counsel for the petitioner as well as counsel for the respondents. The procedure for adjudication of the application under Section 34 of the Act has not been specifically mentioned in the Act, taking into consideration the objectives of the Act, the adjudication of an application under Section 34 of the Act has to be just like summary proceedings because the scope of setting aside of arbitral award has been limited by Section 34 of the Act. Section 34 of the Act reads as follows:- ““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 subsection (3). (2) An arbitral award may be set aside by the court only if- (a) The party making the application furnishes proof that- (i) A party was under some incapacity, or C.R. No. 3301 of 2009 (O&M) [7] (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 beyond 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 conflict with a provision of this Part from which the parties cannot derogate, or, failing such C.R. No. 3301 of 2009 (O&M) [8] 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. (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 C.R. No. 3301 of 2009 (O&M) [9] 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.” The scope of power and jurisdiction of a Court under Section 34 of the Act came up before the Apex Court in Oil and Natural Gas Corporation Ltd. Vs. Saw Pipes Ltd., 2003 (5) SCC 705, wherein it was observed that limited jurisdiction has been given to a Court under Section 34 of the Act for giving finality to the award and resolving the dispute by speedier method. The said objective would be frustrated by permitting patently illegal award to operate. It is only patently illegal award which is required to be set at naught, otherwise it would promote injustice. Laying down guidelines in the said case, it was held that Court can set aside an arbitral award under Section 34 (2) of the Act:- “(1) for the reasons mentioned in Section 34 (2) (a) (i) to (v), (2) for the reasons stated in Section 28 (a) (3) for the reasons stated in Section 34 (2) (b) (ii) on ground of conflict with the public policy of India, that is to say, if it is contrary to: (a) fundamental policy of Indian law; or (b) the interest of India; or (c) justice or morality; or (d) if it is patently illegal. C.R. No. 3301 of 2009 (O&M) [10] (4) for the reasons stated in Sections 13 (5) and 16 (6). ” Since in the present case, the Court exercising powers under Section 34 of the Act has opted to frame the issues for adjudication and has fixed the case for evidence for determination of the issues but the said procedure adopted will not, in any manner, permit the Court to bring on record anything which is contrary or would delay the proceedings. Anything which is not focused to bring the challenge of the arbitral award within the scope of Section 34 of the Act, cannot be permitted to be brought on the record directly or indirectly. The District Judge, Amritsar, seems to have without examining the purpose and objective of the documents summoned, exercised jurisdiction to summon the witnesses. It will not be in the interest of justice to enable the objector to place on record any document or material which would take the enquiry under Section 34 of the Act beyond the scope prescribed by the Legislation, in its wisdom. It will not be appropriate for this Court to examine each and every document which is sought to be produced by summoning the abovesaid three witnesses, to determine if the documents, in any manner, would help in achieving the objective under Section 34 of the Act. The said exercise should have been undertaken by the Court which had opted to summon the witnesses of the petitioner in whose favour the award has been passed. It is specifically observed here that fishing enquiry cannot be permitted in proceedings under Section 34 of the Act. The leading of evidence in the Courts is governed by Section 5 of the Indian Evidence Act which provides that evidence may be given in any C.R. No. 3301 of 2009 (O&M) [11] suit or proceedings of the existence or non-existence of every fact in issue and on such other facts as are declared to be relevant in the Evidence Act. No other evidence is even permitted to be produced in a suit or other proceedings as per the Indian Evidence Act. In view of the above discussion, I am of the opinion that the application filed by the petitioner for review/ recalling of the order dated October 31, 2007 should have been carefully considered in context to the objective and scope of Section 34 of the Act. The Court below does not seem to have properly exercised the judicial authority. The petition is allowed. The impugned order dated May 2, 2009 is hereby set aside and the matter is remanded back to District Judge, Amritsar to reconsider the relevance and purpose of summoning of the witnesses and the documents which are sought to be summoned. In case required, the said Court will be entitled to ask the objector to furnish the detailed particulars and the purpose for which the witnesses or the documents are sought to be produced/ summoned. It is left open to the satisfaction of the Court to determine whether the evidence sought to be produced has got any nexus to the grounds on the basis of which an arbitral award can be set aside under Section 34 of the Act. Parties are directed to appear before the court on September 26, 2009, the date already fixed. September 22, 2009 (M.M.S.BEDI) sanjay JUDGE