... 1 ... IN THE HIGH COURT OF BOMBAY AT GOA. WRIT PETITION NO.280 OF 2009 1. M/s Sujata Enterprises a Firm registered under the Indian Partnership Act, having office at Amruth Niwas, Krishnanagar, Sandur 583 119 Bellary District, Karnataka. 2. M/s V. S. Lad and Co. a Firm registered under the Indian Partnership Act, having office at Prashanth Nivas, Krishnanagar, Sandur 583 119 Bellary District, Karnataka. Both represented by their Partner, Mr. Santosh S. Lad. … Petitioners v e r s u s 1. N/s V. S/ Dempo and Co. Pvt. Ltd., Dempo House, Campal, Panaji, Goa. 403 001 2. The Learned Arbitrator, 3 rd floor, Govinda Building, M.G. Road, Panaji Goa, 403 001 … Respondents ... 2 ... Mr. Arvind P. Datar, Senior Advocate with Mr. Vijya Palekar, Advocate, Mr. Rishi Kumar, Advocate and Mr. Chidanand, Advocate for the petitioners. Mr. M. S. Usgaonkar, Senior Advocate with Mr. S. Usgaonkar, Advocate for the respondents. CORAM: SMT. R. S. DALVI, J. DATE OF RESERVING JUDGMENT: 7th MAY, 2009. DATE OF PRONOUNCING THE JUDGMENT: 8th MAY, 2009. JUDGMENT: Rule returnable forthwith. 2. This writ petition challenges the judgment dated 13.01.2009 rejecting the application made by way of CMA 95/2008 before the Principal District Judge, Panaji seeking to set aside the award of the ... 3 ... Arbitral Tribunal dated 05.03.2008 passed in Arbitral reference allowing the claimants to lead oral evidence. The application before the learned Principal District Judge was under Section 34(2)(a) (v) r/w Section 37(2)(a) of the Arbitration and Conciliation Act 1966 (the Act). 3. Parties agreed to refer their dispute to Arbitration. Meetings were held by the learned Arbitrator from time to time. This petition concerns itself with the meetings held on 06.11.2006 to 05.03.2008 when the order impugned in the application was passed by the learned Arbitrator. The contents of the minutes of the meeting held by the Arbitrator therefore becomes material. 4. On 06.11.2006, the parties inter alia stated to the learned Arbitrator that they would not lead oral evidence and that the arguments shall be ... 4 ... restricted to the documents only. “Liberty to both the parties to take definite stand on the next occasion” was given. 5. The petitioner contends that the parties orally agreed not to lead evidence but respondent no.1 sought to lead evidence later. Counsel for the petitioner contended that since both the parties stated to the learned Arbitrator the fact that no oral evidence would be led binds them to such oral agreement. The respondents contend that the oral agreement was not complete and the respondents (original claimants) could lead evidence if they desired. The learned Arbitrator in the interest of justice gave liberty to both the parties to take a definite stand on the "next occasion." This aspect has been considered in the order of the learned Arbitrator dated 05.03.2008. A look at how the arbitration proceedings went on from the "next ... 5 ... occasion" until the order dated 05.03.2008 would be required. 6. After 06.11.2006 the Arbitrator has issued notice to the parties canceling the dates fixed for hearing in January, 2007. He stated that he would fix the dates in consultation with the parties on 21.10.2007. This was because he was to be out of station. On 24.12.2006 he has again issued notice to the parties to file sur-rejoinder by 09.01.2007. He has notified that new date for final hearing would be fixed later. On 17.06.2007 he again issued notice to the parties that Arbitral reference is fixed for final oral arguments on 13 th, 14 th, 15 th August, 2007. Thereafter on 08.08.2007 the Arbitrator has again issued notice that arbitration would be taken up on 18 th, 19 th and 20 th October, 2007 cancelling the dates fixed on 13 th, 14 th, 15 th August, 2007 due to his own personal difficulty. Thereafter he notified the ... 6 ... parties to book the venue to be fixed for Arbitration for hearings on 18 th, 19 th and 20 th October, 2007. It is not known as to what transpired on 18 th, 19 th and 20 th October, 2007. 6. The annexures to the petition show an application dated 23.10.2007 made by the Advocate for the claimants (respondent no.1 herein) stating that the claimant is required to tender evidence to prove its claim and wishes to lead necessary evidence that was objected to by the petitioners herein (respondents in Arbitration) on the principle of “party autonomy.” The learned Arbitrator observed that the claimant had not taken any definite stand earlier and that no prejudice would be caused to the claim if any oral evidence was adduced. The learned Arbitrator referred to the provisions of Section 19 and the law thereunder including the principle of “party autonomy” and the fact that it was described ... 7 ... as the Magna Carta of the Act. He accepted that the parties are free to follow arbitration proceedings failing which the Arbitrator would consider appropriate procedure. The learned Arbitrator further considered that what transpired on 06.11.2006 was a unilateral statement of the parties and that there was no agreement between them. He also reasoned that after that date no hearings were held and the matter was adjourned without meeting. He observed that the claimants came up with an application for leading evidence at the first opportunity. He allowed them to lead evidence. 7. The petitioners herein were aggrieved. They challenged the said order allowing parties to lead evidence under Section 34(2)(a)(v) and 37(2)(a) of the Act. 8. Section 34 deals with application for ... 8 ... setting aside Arbitral awards. Section 37 considers inter alia an appeal to a Court from an order of the arbitral tribunal under section 16(3) of the Act. Section 16 falls under chapter 4 of the Act which deals with the competence of arbitral tribunal to rule on its jurisdiction. Under section 16(3) a plea that the arbitral tribunal is exceeding the scope of its authority is to be raised as soon as the matter alleged to be beyond the scope of its authority is raised during the arbitral proceedings. Authority by which the Arbitrator would exceed its jurisdiction is therefore dealt with under section 16(3). However, it has been argued on behalf of the petitioner that the authority of the Arbitrator to allow evidence to be led which is against the claimant recorded by the parties would also fall within the mischief of section 16(3) of the Act. Such authority is challenged as an interim award since it is the an Arbitration proceeding. It is seen that in this case ... 9 ... it is a procedural irregularity, if at all, under section 19(3) by which the learned Arbitrator exercised his discretion to follow the procedure upon what he considered was lack of agreement between the parties not to lead oral evidence. 9. Mr. Datar has further contended that the ruling of the Arbitrator would fall under section 17 (1) of the Arbitration. It being an interim measure of protection, the decision taken by the learned Arbitrator, it is contended, is challengeable as an interim award before the relevant District Judge. The impugned order shows that the application before the learned Principal District Judge was not made under the aforesaid section. Nevertheless it is required to be considered as a question of law, since it is brought within the perview of Section 37(2) of the Act. Section 37(2) runs thus: ... 10 ... 37. Appealable orders .-...... (2) An appeal shall also lie to a court from an order of the arbitral tribunal - (a) accepting the plea referred to in sub- section (2) or sub-section (3) of Section 16 or (b) granting or refusing to grant an interim measure under Section 17. It can be seen that the appeal would lie to the Court from an order relating to jurisdiction under section 16 OR an order relating to an interim measure ordered by the Arbitral Tribunal under section 17 of the Act. Section 17 (1) reads thus: 17. Interim measures ordered by arbitral tribunal - (1) Unless otherwise agreed by the ... 11 ... parties,the arbitral tribunal may, at the request of a party, order a party to take any interim measure of protection as the arbitral tribunal may consider necessary in respect of the subject-matter of the dispute. 10. What must be first understood is to what is “Interim measure of protection”. To protect any property in dispute, any measure adopted in the arbitration proceedings, may be an interim measure challengeable in appeal under section 37(2) of the Act. The measure is not any order relating to the procedure to be followed in arbitration. If all the orders and directions which are passed in an arbitration can be taken to be interim measures, it would lead to chaotic situation and be counter- productive. Interpretation cannot be overstretched to absurd limits. Such an interpretation of the term “interim measure” cannot be adopted. A procedural ... 12 ... direction to lead or not to lead oral evidence passed by the Arbitrator cannot be contemplated as an interim measure under the Act. 11. Mr. Usgaonkar rightly drew my attention to the importance of the words “in respect of the subject matter of the dispute”. These words guide the interpretation of Section 17 (1) of the Act. Besides the words “of protection” channelize the concept of “interim measure:. It is therefore clear that no appeal under section 37(2) can lie from any orders or directions of any arbitrator regulating its own procedure. It would lie only from the orders passed for protecting the property in dispute pending arbitration proceedings. The Principal District Judge has rightly considered that an application of the petitioner herein (applicants therein) would not lie under section 37(2). ... 13 ... 12. The application was also made under section 34(2)(A)(v) of the Act. This section falls under chapter 7 of the Act dealing with recourse against Arbitration awards. Since it concerns itself with Arbitration and the recourse that the party may have against it, it contemplates passing of an Arbitration award. An arbitral award would terminate the proceedings under section 32 (1) of the Act. It includes an interim award though an interim award does not terminate the proceedings under section 32 (2) of the Act. Hence a party has recourse against both the final and interim “awards”. Nevertheless, the recourse can be had only when an “award” is made. Any procedural direction in the Arbitration proceedings cannot be contemplated to be an award, final or interim. Since no award is made, an application under section 34 cannot lie. The learned Principal District Judge has rightly considered the aspect of the recourse allowed by the legislation to ... 14 ... any party under section 34 also. The decision of the learned Judge that since neither an interim or final award is passed no application could have been made under section 34 is also correct. 13. Section 34(2)(A)(v) relates to arbitration procedure which is not in accordance with the claim of the parties. - Section 34(2)(A) shows five modes of proof if an arbitral award is applied to be set aside. One of those modes is that the arbitral procedure is not in accordance with the agreement of the parties. That is the concept of “party autonomy” which the petitioners seek to adhere to. Indeed arbitration proceedings are not bound by rules of Civil Procedure under the law of evidence and the parties are free to agree on the procedure to be followed under section 19(1) and (2) of the Act. If that is not followed when an arbitral award is passed, be it final or interim, the petitioners ... 15 ... would be entitled to avail of the proof under section 34(2)(A)(v) to have the arbitral award set aside under that sub-section. The petitioner must however, await the award. The petitioners cannot challenge every order and direction of the arbitrator pending interim or final award being passed. 14. The petitioners have chosen arbitration as a mode of redressal of their grievance. The petitioners are bound by the provision in the Special Legislation. The purpose and intent of the legislation is to provide an alternate mode of adjudication. Section 19, which the petitioners agree is a Magna Carta of the Arbitral proceedings, allows the arbitrator, failing the parties to determine the procedure. If it is the petitioners' contention that the agreement between the parties not to lead oral evidence was orally arrived at and was binding upon the parties as well as the learned ... 16 ... Arbitrator, the petitioners would be allowed recourse to such contention upon challenging the arbitral award. The petitioners cannot sabotage arbitration proceedings by rushing to Court at every irregularity by way of directions or order in the proceedings. The Arbitrator must be free to pass such orders and directions since he can lay down his own procedure. 15. It may be mentioned that the twin objects of arbitration are to avoid delay in the final arbitral award being passed, in keeping with the principles of natural justice to both the parties to lay before the Arbitrator all the evidence, oral as well as documentary. 16. The learned Arbitrator upon considering the judgments cited before him has seen an arguable case on both sides. It may be mentioned that the ... 17 ... respondents herein have sought to lead evidence at the first available opportunity. They were allowed to take “definite stand” despite the say of the parties. The learned Arbitrator had not taken as conclusive any agreement between the parties to restrict themselves to a particular mode of leading evidence only on 06.11.2006. The arbitration, I am told, is inter alia for damages upon breach of contract. The right to lead oral evidence to prove damages cannot be denied. The petitioners would be entitled to cross examine the respondents' witnesses. The petitioners would also be entitled to lead oral as well as documentary evidence since there would be equal treatment to be given to all parties under section 18 of the Act (which is also a part of what is called the Magna Carta of arbitral proceedings). 17. The writ petition is devoid of merits. In fact it appears to be an attempt to delay the final ... 18 ... Arbitral award. In view of the clear legal position under the Legislation, reference to judgments tendered by the petitioners' Advocate in a compilation need not be made. Hence writ petition is dismissed. Rule discharged. The Arbitration is stayed for eight weeks. SMT. R. S. DALVI, J. lh/.