Case: Department Of Telecommunications Vs. Gujarat Coop.Milk Mkting. Federation Ltd

grant rebates to several subscribers. But that cannot be a ground for granting rebate in this case, as no irregularity was found in this case. The fact that in some case, some departmental employee had committed some tampering, is not a ground for inferring that there must have been tampering in this case. The High Court has inferred that the fault was with the department because it refused to refer the matter for CBI for investigation. The learned Single Judge has observed: “It is also required to be noted that the petitioner had requested for an investigation into the matter by Central Bureau of Investigation. According to the petitioner, if such an investigation is resorted to, it would unearth the mischief and it was further stated that the petitioner was ready and wiling to bear the costs thereof. Even this was not accepted by the respondent authority, which would indicate that the respondent did not want to go deep into the matter.” Reference to CBI is not a condition precedent for raising a bill, merely because the subscriber demands it.13. There was thus no ground for the High Court to interfere with the findings arrived at by the Arbitrator in exercising the power of judicial review. By assuming a non-existing appellate jurisdiction and by making wrong assumptions and drawing wrong inferences, the learned Single Judge has interfered with a reasoned arbitral award.14. We may next deal with the conclusion of the learned Single Judge that the award was invalid because it was made by an Arbitrator who was junior in rank, when compared to the officer who passed the appellate order dated 12.2.1998. It is a usual practice for the Government departments to have the employees of the department (high level officers unconnected with the contract) as Arbitrators. The mere fact that the Arbitrator is of a rank lower than the officer who rejected the claim of the subscriber would not invalidate the arbitration or can be a reason for imputing bias to the Arbitrator (see Secretary to Govt., Transport Department v. Munuswamy Mudaliar, 1988 SCC (Suppl.) 651 and Indian Oil Corporation Ltd. v. Raja Transport (P) Ltd., VI (2009) SLT 571=III (2009) CLT 250 (SC)=2009 (8) SCC 520 ). In Indian Oil Corpn. Ltd. (supra) this Court held thus: “The fact that the named Arbitrator is an employee of one of the parties is not ipso facto a ground to raise a presumption of bias or partiality of lack of independence on his part. There can however be a justifiable apprehension about the independence or impartiality of an Employee-Arbitrator, if such person was the controlling or dealing authority in regard to the subject contract or if he is a direct subordinate (as contrasted from an officer of an inferior rank in some other department) to the officer whose decision is the subject matter of the dispute. Where however the named Arbitrator though a senior officer of the Government/statutory body/Government company, had nothing to do with execution of the subject contract, there can be no justification for anyone doubting his independence or impartiality, in the absence of any specific evidence. Therefore, senior officer/s (usually heads of department or equivalent) of a Government/statutory corporation/public sector undertaking, not associated with the contract, are considered to be independent and impartial and are not barred from functioning as Arbitrators merely because their employer is a party to the contract.” In this case, the Arbitrator had neither dealt with the matter at any point of time nor was he a subordinate of the appellate authority in the concerned telecom district who decided the matter. The bills related to a telephone installed at the premises in Anand/Nadiad falling within the jurisdiction of the General Manager Telecom Kheda Telecom District, Nadiad and the appellate order dated 12.2.1998 was passed by the General Manager of Kheda Telecom District, Nadiad. The Arbitrator was working as a Deputy General Manager (T) East & Arbitrator Ahmedabad Telecom District, not under the General Manager who passed the appellate order but in a different telecom district. Therefore, there was no justification for the learned Single Judge to hold that the award was invalid merely because the Arbitrator was of a rank lower than that of the officer who passed the appellate order. It should also be noted that the appeal was decided by the General Manager, Kheda Telecom district in pursuance of a direction of the High Court. Again in a subsequent proceeding the High Court directed that the matter should be referred to arbitration under Section 7B of the Act and accordingly the dispute was referred to arbitration and the departmental officer functioning as Arbitrator decided the matter. There is nothing irregular or erroneous in the said procedure.15. The last para discloses the learned Single Judge had virtually prejudged the matter and was prejudiced against the appellant. The learned Single Judge allowed himself to be swayed by the following irrelevant factors in deciding against the appellant: (i) the respondent had come up before the High Court thrice; and (ii) the department Counsel did not agree with the suggestion of the learned Single Judge to reconsider the bill amounts by issuing a revised bill on the basis of the average of the bills for last six months. The learned Single Judge proceeded on the basis that the attitude of the department was adamant and it was indulging in unnecessary litigation. The department was simply pursuing a legitimate claim. The matter had been decided by a statutory Arbitrator. Therefore if the department decided not to give up or reduce its claim that cannot be held against the department. The order shows that the learned Single Judge had tried virtually to force the department to agree for suggestions which obviously the officers and the Counsel for the department could not agree. Such attitude on the part of the High Court requires to be discouraged. Unfortunately the Division Bench did not examine any of these aspects and merely affirmed the decision of the learned Single Judge.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]9. The learned Single Judge held that the Arbitrator had without any evidence assumed that the son or other family members of subscriber must have used the telephone available on account of plug/socket arrangement in every room as also an extra telephone, parallel lines for making theThe basis for the billing is not the said assumption or inference. The basis is the clear evidence consisting of the records of Telecom and the meters which showed that the billed calls, that is, the international party line calls, were regularly being made from the said telephone. The inference drawn by the Arbitrator that theson or other family members must have made the calls from a parallel line by using the plug and socket facility available in various rooms, has to be read in the context of the assertion of the subscriber that he had not made any such party calls. The Arbitrator had three facts before him : (1) that the department records showing that the disputed international party calls were made from the telephone in question regularly; (2) that the subscriber had plug and socket facility in several rooms with an extra telephone which could be used any time by any one in the house; and (3) that the subscriber had not made use of the STD/ISD dynamic lock facility, though available. Therefore when there was an assertion by the subscriber that he had not made any such calls, the Arbitrator merely made an inference from the proved facts that even if the subscriber had not made the calls, it was possible that his family members including his son (who had returned home a day prior to the commencement of ‘partycould have made such calls by using the plugs and sockets arrangement and parallel lines in several rooms without the knowledge of the subscriber. The Arbitrator was only dealing with a contention by the subscriber that he had not made any such calls and giving his reasons for rejecting such a contention.10. The learned Single Judge next inferred that even if such calls were being made earlier, after receiving the bill dated 1.4.1996, the subscriber would have naturally restricted any such calls; and the fact that even after receipt of the first bill, there were such ‘partyas was evident from the second bill, made it improbable that thephone was used for making such ‘partyand therefore it had to be inferred that someone else was mischievously using the said telephone connection for making unauthorised ISD calls. This inference is also contrary to facts. The first bill dated 1.4.1996 was for the period 16.1.1996 to 15.3.1996. Though the second bill dated 1.6.1996 was subsequent to complaint dated 25.4.1996, the said bill related to the period 16.3.1996 to 15.5.1996, major portion of which was prior to 25.4.1996. Further, the second bill was only for Rs. 91,929/as against the first bill for Rs.The amount of the second bill and the period for the second bill demonstrates that after receipt of first bill and complaint, there was in fact some kind of control and reduction in such phone calls. Therefore the inference by the learned Single Judge was absolutely baseless.11. The finding of the learned Single Judge that the Arbitrator had not given importance to the complaint in the letter dated 25.4.1996 that he had heard cross talk on the line is also incorrect. The Arbitrator has dealt with this matter. The simplest explanation is the existence offacility and parallel lines. If the parallel line was being used and the subscriber lifted the receiver, he would certainly hear the conversation or talk, which was not from any external source, but from the very same telephone.12. The last assumption by the learned Single Judge was with reference to an affidavit filed by the Telecom Department in some criminal proceeding against some departmental employee unconcerned with this case, admitting that its employee had tampered with the instruments for making international calls, and as a result the department had to grant rebates to several subscribers. But that cannot be a ground for granting rebate in this case, as no irregularity was found in this case. The fact that in some case, some departmental employee had committed some tampering, is not a ground for inferring that there must have been tampering in this case. The High Court has inferred that the fault was with the department because it refused to refer the matter for CBI for investigation. The learned Single Judge hasis also required to be noted that the petitioner had requested for an investigation into the matter by Central Bureau of Investigation. According to the petitioner, if such an investigation is resorted to, it would unearth the mischief and it was further stated that the petitioner was ready and wiling to bear the costs thereof. Even this was not accepted by the respondent authority, which would indicate that the respondent did not want to go deep into theto CBI is not a condition precedent for raising a bill, merely because the subscriber demands it.13. There was thus no ground for the High Court to interfere with the findings arrived at by the Arbitrator in exercising the power of judicial review. By assuming aappellate jurisdiction and by making wrong assumptions and drawing wrong inferences, the learned Single Judge has interfered with a reasoned arbitral award.14. We may next deal with the conclusion of the learned Single Judge that the award was invalid because it was made by an Arbitrator who was junior in rank, when compared to the officer who passed the appellate order dated 12.2.1998. It is a usual practice for the Government departments to have the employees of the department (high level officers unconnected with the contract) as Arbitrators. The mere fact that the Arbitrator is of a rank lower than the officer who rejected the claim of the subscriber would not invalidate the arbitration or can be a reason for imputing bias to the Arbitrator (see Secretary to Govt., Transport Department v. Munuswamy Mudaliar, 1988 SCC (Suppl.) 651 and Indian Oil Corporation Ltd. v. Raja Transport (P) Ltd., VI (2009) SLT 571=III (2009) CLT 250 (SC)=2009 (8) SCC 520 ). In Indian Oil Corpn. Ltd. (supra) this Court heldfact that the named Arbitrator is an employee of one of the parties is not ipso facto a ground to raise a presumption of bias or partiality of lack of independence on his part. There can however be a justifiable apprehension about the independence or impartiality of anif such person was the controlling or dealing authority in regard to the subject contract or if he is a direct subordinate (as contrasted from an officer of an inferior rank in some other department) to the officer whose decision is the subject matter of the dispute. Where however the named Arbitrator though a senior officer of the Government/statutory body/Government company, had nothing to do with execution of the subject contract, there can be no justification for anyone doubting his independence or impartiality, in the absence of any specific evidence. Therefore, senior officer/s (usually heads of department or equivalent) of a Government/statutory corporation/public sector undertaking, not associated with the contract, are considered to be independent and impartial and are not barred from functioning as Arbitrators merely because their employer is a party to thethis case, the Arbitrator had neither dealt with the matter at any point of time nor was he a subordinate of the appellate authority in the concerned telecom district who decided the matter. The bills related to a telephone installed at the premises in Anand/Nadiad falling within the jurisdiction of the General Manager Telecom Kheda Telecom District, Nadiad and the appellate order dated 12.2.1998 was passed by the General Manager of Kheda Telecom District, Nadiad. The Arbitrator was working as a Deputy General Manager (T) East & Arbitrator Ahmedabad Telecom District, not under the General Manager who passed the appellate order but in a different telecom district. Therefore, there was no justification for the learned Single Judge to hold that the award was invalid merely because the Arbitrator was of a rank lower than that of the officer who passed the appellate order. It should also be noted that the appeal was decided by the General Manager, Kheda Telecom district in pursuance of a direction of the High Court. Again in a subsequent proceeding the High Court directed that the matter should be referred to arbitration under Section 7B of the Act and accordingly the dispute was referred to arbitration and the departmental officer functioning as Arbitrator decided the matter. There is nothing irregular or erroneous in the said procedure.15. The last para discloses the learned Single Judge had virtually prejudged the matter and was prejudiced against the appellant. The learned Single Judge allowed himself to be swayed by the following irrelevant factors in deciding against the appellant: (i) the respondent had come up before the High Court thrice; and (ii) the department Counsel did not agree with the suggestion of the learned Single Judge to reconsider the bill amounts by issuing a revised bill on the basis of the average of the bills for last six months. The learned Single Judge proceeded on the basis that the attitude of the department was adamant and it was indulging in unnecessary litigation. The department was simply pursuing a legitimate claim. The matter had been decided by a statutory Arbitrator. Therefore if the department decided not to give up or reduce its claim that cannot be held against the department. The order shows that the learned Single Judge had tried virtually to force the department to agree for suggestions which obviously the officers and the Counsel for the department could not agree. Such attitude on the part of the High Court requires to be discouraged. Unfortunately the Division Bench did not examine any of these aspects and merely affirmed the decision of the learned Single Judge.