Page 1 REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 8426 OF 2013

(@ out of SPECIAL LEAVE PETITION (CIVIL) NO. 28418/2012 )

Delta Distilleries Limited … Petitioner

Versus

United Spirits Limited & Anr. …

Respondents

J U D G E M E N T

H.L. Gokhale J.

Leave Granted.

2. This appeal by Special Leave seeks to challenge

the judgment and order dated 20.7.2012 rendered by a

Single Judge of Bombay High Court allowing Arbitration

Petition No.838 of 2011 filed by the respondent No.1 herein.

The said petition sought to invoke the powers of the court

under Section 27 of the Arbitration and Conciliation Act, 1996

(herein after referred to as the Act of 1996), which provides

for seeking assistance of the court in taking evidence. The

Page 2 said petition had been moved in pursuance of the order

dated 16.9.2011 passed by a three member Arbitral Tribunal

permitting the respondent No.1 to file such an application.

The learned Single Judge allowed the said petition, and

thereby directed the appellant to produce the documents as

sought by the respondent No.1 before the Arbitral Tribunal.

This appeal has been filed by Special Leave to challenge the

said judgment and order. The appeal raises the question with

respect to the scope of Section 27, and the circumstances in

which the Arbitral Tribunal or a party before the Arbitral

Tribunal can apply to the court for assistance in taking

evidence.

Facts leading to this appeal are this wise:-

3. The respondent No.1 herein is a company which

owns certain brands of Indian Made Foreign Liquor (IMFL).

The appellant is a company carrying on the business of

distilling and bottling of IMFL. The predecessor of the

respondent No.1 entered into an agreement with the

appellant on 25.3.1997, under which the appellant agreed to

manufacture and supply to the respondent No.1, IMFL of such

2

Page 3 brands and quantity, as would be specified from time to time

on the terms and conditions contained therein. Under the

said agreement, the contract price at which the IMFL was to

be sold by the appellant to the respondent No.1, was

exclusive of sales tax and other taxes, and the respondent

No.1 was required to bear the same.

4. It appears that sometimes in 2001-2002, certain

disputes arose between the parties. A major dispute

between them related to the outstanding amount payable at

the foot of the running account between them. The

respondent No.1 claimed that amongst others, amounts to

the tune of Rs.1,22,30,692 and Rs.70,23,107.52 were due

and payable to the respondent No.1, whereas the appellant

maintained that an amount of Rs.39,37,993 was payable to

the appellant. According to the first respondent, the appellant

had obtained from the Sales Tax Department set-off/refund

on the sales tax paid on packaging material, and such set-

off/refund operated to reduce the sales tax liability of the

appellant, which was ultimately being borne by the

respondent No.1. The respondent No.1 therefore, claimed

3

Page 4 that it was entitled to the benefit of the said set-off/refund,

and accordingly debited the appellant for the amount of set-

off/refund.

5. It was the case of the first respondent that

although the appellant had accounted for some of these

entries in its accounts, it did not account for a major portion

of the same. Clause 14 of the agreement between the

parties provided that any dispute or difference arising or

relating to or connected with the said agreement, was to be

referred to arbitration. The above dispute was, therefore,

referred to the Arbitration of Hon’ble Mr. Justice D.M. Rege,

former Judge of Bombay High Court. However, the Learned

Judge resigned as arbitrator, and thereafter the proceedings

were continued before another arbitrator Hon’ble Mrs. Justice

Sujata Manohar, former Judge of the Supreme Court of India.

6. Thereafter, the advocates of the respondent No.1

gave a notice to the advocate on record of the appellant on

17.3.2007, calling upon them to give inspection and to

produce the following documents before the learned

Arbitrator:-

4

Page 5 (a)All sales tax returns filed by the appellant with the sales

tax authorities for the assessment years 1995-1996 to 2001-

2002.

(b)All sales tax assessment orders passed with regard to

the appellant for the above-mentioned period, and all

appellate orders, if any passed in any appellate proceedings

arising out of the same.

(c)The objection, if any, filed by the appellants against the

Notice in Form 40, and proposed order at pages 123 & 124 of

Volume VI of the documents filed in the arbitration, the order,

if any, passed thereon, and the appellate proceedings, if any,

therein.

(d)The letter dated 26

th

May 2000 mentioned in the letter

at page 32 of Volume III of the documents filed in the

arbitration.

7. The advocate of the appellant vide his reply dated

21.3.2008, protested and objected to the production of these

documents, since according to the appellant the same were

being sought at a late stage when the proceeding had

reached the stage of cross-examination of the witnesses of

5

Page 6 the respondent No.1. In paragraph 3 of this reply the learned

advocate stated as follows:-

“3. As regards the inspection of

documents sought by your clients, my clients

repeat that your clients are not entitled to

inspection of any documents at this belated

stage. In any event, my clients are not

relying on any of the documents referred to

in paragraphs (a), (b) and (c) of your letter.

As regards the documents referred to in

paragraph (d) of your letter, the said

document is already on record before the

Hon’ble Arbitrator and hence a copy of the

said document is already available with you.”

8. Inasmuch as the appellant declined to give

inspection / and produce the document as sought for, the

respondent No. 1 made an application on 26.3.2007 before

the learned Arbitrator, and in paragraph No. 5 thereof, sought

a direction to produce the documents mentioned at Sl. Nos.

(a) to (c) in the notice dated 17.3.2007. The learned

Arbitrator by her order dated 27.3.2007 allowed the

application only to the extent of the assessment orders

relating to the period 1995-1996 to 2001-2002 and the

appellate orders mentioned in paragraph 5(b). The prayer for

producing the sales tax returns mentioned in paragraph 5(a)

was not entertained. Similarly, the prayer to produce the

6

Page 7 documents as sought in paragraph 5(c) was not entertained.

The learned Arbitrator held in paragraph 4 of her order as

follows:-

“4.…. The documents in paragraphs 5

(a) and 5 (b) relate to Sales Tax Returns filed

by the Respondents for Assessment Years

1995-1996 till 2001-2002 and Sales Tax

Assessment Orders passed in respect of the

Respondents for this period including any

Appellate Orders. One of the claims made by

the Claimants in these proceedings against

the Respondents related to the benefit of any

sales tax set-off granted to the Respondents

in connection with the goods in question

which, according to the Claimants, should

accrue to their benefit. Therefore, Sales Tax

Assessment Orders relating to the period in

dispute passed in respect of the Respondents

are relevant for the purpose of determination

of this aspect of the dispute. Mr. Savant,

learned counsel for the Respondents has

contended that these Sales Tax Assessments

are not relevant because in any case, the

Claimants have quantified the set-off which

they are claiming, and hence, it is not

necessary to look at Sales Tax Assessments

to ascertain the quantum of set-off.

However, the quantification is done by the

Claimants on the theoretical basis that full

set-off must have been granted to the

Respondents and hence, 75% of the value of

the set-off until May 2000 and the full value

of such set-off thereafter should be

considered as having accrued for the benefit

of the Claimants. A hypothetical calculation

on such basis should not be resorted to when

actual Sales Tax Assessments are available

7

Page 8 which show the quantum of set-off allowed.

This is in the interest of both the parties.

Hence, the argument of Mr. Savant cannot be

accepted.”

9. The appellants were dissatisfied with the order

passed. In their subsequent correspondence they made

certain allegations against the learned Arbitrator, who

therefore, resigned from the said proceeding. The parties

therefore, appointed an Arbitral Tribunal consisting of three

Judges, Hon’ble Mr. Justice M. Jagannadha Rao (Presiding

Arbitrator) and Hon’ble Mr. Justice S.N. Variava (both former

Judges of the Supreme Court of India), and Hon’ble Mr. Justice

M.S. Rane (Former Judge of Bombay High Court). On

reconstitution of the Arbitral Tribunal the respondent No.1

pointed out that the order passed by the earlier Arbitrator

dated 27.3.2007 had not been complied with. The Tribunal,

therefore, called upon the appellant to state their position on

an affidavit. Thereupon the Chairman of the appellant filed

an affidavit before the Tribunal on 16.9.2011 stating that the

appellant would not produce the sales tax assessment

orders. In paragraph 3 of his affidavit he specifically stated

as follows:-

8

Page 9 “3.I humbly and most respectfully

submit before this Hon’ble Tribunal that,

Sales Tax Returns are the documents which

are highly confidential and hence the same

cannot be subject matter to be produced

before this Hon’ble Tribunal especially when,

sales tax set off is already quantified by the

Claimants and the same is forming a part of

their claim in the present arbitration

proceedings. I say that, it is not necessary to

inspect the said sales tax assessment orders

in order to ascertain the quantum of set off. I

say that, the Claimants’ demand of sales tax

set off to an extent of 75% and somewhere

also 100% is completely vague and arbitrary

and that the same is completely de hors the

contents of the agreement dated 25.03.1997.

I therefore say that, disclosure of any such

sales tax assessment orders shall be

completely detrimental to the rights and

interest of the Respondent Company.”

10. In view of this affidavit of the Chairman of the

appellant, the Tribunal noted that the party in possession of

the concerned documents was refusing to produce them,

even though it had been directed to do so. The Tribunal vide

its order dated 16.9.2011, held that the earlier order dated

27.3.2007 passed by the previous arbitrator could not be

reviewed, nor did the Tribunal have any jurisdiction to do so.

The Tribunal, therefore, permitted the respondent No.1 to

apply to the court under Section 27 of the Act of 1996, and to

seek production of the sales tax assessment order for the

9

Page 10 period 1995-1996 to 2001-2002, including any appellate

orders in support thereof. The Tribunal observed as follows:-

“7.……One would have expected the

Respondent to obey the directions of this

Tribunal and produce the above said

documents. However, in as much as they

have not been produced for more than four

years and now there is categorical statement

by the Chairman of the Respondent Company

that they will not produce these documents,

the Tribunal is compelled to exercise the

powers under Section 27 of the Act and grant

permission to the Claimant to apply to the

Court for production of the documents from

the Respondent and/or the Sales Tax

Authorities……”

11. Pursuant to the said permission granted by the

Tribunal, the respondent No.1 filed the Arbitration Petition

before the Single Judge of Bombay High Court invoking the

powers of the Court under Section 27 of the Act of 1996, to

seek a direction to the appellants to produce the earlier

mentioned assessment orders and appellate orders. The

Assistant Commissioner of Sales Tax, Pune was joined as

respondent No. 2, and a direction to produce those

documents from his records was as well sought. The

appellant herein, opposed the said Arbitration Petition. Now

10

Page 11 for the first time, in paragraphs 5 and 6 of the reply the

appellants stated as follows:-

“5. The Petitioner’s demand pertains to

records for the period 1995-1996 to 2001-02.

I say and submit that these are very old

records. The same are not available with the

Respondent No. 1. I say and submit that

Respondent No. 1 is not able to trace these

old records. I say that in fact when I made

my Affidavit dated 16

th

September, 2011, I

had in fact not searched the Company’s

records to ascertain whether the sales tax

orders were in fact available with it. I say

that accordingly I had made the said Affidavit

dated 16

th

September, 2011 opposing the

disclosure on the grounds stated therein. I

say that during the pendency of the present

petition, I have checked in order to ascertain

whether these records were in fact available

with the Company and have discovered that

they cannot be traced.”

6. Without prejudice to the aforesaid, I

further say that the information that is being

requested for by the petitioner is confidential

and accordingly the same ought not be

disclosed.”

12. The learned Single Judge thereupon heard the

parties. It was submitted on behalf of the appellant before

the Learned Single Judge, that the provisions of Section 27 of

the Act of 1996 were analogous to Section 43 of the

Arbitration Act, 1940. A judgment of the Delhi High Court in

the case of Union of India v. Bhatia Tanning Industries

11

Page 12 reported in AIR 1986 Delhi 195, on the said Section 43 was

relied upon to submit that the said section applies only to

calling witnesses, and not for giving any direction to the

parties. It was further submitted that at the highest, an

adverse inference may be drawn against the appellant under

Order 21, Rule 11 of Code of Civil Procedure (hereinafter

referred as CPC). Reliance was also placed on the provision

of Section 71 of Maharashtra Value Added Tax Act, 2002

(hereinafter referred as the Maharashtra Act) which is pari

materia with Section 64 of the Bombay Sales Tax Act, 1959,

and it was contended that the assessment orders were

confidential, and could not be directed to be produced. The

Assistant Commissioner of Sales Tax who was respondent

No.2 to the Writ Petition (and who is respondent No. 2 to this

appeal also), submitted that the old record of the relevant

period was not available with the Sales Tax Department, and

was already destroyed. In any case it was submitted that in

view of the above referred Section 71, such a direction could

not be issued.

12

Page 13 13. The learned Judge repelled all these arguments.

He held that the appellant was misreading the judgment of

Delhi High Court, and that it could not be anybody’s case that

a party in a proceeding can not be examined as a witness.

With respect to Section 71 of the Maharashtra Act, the

learned Judge held that it barred only the production of

statements and returns, and it was not applicable to the

assessment orders. The learned Judge also noted that in the

earlier affidavit filed before the Tribunal, the appellant had

not taken any such plea that the assessment orders were not

available, but within ten months thereafter in another

affidavit before the High Court it was being contended that

the said documents were not traceable. The learned Judge

therefore, allowed the said petition invoking Section 27 of the

Act of 1996, and directed the appellant herein to produce the

documents sought for. Being aggrieved by this judgment and

order the present SLP has been filed.

14. We have heard Mr. Ravindra Srivastava, learned

senior counsel in support of this appeal, and Mr. Chander

Uday Singh, learned senior counsel for the respondent no. 1.

13

Page 14 Respondent no. 2 is a proforma respondent. The challenge in

this appeal is principally on two grounds. Firstly, that the

type of order which was sought under Section 27 of the Act of

1996, against the appellant was not within the competence of

the court, and at the highest the Arbitral Tribunal should

have drawn an adverse inference against the appellant under

Order 11 and Rule 21 of CPC for non-production of the

documents, the production of which was sought by the

respondent no.1. The second challenge was that in any case,

the documents which were sought were confidential

documents, and in view of the provision contained in Section

71 of the Maharashtra Value Added Tax 2002, and the order

compelling the appellant to produce such documents could

not have been passed.

15. As far as the first ground of challenge is

concerned, as pointed out earlier, reliance was placed by

the respondent no. 1 on the judgment of a Division Bench of

Delhi High Court in Bhatia Tanning Industries (supra).

Now, what had happened in this matter was that the

respondent/industries were to supply certain material to the

14

Page 15 appellant, and since the respondent had committed default

in making the supply, the appellant had raised a claim on

account of risk purchase which was referred to arbitration.

The arbitrator sent notices to the address of the

respondents on record twice, and on both occasions the

registered notices were returned to the arbitrator stating

that the addressee was not available. It was in these

circumstances that the arbitrator ordered that there shall be

a publication of the notice in a newspaper. That having

being done, nobody appeared for the respondent thereafter

also, and the arbitrator made an ex-parte award. After the

award was filed in court, and notice was sent to the

respondent, an objection was raised that the arbitrator had

no power to order service by means of publication in the

newspaper. The learned Single Judge who heard the matter,

set aside the award on the ground that the arbitrator should

have gone to the court under Section 43 of the Arbitration

Act, 1940 (Act of 1940 for short), and obtained an order

from the Court for service by publication which had not

been done.

15

Page 16 16. This order was challenged in appeal, and a

Division Bench of the High Court allowed the said appeal.

The Division Bench held that the there are two separate

sections in the Act of 1940. One was Section 42 which

provided service of notice by a party or arbitrator, and the

other was Section 43. Section 43 of the Act of 1940 reads

as follows:-

“43. Power of Court to issue

processes for appearance before

arbitrator – (1) The Court shall issue the

same processes to the parties and witnesses

whom the arbitrator or umpire desires to

examine as the Court may issue in suits tried

before it.

(2)Person failing to attend in

accordance with such process, or making any

other default, or refusing to give their

evidence, or guilty of any contempt to the

arbitrator or umpire during the investigation

of the reference, shall be subject to the like

disadvantages, penalties and punishments by

order of the Court on the representation of

the arbitrator or umpire as they would incur

for the like offences in suits tried before the

Court

(3)In this section the expression

“processes” includes summonses and

commissions for the examination of

witnesses and summonses to produce

documents.”

16

Page 17 The Division Bench in paragraph 9 of its judgment noted

that Section 42 provides for the service of a notice by the

arbitrator on a party before he proceeds to hear the case.

On the other hand in paragraph 11, the court held that

Section 43 is confined to cases where a person, whether a

party or a third person, is required to appear as a witness

before the arbitrator. Such witnesses whom the arbitrator or

umpire desires to examine may be summoned

through court.

17. We, therefore, fail to see as to how this judgment

can advance the submission of the appellant, though it was

contended that Section 27 of the Act of 1996 is similar to

Section 43 of the Act of 1940. On the other hand, as stated

above, the Division Bench judgment of Delhi High Court

clearly lays down that Section 43 of the pre-cursor Act

permitted the arbitrator to call a third person as well as a

party as a witness, and the section was not confined only to

calling third persons as witnesses.

18. It was contended on behalf of the appellant that

whereas Section 43 used the phrase “parties and witnesses”,

17

Page 18 Section 27 did not contain such a phrase, and it speaks of

calling ‘any person’ as a witness. Section 27(2) (c) does

provide that an application under this section seeking

assistance of the court shall specify the name and address of

any person to be heard as a witness or as an expert witness.

As far as the appearance of a party in pursuance to a notice

of the arbitrator is concerned, there is a specific provision for

proceeding in the event of default of a party under Section

25. We may refer to Sections 25 and 27 in this behalf which

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

18

Page 19 proceedings and make the arbitral award on

the evidence before it.”

“27.Court assistance in taking

evidence.- (1) The arbitral tribunal, or a

party with the approval of the arbitral

tribunal, may apply to the Court for

assistance in taking evidence.

(2) The application shall specify----

(a) the names and addresses of the

parties and the arbitrators.

(b) the general nature of the claim and

the relief sought;

(c) the evidence to the obtained, in

particular,----

(i) the name and address of any person

to be heard as witness or expert witness

and a statement of the subject-matter

of the testimony required;

(ii) the description of any document to

be produced or property to be

inspected.

(3) The Court may, within its

competence and according to its rules on

taking evidence, execute the request or

ordering that the evidence be provided

directly to the arbitral tribunal.

(4) The Court may, while making or

order under sub-section (3), issue the same

processes to witnesses as it may issue in

suits tried before it.

19

Page 20 (5) Persons failing to attend in

accordance with such process, or making any

other default, or refusing to give their

evidence, or guilty of any contempt to the

arbitral tribunal during the conduct of arbitral

proceedings, shall be subject to the like

disadvantages, penalties and punishments by

order of the Court on the representation of

the arbitral tribunal as they would incur for

the like offences is suits tried before the

Court.

(6) In this section the expression

"Processes" includes summonses and

commissions for the examination of

witnesses and summonses to produce

documents.”

19. As seen from these two sections, Section 25 (c)

provides that in the event 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. This evidence can

be sought either from any third person or from a party to

the proceeding itself. The substitution of the phrase

“parties and witnesses” under Section 43 of the earlier act

by the phrase ‘any person’ cannot make any difference, or

cannot be read to whittle down the powers of the Arbitral

Tribunal to seek assistance from the court where any person

20

Page 21 who is not cooperating with the Arbitral Tribunal or where

any evidence is required from any person, be it a party to

the proceedings or others. It is an enabling provision, and it

has to be read as such. The term ‘any person’ appearing

under Section 27 (2) (c) is wide enough to cover not merely

the witnesses, but also the parties to the proceeding. It is

undoubtedly clear that if a party fails to appear before the

Arbitral Tribunal, the Tribunal can proceed ex-parte, as

provided under Section 25 (c). At the same time, it cannot

be ignored that the Tribunal is required to make an award

on the merits of the claim placed before it. For that

purpose, if any evidence becomes necessary, the Tribunal

ought to have the power to get the evidence, and it is for

this purpose only that this enabling section has been

provided.

20. The counsel for the appellant tried to take

advantage of the first sentence of paragraph 12 of the Delhi

High Court judgment, which reads as follows:-

“(12) Section 43 has no application

where the party to an arbitration agreement

21

Page 22 has to be summoned for appearance before

the arbitrator so that he may participate in

the proceedings and state his defense.”

We must however note, what the Division Bench has stated

thereafter, in the very paragraph which is to the following

effect.

“The learned judge seems to have been

misled by the expression 'parties' appearing

in section 43. The word 'parties' is used in

the sense where the party itself is desired to

be examined as a witness by the arbitrator or

umpire. The expression 'witnesses' used

along with the word 'parties' makes the

meaning of the legislature abundantly clear.

The principle of construction is that words of

the same feather flock together.”

As can be seen from the paragraph, the paragraph itself

says that Section 43 has no application for summoning a

party to appear to participate in the proceeding. It is meant

for securing the presence of third persons as well as parties

as witnesses. This position cannot be said to be altered due

to the absence of these words and use of the words ‘any

person’ in Section 27 of the Act of 1996.

21. It was contended that if the necessary documents

are not produced, at the highest an adverse inference may

22

Page 23 be drawn against the appellant. That is a power, of course

available with the Arbitral Tribunal, and if necessary the

same can be used. However, as observed by the learned

Arbitrator in her order dated 27.3.2007, the documents

sought in the present matter were required to arrive at the

decision on the claim of the respondent no. 1, since, the

quantification in support of the claim had been done by the

respondent no. 1 on a theoretical basis. A hypothetical

calculation should not be resorted to when actual Sales Tax

Assessments are available, which would show as to whether

the quantum of set-off allowed and claimed was in fact

justified.

22. In the circumstances, there is no substance in the

first objection viz. an order passed by the earlier Arbitrator

dated 27.3.2007, and the subsequent enabling order passed

by the Arbitral Tribunal dated 16.9.2011 permitting the

respondent to apply under Section 27 could not have been

passed.

23. The second objection was that the assessment

orders were confidential documents, and Section 71 of the

23

Page 24 Maharashtra Value Added Tax, 2002 and its pre-cursor

Section 64 of the Bombay Sales Tax Act, did not permit

production of these documents, and a direction as sought

could not have been granted. Since, these two sections are

invoked, the relevant part of both the sections are quoted

below.

“Section 71 (1) – All particulars

contained in any statement made, return

furnished or accounts or documents

produced in accordance with this Act, or in

any record of evidence given in the course of

any proceedings under this Act (other than

proceeding before a Criminal Court) or in any

record of any assessment proceeding, or any

proceeding relating to the recovery of a

demand, prepared for the purposes of this

Act shall, save as provided in sub-section (3),

be treated as confidential; and

notwithstanding anything contained in the

Indian Evidence Act, 1872 (1 of 1872), no

court shall save as aforesaid, be entitled to

require any servant of the Government to

produce before it any such statement, return,

account, document or record or any part

thereof, or to given evidence before it in

respect thereof.”

“Section 64 (1) – All particulars

contained in any statement made, return

furnished or accounts or documents

produced in accordance with this Act, or in

any record of evidence given in the course of

any proceedings under this Act (other than

24

Page 25 proceeding before a Criminal Court) or in any

record of any assessment proceeding, or any

proceeding relating to the recovery of a

demand, prepared for the purposes of this

Act shall, save as provided in sub-section (3),

be treated as confidential; and

notwithstanding anything contained in the

Indian Evidence Act, 1872 (1 of 1872), no

court shall save as aforesaid, be entitled to

require any servant of the Government to

produce before it any such statement, return,

account, document or record or any part

thereof, or to given evidence before it in

respect thereof.”

24. If we look at the words used in these two sections,

they very clearly state that particulars contained in any

return or statement made by a party, or document

produced along therewith are confidential, and no court

shall pass any order requiring the Government or a

Government servant to produce any such statement,

document or return. It is a settled principle of law that the

words used in a statute are to be read as they are used, to

the extent possible, to ascertain the meaning thereof. Both

these provisions contained a bar only against the

Government officers from producing the documents

mentioned therein. There is no bar therein against a party

to produce any such document. In Tulsiram Sanganaria

25

Page 26 and Another v. Srimati Anni Rai and Ors. reported in

1971 (1) SCC 284, a bench of three Judges of this Court

interpreted an identical provision in Section 54(1) of the

Income Tax Act, 1922, and held that the said provision

created a bar on the production of the documents

mentioned therein by the officials and other servants of the

Income Tax Department, and made it obligatory on them to

treat as confidential the records and documents mentioned

therein, but the assessee or his representative-in-interest

could produce assessment orders as evidence, and such

evidence was admissible. Thus, if a claim is to be decided

on the basis of an order of assessment, the claimant as well

cannot be denied the right to seek a direction to the party

concerned to produce the assessment order. It is this very

prayer which has been allowed by the earlier order dated

27.3.2007 passed by the then Arbitrator, and also by the

subsequent order dated 16.9.2011 passed by the Arbitral

Tribunal, and in our view rightly so. There is no substance

in the second objection as well.

26

Page 27 25. There is one more aspect which we must note,

i.e., when the first respondent made an application for

production of the assessment orders, the defence taken by

the appellant in their affidavit dated 16.9.2011 was that

those documents were confidential documents, and could

not be directed to be produced. It was not stated at that

time that the said documents were not available. It is ten

months thereafter, that when the second affidavit was filed

in the High Court, that the respondent for the first time

contended that the said documents were not available. This

was clearly an after thought, and this attitude of the

Respondent in a way justified the earlier order permitting an

application under Section 27 passed by the Arbitral Tribunal.

The Assistant Commissioner of Sales Tax of the concerned

area was also joined as respondent so that he could be

directed to produce the required documents. However, he

reported that those documents were old records, and were

destroyed. The learned Single Judge did not pass any order

against the respondent No.2 to produce the documents, as

sought. However, the learned Single Judge rightly allowed

27

Page 28 the petition as against the appellant in terms of prayer

clause ‘A’, directing the appellant to produce the documents

which were sought by the respondent no. 1.

26. In the circumstances, there is no merit in the

appeal. The appeal is, therefore, dismissed.

…………..……………………..J.

[ A.K. Patnaik]

……………………………..J.

[ H.L. Gokhale ]

New Delhi

Dated : September 23, 2013

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