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CASE NO.:

Appeal (civil) 2809 of 1979

PETITIONER:

Sohan Lal Gupta (Dead) Thr. L.Rs. & Ors.

RESPONDENT:

Vs.

Smt. Asha Devi Gupta & Ors.

DATE OF JUDGMENT: 01/09/2003

BENCH:

CJI & S.B. Sinha.

JUDGMENT:

J U D G M E N T

W I T H

CIVIL APPEAL NO.2810 OF 1979 AND

CONTEMPT PETITION (C) 484 OF 1998

S.B. SINHA, J :

What constitutes a reasonable notice by an arbitrator is the

question involved in these appeals which arise out of a judgment and

decree dated 1.3.1979 passed by a Division Bench of the Calcutta High

Court affirming an order passed by a learned Single Judge setting aside

an arbitration award.

The basic fact of the matter is not in dispute. Two groups of

persons - one Guptas and another Sharmas - held several properties

including three firms, six limited companies, one trust and other

movable and immovable assets. Both the groups had 50% shares each.

The family members of the Guptas and Sharmas Groups were interested in

many or in some of the businesses and the firms . The family

tree of the Gupta Group is as under :

GENEOLOGICAL TABLE OF GUPTA GROUP

I II III

IV

Dulichand (Deceased) Sita Ram (Died on 1.12.75) Balaprasad Shri

lal (deceased)

= Basanti =Ana

ri

-------------------------- ----------------------------- ------------

- ---------------------

| | |

|

| | |

|

(1) | (2) (3) |

| (1) (2) (3)

---------------------------------------------- | |

-------------------------------------------

| | | | | |

| |

Motilal Brijmohan Sohanlal | | Kailash

Vinod Arun

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=Kapuri =Padma Gayatri | | =Pushpa

=Manjula

| | |

As|hok | |

| |

| |

| |

| |

-----------------------------------------------------------------------------

|

| | | | |

|

Rambabu Hari Pd. Prem Om Prakash Kamal |

=Radha =Shankuntala =Asha |

|

|

|

-------- -----------------------------------

-------------

| |

|

Niranjan Banwari

Ghanshyam

=Kamla =Vidya =Renu

Disputes and differences having arisen between the two groups as

also between the family members of the same group, an agreement was

entered into on or about 10.4.1975 for referring some of the disputes

to the arbitration of one Mr. B.J. Bhide. The material parts of said

agreement are as under :

"1. The parties hereto hereby agree that all disputes

differences between the parties or their

representatives concerning or relating to or touching

the said several firms, companies, assets moveable

or immoveable or any act done by the parties or in

regard to their respective rights, duties and

obligations of the parties hereto or their

enforcement which exist between the parties and also

of other disputes and differences that may hereafter

arise between the parties and be laid by the parties

or either of them before he shall make his award are

hereby referred to the Award and final determination

of Shri P.J. Bhide alias Purshottam Jagannath Bide,

son of Shri J.V. Bhide, residing at No.P-390 Keytolla

Lane, Calcutta-29.

2. That the said Arbitrator shall have powers to have

the accounts of the said firms and/or companies

and/or assets checked, inspected and/or audited by

the Chartered accountant or by any other person or

persons.

3. That the said Arbitrator shall have powers to

formulate and lay down his own procedure for the

conduct of arbitration proceedings according to law.

4. That the said Arbitrator shall have power to proceed

ex parte in case the other party fails after

reasonable notice to attend before him.

5. That the said Arbitrator shall have powers to ask for

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any paper, documents and/or information from any of

the parties hereto and to draw adverse inference for

non-production thereof.

6. That the said Arbitrator shall be free to make use of

information, documents, papers received from any

source whatsoever if he considers them relevant to

the matter and to this regard his decision will be

final.

7. That the Arbitrator shall have powers to apply and

employ his personal knowledge in the matter under

reference while giving his award.

8. That the Arbitrator shall have power to award cost

and to ask for periodical deposits towards his own

fees and charges, audit charges and/or other charges

from the parties hereto in the manner he may think

fit and proper.

9. That the said Arbitrator shall not be required to

give any reasoning for his determination and award.

10. That the said Arbitrator shall have powers to give

directions for the running of the business of the

said firm and/or companies including the direction

for operation of Banking Account during the pendency

of arbitration proceedings.

11. That the said Arbitrator shall have full power and

control over all the assets, properties, moveable or

immoveable of the said firms and/or companies and

shall also have the powers to dispose of any of them

at his discretion, for the good and benefit of the

said firm.

12. *** *** ***

13. That the arbitrator shall have in his absolute

discretion power to award the dissolution of the

various partnership firms and to name the date from

which such dissolution shall take effect. He may

also provide for the mode of realisation of the

partnership assets and discharging the liabilities

and discharging either by award that the said be done

by one of the partners or by the Receiver to be

named by the Arbitrator. He may also award which of

either of the groups shall be entitled to continue,

carrying on business and upon what terms as to the

price, mode, payment, indemnity and otherwise. AND

he may direct the execution of the each of the

parties hereto of all notices, deeds and documents

whatsoever necessary for giving full effect to his

Award.

14. Each of the groups within fifteen days of this

agreement shall deliver to either of them and to the

said Arbitrator a full and particular statement of

claim in writing of all his claims and all of the

items thereof giving credits for all payments,

counter claims and deductions and leaving a margin of

at least 2 and ½ inches of each page and shall at the

same time deliver all contracts, documents and papers

thereof that may be necessary to explain the said

Account

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16. The same course shall be adopted and concerning in

the set off or the counter claim adduced by either of

the parties against the demands of either of them.

17. The Arbitrator shall be at liberty to employ an

Accountant to whose examination he may submit such

account connected with the matters hereby referred

as she shall think fit. AND the said Arbitrator may

act upon any statement of accounts given by such

accountant without being obliged to verify the same.

18. The Arbitrator may have a legal assessor to sit with

him and may act under the advice of such assessor.

19. The Arbitrator shall be at liberty at any stage of

the proceedings to state a case for the opinion of

counsel or Court upon any question arising in the

course of the reference and may act upon the opinion

so taken.

20. The Arbitrator shall have power to cause such maps

plans and measurements valuations to be made and

taken as he shall deem necessary or expedient and

the costs and expenses thereof shall be in the

discretion of the arbitrator and he may accept such

valuation as correct and act in terms thereof.

*** *** ***

38. Ten days' time shall be considered as reasonable time

for the purpose of doing or complying with any

direction of the Arbitrator."

The jurisdiction of the Arbitrator was, thus, of wide import.

It is not in dispute that said Shri B.J. Bhide was a Chartered

Accountant and a Tax Consultant. He had been dealing with accounts and

other matters for and on behalf of the firms and the companies

belonging to the parties. The parties indisputably had great faith and

confidence in him.

During the pendency of the arbitration proceedings, certain

disputes arose as regards management, wherefor also intervention of the

arbitrator was sought for. Several correspondences passed between the

arbitrator and the parties with which we are not concerned at this

juncture.

The arbitrator gave two awards, which were as regards (1)

division of 50% cumulatively and (2) the said division among the family

members of the Guptas.

Seven members of the Guptas Groups filed objections to the said

awards including one Ghanshyamdas Gupta. The said Ghanshyamdas Gupta

at the relevant point of time was a resident of Madras. The primary

objections raised by the objectors i.e. as regard validity of the

awards purported to be (1) violative of Section 108 of the Companies

Act, (2) awards made in favour of different persons including friends,

relations and other individuals who were not the parties to the

agreement; and (3) that the arbitrator erred in treating all the

disputes in a composite award, were rejected.

The learned Single Judge although did not set aside the said

award on the ground of misconduct on the part of the arbitrator but set

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aside the said award, inter alia, on the ground of procedural

irregularity holding that no reasonable notice was given to the said

Ghanshyamdas Gupta. Before the learned Single Judge, a further

contention was raised that the arbitrator committed illegality insofar

as he sought for a letter from the parties in anticipation that they

would accept his award. The learned Single Judge in this behalf was

of the opinion :

"...In the background of this case, this conduct of

the arbitrator, seeking for such a letter from the

parties, in my opinion, makes the award vulnerable."

The appellants herein carried the matter in appeal before a

Division Bench against the said judgment. The Division Bench of the

High Court upheld the findings of the learned Single Judge that

Ghanshyamdas Gupta had not been given a reasonable notice amounting to

violation of principles of natural justice. The Division Bench also

upheld the second finding of the learned Single Judge holding that the

comments of the learned Single Judge were clearly justified.

On the said findings the appeal was dismissed. Cross objections

filed by the respondent were also dismissed. Aggrieved thereby and

dissatisfied therewith, the appellants are before us.

Before proceeding to consider the rival contentions of counsel

for the parties, we may notice that Ghanshyamdas Gupta filed an

Interlocutory Application in the year 1998 withdrawing his objections.

However, he engaged another counsel without obtaining a certificate of

no objection from his Advocate on Record for withdrawing the same. We

may further place on record that keeping in view the fact that the

parties are relations and have a large number of properties, this Court

at one stage opined that the disputes and differences amongst the

parties should be amicably settled and for the said purpose the matter

was referred to Hon'ble Mr. Justice M.K. Mukherjee, a retired Judge of

this Court for conciliation. The learned Judge, however, failed in his

efforts in this behalf and submitted a report to that effect before

this Court in 2001.

Mr. Bhasker P. Gupta, learned senior counsel appearing on behalf

of the appellants, has raised a short question in support of these

appeals. The learned counsel would submit that the findings of the

learned Single Judge as also the Division Bench of the High Court that

no reasonable notice was given to Ghanshyamdas Gupta by the arbitrator

in terms of the arbitration agreement suffers from manifest error

insofar as the entire fact situation obtaining in this case had not

been taken into consideration. The learned counsel would submit that

the arbitrator was required to submit his award by 30.6.1976. He had

been holding arbitration proceedings wherein Ghanshyamdas Gupta had

participated from time to time and all the parties having regard to

the enormity of the disputes were directed to remain present at Kolkata

on 8.6.1976 so that the they may be heard and award may be made on or

before 30.6.1976, wherefor a notice was issued on 24.5.1976 to all the

parties which is in the following terms :

"P.J. Bhide & Co. 7, Waterloo Street,

Chartered Accountants Calcutta-700 069

24.5.76

Shri Omprakash Gupta,

Calcutta.

Dear Sir,

Re: Finalization of Arbitration

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Proceedings.

It has been desired by all that the arbitration

proceedings should be completed at the earliest, so

that the necessary Award can be given by the middle

of next month.

In this connection, you are directed to furnish

to me the following, at the earliest :-

1. Please submit to me a list of furniture,

fixtures, fittings and other household

appliances in possession of yourself and/or

other persons whom you represent belonging to

the firm and/or Limited Companies in which you

are or the others are partner and/or director.

Also state the year in which the same were

purchased and the present market value thereof.

Similar details may please be furnished in

respect of car scooter or cycle, the year of

purchase, the make, the present condition

thereof and the present market value thereof.

2. Kindly furnish to me full description of the

buildings and land under the occupation of a

partner and/or his relatives in your Group and

owned by the Firm and/or company as mentioned

in the Arbitration Agreement dated 28th June,

1975. Kindly also state what in your opinion

is the market value thereof with supporting

evidence, if any. Also state what is the

Municipal rateable value of the said buildings

and land.

3. As regards plants, factories and branches owned

by the said firms and limited companies, kindly

state what in your opinion is the net worth of

each plant factory and branch, i.e. value of

all the assets at the factories which may arise

in future in respect of past dealings.

4. Regarding drawings made by the partners or

their relatives, of your Group from partnership

firms and/or Limited Companies, as mentioned in

the Arbitration Agreement referred to above,

kindly furnish details of datewise of the

drawings made after 1st January 1976 to-date,

indicating the nature and purpose of such

withdrawal. Similar details may kindly be

furnished in respect of credits therein.

5. Drafts of resignation letters from the

Directorship of Ltd. Companies and/or

partnership firms and/or from the office of

Trusteeship are enclosed herewith. Kindly

complete therein the name and address of the

Company and/or the name and address of the

partnership firm in which you or otherwise whom

you represent are Director and/or Partner

and/or a Trustee and return to me the said

resignation letters duly signed by you and/or

the others as the case may be, leaving the date

blank. If required, you can have copies made

of these resignation letters to cover all the

persons represented by you in your Group.

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Please ensure that these resignation letters

reach me by 5th June, 1976. Arising out of

this, I am arranging to send to you in a day or

two Transfer Deeds which should be signed by

you or the other persons whom you represent, at

the place marked with an "X" in pencil and

witnessed by a known person and returned to me

with the relevant shares scrip of the concerned

Limited Company.

The next meeting in connection with the

finalisation of the arbitration proceedings

will be held in Calcutta on 8th June, 1976. I

have a mind to have continuous sittings upto

12th June, 1975 and declare the Award

immediately thereafter.

You are therefore requested to make

yourself available to Calcutta at the proposed

meetings on and from the 8th June 1976 without

fail. Kindly bring with you all the books of

accounts upto-date part pertaining to the

branches and/or companies under your control.

I trust the above programme will suit you

and you will extend your whole-hearted co-

operation to expedite finalisation of the

arbitration proceedings.

Thanking you,

Yours faithfully,

Sd/- P.J. Bhide & Co.,

Arbitrator.

Enclo: Draft of resignation

Letters for completion

and signatures and return

by 5.6.1976."

When Shri Ghanshyamdas Gupta did not reach Kolkata pursuant to

the said circular letter, a telegram was sent to him on 12.6.1976

asking him to attend the meeting on 15..6.1976. The said telegram

reads thus :

"C.No.88 INDIAN POSTS AND

TELEGRAPHS DEPARTMENT.

TELEGRAM

88/13

GHANSHYAMDAS HARANATHRAIKA CARE

SANSARMAYA MADRAS

X 1905 547 CALCUTTA 12 45

REMYLET 24TH MAY STOP YOU HAVE NEITHER

REACHED HERE NOR REPLIED MY LETTER STOP RETURN

IMMDTLY ENCLOSURE TO MY LETTER DULY SIGNED STOP

MEETING FIXED 15TH AFTERNOON 7 WATERLOO ST. PROCEEDING

CONTINUE EX PARTE IF YOU DON'T A. DON'T ATTEND.

ARBITRATOR BHIDE

131 547 SANSARMAYA 24 157"

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The learned counsel drew our attention to the minutes of the

meetings maintained in the arbitration proceedings and submitted that

even if the minutes produced before the High Court by the respondents

are taken to be correct; from a perusal thereof it would appear that

Ghanshyamdas Gupta appeared before the arbitrator on 27.11.1975 at 11

a.m., 27.1.1976 and 28.1.1976 both in the first session as also in

the second session and on 29.1.1976 at 1.30 p.m. and 4 p.m. It was

pointed out that apart from Ghanshyamdas Gupta, objections were filed

by Asha Devi w/o Prem Kumar Gupta, Om Prakash Gupta, Kamal Kumar Gupta,

Prem Kumar Gupta, Ram Babu Gupta and Smt. Radha Rani. Our attention

has been drawn to the fact that as Om Prakash Gupta, Ram Babu Gupta and

Kamal Kumar Gupta were present in the meeting dating 15.6.1976 on

various dates in the arbitration proceedings and, thus, the interest of

all the objectors had sufficiently been represented before the

arbitrator.

The learned counsel would contend that even if the decision of

the Calcutta High Court in [D.L.Miller and Co., Ltd. vs. Daluram

Goganmull - AIR 1956 Calcutta 361] is taken to its logical conclusion,

a reasonable notice in the facts and circumstances of this case should

be inferred. It was further submitted that Rambabu Gupta, Kamal Kumar

Gupta and Brij Mohan Gupta attended the meeting also on 19.6.1976.

Mr. Gupta would urge that the purported letter of the Arbitrator

to the parties asking them to send a letter to him stating that they

would not challenge the award would not vitiate the arbitration

proceedings.

Mr. Parijat Sinha, learned counsel appearing on behalf of

Respondent Nos. 22 to 32, Mr. Vijay Kumar Sharma, appearing in person

and Mr. Gourab Banerji, appearing on behalf of some members of the

Sharma Group, supported the contentions of Mr. Bhasker Gupta.

Mr. Bijan Kumar Ghosh, learned counsel appearing on behalf of the

respondents, however, drew our attention to the objections raised

before the learned Single Judge of the Calcutta High Court and

submitted that in the peculiar facts and circumstances of this case,

the Court should not only consider the same de novo but also must take

into consideration the subsequent events. According to the learned

counsel, as the cross-objections filed by the objector-respondents were

dismissed by the Division Bench without assigning any reason therefor,

this Court in the interest of justice should consider the same on its

own merits, although no appeal thereagainst or any cross-objection has

been filed by the respondents.

There cannot be any dispute with regard to the proposition of law

that the parties would be entitled to a reasonable opportunity of

putting their case. [See Montrose Cannel Foods Ltd. v. Eric Wells

(Merchants) Ltd. [(1965) 1 Lloyd's Report 597]. A reasonable

opportunity would mean that a party must be given an opportunity to

explain his arguments before the Tribunal and to adduce evidence in

support of his case. However, under the old Act, an oral hearing would

only be permitted if a party requested one, unless there was some

agreement to the contrary [See Henry Southeran Ltd. vs. Norwich Union

Life Insurance Society (1992) 31 E.G. 70].

What would constitute a reasonable opportunity of putting case

as also qualification of the right has been stated in 'Russell on

Arbitration', 22nd Edition, paragraphs 5-053 and 5-054 which are in

the following terms :

"5-053 A reasonable opportunity of putting

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case. Each party must be given a reasonable

opportunity to present his own case. This

means he must be given an opportunity to

explain his arguments to the tribunal and to

adduce evidence in support of his case.

Failure to comply with this requirement may

render the award subject to challenge under

section 68 of the Arbitration Act 1996. It is

also a ground for refusing enforcement of the

resulting award under the New York Convention.

5-054 Qualification of the right. The need to

allow a party a reasonable opportunity to

present his case can give rise to difficulties.

To what extent can the tribunal intervene

where, for example, a party's submissions or

evidence is needlessly long, repetitive,

focuses on irrelevant issues or is sought to be

made over an extended period of time? What if

a party ignores procedural deadlines imposed by

the tribunal but maintains he still has points

to put before it in support of his case?

Inevitably each situation has to be dealt with

in its own context but the following general

considerations should be taken into account."

There cannot, therefore, be any doubt that a party does not

have an unfettered right. The arbitrator can not only ask a party to

comply with procedural orders and directions including those imposing

limits as to time and content of submissions and evidence but also the

arbitrator has a right of managing the hearing. In 'Russell on

Arbitration', 22nd Edition the law is stated thus :

"5-057 Managing the hearing. Similarly, a tribunal

cannot be expected to sit through extended oral

hearings listening to long-winded submissions on

irrelevant matters. The tribunal is entitled, and

under section 33 is obliged and encouraged, to avoid

the unnecessary delay and expense that would be

caused by such an approach. The tribunal should take

a grip on the proceedings and indicate to the parties

those areas on which it particularly wishes to be

addressed and those which it does not consider

relevant to the real issues in dispute. If a party

fails to heed such guidance, the tribunal might seek

to focus the proceedings by allocating the remaining

hearing time between the parties. This the tribunal

is entitled to do, provided it will allow a

reasonable time for both parties to put forward their

argument and evidence."

For constituting a reasonable opportunity, the following

conditions are required to be observed :

1. Each party must have notice that the hearing is to take

place.

2. Each party must have a reasonable opportunity to be

present at the hearing, together with his advisers and

witnesses.

3. Each party must have the opportunity to be present

throughout the hearing

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4. Each party must have a reasonable opportunity to present

evidence and argument in support of his own case.

5. Each party must have a reasonable opportunity to test

his opponent's case by cross-examining his witnesses,

presenting rebutting evidence and addressing oral

argument.

6. The hearing must, unless the contrary is expressly

agreed, be the occasion on which the parties present the

whole of their evidence and argument.

The objectors do not say that Ghanshyamdas Gupta has an interest

adverse to or independent of them. Ghanshyamdas Gupta himself has not

stated as to whether his interests were not safeguarded by other co-

sharers who were present in the meeting.

The minutes of the meeting referred to hereinbefore clearly show

that not only he had notice of arbitration proceedings but also took

active part therein days after days. The circular letter dated

12.5.1976 was issued by the arbitrator so as to give a notice of

caution that the arbitration proceedings shall be held and continued at

Kolkata.

Can it be said having regard to the magnitude of the problem and

the number of parties involved, the extent of the properties in

dispute and the disputes not only between the two groups but also some

members of the same group that the arbitrator was not entitled to take

recourse thereto ? If the arbitrator is to manage the arbitration

proceedings, in our opinion, he would be entitled to give direction to

the parties to be present on the particular date, particular time and

particular place which would be sufficient compliance of the

requirements of law. Ghanshyamdas Gupta does not say that he did not

receive the circular letter dated 12.5.1976. He did not make out a case

that the said dates did not suit him. As despite receiving the said

circular letter from the arbitrator, he did not choose to make himself

available on 8.6.1976 at his own, the arbitrator sent him a telegram

dated 12.7.1976. The said telegram was sent ex abundanti cautela.

The arbitrator, as appears from the minutes of the meeting,

proceeded only on the documentary evidences. No party appears to have

presented oral evidence. Thus, the question of cross-examination the

witnesses appearing on behalf of the other parties did not arise.

Submissions must have been made by the parties themselves.

Ghanshyamdas Gupta does not say that he had difficulty in appearing on

15.6.1976 or any subsequent date and he had asked for adjournment.

Even otherwise, a party has no absolute right to insist on his

convenience being consulted in every respect. The matter is within the

discretion of the arbitrator and the Court will intervene only in the

event of positive abuse. [See Montrose Cannel Foods Ltd. (supra)].

If a party, after being given proper notice, chooses not to appear,

then the proceedings may properly continue in his absence. [See British

Oil and Cake Mills Ltd. vs. Horace Battin & Co. Ltd. (1922) 13 LI L

Rep. 443].

In D.L. Miller (supra) the law is stated in the following terms :

"The doctrine of Arbitrators' legal misconduct

has been so over-worked in recent years that across

the whole branch of case law on this point one finds

the blazing trial of principles of natural justice.

They are discussed and agitated in an atmosphere of

complete unreality and divorced from the facts of

each case.

Somehow the obvious point is missed in most of

such cases that when the parties agree to go to

arbitration they stipulate not so much for vague

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principles of natural justice as for concrete

principles of contractual justice according to the

contracts of the parties and their specific

stipulations. Where the contract of arbitration

itself prescribes a private procedure of its own,

then so long as such agreed private procedure is not

against the laws and the statutes of the land, then

such agreed procedure must prevail over the notions

and principles of natural justice."

The principles of natural justice, it is trite, cannot be put in

a straight jacket formula. In a given case the party should not only

be required to show that he did not have a proper notice resulting in

violation of principles of natural justice but also to show that he was

seriously prejudiced thereby. In The Chairman, Board of Mining

Examination and Chief Inspector of Mines and Another vs. Ramjee

[(1977) 2 SCC 256], this Court held :

"...Natural justice is no unruly horse, no lurking

land mine, nor a judicial cure-all. If fairness is

shown by the decision-maker to the man proceeded

against, the form, features and the fundamentals of

such essential processual propriety being conditioned

by the facts and circumstances of each situation, no

breach of natural justice can be complained of.

Unnatural expansion of natural justice, without

reference to the administrative realities and other

factors of a given case, can be exasperating. We can

neither be finical nor fanatical but should be

flexible yet firm in this jurisdiction. No man shall

be hit below the belt - that is the conscience of the

matter."

[See also Union of India and Others vs. Anand Kumar Pandey and Others -

(1994) 5 SCC 663], and R.S. Dass etc. vs. Union of India and Others

[1986 (Supp.) SCC 617].

In Anand Kumar Pandey's case (supra), this Court again reiterated

that the rules of natural justice cannot be put in a straight jacket

and applicability thereof would depend upon the facts and

circumstances relating to each particular given situation.

In M.C. Mehta vs. Union of India and Others [(1999) 6 SCC 237],

this Court held that in a case of natural justice upon admitted or

indisputable factual position, only one conclusion is possible, a writ

of certiorari may be issued.

In State of U.P.vs. Harendra Arora and Another [(2001) 6 SCC

392], this Court followed, inter alia, Managing Director, ECIL vs. B.

Karunakar [(1993) 4 SCC 727] and State Bank of Patiala vs. S.K. Sharma

[(1996) 3 SCC 364] and held that an order passed in a disciplinary

proceeding cannot ipso facto be quashed merely because a copy of the

enquiry report has not been furnished to the delinquent officer, but

he is obliged to show that by non-furnishing of such a report he has

been prejudiced, would apply even to cases where there is requirement

of furnishing a copy of enquiry report under the statutory rules.

In Aligarh Muslim University and Others vs. Mansoor Ali Khan

[(2000) 7 SCC 529], it was held :

"The principle that in addition to breach of

natural justice, prejudice must also be proved has

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been developed in several cases. In K.L. Tripathi v.

State Bank of India Sabyasachi Mukharji, J. (as he

then was) also laid down the principle that not mere

violation of natural justice but de facto prejudice

(other than non-issue of notice) had to be proved.

It was observed, quoting Wade's Administrative Law

(5th Edn., pp.472-75), as follows :

"It is not possible to lay down rigid

rules as to when the principles of natural

justice are to apply, nor as to their scope and

extent...There must also have been some real

prejudice to the complainant; there is no such

thing as a merely technical infringement of

natural justice. The requirements of natural

justice must depend on the facts and

circumstances of the case, the nature of the

inquiry, the rules under which the tribunal is

acting, the subject-matter to be dealt with,

and so forth."

Since then, this Court has consistently applied the

principle of prejudice in several cases. The above ruling

and various other rulings taking the same view have been

exhaustively referred to in State Bank of Patiala vs. S.K.

Sharma. In that case, the principle of "prejudice" has

been further elaborated. The same principle has been

reiterated again in Rajendra Singh vs. State of M.P."

In U.P. Awas Evam Vikas Parishad vs. Gyan Devi (Dead) by LRs. and

Others (1995) 2 SCC 326], the Constitution Bench observed :

"...In other words the right conferred under Section

50(2) of the L.A. Act carries with it the right to be

given adequate notice by the Collector as well as

the reference court before whom the acquisition

proceedings are pending of the date on which the

matter of determination of the amount of compensation

will be taken up. Service of such a notice, being

necessary for effectuating the right conferred on the

local authority under Section 50(2) of the L.A. Act,

can, therefore, be regarded as an integral part of

the said right and the failure to give such a notice

would result in denial of the said right unless it

can be shown that the local authority had knowledge

about the pendency of the acquisition proceedings

before the Collector or the reference court and has

not suffered any prejudice on account of failure to

give such notice."

In Graphite India Ltd. and Another vs. Durgapur Project Ltd. and

Others [1999) 7 SCC 645], it has been held that the principles of

natural justice can be waived.

In 'Administrative Law', 8th Edn., by William Wade and Christopher

Forsyth at page 491, it has been stated :

"...At the other end of the spectrum of power, public

authorities themselves are now given the benefit of

natural justice, as illustrated at the end of this

section. Basically the principle is confined by no

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frontiers.

On the other hand it must be a flexible

principle. The judges, anxious as always to preserve

some freedom of manoeuvre, emphasise that 'it is not

possible to lay down rigid rules as to when the

principles of natural justice are to apply: nor as to

their scope and extent. Everything depends on the

subject-matter'. Their application, resting as it

does upon statutory implication, must always be in

conformity with the scheme of the Act and with the

subject-matter of the case. 'In the application of

the concept of fair play there must be real

flexibility'. There must also have been some real

prejudice to the complainant: there is no such thing

as a merely technical infringement of natural

justice."

In Khaitan (India) Ltd. & Ors. vs. Union of India & Ors. [Cal LT

1999 (2) HC 478], one of us said :

"The concept of principles of natural justice has

undergone a radical change. It is not in every case,

that the High Courts would entertain a writ

application only on the ground that violation of

principles of natural justice has been alleged. The

apex court, in State Bank of Patiala & Others vs. S.

K. Sharma reported in 1996 (3) SCC 364 has clearly

held that a person complaining about the violation of

the principles of natural justice must show causation

of a prejudice against him by reason of such

violation. The apex court has held that the

principles of natural justice, may be said to have

been violated which require an intervention when no

hearing, no opportunity or no notice has been given.

Reference in this connection may also be made to

Managing Director, E.C.I.L. v. B. Karmarkar, reported

in AIR 1994 SC 1076. The question as to the effect

of non-grant of enough opportunity to the learned

counsel for the appellant by the Commission to meet

the allegations made in the supplementary affidavit

requires investigation. As to what extent the

appellant has suffered would be a question which

would fall for a decision of a High Court. Where

such a disputed question arises, in the considered

opinion of this Court, a writ application will not be

entertained only because violation of natural justice

has been alleged and more so, in a case of this

nature where such a contention can also be raised

before the Highest Court of India. A distinction has

to be borne in mind between a forum of appeal which

is presided by an Administrative Body and the apex

court as an appellate court."

The principles of natural justice, it is trite, must not be

stretched too far.

I.A. Nos. 1 and 19 in C.A. Nos. 2809-10 of 1979

Ghanshyamdas Gupta on or about 30.8.1998 filed an application

withdrawing his objections for setting aside the award; having regard

to the various developments which took place since the passing of the

award. The prayer made in the said application reads as under :

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"That the objections raised on behalf of Shri

Ghanshyam Das Gupta, the respondent No.7 herein may

be allowed to be withdrawn in respect of Awards dated

29th June, 1976 and 30th June, 1976 passed by Sole

Arbitrator Shri P.J. Bhide and the said Awards be

made the rule of the Court;"

Thus, the fact remains that unequivocally Ghanshyamdas Gupta had

withdrawn his objections. He now seeks to resile therefrom by filing

an application i.e. I.A. No.19 of 2003 wherein he has prayed for

discharge of his advocate.

Keeping in view the statements made by Ghanshyamdas Gupta in the

said interim application, we are of the opinion that at this stage, he

cannot be permitted to change his advocate, particularly in view of the

fact that he stuck to his earlier stand for several years.

In view of the aforementioned, no orders are passed on I.A. Nos.

1 and 19.

Furthermore, in this case Ghanshyamdas Gupta expressly

relinquished his right by filing an application stating that he would

withdraw his objection. Such relinquishment in a given case can also

be inferred from the conduct of the party. The defence which was

otherwise available to Ghanshyamdas Gupta would not be available to

others who took part in the proceedings. They cannot take benefit of

the plea taken by Ghanshyamdas Gupta. Each party complaining violation

of natural justice will have to prove the misconduct of the arbitrator

tribunal in denial of justice to them. The appellant must show that

he was otherwise unable to present his case which would mean that the

matters were outside his control and not because of his own failure to

take advantage of an opportunity duly accorded to him. [See Minmetals

Germany GmbH v. Ferco Steel Ltd. [(1999) 1 All ER (Comm) 315]. This

Court's decision in Renusagar Power Co. Ltd. vs. General Electric Co.

[AIR 1994 SC 860] is also a pointer to the said proposition of law.

Keeping in view the facts and circumstances of this case, we are

of the opinion that Ghanshyamdas Gupta cannot be said to have been

refused a fair opportunity of participation in the arbitration

proceedings.

So far as the other ground is concerned, which found favour of

the High Court, namely, that the arbitrator had asked the parties to

issue a letter to him that his award shall not be questioned would

render the award a nullity inasmuch the same was not acted upon and in

fact no letter was issued. The arbitrator must have done so keeping in

view the peculiar nature of the disputes and to see that all the

disputes come to an end.

OTHER INTERLOCUTORY APPLICATIONS :

Several interlocutory applications have been filed, some of which

are required to be dealt with.

I.A. No.15 in C.A. No.2809 of 1979 :

I.A. No. 15 has been filed at the instance of one of the

parties herein for staying the auction of the properties belonging to

M/s Omrao Industrial Corporation Private Limited, Kanpur and Oil

Corporation of India Private Limited, Kanpur. The auction of the

properties was stayed by this Court by an order dated 20.1.2003.

The said auction was being held at the instance of Bank of Baroda

in terms of a recovery certificate issued by the Debt Recovery

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Tribunal. The said proceeding was initiated by the Bank for enforcement

of an equitable mortgage as also of guarantee. The dispute by and

between a third party and a company has nothing to do with the question

as to whether an award made by the arbitrator should be set aside or

not. Whatever be the little connection, the same cannot be permitted

to be agitated in this appeal. The parties must take recourse to such

remedies which are available to them in law. The interim order dated

20.01.2003 is vacated.

I.A. No.17 in C.A. No.2809 of 1979 :

An application has also been filed for appointment of a receiver

by the legal heirs of Respondent Nos.12 to 15. Having regard to the

fact that as a limited question arises for our consideration in these

appeals, it may not be proper for us to pass any order on the said

application. If any necessity arises, parties can file appropriate

application for initiating appropriate proceedings before the

appropriate forum.

I.A. No.3 in C.A. No.2809 of 1979

Contempt Petition No. 484 of 1998 :

Applications have been filed for initiating proceedings for

contempt of this Court for alleged violation of this Court's orders

dated 21.9.1979, 16.8.1982 and 20.10.1982. According to the applicant,

Appellant nos.2 and 9 and Respondent Nos.1 to 4, 7, 19, 22 and 28 have

violated the said orders by surrendering the tenancy rights purported

to be in violation of order dated 16.8.1982. It is further alleged

that several other appellants and respondents have similarly violated

the interim orders passed by this Court. No order appears to have been

passed on the contempt petition. A direction was merely issued that

this matter may be considered at the time of final hearing.

Keeping in view the fact that the appeal remained pending for a

long time, it is not advisable that this Court now adjudicate upon the

factual disputes. We, thus, do not intend to pass any order on the

said applications.

We may, however, observe that an appropriate proceeding may be

initiated by the parties concerned before the executing court, if any

occasion arises therefor.

I.A. No..... in C.A. No.2809 of 1979 for substitution of L.Rs. of

Deceased Respondent No.5 :

The I.A. is allowed.

I.A. No. No....in C.A. Nos. 2809-10 of 1979 for withdrawal of V/A on

behalf of Appellant Nos. 9 and 10 :

No orders are necessary to be passed.

For the reasons aforementioned, the impugned judgment cannot be

sustained which is set aside accordingly. These appeals are allowed.

Award given by the arbitrator is made rule of the court. Any

transaction in regard to property covered by the award shall be subject

to this decision. The Executing Court would look into these matters.

However, in the facts and circumstances of the case, there shall be no

order as to costs.