* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of Reserve: April 24, 2009
Date of Order: May 04, 2009
+ FAO 37-38/2006
% 04.05.2009
Surat Singh Virk & Anr. ...Appellant
Through : Mr.Navin Chawla and Mr. Sidhartha Sampath, Advocates
Versus
Fit Jee Franchise Networks Ltd. ...Respondent
Through: Mr. Anil K. Khaware, Advocate
JUSTICE SHIV NARAYAN DHINGRA
1. Whether reporters of local papers may be allowed to see the judgment?
2. To be referred to the reporter or not?
3. Whether judgment should be reported in Digest?
JUDGMENT
1. This appeal has been preferred by the appellants against the orders of
learned Arbitrator dated 19th December 2005 and 31st December 2005. By
first order, the learned Arbitrator directed the appellants to submit a host of
documents in support of the claim of claimant i.e. respondent herein viz i.e.
details of data notes, details of students, copies of communications with
franchise, details of reply received, copies of letters issued to students, proof
of closure of Fit Jee etc etc. The list of documents sought by Arbitrator runs
into 4 pages (foolscap) and by the second order, he dismissed the objections
raised by the appellants under Section 16 of the Arbitration & Conciliation
Act, 1996 stating that the objections were not tenable. The Arbitrator in this
case is the Chartered Accountant of the Claimant company.
2. It is very interesting to note that the reference was made to the
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learned Arbitrator on 22nd August 2004 by the respondent. However, the
Arbitrator did not ask the respondent to file its claim after entering the
reference nor the claim was filed by the respondent suo motto. The learned
Arbitrator and the respondent kept quite. After about one year, on 17th
October 2005, the respondent filed an application under Section 17 and 26 of
the Arbitration & Conciliation Act, 1996 asking the Arbitrator to appoint a
Local Commissioner to visit the premises of appellants to unreveal the truth
and to accord police protection to the Local Commissioner. The Claimant also
made a prayer for appointment of a Chartered Accountant from the reputed
agency in order to assist the Local Commissioner. A prayer was also made to
appoint administrator in terms of the franchise agreement and allow the
applicant to conduct class of students and to direct the respondent to deposit
the security money of Rs.1.5 crores and not to misuse the particulars of Fit
Jee.
3. It is unknown to law that without filing the main claim, an application
for interim relief is made by the party. An exception has been carved out in
case of an emergent situation under Section 9 of the Arbitration &
Conciliation Act only, where a party intends to invoke the arbitration
proceedings but due to an urgent scenario or situation has to seek relief of an
urgent nature which could not wait the appointment of an Arbitrator. But once
the Arbitrator is appointed, a reference is made, there is no reason for a
claimant not to file the claim before the Arbitrator and to file only an
application for interim relief. Since the claimant herein did not file claim
before the Arbitrator the Arbitrator could not have come to know what was
the dispute raised. The Arbitrator without knowing what was the dispute
raised entertained the application and passed an order for production of
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about more than 200 documents.
4. An Arbitrator is not an inquiry officer who is conducting an inquiry in
respect of allegations made by a party or is to investigate charges leveled by
a party. The Arbitrator is an adjudicating authority and he has to conduct
proceedings following principles of natural justice, by asking the parties to file
claim and response to the claim and the evidence which they have in support
of claims and counter claims and adjudicate the matter. The parties can seek
help of the Arbitrator or Court for summoning the witnesses and can also take
necessary steps to bring out the truth. But the claimant or the respondent
cannot ask the Arbitrator to pass interim orders in respect of claim before the
claim being filed, for finding out truth and documents. This would be putting
the cart before the horse. I consider that the order of the learned Arbitrator
dated 19th December 2005 whereby the learned Arbitrator asked the
appellants to place on record several documents, is without jurisdiction. The
Arbitrator has jurisdiction to entertain the interim applications concerning
claim after the claim is filed before him.
5. The other order passed by the Arbitrator is in respect of objections
against his competence raised by the Appellants. The Arbitrator in this case is
the one named, in the agreement. However, it is not in dispute that he is the
Chartered Accountant of the Claimant. The appellants/ respondent alleged
that the money from the bank account was withdrawn by the Claimant on the
basis of certain back dated invoices procured from the Chartered Accountant.
It is also alleged that he was biased and having financial interest in the
Claimant Company. The Chartered Accountant dismissed these objections of
the appellants observing inter alia that he was holding a post of statutory
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auditor of the Claimant company and there was no reason that he shall not
act fairly. Regarding debit notes he observed same were not vetted/ signed
by the Arbitrator in person but they were vetted and signed on behalf of the
firm of Arbitrator (the Chartered Accountant firm) by some other person,
therefore, it cannot be said that he was a witness to the correctness of the
debit notes.
6. The mandate of the Arbitrator can be terminated by the Court under
Section 14 if the conditions mentioned therein are satisfied. If the appellant’s
plea before the Arbitrator of his being biased is dismissed, the appellant
would be entitled to challenge the award in terms of Section 13(5) read with
Section 34 of the Act. I consider that it would not be appropriate for this Court
to arrive at a conclusion at this juncture that the Arbitrator was biased, since
the Arbitrator has not even started with the proceedings on the claim. This
part of the order passed by the Arbitrator is, therefore, not disturbed.
However, the appellant will have the liberty to assail the award on this ground
if the appellant is able to prove bias on the part of the Arbitrator.
7. With above order, this appeal stands disposed of.
May 04 , 2009 SHIV NARAYAN DHINGRA J. rd
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