ORDER
Savant, J.
36. We may now turn to the grounds of attack against the Award. The Award is assailed on two grounds, namely, the misconduct of the Arbitrators and the Umpire and the errors of law apparent on the face of the record. In support of the first ground vis. the misconduct, the Petitioners’ contentions are fourfold. Firstly, it is contended that the Umpire actively participated in the arbitration proceedings and in fact dominated the same. Secondly, it is contended that the Arbitrators wrongfully rejected the application for adjournment on two occasions when the applications were made to secure the presence of the Indian counsel to agrue law points arising under the Indian law. Thirdly, it is submitted that the refusal on the part of the Arbitrators as well as Umpire to state a special case and the refusal on the part of the Umpire to inform the parties that he was not stating a special case vitiated the award. The last contention was that the Umpire entered on the reference and closed the proceedings on claim 1 without hearing the parties further. This was in breach of the principles of natural justice and therefore the Award was void.
37. In support of the first contention the petitioners have in paragraph 3(ee) of the petition pointed out that the Umpire remained present throughout the hearing and not merely participated in them but also dominated the same. He was, in fact, in general and overall control of the proceedings, acting as if he was the Chairman of the Board of Arbitrators. He put questions to the Counsel and witnesses and was also instrumental in dismissal of the applications of the Petitioners before the Arbitrators. According to the Petitioners, the Umpire was in overall charge of the proceedings even before there was a difference of opinion between the Arbitrators. The Petitioners further pointed out that although the parties consented to the Umpire’s presence and to his participation in the proceedings to the extent permitted by Indian law, the Petitioners had never given an authority to the Umpire to enter upon the reference before the event. It is further their contention that seeing the attitude of the Umpire, the Petitioners participated in the proceedings under protest and reservations. It is therefore claimed that proceedings were thus misconducted by the Arbitrators and the Umpire. In their reply, the Respondents pointed out that the Umpire sat in the proceedings and participated in the same with the consent of the parties and no objection was raised to it by the petitioners. It was clearly accepted by both the parties that it was perfectly proper and sensible for the Umpire to sit and participate in the proceedings to avoid unnecessary duplication of the time and expenses of a completely new hearing in the event the Arbitrators disagreed. The Respondents also contended that it was a common practice for the Umpire to do so in commercial arbitration to save time and expenses. They submitted that during the proceedings, the Umpire had merely acted as the spokesman of the Arbitrators. The decisions were the decisions of the Arbitrators. No objection was ever taken by the petitioners to the Umpire acting as the spokesman of the Arbitrators. The petitioners in their rejoinder submitted that whilst it was correct that the petitioners did not object to the presence (sic) of the Umpire at the meetings, it was wholly illegal and improper for the Umpire to have participated in the proceedings even before the Arbitrators had disagreed. They contended that the Umpire not only dominated the proceedings but also influenced the decision of the Arbitrators from stage to stage. The petitioners also submitted that it was not correct to say that the Umpire was merely a spokesman of the Arbitrators. They contended that the Arbitrators communicated with the parties at the hearing through the Umpire and that he was generally in charge of the arbitration proceedings. In support of their contention the petitioners pointed out various places at which, according to them, the Umpire during the conduct of the proceedings aired his views, gave directions, discussed matters and consulted with the Arbitrators and sought to influence them.
The record undoubtedly shows that the Arbitrators asked questions both to the Council and the witnesses through the Umpire and/or the Umpire was asking the questions on their behalf. The record also indicates that the Arbitrators might have discussed matters with the Umpire or consulted with him. However, there is nothing on record to show that he had either influenced their decisions in any manner or had given directions on his own. The decisions and directions, on the other hand, appear to be of the Arbitrators themselves. The facts on record show that both the parties had agreed to the procedure which was adopted in the proceedings before the Arbitrators. In view of the said agreement the Umpire not only remained present but also participated in the proceedings. Such procedure is further not unknown particularly to commercial arbitration. The parties often agree not only to the presence but also to the participation of the Umpire in the proceedings before the Arbitrators, to save both cost and time. This is to their mutual benefit. There is further nothing in the Act which prevents the parties from agreeing not only to such procedure but to any other procedure. It has to be remembered in this connection that the proceedings are for arbitrating the dispute and the Arbitrators and the parties are free to decide upon any procedure of their choice. This is exactly what happened in the present case and the following circumstances on record bear out the agreement between the parties on the procedure adopted:– (a) the directions given by the Arbitrators in their first meeting on March 27, 1985 had in particular stated that all correspondence, pleadings, documents and communications of any kind by either party should be addressed to the two Arbitrators and the copies of the same should be sent to the Umpire; (b) in their meeting of June 10, 1985, the then Umpire Mr. Eckersley was also present along with the Arbitrators. It appears that before that date the Respondents had suggested that the Umpire should act as a third Arbitrator. This suggestion was later withdrawn by the Respondents. But at the same time it was agreed that the said Umpire or his successor will attend the arbitration proceedings in his capacity as the Umpire. What is noteworthy with regard to these proceedings is that in these proceedings two sessions of hearings were fixed, the first from 30th July to 7th August 1985 and the second from September 18, 1985 to September 26, 1985. It appears that these dates were not suitable to Mr. Eckersley. But since it was agreed that the Umpire would attend the arbitration proceedings, as Umpire, it was proposed to appoint another Umpire in his place who could remain present throughout the proceedings. There was no need to change the Umpire, if he was not to remain present in the proceedings. In course of time Mr. lan Kinnell, the present Umpire was appointed, precisely because he could remain present in the proceedings. Hence at least the fact that the Umpire was to remain present in the proceedings cannot be disputed; (c) the proceedings of the first day, namely, of July 30, 1985 show that they opened with the Umpire remaining present along with the Arbitrators. It is the Umpire who opened the proceedings and Mr. Glennie, the counsel appearing for the Petitioners, began his speech with address to the Umpire. The entire proceedings further show that the requests and applications were addressed to the Arbitrators through the Umpire, and the Arbitrators were answering or disposing of the requests and applications through the Umpire. The copies of the requests and applications, as decided earlier, were also sent to the Umpire along with the Arbitrators. But what is more notemorthy is that on the first day itself, a specific question was raised with regard to the precise role of the Umpire in the arbitration proceedings under the Indian Law, and both the Umpire and the Arbitrators wanted to get that point resolved first before they would proceed with the arbitration. This question was resolved in favour of the Umpire taking part in the proceedings as the parties may agree. The precise questions and answers on the subject, as noted in para 24 of the proceedings, are as follows:
The Umpire : The first thing we must deal with this afternoon is to place as it were on the record the parties position as to my position in this reference. It is probably convenient for you Mr. Glennie to open the batting on that.
Mr. Glennie : Yes. Sir, our position is that our Indian lawyers have spoken to Mr. Singhania, and his view as expressed to them is there is no such case preventing the parties agreeing that the Umpire sit and take such part as the parties agree he should Jake. On that basis we are content to give such consent as is required, and we are very happy to have you take part. All I can say is if that advice is wrong, and if it turns out that is the case, none of us here can do anything about it.
After that no further question was raised with regard to the participation of the Umpire in the proceedings. It is only after the parties agreed as above that the proceedings went ahead and the first application for adjournment made on behalf of the petitioners was heard; (d) what is further from that day onwards not only the first session went on upto 2nd of August 1985, but the second session which commenced more than a month and half thereafter, namely, on September 18, 1985 was also carried to the end of September 26, 1985 when the arbitration proceedings were closed. The proceedings went on from day to day in both the sessions. No objection at any stage was raised thereafter against the participation of the Umpire in the proceedings. On the other hand the letter dated September 26, 1985 jointly addressed by the Solicitors of both the parties to the Arbitrators and the Umpire placed on record the formal consent of the parties to the extension of the Arbitrators’ time for making and publishing the Award, until November 30, 1985. The letter also stated as follows:
“Furthermore, if the Arbitrators or the Umpire, as the case may be, determine and award that the day rates set out in the said Drilling Agreement are not payable by the Respondent (i.e. petitioners) to the Claimant (i.e. Respondents) for the period of the Respondent’s hire…… then without prejudice to any jurisdiction which the Arbitrators or Umpire may have under Article 14 of the said Drilling Agreement and without prejudice to the rights of the parties to challenge such award, we hereby, on behalf of our respective clients, agree that the Arbitrators and Umpire shall have jurisdiction to determine the amount payable….. and to make and publish an award of the sum so determined, together with interest and costs if appropriate.”
There is not a word in this letter nor is there any other letter to suggest that the proceedings which had ended were tainted with the stigma of the participation by the Umpire in the arbitration proceedings.
38. The aforesaid circumstances make it more than clear that, firstly, the parties had agreed to the procedure whereunder the Umpire would participate in the proceedings. In fact, when the question arose whether under the Indian law an Umpire could participate in the proceedings in the manner he did, both the Arbitrators as well as the Umpire wanted to be clear on that point first before they could even consider the application for adjournment of the proceedings which was made on behalf of the petitioners. It is only after Mr. Glennie, the counsel appearing for the petitioners, pointed out that there was no law or authority preventing the participation of the Umpire and that not only the petitioners did not have any objection but they were happy to have the presence of the Umpire at the proceedings that the proceedings progressed further. At no stage in the proceedings thereafter any suggestion or objection was raised on behalf of the Petitioners that the Umpire was either dominating the proceedings or that he was influencing the decision of the Arbitrators or that he was giving rulings for the Arbitrators. The proceedings also show that whenever the Umpire spoke or gave rulings on behalf of the Arbitrators, he made it clear that he was doing so as asked by the Arbitrators.
39. We are therefore more than satisfied that the petitioners had consented not only to the presence of the Umpire but also to his participation in the proceedings as he did. It was with their consent that the proceedings had gone ahead and at no stage had they complained against the Umpire’s conduct either in or with respect to the said proceedings. Having thus allowed both the Arbitrators and the Umpire to act as they did without a word of protest, it is wrong on their part now to complain against the said agreed procedure when the Award has gone against them.
40. We also find that their grievance in that respect is legally unsustainable. As held by the Supreme Court in its decision Pras.un Roy v. The Calcutta Metropolitan Development Authority where though a party is aware from the beginning that by reason of some disability the matter is legally incapable of being submitted to arbitration, participates in arbitration proceedings without protest and fully avails of the entire arbitration proceedings and then when he sees that the award has gone against him comes forward to challenge the whole of the arbitration proceedings as being without jurisdiction on the ground of a known disability, the plea cannot be allowed. As held by the Court there, this principle applies both before and after the making of the award. The principle is that a party shall not be allowed to blow hot and cold simultaneously. Long participation and acquiescence in the proceeding preclude such a party from contending that the proceedings were without jurisdiction. In that case both parties got extension of arbitration proceedings at least 14 times, the Arbitrators held 74 sittings which were attended by both the parties and their counsel, and a large amount of time and money was spent at the cost of the public. The Court held that in view of the acquiescence of the parties, one of them will not be allowed to challenge the arbitration proceedings on ground that because of some disability the matter could not have been referred to arbitration. To similar effect is the decision of the Supreme Court Neelkantan and Bros. Construction v. Superintending Engineer, National Highways, Salem. There it is held that if the parties to the reference either agree beforehand to the method of appointment, or afterwards acquiesce in the appointment made, with full knowledge of all the circumstances, they will be precluded from objecting to such appointment as invalidating subsequent proceedings. We are therefore of the view that the grievance made now by the petitioners that the award is vitiated because the Umpire had not only participated but dominated the proceedings is too late in the day even assuming that there was some substance in it. We have pointed out above that there is no merit in the grievance itself.
41. Furthermore this grievance, if at all, can be heard only with regard to the rulings given by the Arbitrators during the course of the proceedings which either denied the petitioners a fair opportunity of presenting their case either on law or on facts or gave unfair advantage to the Respondents in that behalf which had affected or was likely to affect the ultimate award. A mere grievance that there was a general domination of the proceedings by the Umpire will neither vitiate the proceedings nor the impugned Award since the Award under challenge is not that of the Arbitrators but is of the Umpire. Hence it matters not whether the Umpire dominated the proceedings. If the Award before us was that of the Arbitrators, it might have been possible to argue that in view of the alleged domination of the Arbitrators by the Umpire it should be held that the Award was that of the Umpire and not of the Arbitrators and hence invalid. When we asked Mr. Zaiwalla, the learned counsel appearing for the petitioners as to in what respect the impugned Award was affected by the alleged demina-tion, his answer was that the Arbitrators had rejected the applications of the Petitioners for adjournment of the case and for stating a special case. Since this was done, according to him, under the influence of the Umpire, if that influence was not present, the petitioners would have in the first instance presented their case in a better manner, and secondly, would have had the advantage of the opinion of the Indian Court on the question of law that was raised. It is therefore necessary to examine whether, firstly, the two applications one for adjournment and the other for stating a special case were rejected under the influence of the Umpire, and secondly, whether they were rejected by the Arbitrators unreasonably.
42. There is no dispute that the petitioners had moved their application for adjournment of the proceedings on the sole ground that they wanted to engage an Indian counsel to argue the points of law arising under the Indian law, and for no other reason. The following facts will reveal that the said application was not only unwarranted but was also unreasonable, and we are satisfied that the Arbitrators did not misconduct themselves in rejecting the said application.
Tuesday, the 28th March 1989.
As pointed out earlier, the Arbitrators first met on March 27, 1985 and gave their ex-parte directions whereunder the Respondents were to file their statement of claim by April 22, 1985 and the Petitioners were to file their reply or statement of defence within 21 days after the receipt of the statement of claim. There is no disput that these directions were received by the Solicitors of the parties and the Respondents filed their statement of claim on April 22, 1985. It is therefore legislatimate to presume that at least as early as the last week .of April 1985, (if not earlier) the petitioners were aware that the arbitration procedings were soon to commence and that they had to be ready to argue the question of law under the Indian Arbitration Act. However it was not till May 16, 1985 that the petitioners wrote their letter to the Arbitrators stating that complicated questions of Indian Law were involved and they needed to instruct a Senior Indian Counsel in India to advise, and informed the Arbitrators that they would not be ready by June 10, which was the date fixed for the preliminary meeting. They also stated in this letter that this would be so although they would be represented by counsel at that meeting. On 10th June 1985 when the Arbitrators and the Umpire met and set the dates of their two Sessions, the first beginning from 30th July 1985, no application was made by the petitioners before them for adjustment of the dates to brief or to get advice from the Indian Counsel. In terms of the directions given on June 10, 1985, the petitioners were to file their points of defence by July 1, 1985, but in fact they filed the same on July 22, 1985. Although in these points of defence, the petitioners stated that the right to take the points of law was reserved by them if they were so advised, no attempt was made till then either to prepare the points of law or to brief an Indian counsel or to take advice from him. It appears that thereafter on July 26, 1985, i.e. barely four days prior to the commencement of the first session, the Solicitors of the petitioners addressed a letter to the Respondents’ Solicitor with copies thereof to the Arbitrators and the Umpire, enclosing a copy of the written opinion dated July 12, 1985 given by Shri Deshpande on the questions of law which were referred by them to him. By this letter they stated that since the proceedings would be governed only by Indian Law they would be applying to the Tribunal for an adjournment of the hearing on July 30, 1985 to enable both sides to instruct Indian Counsel to appear on their behalf to argue “the issues of Indian Law”. It is important to note that this very letter however proceeded to stale that the hearing on July 30 could proceed in so far as issues of facts were concerned, Thereafter one day earlier to the commencement of the proceedings, i.e. on July 29, 1985 the Petitioners’ Solicitors addressed yet another letter to the Arbitrators and the Umpire, in which they stated that they were “formulating” the questions of law which would arise in the proceedings and the same would be forwarded to the Arbitrators “in due course” and hence an adjournment would be the most practicable course to adopt in order to enable the petitioners to instruct a practising counsel of the Indian Bar to appear with the English Counsel with a view to making appropriate submissions on the latest judicial authorities on Indian law.
The aforesaid developments would clearly show that although the petitioners had an ample time right from April to July to brief an Indian Counsel they had taken no steps in the matter nor had they even formulated the questions of law till July 29, 1985. It is in this background that when an application was moved for adjournment before the Arbitrators and the Umpire on July 30, 1985 that the Arbitrators rejected it. The ruling given by them appears in the proceedings of July 30, 1985. The ruling which was pronounced by the Arbitrators through the Umpire stated, firstly, that the interest of justice did not demand an adjournment because both the parties had considered at least for some weeks the possible need to consult Indian Lawyers or jurists; secondly it was more likely to prejudice the Claimants than the Respondents since it was an issue whether it was open for the Arbitrators to compensate the Respondents by an appropriate award of interest upon any sum which the Respondents might be entitled to recover in the arbitration; thirdly the Respondents had by their side Mr. Deshpande, a distinguished Indian jurist to assist their counsel and when they had consulted with and lastly the adjournment would run counter to the object of the Indian Arbitration Act since it would prolong the arbitration. The Arbitrators further made it clear that they were very anxious to ensure that each side had the fullest opportunity to present to them all submissions that they might wish to make on Indian law, and for that reason the Arbitrators would give liberty to the parties to submit written submissions on any aspect of the Indian law which they deemed germane to the proceedings in relation to the said session, within fourteen days after the completion of that session. The arbitrators also stated that the said ruling was given with reference to claim one on which it was known that the petitioners had already obtained specific advice, and they would, if necessary, consider any submissions that either party wished to make in relation to any other claim as and when it arose. The Arbitrators also concluded by emphasizing that the parties had always been and were free if they so wished at any time whether during that session or otherwise to instruct those qualified in Indian Law to address the Tribunal. It must further be remembered that Mr. Glennie appearing for the petitioners told the Arbitrators that he fully accepted the said ruling. However he added that he was instructed that he carried on taking part under reserve, reserving their right to take such steps in the Indian Courts as might be apprepriate on further consideration. Admittedly, the petitioners did not take any steps to challenge this decision in any Court, in spite of their threats.
43. Thereafter yet another attempt was made by the petitioners to get the proceedings adjourned. This was by sending a telex to the Arbitrators at the close of the proceedings on the next day, i.e. July 31, 1985. The Arbitrators took up this application for consideration on August 1, 1985. The application was made to reconsider the Arbitrators’ ruling of July 30, rejecting the application for adjournment. On this application, the Arbitrators opined that they recognised their duty to give proper consideration to the request and since the telex in question covered matters previously argued before them, they invited counsel of both the parties to address them briefly. While doing so, they pointed out that the relevant passage in the telex had stated that Mr. Deshpande was contacted by the Solicitors of the petitioners by a letter of July 12, without any authority from the petitioners and he was instructed on a particular point and thereafter he was contacted only on July 26. But Shri Deshpande’s reasoned opinion on claim 1 which was forwarded to the Arbitrators was of July 12 and it was given in response to the letter of July 9. Upon this Shri Deshpande explained to the Arbitrators that the letter from the petitioners’ Solicitors was received by him on July 12, and he had dictated his opinion on July 13 which was typed out by his Secretary on July 14. At that time he had no benefit of the entire documentation and the opinion was based only on three documents which were sent to him. The Arbitrators then agairj speaking through the Umpire, told Shri Deshpande that he was not tied down to his earlier opinion and he could argue the case with complete documentation pertaining to it and they hoped to allow him to do so, but there was no need for adjourning the proceedings for the purpose. The Arbitrators also reminded the parties of their earlier ruling which had given liberty to both the parties to submit written submissions on relevant Indian Law within fourteen days before the close of the session. The Arbitrators therefore felt that there was no need to adjourn the matter for the purpose. Thus by this ruling the second application for adjournment for the very same purpose was rejected.
It is further necessary to point out here that the second application was made for adjourning the matter for about three to four months and the Arbitrators were prepared to adjourn the hearing, provided the Petitioners agreed to pay interest for the said period on the amount that might be awarded eventually to the Respondents. The petitioners declined to pay the interest. The matter thereafter proceeded further and not only in the said session which ended on August 2, 1985 but also in the second session which lasted from 18th September 1985 to 26th September 1985, no word of protest was heard from the Petitioners. A written ruling on the application for adjournment was given by the Arbitrators on August 7, 1985 wherein they have given exhaustive reasons for refusing the adjournment.
44. The aforesaid narration would show that there was no merit whatsoever in the application for adjournment which was made for the sole reason of engaging an Indian Counsel well versed in Indian Law to argue the points of Indian Law. At the cost of repetition, we may point out that the petitioners as early as in April 1985 knew that they would be required to argue the question of Indian Law. No explanation whatsoever is given as to why they had made no arrange-ment for the same till July 30, 1985 which was the first date of the first session of the arbitration proceedings. Secondly, Mr. Dashpande the Ex-Chief Justice of the Delhi High Court was already approached by the petitioners in the first week of July and he had given his opinion, though according to him, on the basis of only part of the documents. Why he was furnished with only a part of the documents and not all the documents is a matter for the petitioners to answer. However, he participated in the arbitration proceedings as a representative of the petitioners and was available on the spot for consultation and also for arguments. What is further, the application was for adjourning the proceedings by three to four months. The Arbitrators were ready to grant even that long an adjournment provided the petitioners agreed to compensate the Respondents by suitable interest, if the Respondents ultimately succeeded, The Petitioners declined to do so. What is further difficult to comprehend is that in their Zeal to attack the Arbitrators for their refusal to adjourn the proceedings, they have forgotten that in their application of July 26, 1985, which is their first application for the purpose, they had themselves stated that the hearing on July 30 could proceed in so far as issues of facts were concerned and that they wanted an adjournment only for arguing the questions of Indian Law. The Arbitrators in their oral ruling given on both the occasions, namely, on July 30, 1985 as well as August 1, 1985 (when the second application for reconsideration of the earlier ruling was taken up for consideration) had in terms given the liberty to the petitioners to submit their written arguments on the questions of Indian Law within fourteen days of the completion of the said first session. They had also made it clear that although the first opinion given by Shri Deshpande was on the basis of only a part of the documents, he would be free to give his further submissions on the basis of all the documents. We are therefore unable to understand as to on what basis any grievance can be made against the Arbitrators for refusing the applications for adjournment. The Arbitrators have further given an exhaustive ruling in writing, as pointed out above, on August 7, 1985 which deals with all the aspects including the latitude given by them to the parties, It shows that they had adopted an extremely just, fair, accommodative and impartial attitude and had not closed their mind on any aspect much less did they want to shut out any arguments on Indian Law that the parties desired to put forth. Hence we are unable to hold that there was any misconduct whatsoever on their part in refusing the applications for adjournment On the contrary, according to us, the applications were frivolous and the attack against the Award on that ground is still more frivolous.
45. That takes us to another allegation of misconduct against the Arbitrators, namely, that the Arbitrators ha’d failed to state a special case under Section 13(b) of the Act in spite of the application made by the Petitioners to that effect. The facts relating to this application are equally revealing. The first inkling that the petitioners had given to the Arbitrators of their intention to make the application for stating a special case was by their application of July 29, 1985. However, this application did not contain a request that the Arbitrators should state a special case. It only referred to the provisions of section 13(b) of the Act and in fact stated that the Solicitors of the petitioners were still formulating the questions of law which would arise and that they would be forwarded to the Arbitrators in due course. Thereafter on August 2, 1985, Shri Deshpande, the Indian Counsel appearing for the Petitioners, for the first time made an oral request to the Arbitrators that he might make an application for stating a special case for the Indian Court along with his submissions on Indian Law which were to be given to the Tribunal within fourteen days from that day, i.e. August 2, 1985 which was the last day of the first session. He also made it clear that he would leave it to the discretion of the Arbitrators to grant it or not. However till that date no written application for the purpose was made. Thereafter on August 16, 1985, an application enclosing submissions on Indian Law settled by Shri Deshpande was made, and in this application the request made was that the Arbitrators should make their “Award” in the form of a special case for the opinion of the Court on the questions of Indian, Law involved in Claim No. 1 as well as the interest claim . It however transpired that Shri Deshpande’s submissions which were enclosed and which were dated August 9, 1985 were not in fact the submissions but an independent application signed by him and addressed to the Arbitrators and the Umpire, for slating a special case. This mistake was corrected by the Petitioners’ Solicitors by their letter of August 30, 1985 addressed to the Arbitrators by stating that what was sent under the cover of their letter of August 16, 1985 was not the submission but an application under Section 13(b) of the Act. The fact remains that whereas the letter of August 16, 1985 sent by the petitioners’ Solicitors stated that the Arbitrators should make their Award in the form of a special case, the application signed by their Counsel Deshpande on August 9, 1985 and which was sent along with the said letter of August 16, 1985 merely stated that the Arbitrators should refer the questions stated in that application to the Indian Court under the said section 13(b). It is therefore not clear from these two applications as to whether the petitioners wanted the Arbitrators to state a special case or wanted them to state the Award in the form of a special case for the opinion of the Court. Be that as it may. It appears that no ruling as such was given by the Arbitrators on these applications. Hence yet another application was moved by Shri Deshpande on September 17, 1985, the application being dated September 16, 1985. This application was, as its heading shows, termed both as “Reapplication under Section 13(b) of the Act” and “Further submissions in support of an application for an oral hearing.” This application contained, as pointed out earlier, three prayers as follows :
(a) That the Tribunal state a case as asked;
(b) In the event of the Tribunal refusing the request at (a) above then the Respondents be given an opportunity to apply to the Court in India under Section 5 and 11(2) of the Arbitration Act, 1940 for leave to revoke the Authority of the Arbitrators;
(c) If (b) above, is not granted then to give,? Reasoned Award.
On 18th September 1985, a telex was sent to
the Arbitrators and the Umpire by the Soli
citors of the petitioners praying for an early
hearing on the said application. The Arbi
trators thereafter gave their ruling on this
application on September 18,1985 which was
the first day of the second session of the
proceedings. By this ruling they held that they
had before them all the arguments on the
subject and therefore they did not consider
that their task would be lightened by any
further submissions upon the said matter and
that they declined to permit the parties to
address them orally upon that aspect at that
stage. They however made it clear that they
did require that they should be supplied at the
earliest possible opportunity with full copies
of the two authorities cited at note 56 on page
265 of the 1983 edition of Bachawat on the
Law of Arbitration which was annexed to the
Petitioners’ submissions contained in their
Solicitors letter of 9th September. They also
stated that it might be that they would be at a
convenient moment during the same session
require the parties further to address them on
the questions which were raised in the said
application, but that was not a commitment
on their part and they would do so only if they
felt it necessary.
46. In spite of this ruling which stated that the Arbitrators did not desire to hear any oral arguments on the application for stating, a special case, the petitioners renewed their application on September 26, 1985 which was the last date of the second session. But this time the application was renewed in the context of claim No. 4 (which is one of the claims rejected by the Award).
Thereafter the application was renewed before the Umpire” on October 8, 1985 in response to the telex of the Umpire of October 3, 1985 informing the parties that he had entered upon the reference consequent upon the difference of opinion between the Arbitrators. We will have an occasion to refer to it once again in the context of the Umpire’s alleged failure to give the hearing to the petitioners. By this application the petitioners Solicitors informed the Umpire that they were renewing the application made earlier to the Arbitrators to state a special case and they would be grateful if he gave a ruling upon it in due course or in the alternative let them know that he was unwilling to state a special case. By his reply of October 11, 1985, the Umpire advised the Petitioners’ Solicitors that he regarded as renewed before him the Petitioners’ request in connection with the statement of a special case on claims 1 and 4 and their request to be advised if he was not minded to state a special case. He assured that he would consider all the said requests and communicate further with the parties in due course.
47. Thereafter, the Umpire gave his Reasoned Award in which he dealt with the said applications made on behalf of the Petitioners for stating a special case and gave his reasons for refusing the same. It is necessary in this context to remember that the application for stating a special case was in fact a bundle of applications. The first being of August 9, 1985 signed by Shri Deshpande, the second being the covering letter of August 16, 1985 sent by the Petitioners’ Solicitors forwarding the said application of August 9, 1985; the third being of September 17, 1985 signed by Shri Deshpande and the fourth being the telex of September 18, 1985 sent by the Petitioners’ Solicitors. The third application of September 17, 1985 signed by Shri Deshpande, as pointed out above, in fact, prayed that if the two prayers (a) and (b) in the application were not granted, a reasoned award should be given. That is what the Umpire ultimately did. He has given exhaustive reasons for refusing to state a special case and we find nothing in the reasons to fault them. We have already pointed out above that the same applications were made before the Arbitrators and in addition a request was ‘made to the Arbitrators to give an oral hearing. The Arbitrators declined to grant the oral hearing on the ground that there was a wealth of material before them. They however permitted the parties to make their written submissions and called for further written material on the question of law. It was not the case of the petitioners that any oral submissions were to be made which were not already included in the written submission. We are therefore of the view that neither the Arbitrators nor the Umpire had misconducted themselves by refusing to give oral hearing or by refusing to state a special case.
48. It is necessary at this stage also to point out the position of law on the subject. Section 13(b) of the Act reads as follows:
“The arbitrators or Umpire shall, unless a different intention is expressed in the agreement, have power to –
(a) x x x x x x x x x x
(b) state a special case for the opinion of the Court on any question of law involved, or state the award, wholly or in part, in the form of a special case of such question for the opinion of the Court.”
The language of the section is very clear. The power given to the Arbitrators or Umpire is discretionary. It is not obligatory for the Arbitrators or the Umpire to state a special case or to state the award in the form of a special case for the opinion of the Court. What is further, it has been held by the Supreme Court at least in two cases that the opinion given by the Court on such statement has no binding effect and can be discarded by the Court while deciding the matter judicially. In Sohan Lal v. Aminchad & Sons, it is held that an opinion given pursuant to the first part of Section 13(b) of the Arbitration Act is not a judgment, decree, determination or order as visualised in Article 136 of the Constitution and therefore even an appeal under Section 136 would not lie from such opinion. It is further held there that in spite of such opinion given by the Court, the Arbitrators are clothed with the final duty of determining the case and the opinion of the Court does not finally determine the case, although it might bind the Arbitrators in honesty and morals to act upon the law as the Court has stated. There can be no appeal from their decision on the ground that they did not act upon the opinion although it might be a ground for impeaching their award on the ground of misconduct. The said consultative jurisdiction of the Court does not result in a decision which is equivalent to a judgment, decree, determination or order. Such opinion given is not to be added to and does not form part of the award.
In International Airports Authority of India v. K. D. Ball it is held that Section 13(b) confers power on the arbitrator to state a special case but it does not make it obligatory on his part to state a special case as soon as the party desires to do so. It was further held in that case that the failure of the arbitrator to state a special case did not amount to a bias on his part since in that case the Petitioner itself had agitated the issue of jurisdiction before the arbitrator, and by its conduct had submitted the question of jurisdiction and other questions of law for determination of the arbitrator. It was not proper for the petitioner in the circumstances to ask the arbitrator to state a special case.
These authorities make two things very clear as far as the Indian Law on the subject is concerned. Firstly, the power to state a special case is discretionary. Secondly, the opinion given by the Court on such a reference is not a judicial decision, and hence, stating a case is virtually an exercise in futility. This is different from the position in English Law on which the petitioners relied. Section 21 of the English Arbitration Act, 1950 deals with the subject of the submission of a special case by the arbitrator or umpire as the case may be. That section states that an arbitrator or umpire may, and shall if so directed by the High Court, state any question of law arising in the course of the reference, or state an award or any part of an award in the form of a special case for the decision of the High Court. The distinction between Section 13(b) of the Indian Arbitration Act and of 21 of the English Arbitration Act is therefore clear. While under the English Law it is discretionary with the arbitrator or the umpire to state a special case when the party requests him to do so, he is under an obligation to state the case when the High Court directs him to do it. There is no such provision in the Indian Arbitration Act. It is for this reason that the reliance placed on behalf of the petitioners on the observations on page 695 of Mustill, Law and Practice of Commercial Arbitration in England is of no avail to them. There it is observed that an arbitrator who is asked to state a case should apply the same principles in deciding whether or not he should do so and if he decides that a special case is not called for he should inform the parties of his decision. Unless his decision is accepted, he should then allow the party requesting a special case a reasonable opportunity to apply to the Court for an order under Section 21(1). For under Section 21, the party can get a direction from the High Court to state a special case. However under the Indian Law which applied to the present case, the only remedy to the party when the Arbitrator or Umpire refuses to state a special case, is to approach the Court either under Section 5 or Section 11(2) for revoking the authority of the Arbitrator or the Umpire as the case may be or for removing them respectively. Obviously there are limitations on the power of the Court to revoke the authority of the Arbitrators or Umpire under Section 5 or to remove them for misconduct under Section 11(2). Since Section 13(b) itself gives discretion to (he Arbitrator or Umpire to state a special case, it can hardly be contended that his refusal to do so amounts to a misconduct within the meaning of the said provisions. It is again for this reason that the reliance placed by the petitioners on the observations in paragraph 600 of Halsbury’s Law of England, Volume 2 to the effect that if the Arbitrator or Umpire, notwithstanding a request to state a case, proceeds to make an award without stating the question of law in the form of a case, or the award, or some part of it in the form of a case, and without giving the party applying a chance to apply to the Court for an order directing a case to be stated, he is guilty of misconduct if the application for the statement of a case was such as ought to have been granted, is misplaced. It may also be mentioned that even under the English Law the position is that it is not the rejection of every application for stating a special case which amounts to a misconduct on the part of the arbitrator or umpire. If the application is frivolous and made merely for the purpose of delay, the arbitrator will be justified in refusing it and the refusal will be upheld. This is the view expressed by the Court of appeal in a decision reported in (1898) 1 QB 131/7 In re Palmer & Co. and Hosken & Co. It may also be mentioned here that the Petitioners’ Counsel Shri Deshpande also agreed before the Arbitrators that under the Indian Law it was within the discretion of the Arbitrators to state a special case or not. We are therefore of the view that in refusing to state a case or to state the award for the opinion of the Court neither the Arbitrators nor the Umpire had committed any error much less a misconduct. We may even at the cost of the repetition point out that the application which was made on September 17, 1985 by no less a person than the Petitioners’ Counsel Shri Deshpande had in fact prayed for a reasoned award in case a special case was not stated or an opportunity was not given to approach the Court for revoking the authority. The Umpire has in fact given a reasoned award whcih reasons also include reasons for refusing to state a case. The reasons given by the Umpire further cannot be said to be unsustainable. In fact no arguments whatsoever were advanced before us 19 assail them.
49. That takes us to the third and the most important attack against the award, namely, that the Umpire had not given a hearing to the petitioners after he had entered upon the reference and without even indicating that he was proceeding to make his award, closed the proceedings and passed both the awards. It is the contention of the petitioners that this has not only resulted in a breach of the principle of natural justice inasmuch as they have been deprived of placing before the Umpire the further submissions but has also deprived them of the opportunity to cross-examine witness who were not cross-examined before Arbitrators. According to the petitioners, they would have led the evidence in particular of one Shri Mittal their General Manager, Drilling, to prove that there were oral negotiations between him on behalf of the petitioners, and one Mr. Falcon on behalf of the respondents with regard to the terms of the new contract and it is these negotiations which were the cause of the delay in preparing and sending the draft of the new contract which was ultimately sent by them on September 4, 1984.
50. At first blush the contentions appear appealing. However as one probes the entire context in whcih the Umpire, who appears to be an experienced Barrister-at-law, acted as he did, none of the contentions stands scrutiny. To appreciate the hollowness of the petitioners’ contentions, it is necessary to recall the procedure which was agreed to by the parties. The procedure agreed was that the Umpire though he will not remain present as a third Arbitrator, will nonetheless remain present during the proceedings as an Umpire and will also participate in the same to the extent agreed to by the parties. What that extent was, was never specified and since at no stage the Umpire’s actions were objected to (assuming that there was anything objectionable in them and he had overstepped the limits, if any agreed to), it can safely be held that the Umpire’s participation in the proceedings as it appears from the record, was as per the agreed procedure. As per this agreement, further, the Final Award was to issue as far as possible after close of the second heraing “hopefully by mid October”. As directed on 2nd August 1985 which was the last day of the first session, the petitioners were to send their submissions within 14 days of 2nd August 1985. They sent their submissions on August 26, 1985. There were requests made by the Solicitors of the respondents that they should be permitted to submit a rejoinder to the petitioners’ submissions of August 28, 1985. The arbitrators by their telex made it clear to both the Solicitors that only the respondents’ Solicitors will have the right to submit the rejoinder to Shir Deshpande’s submissions (i.e. the petitioners’) and that there shall be no further submissions. Thereafter when the proceedings commenced on September 18, 1985, which was the first day of the second session, the arbitrators complairied that there was an unstructured progress of the arbitration following the conclusion of the first session notwithstanding the directions given at that hearing and also the directions which were given by their telex of September 6, 1985. The Arbitrators therefore made it clear through the Umpire that in no circumstances they would permit a similar situation
was to he given or submissions to be made or evidence to be led, can it be said that the Umpire committed any error in proceeding to declare the Award without giving a hearing?
to develop in relation to outstanding matters. The arbitrators then stated that they were fully mindful of their duty to give to the parties a full and fair opportunity to develop their respective cases and to put before the Tribunal all such evidence and arguments as they wished to. Nevertheless, they felt it necessary to state unequivocally that following the conclusion of the said hearing (namely the said second session) they would entertain no further submissions by either party unless they had been specifically requested or authorised by them. They then went on to state that by the end of the said session the parties will have had a sufficient opportunity to conclude their evidence and all their submissions, including submissions on Indian Law, on all outstanding matters and the proceedings would then be closed. They further made it clear that if their expectation that the parties had sufficient opportunity to conclude their evidence and make their submissions during the said session was not fulfilled they would, prior to the conclusion of the hearing, give the parties the opportunity to address them as to what, if any, further submissions should be permitted. They would also then give directions upon compliance with which or in default of compliance of which the proceedings would be closed. The Tribunal, the Arbitrators or Umpire, as appropriate, will proceed towards the determination of the issues. They also stated that they thereby give notice that they would require strict compliance with any directions they had given.
These directions given by the Arbitrators on September 18, 1985 along with the earlier directions and the agreed procedure make it very clear that it was the understanding of the parties that whatever evidence was to be led and the submissions to be made were to be before the Arbitrators in the presence of the Umpire and that no further evidence or submissions were to be permitted except with the permission of the Arbitrators/ Umpire. In fact, there was a further understanding that no sooner the proceedings in the said session were over the Arbitrators/Umpire, as the case may be, would proceed to make their/his Award. If this is so and if no further hearing?
51. It must be remembered in this connection that even after the Umpire communicated to the parties on October 3, 1985 that pursuant to the disagreement of the Arbitrators he had entered upon the. reference and that he had considered the proceedings as closed, the only request made by the Solicitors of the petitioners was as contained in telex of October 8, 1985. It is necessary to produce both the communication by the Umpire on October 3, 1985 and the request of the petitioners’ Solicitors of October 8, 1987. The Umpire’s telex reads as follows :
“By this telex I would inform you that on 2 October 1985 I received written notice from the Arbitrators stating that on 1 October they had concluded that they were unable to agree on remaining issues in this arbitration.
Accordingly I would advise you that on 2 October 1985 I entered upon the reference in their stead.
Prior to receipt of notice of their inability to agree I received from the Arbitrators a copy of their directions upon the question of costs. I confirm that direction.
Having now entered upon the reference, I shall give consideration to all outstanding matters in due course but wish to advise the parties that subject to compliance with the above directions relating to costs, and to any further directions I may give relating to costs or otherwise, the proceedings should be considered closed save in relation to the quantification, of ‘Quantum Meruit’ upon which further directions will be given if appropriate.
For the record I would also confirm receipt of the parties’ respective Solicitors’ letters of 27 and 30 September (Dealing with the extension of time and form of declaration) and the claimants’ Solicitors’ letters of 30 September dealing the latter and enclosing extract from Bachawat.
Regards.”
The reply of M/s. Zaiwalla & Company, Solicitors for the petitioners was as follows:
“We thank you for your telex of the 3rd of October in which you inform us that you have entered upon the reference in this matter in the room of the Arbitrators, who have been unable to agree on the remaining issues therein.
In view of this, we must renew our applications made earlier to the Arbitrators for them to state a special case and we should be grateful if you would consider this application and give a ruling upon it in due course, or, in the alternative, let us know that you are unwilling to state a special case.
Regards.”
It must be noted from this exchange of telexes that the Umpire in no uncertain terms had made it specifically clear that except for the matters stated in his telex there would be no further proceedings. To this telex petitioners’ Solicitors’ only reply was that they wanted the Umpire to consider the application made by them earlier for stating a special case and to give a ruling on the same. No other reaction was communicated by them to the Umpire. Neither did they tell the Umpire that the proceedings should not be deemed to have been closed nor did they inform him that they wanted a rehearing of the case either to cross-examine the witnesses or to lead more evidence. They did not even ask the Umpire as to on what points the Arbitrators had disagreed. However, now a case is sought to be made out that they are prejudiced because the Umpire straightway proceeded to pronounce the Award without giving them a chance to examine and cross-examine certain witnesses. It is also now their case that they were waiting for the Umpire’s ruling on their application for stating a special case, forgetting the fact that the application which they had made for stating a special case itself had left the Arbitrator’s and the Umpire to decide which of the three courses should be adopted by them. It was also conceded by their counsel that the power to state a case was discretionary. The Umpire had adopted the course, namely, that of giving a Reasoned Award. The reasons include the reasons for refusing to state a special case.
It further appears from their submissions contained in grounds 5(e), (f) and (g) of the petition, that the petitioners are trying to create a confusion between two unrelated issues, namely, the Umpire’s refusal to state a special case and his proceeding to make the Award without hearing the petitioners. In ground 5(e), the petitioners contend that under the Act once the Umpire enters upon the reference he has to conduct the arbitration proceedings as though he was the sole Arbitrators and therefore the Umpire is obliged to hear the parties before he gives his award. While making this submission, the petitioners have not cared to refer to the Umpire’s telex of October 3, 1985 informing them of the fact that he had entered upon the reference, and their own Solicitors’ telex to the Umpire sent on October 8, 1985 (supra) and the fact that the only request made by them to the Umpire was to consider their application for stating a special case. In paragraph 5(f) again the petitioners have made a grievance that the disagreement between the two Arbitrators was not communicated to the parties and therefore no opportunity was given to the parties to address the Umpire or to make any submissions or to raise any objection regarding the finding of the Arbitrators. In paragraph 5(g) which is the only other place where the petitioners urge the point, they contend that the proceedings before the Umpire after he enters upon the reference constitute a separate arbitration and a party is entitled to have “fresh hearings and proceedings before him.”
52. Even in the petition thus no specific grievance is made that the petitioners wanted to cross-examine or lead the evidence of, any particular witness or witnesses. On the other hand, contrary to the agreed procedure it is contended that the petitioners had a right to have a fresh hearing and proceedings before the Umpire. Although in the circumstances it is not open for the petitioners to contend that any particular prejudice was caused to them because of the want of hearing before the Umpire and it is also not open for us to probe into the same, it was contended on behalf of the petitioners that two specific injuries were caused to them. The first was that they wanted to place before the Umpire further submissions and secondly, they wanted to cross-examine and examine certain witnesses. As regards the first grievance that they wanted to make further submissions, the petitioners did not indicate to us as to on what points they wanted to make the submissions and what the submissions were which they had not already urged before the Arbitrators and were not on record before the Umpire. They were also unable to tell us as to on what questions of law the Umpire had gone wrong. The only point on which the Umpire has gone wrong and on which the petitioners could place their fingers was the award of interest pendente lite. We will deal with the said question at a later stage and point out that since that part of the award can be legally severed from the rest of the award, the award as a whole does not stand vitiated.
As regards the second point, namely, that they would have cross-examined some witnesses of the respondents and led their own fresh evidence before the Umpire, it is conceded before us that the only witness they wanted to cross-examine was one Mr. Falcon and the only witness they wanted to examine was Shri Mittal. The record shows that Mr. Falcon was available for cross-examination before the Arbitrators so was Shri Mittal. In fact, the proofs of Mr. Mittal’s evidence were already tendered and they related to all the developments between the parties at least from April 1984 to December 1984. In this connection, the interesting point to be noted is that on the second day of the first session, namely, July 31, 1985, after the close of the proceedings, the petitioners sent an application to the Arbitrators and the Umpire by telex for amending Mr. Mittal’s proofs. The amendment was sought on the ground that it was the petitioners’ case that the parties by their contract had agreed to treat the July 1984 contract (i.e. 1982 contract ending in July 1984) at an end before the drilling of the new well began on May 20, 1984 and all further discussions thereafter concerned the making of a totally new contract. Therefore by this amendment the petitioners had sought to introduce a new case that even before the drilling of the new well began on May 20, 1984, the old contract had come to an end, and in fact the drilling of the new well on May 20, 1984 had begun under a new contract. What followed after this application is very important to examine the bona fides of the petitioners case that they were deprived of an opportunity to examine Shri Mittal on this point. This matter was taken up by the Arbitrators in their proceedings the next day, i.e. on August 1, 1985 when it was pointed out by the Arbitrators that there was no such case made out by the petitioners in their pleadings. Mr. Deshpande, the counsel for the petitioners, thereupon craved time to go through the pleadings. It then appears that questions were sought to be asked by the petitioners on the basis of this new case to the respondents’ witness who was in the witness box at that time, and this was objected to on behalf of the respondents. Hence the arbitrators suggested that the proper course for the petitioners was to make an application, if they so desired, to amend the pleadings. Accordingly, an application was made for amending the pleadings to that effect by Mr. Zaiwalla, the Solicitors of the petitioners, and the reason that was given for making the said application late was that Mr. Mittal was being interviewed by the petitioners’ Solicitors for the first time that afternoon with the intention of taking his proofs and the Solicitors M/s. Zaiwalla were instructed by the petitioners for the first time orally in May 1985, and till 10th June they had no instructions from the petitioners save and except that they were nominated as Solicitors. Consequently they had received an incomplete bundle of papers, The application for amendment was stoutly opposed by the respondents. In spite of the opposition, it was allowed by the Arbitrators holding that the amendment was not fundamentally inconsistent. The arbitrators however required the petitioners to formulate the amendment properly in writing and to be made available by 10 O’Clock the next morning, i.e. on August 2, 1985. However on the next day the petitioners withdraw the said amendment. It must further be remembered in this connection that for the purpose of this what was relied upon was the conversation between Mr. Mittal of the petitioners and Mr. Falcon of the respondents which had allegedly taken place between April 25 and May 15, 1984. If therefore the record before the Arbitrators shows this state of affairs with regard to the attempt to change the original case and thereafter the withdrawal of even the changed case, we fail to understand what case could have been made out by the petitioners before the Umpire by examining Mr. Mittal on the point. It has further to be remembered that the very same amendment was again sought to the introduced by the petitioners’ Solicitors by their letter of 5th August 1985. By their reply of August 6, 1985 the Arbitrators informed both the Solicitors that they did not propose to consider the second application for amendment without the comments from the respondents’ Solicitors. The respondents’ Solicitors by their reply of August 7, 1985 opposed the amendment on the ground that the petitioners had not availed of the opportunity to examine Mittal which was given to them and the only intention of the petitioners in making the said application was to cover the respondents letter of August 8, 1984 by which they had pointed out to the petitioners that they were going ahead with the rigging of the new well after the expiry of the old contract without the terms of the new contract in writing. To this, the Petitioners’ Solicitors rejoined by their long letter of August 8, 1985 in which they urged that there was a need to permit the amendment and the parties should not be bound down to their pleadings. This letter is remarkable for one more thing viz., that the procedure before the Arbitrators was as per agreement. The petitioners’ Solicitors in that latter, among other things, stated as follows:
“You are also aware that what is called the agreed procedure was reached by us in good faith without having full instructions (a fact which the other side was aware of) and, therefore, there must necessarily be a term implied in any such procedural agreement that, in so far as it is necessary in the interests of justice, the agreement relating to the procedure is open to amendment.”
The contents of the letter which were written long before the commencement of the second sitting on the September 18, 1985 also therefore prove that the parties had agreed before the Arbitrators to certain procedure to which we have already made a reference earlier and whereunder the Umpire was to participate in the proceedings and the Umpire did actively participate in the proceedings to which neither in this letter nor at any time thereafter any objection was taken.
53. On August 9, 1985 the Arbitrators gave their ruling that the petitioners had ample, fair and full opportunity to present such evidence as they desired and they may not now adduce additional evidence on that claim. The arbitrators also stated that they would only consider the two separate proofs of Mr. Mittal which were presented to them at the hearing. What is necessary to remember in this connection is that the petitioners had already submitted two separate proofs of Mr. Mittal’s evidence, one on July 26, 1985 and another on August 1, 1985 and in spite of that, it is the petitioners’ case, that Mittal had not made a mention of the negotiations with regard to the terms of the new contract in any of these proofs. We have already pointed out that, in fact, an application made earlier, i.e. on 31st July/August 1, 1985 to amend even these proofs for that purpose was withdrawn. We therefore fail to understand how the ruling given by the Arbitrators could either be faulted or called a misconduct. It is also necessary to point out that thereafter when the petitioners’ Solicitors wrote their letter of August 16, 1985 enclosing their Counsel Deshpande submissions-cum-application of August 5, 1985 for stating a special case, no mention of the amendment of Mittal’s proof was made there nor was the topic of the said amendment touched again throughout the further proceedings. In the circumstances the only conclusion that is possible is that there is no substance in the grievance made by the petitioners that the arbitrators had not given any opportunity to examine the witnesses. In fact, the opportunity given by the Arbitrators was not availed of by the petitioners. Hence the case now made out that the petitioners would have cross-examined Mr. Falcon or examined Shri Mittal had the Umpire given them an opportunity, lacks conviction.
54. We may now refer to the position of law on the question, namely, whether when the Umpire sits and participates in the arbitration proceedings with the consent of the parties to save both time and costs, there is an obligation on him to hear the parties once again after he enters upon the reference.
In (Oriental Fire and General insurance Co. Ltd. v. Murlidhaf Gopikissen Pvt, Ltd., the Division Bench of the Calcutta High Court held that just like the arbitrator, an umpire enters on the reference when he first applies his mind to the dispute or controversy before him. In that case the hearing of the case before the Arbitrators was presided over by the Umpire in terms of the arbitration clause. As the arbitration clause stated that the umpire appointed by the arbitrators would preside over the meeting held before the arbitrators and not merely remain present at the meeting, the intention of the parties was that Umpire as Presiding Officer would also take part in the proceedings. Accordingly the Umpire was required to apply his mind and to remove his doubt, he was entitled to put questions to the counsel and witnesses as also to hear the arguments. As the Umpire presided over the meeting held before the arbitrators, he was in the know of the subject-matter of the reference in full. Therefore, no further hearing was necessary before the Umpire. In these facts and circumstances when the arbitrators by their letter informed that they could not agree and requested the Umpire to proceed to make the Award the Umpire applied his mind to the dispute referred to arbitration and as such entered on the reference and thereafter made his award. It was further held that the question as to whether the Umpire upon entering on the reference, after the arbitrators had differed and before making his award, should have given notice to the parties, heard their witnesses and further submissions again, is to be considered in the context of the arbitration clause agreed by and between the parties and the facts and circumstances of the case. Where the arbitration clause requires or it is agreed by the parties that he Umpire will only sit with the Arbitrators at the meeting, then if the Arbitrators disagree or allow “their time to expire without making the award and the umpire enters on the reference, the umpire should give notice to the parties about his entering on the reference and would allow them to examine the witnesses and make submissions afresh if they so desire although that may amount to duplication of hearing of the case. However, where the arbitration agreement enjoins the Umpire to preside over the meetings of the arbitrators thereby entitling him to exercise control over the meeting, i.e., to hear the witnesses and put questions to them as also to put questions to the lawyers and hear their submissions etc. the intention of the parties is clear that in case of difference between the arbitrators there shall not be duplication of hearing including hearing of witnesses in order to save delay and expenses of two investigations of evidence. In such cases the parties have had full opportunity to place their respective cases before the umpire and therefore by the failure of the Umpire to issue notices to the parties before making award it could not be said that any prejudice has been caused to the parties due to the absence of further hearing of the case before the umpire. We are in respectful agreement with this observation. All that we have to do in the present case is to substitute for a specific clause in the arbitration agreement itself the procedure agreed between the parties to the same effect. As pointed out earlier, in the present case the parties by an express agreement and also by their conduct had provided that in order to save both time and cost, the Umpire will not only remain present during the proceedings but will also participate in them and there w:ould be no need of a fresh hearing before the Umpire. All that the parties had agreed was that he would not act as a third arbitrator which would have meant that the decision of the arbitrators could have been by a majority. The umpire was to sit as an umpire and give his award as an Umpire on the basis of the hearing before him and the arbitrators, and that is what exactly he did. That was the understanding of the Arbitrators and the Umpire as well as of both the parties.
Russeli in his book on the Law of Arbitration (28th Edition) on page 237 while dealing with the position of the umpire sitting with arbitrators has observed as follows:
“In order to save the delay and expense of two investigations of evidence, it is often arranged that the umpire shall sit with the arbitrators and hear the evidence once for all. If without any special arrangement the umpire sits with the arbitrators and hears the evidence, that is no ground of objection to the award, but the umpire ought not in such a case to interfere with the arbitrators when they discuss the case.
If there be no special agreement, the umpire has no jurisdiction until the arbitrators disagree; but there appears to be no reason why they should not deliver notice of disagreement after a mere discussion of the case and before hearing the evidence, and this course is often resorted to in commercial arbitrations in order to save expense.”
On page 239 the learned author while dealing with the extent of umpire’s authority has stated that unless the arbitration agreement provides for an umpire to take an active part in the reference from the beginning, his duties do not arise (in the absence of intervention by the Court) until the arbitrators disagree. On page 240 the learned author proceeds to state that what the parties generally desire, however, is that the arbitrators shall sit with the umpire, so that he shall be in a position to decide upon all the evidence and argument presented to the arbitrator. For this reason it is a common practice in commercial arbitrations for the two arbitrators to express their disagreement in writing before formally hearing the evidence. There would seem to be no objection to this practice, which saves the expense of a double hearing.
Mustill and Boyd in their thesis on the Law and Practice of Commercial Arbitration in England on page 242 have with regard to the ascertainment of the procedure to be followed in arbitration proceedings observed as follows :
“Since the Acts are silent, (so also the Indian Arbitration Act) and the Courts have been careful not to provide a list of rules which are to be applied by rote, irrespective of the circumstances, a newly appointed arbitrator must look elsewhere for guidance on the way to conduct the reference. Since arbitration is a creature of agreement, one would except to find the arbitrator’s duties defined in the arbitration agreement itself, and one would also expect the Court to enforce such an agreement, subject to such qualifications as are imposed by the overriding requirements of public policy.”
On page 243, they have observed that the parties may agree upon the procedure even on a subsequent occasion. There can be an implied agreement or an agreement may be implied from the conduct of the parties. Referring to the implied agreement, the learned authors have observed that even if the parties have not expressly provided for the way in which the dispute is to be conducted, it may be possible to infer an agreement on one or more aspects of the procedure, from the way in which the parties have already begun to conduct the reference. Thus, if they behave in a manner which shows that they take it for granted that there will be no oral hearing, the absence of a hearing will by implication become part of the agreed procedure.
The position of law therefore is very clear. What procedure should be adopted for the conduct of the arbitration proceedings can be decided upon by agreement between the parties. The agreement can be inferred from several circumstances including the conduct of the parties. The parties by agreement can also dispense with the oral hearing and may leave the matter to the arbitrators or the umpire as the case may be to decide the dispute on the basis of the documents. Oral hearing is not a sine qua non of the principles of natural justice. If we appreciate this position in law, then as pointed out above, there being an agreement between the parties that the umpire will not have to go through a second set of hearing, there was nothing wrong if the umpire had proceeded to make the award as he did. This agreement between the parties was clearly spelt out from the directions given by the Arbitrators and the Umpire on June 11, 1985 and September 18, 1985 which were accepted by the parties, The petitioners have also made it expressly clear in their letter of August 8, 1985. At no stage any objection was raised to the said procedure. What is more, when the umpire by his telex of October 3, 1985 informed the parties that the proceedings were deemed to have been closed and he was proceeding to give his award, the only request made by the petitioners’ Solicitors was that their application for stating a special case should be considered. The Umpire therefore assured the petitioners’ Solicitors that he would consider that application. The application had left an option open to the Arbitrators/ Umpire that in case they were not minded to state a special case or to give an opportunity to move the Court under Ss. 5 and 11(2) of the Arbitration Act, they should give a reasoned award. At the cost of repetition, we may state that the Umpire has not only given a Reasoned Award but has also given reasons as to why he was not stating a special case for the opinion of the Court. We are therefore of the view that the grievance made by the petitioners that the Umpire had not given a hearing to them is without substance. They had taken the chance and now that they find that the award has gone against them, they have come out with the said grievance. That is the impression one gets after going through their entire case on the point.
55. It would not be out of place to point put at this stage the various facets of the conduct of the petitioners in this matter. It appears that from the beginning there was a constant attempt made by the petitioners to delay the proceedings. Although they were supposed to file their points of defence within 21 days of the filing by the respondents of their statement of claim, they did not do so till July 20, 1984. Further, even though there were two sets of hearing fixed as early as on June 10, 1985 and though their Indian Counsel Shri Deshpande was available from the beginning and in fact he acted as their counsel in the proceedings, the application for adjournment on the ground that they wanted to engage an Indian Counsel was made only on July 26, 1985. This was so in spite of the fact that the petitioners’ Solicitors’ letter of May 16, 1985 shows that the petitioners were conscious that they might have to argue the questions of Indian Law. This application for adjournment was again renewed one day earlier to the commencement of the first sitting of the arbitrators, i.e. on July 29, 1985 and when it was rejected on July 30, 1985, a second application for adjournment was made on August 1, 1985 when the Indian Counsel Shri Deshpande was present at their side at least from 30th July 1985, if not earlier, when the application for adjournment was refused, the petitioners threatened to move the Court but did not do so, taking a chance with the proceedings. What is further remarkable (probably not remarkable if the Indian practice in that behalf is taken as a standard), the adjournment for engaging an Indian Counsel was for no less than four months. Even so the arbitrators were prepared to grant the adjournment, provided the petitionrs agreed to pay interest for the period on the amount which may eventually be found due to the respondents. The petitioners declined to do so. That shows their sincerety in the conduct of the proceedings. What is further, an attempt was made to amend their witness Mittal’s proof by introducing a version that an agreement was concluded between him on behalf of the petitioners and Falcon on behalf of the respondents, to treat the original contract as being terminated either after 30th April or July 17, 1984 and to draw: up a new contract. When that application was granted by the Arbitrators, the next day the application was withdrawn. After abondoning their case for oral evidence on that aspect, the petitioners again sought to renew the very same application on August 5, 1985 which as stated earlier, the arbitrators rejected. At no time thereafter the petitioners pleaded either before the Arbitrators or the Umpire that there was an insufficient opportunity given to them to lead evidence. In fact as stated earlier, the only application made before the Umpire was to state a special case.
Further the petition as was filed originally did not make any mention of the Umpire’s telex of March 3, 1985 or of the petitioners’ Solicitors response of October 8, 1985 giving an impression that the Umpire had proceeded to make the impugned Award without even informing them that the Arbitrators had disagreed and he had entered upon the reference. It may also be ‘stated here that knowing fully well the legal status of the opinion given by the Court when the case is stated under Section 13(b) of the Act for its opinion, there was no need to insist even before the Umpire upon the statement of such case.
56. Although it is not open for us to go into the merits of the case we did so to find out if there was any error apparent on the face of the record. The petitioners advanced their arguments before us mainly on the merits of claim No. 1. On this, the bone of contention between the parties, was, firstly, whether there was an extension of the contract on the same terms and conditions up to December 2, 1984 after it expired on July 17, 1984 or whether a new contract had come into existence after July 17, 1984 and whether therefore the petitioners were liable to pay the hire charges at the rate of U.S. Dollars 41, 600 per day or at the reduced rate of U.S. Dollars 18,500 per day. This was essentially a matter of construction of the contract and also of the construction to be placed on the conduct of the parties. In terms of clause 14.0 of the Contract, if any dispute, difference or question were to arise between the parties in respect of the construction of the Contract, the same was to be decided by the Arbitrators. Therefore when the Umpire after interpreting the contract in question came to the conclusion that it was the original contract which had continued after July 17, 1984 in view of its clause 15.1 the Umpire was within his right and jurisdiction to do so and it could not be said that he had acted either without jurisdiction or had misconducted himself. The Court cannot interfere with the powers exercised by the Umpire in that behalf unless it was shown that the construction which he had put on the said clause 15.1 was either unreasonable or perverse. That is not even ihe case made out before us. On the other hand what is sought to be contended before us is that on the facts of the case, it should have been held that there was a new contract after 17th July 1984 at a reduced rate of U.S. Dollars 18,500 per day, and that the original contract had not continued. This submission is made on the basis that the interpretation placed by the Umpire on the said clause 15.1 is not correct. As stated earlier, it is not open for this Court to look into this grievance. The law on the subject is clear that when the construction of the contract is left to the Arbitrators, the Court does not interfere with the construction put on by them. In , M/s. Kapoor Nilokheri Co-op. Dairy Farm Society Ltd. v.’ Union of India, it is in so many words held that where an arbitrator is called upon to decide the effect of the agreement, he has really to decide a question of law, that is of interpreting the agreement, and hence, his decision is not open to challenge. In ; U. P. Hotels v. U. P. State Electricity ‘Board, the Supreme Court has stated that even assuming that there was an error of construction of the agreement or that there was an error of law in arriving at the conclusion, such an error is not an error which is amenable to correction even in a reasoned award. In order to set aside an award, there must be a wrong proposition of law laid down as the basis of the award. There is no contention advanced before us that the construction placed by the Umpire is based on a wrong proposition of law. On the other hand, as stated earlier, what is contended before us is that on the facts of the case, the Umpire ought to have held that there was a new contract arrived at between the parties after July 17, 1984.
57. Again, although it is not open for us to go into the question, the history of the negotiations between the parties after the petitioners terminated the contract with effect from 30th April, 1984 to which we have made a reference while narrating the facts, would show that the petitioners had not availed of the offer made by the respondents at the reduced rate of U.S. Dollars 18,500 per day or for that matter of U.S. Dollars 17,500 in time while the offer was still open. They had allowed the matter to drag on even after the respondent had made it clear that their offer was valid only till August 31, 1984, It is for the first time on September 4, 1984 that the petitioners came out with a draft of a new contract. Even this, draft was not on the pattern of the offer made by the respondents but contained terms which were materially different from the terms on the basis of which the offer was made by the respondents. Having therefore failed to respond to the offer in time, it was not thereafter open for the petitioners to tie down the respondents to their original offer. The situation which therefore emerged was that in the absence of a new contract arrived at between the parties, the petitioners were in terms of clause 15.1 of the contract liable to pay at the same daily rate of U.S. Dollars 41,600 till the respondents completed the new well which was then in progress. This is exactly what the Umpire has held. We find that even on facts it cannot be said that the Umpire has committed any error apparent on the face of the Award. It may be pointed out that the petitioner’s counsel Shri Deshpande had also conceded that as far as claim No. 1 was concerned, it was a matter of construction of the contract and not of facts. This being the case it is not possible to entertain the contention that there is any error of law committed by the Umpire with regard to the said claim. And the petitioner’s arguments mainly centred round the said claim.
58. Shri Zaiwalla for the petitioners submitted that no procedure as contended by the respondents was agreed upon for conducting proceedings either before the Arbitrators or the Umpire. In particular, he submitted that it was not agreed that there will be no hearing before the Umpire and if necessary, the petitioners were ready to examine in this Court their Counsel Shri Deshpande for the purpose. We have already discussed in detail all the circumstances on record to show that the procedure adopted in the proceedings before the Arbitrators and the Umpire before the disagreement of the Arbitrators and that adopted by the Umpire after the disagreement were both agreed to by the parties. Both the parties had acquisced in the same and none had ever raised any objection to it precisely because it was an agreed procedure. When the record is so clear on the subject no oral evidence can either undo or improve upon it. The Court has to come to the conclusion on the point on the basis of the contemporaneous events and documents and not on the basis of the oral evidence that the parties may choose to lead before it subsequently. Since on the basis of the relevant record we have come to the conclusion that the procedure adopted before the Arbitrators and that adopted by the Umpire was agreed to by all the parties, we have declined the offer of the petitioners to lead oral evidence of their Counsel on the point.
59. In view further, of our finding that the procedures adopted before the Arbitrators and by the Umpire were agreed once, we have not thought it necessary to go into the question whether the petitioners had waived their right to object to the said procedures.
60. The only other part of the Award assailed on merits was that pertaining to claim 5, i.e. the interest. It is contended by the petitioners that in awarding the interest as he did, the Umpire had committed an error apparent on the face of the record. The Umpire has granted interest on the amounts awarded by him under claims 1 and 3. There is no dispute that under clause 7.8 of the Contract, the petitioners were liable to pay to the respondents the undisputed amount within 30 days from the receipt of the Invoice from the respondents, failing which the petitioners were liable to pay interest at the rate of 12% per annum from the expiry of 30 days till payment. Acting under this clause, the Umpire has granted interest on the amounts awarded under claims 1 and 3. The interest has been granted for two periods, the first period runs from the date the amounts became due till 22nd April 19S5 on which date the respondents filed their statement of claim and the second period runs from 22nd April 1985 till the date of decree or sooner payment. There is no dispute that the Interest Act, 1978 being applicable to the arbitration proceedings, the arbitrator can award interest from the date on which the claim arises to the date of reference or of the statement of claim. In the present case, the Arbitrators had met on March 27, 1985 pursuant to the reference made to them and therefore the date on which [hey entered upon the reference is March 27, 1985. To that extent Shri Zaiwalla is right in contending that the date up to which the respondents were entitled to interest under the Interest Act was 27th March 1985. The Umpire has given interest up to the filing of the statement of claim, i.e. up to 22nd April 1985. Hence there is an error apparent on the face of the Award.
Mr. Zaiwalla further contended that no interest is payable for this period at all, since the contract does not provide for it and neither the provisions of Section 3(1)(a) nor of Section 3(1)(b) of the Interest Act are applicable in the present case. According to the Umpire himself there is no contract to pay interest on the disputed amount and he has recorded a finding that the amount awarded was not undisputed. Further the provisions of Section 3(1)(a) are inapplicable because, according to the said finding, no amount is payable under the contract and the provisions of Section 3(1)(b) are not applicable because admittedly there is no notice claiming interest for the said period. The Umpire has wrongly-relied upon a commercial practice for awarding interest for the said period.
We are afraid that the aforesaid submission is based on a wrong reading of the Umpire’s finding. The Umpire has not said that there is no amount payable by virtue of the contract. He has stated that there is no contract to pay interest on disputed amount. Since the claim or the debt is payable under the written contract, the provisions of Section 3(1)(a) are squarely applicable in the present case. Hence the respondents are entitled to interest for this period.
The second period for which interest has-been given is the period during which the arbitration proceedings were pending. It is conceded by Mr. Nariman appearing for the respondents that payment of interest for the period pendente lite is not permissible in the present case because even according to the Umpire’s finding the amount was not undisputed. Hence it is not necessary to discuss the relevant decision of the Supreme Court Executive Engineer, Irrigation, Galimalay. Abnaduta Jena. In so far as the Umpire has granted interest for the period pendente lite, there is thus again an apparent error of law.
As regards the third period, namely, from the date of the award to the date of the decree or sooner payment, Mr. Zaiwalla contended that the Arbitrators have no power to grant interest for the said period and for this purpose he relied upon a decision of the Supreme Court reported in 1989 (1) SCALE at i70 Gujarat Water Supply and Sewerage Board v. Unique Erectors (Gujarat) (P) Ltd.. The observations made there are to the effect that so far as interest for the period from the date of the Award till the date of the decree is concerned, the question was not specifically considered in Abnaduta Jena’s , but special leave had been refused against the order in so far as it allowed interest for the said period. The Court however held that interest should be allowed for this period, on the principle that the Court can, once proceedings under Sections 15 to 17 are initiated, grant interest pending the litigation before it, i.e. from the date of the Award to the date of the decree. The Court further observed that it might be doubtful whether this can be done in cases arising before the Interest Act, 1978 in view of the restricted scope of Section 29 of the Arbitration Act. But there could be no doubt about the Court’s power to grant this interest in cases governed by the Interest Act, 1978 as Section 3(1)(a) which was applied by the Court in the case of Abnaduta Jena to Arbitrators would equally apply to enable the Court to do it in the proceedings then before it.
No doubt that these observations show that it is the Court which has power to grant interest for the period between the date of the Award and the date of the decree. However, we do not see anything in these observations to prevent the Arbitrators from granting interest for the period from the date of the Award to the date of the decree. The Umpire has granted interest for this period also at the contractual rate and since the transaction is commercial we do not see anything wrong in it. Mr. Nariman conceded that so far as the payment made pursuant to the order of the Supreme Court is concerned the same was paid with interest up to the date of the said payment. Hence the balance amount would carry interest up 10 the date of the decree and that is how the direction in the Award till decree or sooner payment should be construed.
61. Sincetheinteresterroneouslygranted as shown above can be severed from the rest of the Award, the Award can be suitably modified without affecting the validity of the rest of the Award.
62. Mr. Nariman then contended that the Umpire had made no Award with regard to claim No. 6 which related to the obligation of the petitioners to pay the taxes corporate and personal on behalf of the respondents. The Umpire has merely expressed his pious hope that in view of the representations which were made by the petitioners before the Arbitrators, the petitioners would comply with their obligations. Although there is a good deal of substance in Mr. Nariman’s contention, it is not possible for. us to do anything in the matter since the present petition filed by the petitioners is to set aside the Award and there is no petition by the respondents to remit it. We may therefore only hope as the Umpire, has done, that the petitioners will honour their obligations in that behalf, if any.
In the result-
(i) we dismiss the petition subject to the modification of the Award on claim No. 5, i.e. interest as follows:
In paragraphs 2(e)(i) and 2(e)(ii) of the Award the interest at the awarded rate shall be calculated on the amounts awarded only for the periods from (i) the date of commencement of interest up to 27-3-1985 and (ii) from 17th October, 1985 till the date of decree.
The amount which is paid pursuant to the interim order including the appropriate interest on it will be deducted from the total amount payable under the Award;
(ii) we also pass an order under Section 17 of the Arbitration Act that there shall be a judgment in terms of the Award;
(iii) the petitioners shall pay to the respondents costs of these proceedings which are fixed at Rs.4,000/-.
63. Our passing the order under Section 17 of the Arbitration Act will not prevent the petitioners from filing an appeal, if they are otherwise entitled to do so.
64. On the application of the petitioners, we stay the operation of the aforesaid orders till 31st July, 1989.
The order dated January 20, 1986 will also continue to operate till July 31, 1989.
65. In the light of what we have held in this judgment, the office will number both the Awards.
Order accordingly.