In certain circumstances, law may permit denial of right of hearing, but, in order to deny that it should have a legal basis.

Ravikiran Shukre | Manikchand Pahade Law College, Aurangabad | 9th January 2020

Rudramuni Devaru V. Shrimad Maharaj Niranjan (AIR 2005 KANT 313)

Facts of the Case:

1. A well-known Veerashaiva Math called Moorusaavira Math at Hubli having large number of devotees in the Veerashaiva Community not only in the State of Karnataka but also from outside. It is regarded as Public Trust under the provisions of Bombay Public Trusts Act, 1950. Mathadhipati is appointed by way of appointment of successor by the existing Mathadhipati in accordance with the opinion of the Lingayath devotees of Hubli and Dharwad.
2. Mathadhipati (appellant no. 1) was appointed by the first respondent with the document dated 30^th October 1991. When Matter stood thus, first respondent sought to cancel the said document and the dispute arose between appellant and respondent. However, the differences and the dispute between them were settled by the intervention of devotees and well-meaning people of the Hubli and Dharwad.
3. Under the said settlement, the first respondent decided to forgive and forget the past and the appellant was again appointed as successor as per the wish of the devotees thereby, in effect, cancelling the cancellation deed dated 19.10.1995 and affirming the appointment of the appellant as successor as per registered deed dated 30th October, 1991. In that regard, the first respondent executed a deed dated 16.10.1998 and the same was duly registered. When the matter stood thus, the first respondent quite curiously and within a short time executed another cancellation deed dated 02.11.1998 cancelling the appointment of the appellant as the Mathadipathi without consulting and obtaining the consent of the Lingayath Devotees of Hubli-Dharwad and without informing the appellant.
4. Due to which there was chaos everywhere in devotees of Hubli and Dharwad. Therefore, appellant and first respondent eventually agreed to refer the dispute between them to the arbitral tribunal consisting of five arbitrators. In terms of the arbitration agreement, out of five arbitrators, the first respondent was to nominate two arbitrators, the appellant was to nominate two arbitrators and the Chief Minister of Karnataka was to nominate one arbitrator and all the arbitrators were required to be Mathadipathies of different Maths. Appellant nominated third and fifth respondents as his nominees whereas the first respondent nominated fourth and sixth respondents as his nominees. The Chief Minister of Karnataka nominated second respondent as his nominee. The second respondent, the records disclose, assumed the role of the presiding arbitrator of the arbitral tribunal.
5. Arbitral Tribunal initiated its proceedings from 25^th, 26^th and 27^th December 1998 and held meeting for the same. Further, sittings were on 17^th, 18^th and 19^th February 1999. Third respondent due to his ill health was unable to attend the sittings. And fifth respondent protested to the sittings were held in absence of the third respondent and requested to give opportunity to appoint another arbitrator in place of third respondent and requested to arbitral tribunal not to proceed without enquiry before arbitral tribunal is properly reconstituted in terms of arbitral agreements.  
6. The arbitral tribunal conducted enquiry passed the award on 27.03.1999 at Bangalore. The award is signed only by the second, fourth and sixth respondents. The third and fifth respondents have not signed the award. In the award, the installation of the appellant as the Mathadipathi vide registered deed executed by the first respondent dated 15.05.1998 and his assumption of the office of the Mathadipathi on 7th/8th November, 1998 in pursuance of the deed executed by the first respondent dated 16.10.1998 are held to be invalid. It is also held that the appellant is not entitled to continue as the Mathadipathi of the Math. Tribunal further held that the action of the first respondent in cancelling the appointment of the appellant as the Mathadipathi vide deed dated 02.11.1998 is valid.
7. Appellant being aggrieved by this award made an application under section 34 of the Act for setting aside the impugned arbitral award on various grounds award is null and void as arbitral tribunal was not constituted properly, and no opportunity of being heard was given to appellant.

Judgment:

1. Shri. Jaykumar S. Patil, learned counsel for the appellant contended that impugned order was passed by only three arbitrators out of five; and cannot be regarded as award within the meaning of that term under this Act. Award is nullity in the eyes of law as it was passed by only three arbitrators out of five arbitrators who constituted panel and third and fifth arbitrator did not participate in the decision making. It is contended that as third and fifth respondents submitted resignation well before the date on which award was passed, the arbitral tribunal ought to have given opportunity to appellant to nominate new arbitrators in pce of third and fifth respondents as third and fifth respondents were nominees of appellant. It was further contended that there is utter violation of principles of natural justice and just hearing.
2. It needs to be noticed in this case that the arbitral tribunal was a multimember body and, therefore, what was of importance and need was the joint deliberation from amongst all the members of the arbitral tribunal. There is a sound rationale behind the insistence that in a multimember body all the members should participate on all the material dates of enquiry. That persistence helps the members of tribunal to influence each other, to appreciate each other’s view point and ultimately to arrive at a conscience and unanimous opinion, if that is possible or to accept the opinion of the majority with respect and perfect understanding. The arbitral tribunal in this case is deprived of the essence of deliberations from amongst all the members of the arbitral tribunal. In taking this view, we are also fortified by the judgment of the Bombay High Court in the case of Faze Three Exports Limited v. Pankaj Trading Company and Ors.[1] arising out of Arbitration and Conciliation Act, 1996. In para 15 of the said judgment it is stated thus: “As arbitrators must all act, so must they all act together. They must each be present at every meeting; and the witness and the parties must be examined in the presence of them all; for the parties are entitled to have recourse to the agreement, experience and judgment of each arbitrator at every stage of the proceedings brought to bear on the minds of his fellow judges so that by conference they shall mutually assist each other in arriving at a just decision. In the present case, it is not disputed that there were only two arbitral meetings after the remand, i.e. on 12th August, 2002 and 14th August, 2002. The first meeting was merely adjourned and no procedure took place thereunder. Therefore, the only effective meeting was held on 14th August, 2002 and for the entire period of that meeting, one arbitrator was absent. In such circumstances, the award made by the arbitral tribunal cannot be sustained and has to be set aside.”
3. This takes us to the other contention of the appellant that the arbitral award is vitiated on account of utter violation of principles of natural justice and lack of fairness in the procedure adopted by the arbitral tribunal. It is needless to state that if the party making an application under Section 34 of the Act to set aside an arbitral award was not given proper notice of appointment of arbitrator or of the arbitral proceedings or was otherwise unable to remain present in the arbitral proceedings before the arbitral tribunal an arbitral award may be set aside by the Court. The minimum requirements of a proper hearing should include: (i) each party must have notice that the hearing is to take place and of the date, time and place of holding such hearing; (ii) each party must have a reasonable opportunity to be present at the hearing along with his witnesses and legal advisers, if any, if allowed; (iii) each party must have the opportunity to be present throughout the hearing; (iv) each party must have the reasonable opportunity to present statements, documents, evidence and arguments in support of his own case; (v) each party must be supplied with the statements, documents and evidence adduced by the other side; (vi) each party must have a reasonable opportunity to cross-examine his opponent’s witnesses and reply to the arguments advanced in support of his opponent’s case.
4. It is also admitted case that arbitral tribunal did not give any opportunity to cross-examine the witnesses of either side. Perhaps realising the above serious flaw in the conduct of the enquiry by the arbitral tribunal, the stock and specious argument placed before us by the learned counsels appearing for the respondents 1, 6 and 8 is that this case cannot be regarded as an adversarial litigation. This contention is not acceptable to us. The subject-matter of arbitral reference relates to the office of Mathadipathi of the Math. There was a serious dispute between the appellant, the 1st respondent and the 8th respondent as to who should be a successor Mathadipathi of Math. Therefore, if the arbitral tribunal were to declare that the appointment of the appellant as Mathadipathi vide registered deed dated 15.05.1998 is invalid and the cancellation of the appointment of the appellant as successor Mathadipathi vide cancellation deed executed by the 1st respondent on 02.11.1998 is valid, the law undeniably requires that the affected appellant should have been apprised of the adverse materials collected by the arbitral tribunal or adduced by the 1st respondent.
5. It was contended by the counsel for the first respondent that arbitration agreement does not provide that arbitral tribunal shall conduct an enquiry in conformity of principles of natural justice and therefore, the procedure adopted by the arbitral tribunal with regard to which complaint is made by complainant cannot be faulted. This contention is rejected as violates the creed flowing from Article 14 of the constitution. In certain circumstances, law may permit denial of right of hearing, but, in order to deny that it should have a legal basis. It is well settled that though a statute or an instrument does not specifically include principles of natural justice, the Court is bound to read into such statute or instrument the principles of natural justice.
6. In Writ Appeal Nos. 3833 and 3834 of 2000 filed by the appellant herein, arising out of the proceedings initiated by the Charity Commissioner, this Court was told that the 3rd respondent therein (8th respondent herein) had already assumed the office of Mathadipathi. The Division Bench having noticed that fact passed the final order thus:

“The 3rd respondent will function as Swamiji. The District Court, Dharwad is directed to dispose of Misc. A. No. 66 of 1999 as expeditiously as possible, within a period of three months and both the parties are directed to co-operate for the disposal of the case. Pending disposal of the proceedings before the District Court, no further proceedings will be taken by the Charity Commissioner or first Respondent-Assistant Charity Commissioner or any other authority. The assumption of the charge by 3rd respondent is subject to the decision of the District Court.”

• The 8th respondent who is a party to the above order of the Division Bench is bound by the above direction.

After the remand, in the first instance, the arbitral tribunal is directed to know from the 3rd and 5th respondents whether they are willing to be members of the arbitral tribunal. In the event of their refusal to be members of the arbitral tribunal, the arbitral tribunal shall grant fifteen days’ time to the appellant to nominate arbitrator/arbitrators in place of respondent 3 and/or respondent 5, as the case may be. Having regard to the importance of the issue covered by the arbitral reference, we request the arbitral tribunal to dispose of the arbitral reference as expeditiously as possible and under any circumstance within the period of six months from today. The office is directed to send a copy of this order forthwith to the arbitral tribunal. In the facts and circumstances of the case, the parties shall bear their respective costs.

[1] 2004(2) RAJ 573 (Bom)