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TMI Blog1994 (4) TMI 265X X X X Extracts X X X X X X X X Extracts X X X X ..... rator. Gurcharan Singh, his wife, Smt. Jaswant Kaur, his daughters, Miss Soniya and Miss Ramanjit Kaur, as also his son, Gurpreet Singh, filed Company Petition No. 79 of 1987 under section 155 of the Companies Act, 1956, for rectification of the register of members. This petition was fixed against Raghbir Cycles Private Limited, Raghbir Singh and his sons, Manjit Singh, Kanwaljit Singh, Paranjit Singh and Harjit Singh. This petition was filed way back in July, 1987, and at that time Paranjit Singh and Harjit Singh were admittedly minors and were sued through their father, Raghbir Singh, as their natural guardian. It is, inter alia, pleaded that the petitioners hold the following shareholding in accordance with the books of the company : 1.Gurcharan Singh 600 shares (although he is entitled to 2,100 shares in accordance with the allotment of 1,500 shares which was made on July 22, 1985, as evidenced by the return of shares made by the company to the Registrar of Companies). 2.Smt. Jaswant Kaur, wife of S. Gurcharan Singh 2,375 shares. 3.Miss. Soniya 2,640 shares. 4.Gurpreet Singh minor 3,250 shares. 5.Miss. Ramanjit Kaur 2,685 shares. 11,650 of Rs. 100 each. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tting the shares to Shri Narinder Singh Sethi, proprietor of Sethi Finance Company, Shri Devinder Singh, proprietor of Sikri Finance Company and Shri Sampuran Singh, proprietor of Sachdeva Finance Company. It is pleaded that these shares were never applied for by these allottees and the same were subsequently got transferred by Raghbir Singh, respondent No. 2, in the names of Kanwaljit Singh, Paranjit Singh and Harjit Singh, respectively. The total number of shares allotted were 37.336 with the following break up : Sardar Narinder Singh 12,256 shares. Sardar Sampuran Singh 11,980 shares. Sardar Devinder Singh 13,100 shares. 37,336 shares. The allotment was made on July 4, 1985. It is alleged that Gurcharan Singh who was the director of the company never attended such a meeting authorising such allotment. The transfers were also pleaded to be in violation of the articles of association of the company which have been reproduced at pages 7, 8 and 9 as under : "11. Subject to the restriction of these articles shares, shall be transferable but every transfer must be in writing in the prescribed form and must be left at the office accompanied by the certificate of the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y time within six calendar months after the expiry of the said 14 days, transfer the shares not so sold to any person (subject to the provisions of clause 15 hereof). (e) The provisions hereinbefore contained shall not apply to a transfer merely for the purposes of effecting the appointment in the name of new trustees, nor to a transfer by executors or administrators of a legatee under the will of, or, to the husband, wife or next of kin of a deceased member, nor a transfer by a trustee to a beneficiary provided that is proved to the satisfaction of the board that the transfer bona fide, falls within one of these exceptions." It is further pleaded that no notice whatsoever was given to the petitioners in compliance with article 12(a) reproduced above nor were they asked if they were willing to get these shares which were sought to be transferred by the allottees who themselves were fictitious. Narinder Singh and Sampuran Singh are brothers-in-law of respondent No. 2, the sisters of petitioner No. 1 as also respondent No. 2 being married to them. Devinder Singh is the sister's son of petitioner No. 1 and respondent No. 2. Somehow or the other fictitious documents were prepared in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shares to Kanwaljit Singh, his son. 2,700 shares to Paranjit Singh, his minor son. 1,700 shares to Harjit Singh, his another minor son." The aforesaid allotment, it is pleaded, was made in the meeting which was never attended by petitioner No. 1 nor was any notice issued to him. It is further pleaded that the above devices were adopted by respondent No. 2 and his sons, respondents Nos. 3 to 6, with a view to obtain a majority holding in the equity capital of the company and defeating for all times to come, the right of petitioner No. 2 who was a shareholder of the company to the extent of 50 per cent, at the time of its inception. The above devices were adopted by respondent No. 2 in league and in consultation with Shri D. C. Gupta, who was the auditor of the company. He never looked into the fictitious entries which had been made. On the other hand, he himself got 10 shares allotted to the Punjab Management Consultants Private Limited of which he is the managing director. On the aforesaid facts, it was sought to be made out that 1,500 shares which had been allotted to petitioner No. 1 were unnecessarily not shown in the register of members; that the shares of Smt. Chanan Devi h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,350 June, 1978 B/f 3,450 B/f 1,350 June, 1979 B/f 3,450 B/f 1,350 June, 1980 B/f 3,450 B/f 1,350 June, 1981 B/f 3,450 B/f 1,350 Smt. Hardip Kaur 400 S. Gurpreet Singh 600 S. Manjit Singh 450 Miss. Sonia 350 S. Kamaljit Singh 500 Miss. Ramanjit 300 S. Harjit Singh 500 S. Paranjit Singh 500 5,850 2,600 June, 1982 B/f 5,850 B/f 2,600 June, 1983 B/f 5,850 B/f 2,600 Smt. Hardip Kaur 800 Smt. Jaswant Kaur 1,200 S. Manjit Singh 550 S. Gurpreet Singh 500 S. Kamaljit Singh 450 Miss. Sonia 850 S. Harjit Singh 500 Miss. Ramanjit Kaur 950 S. Paranjit Singh 850 9,000 6,050 June, 1984 B/f 9,000 B/f 6,050 S. Raghbir Singh 900 S. Gurcharan Singh 550 S. Manjit Singh 1,700 S. Gurpreet Singh 1,650 S. Kamaljit Singh 1,600 S. Harjit Singh 1,650 S. Paranjit Singh 1,400 16,250 8,350 June, 1985 B/f 16,250 B/f 8,350 Smt. Jaswant Kaur 75 S. Gurpreet Singh 100 Miss. Sonia 1,240 Miss. Ramanjit Kaur 1,185 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 81 and was fully aware of the investments which were made by the brothers-in-law and nephew of petitioner No. 1 and respondent No. 2. It had been agreed that the loan/deposit given by the said firms shall be given 18 per cent, interest. The said firms rightly advanced money and gave deposits as they were aware of the fact that the company was doing good business and was contemplating to extend and expand the export business as well. Petitioner No. 1 and respondent No. 2 had agreed to accept the deposit/loan from their relations as the amount would be available without going through numerous formalities as were required if the amount was to be taken from banks or other financial institutions. It was denied that the said deposits are fictitious deposits and no interest was paid by the company to the said finance companies. The other transfer of shares as have been noticed in the petition were also pleaded to be legal, proper and in accordance with the provisions of the Companies Act and the rules framed thereunder. The petitioners filed the replication controverting the contents of the written statement. Company Petition No. 134 of 1987 was filed on November 3, 1987, by Gurcharan S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 2, who was alive at that time. In addition, 40 shares were being held by persons other than the two groups mentioned above). 1985 11,650 shares 16,250 shares. (June 30, 1985) (Additional 1,500 shares of Smt. Chanan Devi, mother of petitioner No. 1 and respondent No. 2, who was alive at that time. In addition, 40 shares were being held by persons other than the two groups mentioned above). 1985 13,150 shares 16,250 shares. (December 31, 1985) (With the addition of 1,500 shares allotted by the company on July 22, 1985). (Additional 1,500 shares of Smt. Chanan Devi, mother of petitioner No. 1 and respondent No. 2, who was alive at that time. In addition, 40 shares were being held by persons other than the two groups mentioned above). It is further pleaded that the affairs of the company were being managed since its incorporation by respondent No. 1. Petitioner No. 1 was managing the sales organisation of the products of the company at Calcutta and having full faith in the integrity and honesty of respondent No. 2. However, it transpired in the year 1981 that the following deposits were shown to have been made by the various companies as mentioned below: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es so allotted to the shareholders were subsequently got transferred by respondent No. 2 in his own name. 10,680 shares were transferred in the name of Raghbir Singh and balance of 10,055 shares were got transferred in the name of Manjit Singh, son of Raghbir Singh. No transfer deed was ever executed by the shareholders nor did the shareholders to whom the allotments of shares were made ever pay the amount said to have been paid at the time of allotment. On June 30, 1986, another lot of 9,100 shares of Rs. 100 each were allotted by Raghbir Singh, as under : "1,500 shares to self. 1,500 shares to Manjit Singh, his son. 1,700 shares to Kanwaljit Singh, his son. 2,700 shares to Paranjit Singh, his minor son. 1,700 shares to Harjit Singh, his another son." It is further pleaded that no meeting of the board of directors was held. Petitioner No. 1 who was one of the directors of the company never received any notice nor did he attend any such meeting whereby these allotments may have been sanctioned. Again on March 5, 1984, respondent No. 2, appointed Kanwaljit Singh, one of his minor sons, a director of the company without holding any meeting or issuing any notice to petitioner N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... being diverted to the coffers of Smt. Hardeep Kaur. It is further pleaded that the company receives different quotas of steel, coal, nickel, etc. These quotas are of the total value of about Rs. 10 lakhs per mensem. The quotas were supplied either monthly or by intervals of two or three months but the total value of the receipts during the year is about Rs. 1 crore. These quotas have been allotted to the respondent-company for the manufacture of bicycle parts and other articles but instead of utilising the same, it is pleaded, the respondent-company is selling the same in the black market. For example, ORC sheets and rods are received in the items of "steel" but they cannot be disposed of as such. The device adopted by the respondent-company is to sell the same by saying they were scrap. Such sales have been effected as scrap to the following parties and this list, it is pleaded, not only includes the disposal of scrap of steel but also nickel scrap : "1. Sonu Steels, Ludhiana (Steel scrap) 2. Sanjay Sales Corporation, Ludhiana do. 3. Standard Castings, Ludhiana do. 4. S. K. Metal Works, Ludhiana do. 5. Saraswati Metal Works, Ludhiana do. 6. Modern Steel Industries, Ludh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tition, too, has been seriously opposed by the respondents as in the written statement filed by the respondents, by way of preliminary objections, it has been pleaded that the petition under section 433 read with section 439 of the Companies Act, 1956, is not maintainable as the petitioners have already agitated the matter by filing a petition under sections 397 and 398 of the Companies Act, 1956, on the very same grounds, i.e., Company Petition No. 78 of 1987, to which a detailed reply has already been submitted. It is also pleaded that the entire story of the claim vis a-vis the shares of the petitioners has been reiterated in another petition, i.e., Company Petition No. 79 of 1987, filed under section 155 of the Companies Act, 1956, seeking rectification of the members of the company. Therefore, the two petitions with regard to one relief cannot proceed simultaneously. The petition is stated to be not disclosing any case for winding up of the company as made out under section 433(f) of the Companies Act, 1956. It is pleaded that the company is functioning smoothly and is successful in achieving the objects as contained in the memorandum of association of the company. The company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Raghbir Cycles (P) Ltd. and Overseas Cycles Company. It will be open to the parties to place necessary evidence before the arbitrator/umpire to show that the other properties even though individually owned were acquired through the funds of the company and if that is shown to the satisfaction of the umpire, it shall be open for him to go into the dispute with regard to the said properties as well. The decision of the arbitrator/ umpire shall be final and binding upon the parties and shall not be called in question in any court of law. It is made clear that it is the ambit and scope of both Petitions Nos. 79 of 1987, and 134 of 1987 which shall be before the umpire/arbitrator for decision. The remuneration of the arbitrator/umpire shall be Rs. 1 lakh and that would be shared by Gurcharan Singh, petitioner, and the respondent, Raghbir Singh, equally from their own funds and not from the funds of the company and/or the firm. Any other expenditure that might be incurred by the arbitrator/umpire for visiting Calcutta or Ludhiana or for any other purpose whatsoever shall be shared by the parties equally. It will be in the sole discretion/jurisdiction of the umpire to pass any interim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... however, been given to Mr. Chhina today. Both the sides undertake to file a reply to the respective claim petition, including the application aforesaid, on December 19, 1992. Both sides agree to appear on the said date, i.e., December 19, 1992, before me at A-27/15 DLF Qutab Enclave Phase-I, Gurgaon at 11.30 a.m. Mr. Suri has paid/made over a draft for Rs. 50,000 and Mr. Chhina has paid/made over a draft for Rs. 25,000 and has undertaken to pay the remaining Rs. 25,000 by December 19, 1992." On the adjourned date, i.e., December 19, 1992, no proceedings could be carried out as counsel for the parties had telegraphically made a joint request to grant more time to enable them to file replies to the respective claim petition and also requested that the next date of hearing be fixed at Chandigarh on December 29, 1992. Accordingly time for filing replies was extended up to December 29,1992, and the next date was fixed as December 29, 1992, at Chandigarh. On December 29, 1992, Shri L. M. Suri with Mr. Deepak Suri appeared along with the petitioner, Gurcharan Singh, before the arbitrator whereas Shri J. S. Narang with Mr. P. S. Chhina appeared for the respondent, Raghbir Singh. Both the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... application under rule 9 of the Companies (Court) Rules and the application under Order 23, rule 3 read with section 151 of the Civil Procedure Code, referred to above, as also the order passed by this court appointing the arbitrator as also the proceedings that have taken place before him and taking into consideration the documents furnished by each party in support of their respective claims decided as under : I.Company Petition No. 134 of 1987 is dismissed. II.The Overseas Cycles Company shall remain the sole proprietary concern of Shri Gurcharan Singh, petitioner, and no one would have any right/share in the said company. The respondent, Raghbir Singh, and his sons shall with immediate effect withdraw proceedings of any nature pending before any court, Tribunal or authority against Shri Gurcharan Singh or his family members, i.e., wife, son and daughters, concerning the property or affairs of Overseas Cycle Company or concerning any claim to any share in the said company or its property or premises owned or held on lease by it or by Shri Gurcharan Singh on its behalf. III.The alleged will of Smt. Chanan Devi, mother of the petitioner and the respondent, allegedly executed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jit Singh's holding shall stand reduced to 7,860 shares; (c)Harjit Singh's holding shall stand reduced to 7,188 shares; And in regard to 20,115 shares referred to above- (a)the shareholding position of Shri Raghbir Singh shall stand reduced to 6036 shares ; (b)and that of Manjit Singh shall stand reduced to 6,033 shares. (iii)As regards 9,100 shares referred to in para 7 of the Company Petition No. 79 of 1987, and detailed in para 15 of the claim petition filed before me by Shri Gurcharan Singh, petitioner, it is decided and directed that out of the said 9,100 shares, Shri Gurcharan Singh and his family shall be entitled to own 3,640 shares, i.e., 40 per cent, and are held to have been the owners all along from the very date the said shares had been allotted to Shri Raghbir Singh and/or any of his family members and these shares shall be treated as fully paid up shares. The resultant position of the shareholding in regard to these shares would be that- (a)Raghbir Singh's shareholding shall stand reduced to 900 shares ; (b)Manjit Singh's shareholding shall stand reduced to 900 shares; (c)Kanwaljit Singh's shareholding shall stand reduced to 1,020 shares ; (d)Paranjit Singh' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Singh, petitioner, and his family or Raghbir Cycles Private Limited, shall have no right of any kind whatsoever in the following : (a)Farm at village Budhewal, Ludhiana or (b)Sikri Steels (P) Limited built in property unit at Nichi Mangli Focal Point, Ludhiana. (c)Sikri Exports (P) Ltd. (d)Raghbir Bicycles International. (xiii)The factory premises of Raghbir Cycles Pvt. Ltd. and the machinery, tools and its property of any kind shall not be used/utilized in any manner by Shri Raghbir Singh and his family or Shri Gurcharan Singh and his family for running and promoting companies and firms individually already floated and run by either family or that may be launched hereafter. (xiv)That Shri Gurcharan Singh shall account for the rent received of the Flat No. 9 on 7th floor (Chowranghee Chatterjee International) 33-A, Jawaharlal Nehru Road, Calcutta, as the flat in question is the property of Raghbir Cycles (Pvt.) Ltd. (xv)That the respondent, Shri Raghbir Singh, and his family members on the one hand and the petitioner, Shri Gurcharan Singh, and his family members on the other hand shall not take out any proceeding in any court, tribunal or authority against each other indiv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es or their counsel shall be heard and not the attorney of the parties. In the manner aforesaid, it is pleaded that the sons of Raghbir Singh have been deprived of the larger part of their shareholding without hearing them or their counsel. It is further pleaded that the arbitrator had misconducted himself by picking up the percentage of shareholding of the parties in the year 1983 and 1985 ignoring the latest position in 1986 and there could be no object except to favour Gurcharan Singh to bestow more shares on him and his family so that they could retain 40 per cent, shareholding of the company instead of 31 per cent, held by them in the year 1986. It is further pleaded that in Company Petition No. 79 of 1987, the allotment of 9,100 shares was not challenged but the arbitrator has cancelled the same in clause IV(3) of his award whereby the shareholding of Raghbir Singh and his sons has been reduced to their prejudice. It is also pleaded that the award is beyond the order of reference as nowhere in Company Petition No. 79 of 1987 and Company Petition No. 134 of 1987 was any request made for making arrangements for the future management of the company Raghbir Cycles Private Limited ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as a sole proprietory concern against the documents on record which include judgments by the courts as also that the arbitrator has not read and applied his mind to the entire evidence on the record. The parties while giving him authority to decide the case on the basis of the documents already on the record rightly thought that he would go through those documents with the help of counsel for the parties. That not having been done, mistakes have appeared in the award and most of the decisions are not borne out by the documents on the record. The award is further objected to on the ground that the arbitrator had directed in clause VII of the award that the house at 319, Model Town, Ludhiana, shall be the absolute and exclusive property of Gurcharan Singh. This house belongs to the company and was purchased through its funds. The sale deed with regard to this house is also in the name of the company and is also on the records of the case. In the order of reference, it was stated that it would be open to the parties to place necessary evidence before the arbitrator/umpire to show that the other properties even though individually owned were acquired through the funds of the company a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ties to their satisfaction and both of them had given in writing that they did not want to lead any other additional evidence or present any other documents. It was agreed by the parties and counsel for both the parties on January 16, 1993, when the case was adjourned to February 6, 1993, that the said date had been given for reconciliation between the parties and the presence of their counsel was not necessary. It is also made out from the reply filed that the arbitrator had not misconducted himself in examining the parties separately behind each other's back like a conciliator. The scope and jurisdiction of the arbitrator was to be an umpire and an arbitrator. There was no such procedure prescribed and it was incorrect that only little time was spent with the two parties by the umpire. In fact the whole day was spent with the two parties who had presented their case respectively. It is also pleaded that none of the parties desired the help of their counsel to refer to the documents and both the parties gave it in writing that they did not want to refer to any other documents. It is further pleaded that the real dispute was between the two brothers who represented themselves, thei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... workability of the cinema hall, it is denied that there is only one way to the cinema hall or only one set of booking windows and there is no provision of separate management of the two cinemas. It is pleaded that although there is only one plot on which two cinemas are built they are two separate independent entities managed by the company separately. Separate accounts are maintained, separate returns are filed under various laws and, therefore, there cannot be any conflict between the employees of the company and Gurcharan Singh, inasmuch as there would be no employee of Gurcharan Singh. It is further pleaded that it is Gurcharan Singh who would manage the affairs of the cinema for and on behalf of the company and all employees would be the employees of the company. The decision of the umpire is also endeavoured to be supported by pleading that the umpire had considered all the pros and cons as also the entire evidence produced by the parties and only then has given a correct finding regarding the various properties of the company as well as various properties which had been constructed by the sons of Raghbir Singh and has rightly considered these properties while giving his awar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s conclusion on a disputed issue. In the case of an error apparent on the face of the award, the award can be set aside only if there is any proposition of law on which the award is based which is in conflict with law. It must be demonstrated to the court that the reasons given by the arbitrator are so palpably erroneous in law that they have resulted in the arbitrator taking a view which cannot be sustained in law. To put it differently, the court does not sit in appeal and does not reassess the evidence. Even if the court feels that had it been left to it, it would have assessed the evidence differently that would not be a valid ground for setting aside the award." The award can be set aside on the ground that there is an error apparent on the face of it. However, the scope of the court's jurisdiction in inter-fering with a non-speaking award on the ground noticed above is extremely limited. In Champsey Bhara and Co. v. Jivraj Balloo Spinning and Weaving Co. Ltd. [1922] 50 LR I.A. 324 (PC), the judicial committee enunciated the rule of limitation in this respect. The Supreme Court in Hindustan Construction Co. Ltd. v. State of Jammu and Kashmir [1992] 5 JT 325 (SC), while relying ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... error in law on the face of the award, means, in their Lordships' view, that you can find in the award or a document actually incorporated thereto, as for instance a note appended by the arbitrator stating the reasons for his judgment, some legal proposition which is the basis of the award and which you can then say is erroneous. Further, it is well-settled that if the award is to be set aside on the sole ground, then the sole ground complained of must be of such nature as to amount to no hearing at all. Further, the parties cannot get out of an award upon objections which do not affect the substantial justice of the case. Begum v. Khwaja Saiyed, AIR 1914 PC. Further, it is also settled that where the award is a fair and honest settlement of a doubtful claim based both on legal and moral grounds it should not be interfered with It was so held in Sitanna v. Marivada Virana, AIR 1934 PC 105. The first contention of Mr. Ramaswami, learned counsel for the objectors is that the order passed by appointing the arbitrator, even though prayed for by the parties themselves in applications filed by them in that behalf, has not emanated from any of the provisions of the Arbitration Act. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions 8,20 and 21. Section 8 deals with the situation where there is an arbitration agreement which provides that the reference shall be made to one or more arbitrators to be appointed by the consent of the parties. Section 20 deals with the persons who have entered into an arbitration agreement before the institution of any suit with respect to the subject-matter of the agreement or any part of it and where a difference has arisen to which the agreement applies. Either of the parties, instead of proceeding under Chapter II, may apply to a court having jurisdiction in the matter to which the agreement relates, that the agreement be filed in court. Section 21 which is attracted to the facts of the present case, reads thus : " Where in any suit all the parties interested agree that any matter in difference between them in the suit shall be referred to arbitration, they may at any time before judgment is pronounced apply in writing to the court for an order of reference." From the narration of the facts that have been given in the earlier part of the judgment it is clear that all the interested parties had agreed that the matter in difference between them which pertains to two compan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the principles of natural justice inasmuch as even though the matter was fixed for arguments for February 6, 1993, when it was adjourned for the said purpose on January 24, 1993, the arbitrator called only Shri Gurcharan Singh and Shri Raghbir Singh on January 24, 1993, and without giving any notice to the company or other parties, announced the award on January 27, 1993, i.e., before even the date fixed for arguments. The contention appears to be attractive but when the same is examined in the light of the proceedings conducted by the arbitrator it pales into complete insignificance. The way and manner the proceedings were taken by the arbitrator have been given in detail above. On December 19, 1992, no proceedings could be taken as learned counsel for the parties telegraphically sought more time to file replies to their respective claim petitions and also requested that the next date of hearing be fixed at Chandigarh on December 29, 1992. On the adjourned date, i.e., December 29, 1992, the parties submitted replies to the respective claim petitions. Counsel representing both the parties requested that the matter be taken up on December 31, 1992. The matter was thereafter adjou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were to appear without their counsel to make efforts at reconciliation. As mentioned above, on January 24, 1993, the joint statement of the parties, i.e., Gurcharan Singh and Raghbir Singh, was recorded. It appears that the point that the arbitrator heard the parties behind each other's back is sought to be made from the proceedings that were conducted on January 24, 1993. Nothing as such has been made out from the proceedings and the order that was recorded on January 24, 1993. However, it has been pleaded in paragraph 3(a) of the objection petition that the arbitrator misconducted the arbitration proceedings as he examined the parties separately behind each other's back like a conciliator and not as an arbitrator, and this procedure was not warranted in arbitration proceedings. Most of time was spent in separate meetings and the joint meeting was held only for 10 or 15 minutes. It is further pleaded that having found that there were vast differences between the two brothers and reconciliation was not possible, the arbitrator should have allowed them opportunity to assist him in resolving the disputes with the help of their counsel, who could refer to the documents on record and a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry to the principles of natural justice. The arbitrator was guilty of legal misconduct and there was sufficient material to vitiate the award. The facts of the cited case reveal that the statement given by the plaintiff to the arbitrator did not mention anything beyond the request that he should peruse the plaint and written statement and give his award according to law and justice. The statement which was obtained from the defendant, however, did not merely repeat the request but contained several statements of fact, which did not find a place in his written statement. These statements have been reproduced at page 22 which are as under : "(1) she felt glad with what was given to her by her husband ; (2) It is seen from the Government accounts that as per the settlement made by her husband, the lands given to her have been in her possession ; (3) Just like the plaintiff has her jewels in her possession, the other females in the house have their jewels in their respective possession or right therein and (4) Considering the domestic circumstances, our elder brother provided maintenance for the third wife, the plaintiff just as he had provided maintenance for his second wife." It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... absence of other." It shall be, thus, seen that the facts of the aforesaid case are entirely different and, therefore, the judgment of the Supreme Court in Bakhtawar Lal's case, AIR 1986 All 160, would provide no help to the objectors. The next contention of Mr. Ramaswami is that in the entire proceedings that were conducted by the arbitrator no notice was given either to the company or to other parties, i.e., parties other than Gurcharan Singh and Raghbir Singh. The parties, who have been affected on various counts by the arbitration award, were, thus, not heard in the matter, violating the principles of natural justice, contends learned counsel. In the facts and circumstances that are available before this court even this argument of learned counsel has no merit and, thus, deserves to be rejected. From the array of parties in Company Petition No. 79 of 1987, it shall be seen that Gurcharan Singh along with his wife, Smt. Jaswant Kaur, daughters, Miss Soniya and Miss Ramanjit Kaur, and son, Gurpreet Singh, had filed the petition against Raghbir Singh, his sons, Manjit Singh, Kanwaljit Singh, Paramjit Singh and Harjit Singh. Hardip Kaur, was impleaded as party before the arbitrat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ects. In so far as this application is concerned, the same was also filed jointly and it does contain the name of counsel for the respondents, Shri J. S. Narang, advocate, although it has not been signed by the said learned counsel. It shall, thus, be seen that it is the two brothers who along with their families who were holding various shares and it is the dispute between them which was to be referred to the umpire/arbitrator whose decision was to be binding upon them and their family members. That apart, this court, while appointing the arbitrator, directed the parties to appear before the arbitrator on a particular date. Admittedly, counsel for the objectors was representing not only Raghbir Singh but his family members as also the company. Once an appearance was made before the arbitrator by counsel, who, as mentioned above, was representing all the respondents, it was not obligatory for the arbitrator to have issued separate notices to all the individuals involved in the matter and if someone really wanted to be heard separately, it was for him or her to have put in appearance before the arbitrator. Mr. Ramaswami has raised serious objection to clause (vii ) of para graph (i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the arbitrator had no jurisdiction to deal with the matter, thus, rendering the award to be wholly illegal and without jurisdiction. Raising the same kind of objection, as has been noticed above, it is stated that there could not be shuffling of shares as has been done by the arbitrator because this was not the scope of either the company petition which was for rectification of the register or the one which was filed under section 433 of the Companies Act for winding up of the company. In one petition, the prayer was for rectification of the register, whereas, in the other, it was for deletion of shares or for transfer of shares of Chanan Devi in the name of the petitioner. This objection is with regard to clauses (i), (ii), (iii ) and (iv) of paragraph (iv) of the award rendered by the arbitrator. The same is the objection of learned counsel with regard to removal of the director without any process and it is argued that if this course could not be adopted by this court while dealing with the company petitions, referred to above, the same could not be done by the arbitrator. Mr. Sibal, learned senior advocate, appearing on behalf of the petitioners, has, however, joined issue wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Singh son of respondent No. 2 and that the two sons of Smt. Chanan Devi, petitioner No. 1 and respondent No. 2, were equally entitled to the extent of half of these shares. There were further allegations with regard to respondent No. 2 managing to show in the books of the company various credits as having been made by Sethi Finance Company, Sikri Finance Company and Sachdeva Finance Com pany. It was alleged that these were fictitious deposits. No interest what so ever was paid by the company to these finance companies. Interest was paid by bearer cheques in their names but the same was encashed from the Punjab and Sind Bank, Miller Ganj, Ludhiana, by Raghbir Singh, respondent No. 2, his sons, Manjit Singh and Kanwaljit Singh. It was also pleaded that these shares were never applied for by the allottees and the same were subsequently got transferred by Raghbir Singh, respondent No. 2, in the names of Kanwaljit Singh, Paranjit Singh and Harjit Singh. It is further the case of petitioners that shares were allotted to 40 persons, 11 existing and 29 non-existing employees of the company. Even though there could not be a prayer in the two company petitions, referred to above, for either ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be an order liquidating the company. It is in that back ground that the parties came to this court in the applications, referred to above, asking for reconciliation through an arbitrator, who was to decide the disputes with regard to the two companies known as Raghbir Cycles (P) Ltd. and Overseas Cycles Ltd. This reconciliation was necessary for the purpose of working the company and not for finishing it. The arbitrator in that light decided the matter and arranged things in a way that the company continues to exist. This court, in addition to rejecting the arguments, as noticed above, is constrained to observe that in all probability the objectors came up with the applications sensing an adverse decision against them, perhaps, with a view to gain time and then to raise all kinds of frivolous objections. The court has no choice in the matter but to reject all the objections as noticed above. It may also be mentioned here that there are four houses with the respondents and the specific allegations of the petitioners are that the same were purchased out of the funds of the company. Mr. Ramaswami, learned counsel, has also touched on some minor points, like the non-workability of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rang also contends that Smt. Hardeep Kaur is the sole proprietor of Raghbir Bicycles International and there was no dispute of any kind but the arbitrator has still mentioned the same in clause (xii) of paragraph (iv) of the award. He has also repeated the points that were taken thread bare by Mr. Ramaswami and have been noted above in the earlier part of the judgment which need no further consideration. However, in so far as the new points, as noticed above, are concerned, it is not understand able as to how in view of clause (v) of para (iv) of the award, there would be a deadlock. All that has been mentioned in the para in question is that there shall be two directors of Raghbir Cycles (P) Ltd. namely, Gurcharan Singh and Raghbir Singh or their respective nominees provided that parity is maintained between the two families in question. Why a company cannot carry on and transact business with two directors or their respective nominees, is wholly un-understandable. All that appears is that the arbitrator in view of the disputes between the parties thought that the two brothers representing their families were in fact the real persons who floated the company and there should be par ..... X X X X Extracts X X X X X X X X Extracts X X X X
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