TMI Blog2014 (3) TMI 866X X X X Extracts X X X X X X X X Extracts X X X X ..... resorted to when actual Assessments are available, which would show as to whether the quantum of set-off allowed and claimed was in fact justified - There is no substance in the order passed by the earlier Arbitrator dated 27.3.2007, and the subsequent enabling order passed by the Arbitral Tribunal dated 16.9.2011 permitting the respondent to apply under Section 27 could not have been passed. Confidentiality of assessment documents – Held that:- Judgment in Tulsiram Sanganaria and Another v. Srimati Anni Rai and Ors. [1971 (1) TMI 2 - SUPREME Court] followed - Section 71 of the Maharashtra VAT Act and its pre-cursor Section 64 of the Bombay Sales Tax Act, clearly state that particulars contained in any return or statement made by a party, or document produced along therewith are confidential and no court shall pass any order requiring the Government or a Government servant to produce any such statement, document or return - The words used in a statute are to be read as they are used, to the extent possible, to ascertain the meaning thereof - Both these provisions contained a bar only against the Government officers from producing the documents mentioned therein - There is no ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peal has been filed by Special Leave to challenge the said judgment and order. The appeal raises the question with respect to the scope of Section 27, and the circumstances in which the Arbitral Tribunal or a party before the Arbitral Tribunal can apply to the court for assistance in taking evidence. Facts leading to this appeal are this wise:- 3. The respondent No.1 herein is a company which owns certain brands of Indian Made Foreign Liquor (IMFL). The appellant is a company carrying on the business of distilling and bottling of IMFL. The predecessor of the respondent No.1 entered into an agreement with the appellant on 25.3.1997, under which the appellant agreed to manufacture and supply to the respondent No.1, IMFL of such brands and quantity, as would be specified from time to time on the terms and conditions contained therein. Under the said agreement, the contract price at which the IMFL was to be sold by the appellant to the respondent No.1, was exclusive of sales tax and other taxes, and the respondent No.1 was required to bear the same. 4. It appears that sometimes in 2001-2002, certain disputes arose between the parties. A major dispute between them related to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at page 32 of Volume III of the documents filed in the arbitration. 7. The advocate of the appellant vide his reply dated 21.3.2008, protested and objected to the production of these documents, since according to the appellant the same were being sought at a late stage when the proceeding had reached the stage of cross-examination of the witnesses of the respondent No.1. In paragraph 3 of this reply the learned advocate stated as follows:- 3. As regards the inspection of documents sought by your clients, my clients repeat that your clients are not entitled to inspection of any documents at this belated stage. In any event, my clients are not relying on any of the documents referred to in paragraphs (a), (b) and (c) of your letter. As regards the documents referred to in paragraph (d) of your letter, the said document is already on record before the Hon ble Arbitrator and hence a copy of the said document is already available with you. 8. Inasmuch as the appellant declined to give inspection / and produce the document as sought for, the respondent No. 1 made an application on 26.3.2007 before the learned Arbitrator, and in paragraph No. 5 thereof, sought a direction to p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ointed an Arbitral Tribunal consisting of three Judges, Hon ble Mr. Justice M. Jagannadha Rao (Presiding Arbitrator) and Hon ble Mr. Justice S.N. Variava (both former Judges of the Supreme Court of India), and Hon ble Mr. Justice M.S. Rane (Former Judge of Bombay High Court). On reconstitution of the Arbitral Tribunal the respondent No.1 pointed out that the order passed by the earlier Arbitrator dated 27.3.2007 had not been complied with. The Tribunal, therefore, called upon the appellant to state their position on an affidavit. Thereupon the Chairman of the appellant filed an affidavit before the Tribunal on 16.9.2011 stating that the appellant would not produce the sales tax assessment orders. In paragraph 3 of his affidavit he specifically stated as follows:- 3. I humbly and most respectfully submit before this Hon ble Tribunal that, Sales Tax Returns are the documents which are highly confidential and hence the same cannot be subject matter to be produced before this Hon ble Tribunal especially when, sales tax set off is already quantified by the Claimants and the same is forming a part of their claim in the present arbitration proceedings. I say that, it is not necessary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Petitioner s demand pertains to records for the period 1995-1996 to 2001-02. I say and submit that these are very old records. The same are not available with the Respondent No. 1. I say and submit that Respondent No. 1 is not able to trace these old records. I say that in fact when I made my Affidavit dated 16th September, 2011, I had in fact not searched the Company s records to ascertain whether the sales tax orders were in fact available with it. I say that accordingly I had made the said Affidavit dated 16th September, 2011 opposing the disclosure on the grounds stated therein. I say that during the pendency of the present petition, I have checked in order to ascertain whether these records were in fact available with the Company and have discovered that they cannot be traced. 6. Without prejudice to the aforesaid, I further say that the information that is being requested for by the petitioner is confidential and accordingly the same ought not be disclosed. 12. The learned Single Judge thereupon heard the parties. It was submitted on behalf of the appellant before the Learned Single Judge, that the provisions of Section 27 of the Act of 1996 were analogous to Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he challenge in this appeal is principally on two grounds. Firstly, that the type of order which was sought under Section 27 of the Act of 1996, against the appellant was not within the competence of the court, and at the highest the Arbitral Tribunal should have drawn an adverse inference against the appellant under Order 11 and Rule 21 of CPC for non-production of the documents, the production of which was sought by the respondent no.1. The second challenge was that in any case, the documents which were sought were confidential documents, and in view of the provision contained in Section 71 of the Maharashtra Value Added Tax 2002, and the order compelling the appellant to produce such documents could not have been passed. 15. As far as the first ground of challenge is concerned, as pointed out earlier, reliance was placed by the respondent no. 1 on the judgment of a Division Bench of Delhi High Court in Bhatia Tanning Industries (supra). Now, what had happened in this matter was that the respondent/industries were to supply certain material to the appellant, and since the respondent had committed default in making the supply, the appellant had raised a claim on account of risk ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 43 is confined to cases where a person, whether a party or a third person, is required to appear as a witness before the arbitrator. Such witnesses whom the arbitrator or umpire desires to examine may be summoned through court. 17. We, therefore, fail to see as to how this judgment can advance the submission of the appellant, though it was contended that Section 27 of the Act of 1996 is similar to Section 43 of the Act of 1940. On the other hand, as stated above, the Division Bench judgment of Delhi High Court clearly lays down that Section 43 of the pre-cursor Act permitted the arbitrator to call a third person as well as a party as a witness, and the section was not confined only to calling third persons as witnesses. 18. It was contended on behalf of the appellant that whereas Section 43 used the phrase parties and witnesses , Section 27 did not contain such a phrase, and it speaks of calling any person as a witness. Section 27(2) (c) does provide that an application under this section seeking assistance of the court shall specify the name and address of any person to be heard as a witness or as an expert witness. As far as the appearance of a party in pursuance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expression Processes includes summonses and commissions for the examination of witnesses and summonses to produce documents. 19. As seen from these two sections, Section 25 (c) provides that in the event a party fails to appear at an oral hearing or to produce documentary evidence, the arbitral tribunal may continue the proceedings, and make the arbitral award on the evidence before it. This evidence can be sought either from any third person or from a party to the proceeding itself. The substitution of the phrase parties and witnesses under Section 43 of the earlier act by the phrase any person cannot make any difference, or cannot be read to whittle down the powers of the Arbitral Tribunal to seek assistance from the court where any person who is not cooperating with the Arbitral Tribunal or where any evidence is required from any person, be it a party to the proceedings or others. It is an enabling provision, and it has to be read as such. The term any person appearing under Section 27 (2) (c) is wide enough to cover not merely the witnesses, but also the parties to the proceeding. It is undoubtedly clear that if a party fails to appear before the Arbitral Tribunal, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lable, which would show as to whether the quantum of set-off allowed and claimed was in fact justified. 22. In the circumstances, there is no substance in the first objection viz. an order passed by the earlier Arbitrator dated 27.3.2007, and the subsequent enabling order passed by the Arbitral Tribunal dated 16.9.2011 permitting the respondent to apply under Section 27 could not have been passed. 23. The second objection was that the assessment orders were confidential documents, and Section 71 of the Maharashtra Value Added Tax, 2002 and its pre-cursor Section 64 of the Bombay Sales Tax Act, did not permit production of these documents, and a direction as sought could not have been granted. Since, these two sections are invoked, the relevant part of both the sections are quoted below. Section 71 (1) All particulars contained in any statement made, return furnished or accounts or documents produced in accordance with this Act, or in any record of evidence given in the course of any proceedings under this Act (other than proceeding before a Criminal Court) or in any record of any assessment proceeding, or any proceeding relating to the recovery of a demand, prepared for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therein, but the assessee or his representative-in-interest could produce assessment orders as evidence, and such evidence was admissible. Thus, if a claim is to be decided on the basis of an order of assessment, the claimant as well cannot be denied the right to seek a direction to the party concerned to produce the assessment order. It is this very prayer which has been allowed by the earlier order dated 27.3.2007 passed by the then Arbitrator, and also by the subsequent order dated 16.9.2011 passed by the Arbitral Tribunal, and in our view rightly so. There is no substance in the second objection as well. 25. There is one more aspect which we must note, i.e., when the first respondent made an application for production of the assessment orders, the defence taken by the appellant in their affidavit dated 16.9.2011 was that those documents were confidential documents, and could not be directed to be produced. It was not stated at that time that the said documents were not available. It is ten months thereafter, that when the second affidavit was filed in the High Court, that the respondent for the first time contended that the said documents were not available. This was clearly ..... X X X X Extracts X X X X X X X X Extracts X X X X
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