published in http://judis.nic.in/supremecourt/imgst.aspx?filename=40827
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 8426 OF 2013
(@ out of SPECIAL LEAVE PETITION (CIVIL) NO. 28418/2012 )
Delta Distilleries Limited … Petitioner
Versus
United Spirits Limited & Anr. … Respondents
J U D G E M E N T
H.L. Gokhale J.
Leave Granted.
2. This appeal by Special Leave seeks to challenge the judgment
and order dated 20.7.2012 rendered by a Single Judge of Bombay High Court
allowing Arbitration Petition No.838 of 2011 filed by the respondent No.1
herein. The said petition sought to invoke the powers of the court under
Section 27 of the Arbitration and Conciliation Act, 1996 (herein after
referred to as the Act of 1996), which provides for seeking assistance of
the court in taking evidence. The said petition had been moved in
pursuance of the order dated 16.9.2011 passed by a three member Arbitral
Tribunal permitting the respondent No.1 to file such an application. The
learned Single Judge allowed the said petition, and thereby directed the
appellant to produce the documents as sought by the respondent No.1 before
the Arbitral Tribunal. This appeal 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 the
outstanding amount payable at the foot of the running account between them.
The respondent No.1 claimed that amongst others, amounts to the tune of
Rs.1,22,30,692 and Rs.70,23,107.52 were due and payable to the respondent
No.1, whereas the appellant maintained that an amount of Rs.39,37,993 was
payable to the appellant.
According to the first respondent, the appellant
had obtained from the Sales Tax Department set-off/refund on the sales tax
paid on packaging material, and such set-off/refund operated to reduce the
sales tax liability of the appellant, which was ultimately being borne by
the respondent No.1.
The respondent No.1 therefore, claimed that it was
entitled to the benefit of the said set-off/refund, and accordingly debited
the appellant for the amount of set-off/refund.
5. It was the case of the first respondent that although the
appellant had accounted for some of these entries in its accounts, it did
not account for a major portion of the same.
Clause 14 of the agreement
between the parties provided that any dispute or difference arising or relating to or connected with the said agreement, was to be referred to arbitration.
The above dispute was, therefore, referred to the Arbitration
of Hon’ble Mr. Justice D.M. Rege, former Judge of Bombay High Court.
However, the Learned Judge resigned as arbitrator, and thereafter the
proceedings were continued before another arbitrator Hon’ble Mrs. Justice
Sujata Manohar, former Judge of the Supreme Court of India.
6. Thereafter, the advocates of the respondent No.1 gave a notice
to the advocate on record of the appellant on 17.3.2007, calling upon them
to give inspection and to produce the following documents before the
learned Arbitrator:-
(a) All sales tax returns filed by the appellant with the sales tax
authorities for the assessment years 1995-1996 to 2001-2002.
(b) All sales tax assessment orders passed with regard to the appellant
for the above-mentioned period, and all appellate orders, if any passed in
any appellate proceedings arising out of the same.
(c) The objection, if any, filed by the appellants against the Notice in
Form 40, and proposed order at pages 123 & 124 of Volume VI of the
documents filed in the arbitration, the order, if any, passed thereon, and
the appellate proceedings, if any, therein.
(d) The letter dated 26th May 2000 mentioned in the letter 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 produce the documents mentioned at Sl.
Nos.(a) to (c) in the notice dated 17.3.2007.
The learned Arbitrator by
her order dated 27.3.2007 allowed the application only to the extent of the
assessment orders relating to the period 1995-1996 to 2001-2002 and the
appellate orders mentioned in paragraph 5(b).
The prayer for producing the
sales tax returns mentioned in paragraph 5(a) was not entertained.
Similarly, the prayer to produce the documents as sought in paragraph 5(c)
was not entertained.
The learned Arbitrator held in paragraph 4 of her
order as follows:-
“4. …. The documents in paragraphs 5 (a) and 5 (b) relate
to Sales Tax Returns filed by the Respondents for Assessment
Years 1995-1996 till 2001-2002 and Sales Tax Assessment Orders
passed in respect of the Respondents for this period including
any Appellate Orders. One of the claims made by the Claimants
in these proceedings against the Respondents related to the
benefit of any sales tax set-off granted to the Respondents in
connection with the goods in question which, according to the
Claimants, should accrue to their benefit. Therefore, Sales Tax
Assessment Orders relating to the period in dispute passed in
respect of the Respondents are relevant for the purpose of
determination of this aspect of the dispute. Mr. Savant,
learned counsel for the Respondents has contended that these
Sales Tax Assessments are not relevant because in any case, the
Claimants have quantified the set-off which they are claiming,
and hence, it is not necessary to look at Sales Tax Assessments
to ascertain the quantum of set-off. However, the
quantification is done by the Claimants on the theoretical basis
that full set-off must have been granted to the Respondents and
hence, 75% of the value of the set-off until May 2000 and the
full value of such set-off thereafter should be considered as
having accrued for the benefit of the Claimants. A hypothetical
calculation on such basis should not be resorted to when actual
Sales Tax Assessments are available which show the quantum of
set-off allowed. This is in the interest of both the parties.
Hence, the argument of Mr. Savant cannot be accepted.”
9. The appellants were dissatisfied with the order passed. In
their subsequent correspondence they made certain allegations against the
learned Arbitrator, who therefore, resigned from the said proceeding. The
parties therefore, appointed 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 to
inspect the said sales tax assessment orders in order to
ascertain the quantum of set off. I say that, the Claimants’
demand of sales tax set off to an extent of 75% and somewhere
also 100% is completely vague and arbitrary and that the same is
completely de hors the contents of the agreement dated
25.03.1997. I therefore say that, disclosure of any such sales
tax assessment orders shall be completely detrimental to the
rights and interest of the Respondent Company.”
10. In view of this affidavit of the Chairman of the appellant, the
Tribunal noted that the party in possession of the concerned documents was
refusing to produce them, even though it had been directed to do so. The
Tribunal vide its order dated 16.9.2011, held that the earlier order dated
27.3.2007 passed by the previous arbitrator could not be reviewed, nor did
the Tribunal have any jurisdiction to do so. The Tribunal, therefore,
permitted the respondent No.1 to apply to the court under Section 27 of the
Act of 1996, and to seek production of the sales tax assessment order for
the period 1995-1996 to 2001-2002, including any appellate orders in
support thereof.
The Tribunal observed as follows:-
“7.……One would have expected the Respondent to obey the
directions of this Tribunal and produce the above said
documents. However, in as much as they have not been produced
for more than four years and now there is categorical statement
by the Chairman of the Respondent Company that they will not
produce these documents, the Tribunal is compelled to exercise
the powers under Section 27 of the Act and grant permission to
the Claimant to apply to the Court for production of the
documents from the Respondent and/or the Sales Tax
Authorities……”
11. Pursuant to the said permission granted by the Tribunal, the
respondent No.1 filed the Arbitration Petition before the Single Judge of
Bombay High Court invoking the powers of the Court under Section 27 of the
Act of 1996, to seek a direction to the appellants to produce the earlier
mentioned assessment orders and appellate orders. The Assistant
Commissioner of Sales Tax, Pune was joined as respondent No. 2, and a
direction to produce those documents from his records was as well sought.
The appellant herein, opposed the said Arbitration Petition. Now for the
first time, in paragraphs 5 and 6 of the reply the appellants stated as
follows:-
“5. The 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
43 of the Arbitration Act, 1940. A judgment of the Delhi High Court in the
case of Union of India v. Bhatia Tanning Industries reported in AIR 1986
Delhi 195, on the said Section 43 was relied upon to submit that the said
section applies only to calling witnesses, and not for giving any direction
to the parties. It was further submitted that at the highest, an adverse
inference may be drawn against the appellant under Order 21, Rule 11 of
Code of Civil Procedure (hereinafter referred as CPC). Reliance was also
placed on the provision of Section 71 of Maharashtra Value Added Tax Act,
2002 (hereinafter referred as the Maharashtra Act) which is pari materia
with Section 64 of the Bombay Sales Tax Act, 1959, and it was contended
that the assessment orders were confidential, and could not be directed to
be produced. The Assistant Commissioner of Sales Tax who was respondent
No.2 to the Writ Petition (and who is respondent No. 2 to this appeal
also), submitted that the old record of the relevant period was not
available with the Sales Tax Department, and was already destroyed. In any
case it was submitted that in view of the above referred Section 71, such a
direction could not be issued.
13. The learned Judge repelled all these arguments. He held that
the appellant was misreading the judgment of Delhi High Court, and that it
could not be anybody’s case that a party in a proceeding can not be
examined as a witness. With respect to Section 71 of the Maharashtra Act,
the learned Judge held that it barred only the production of statements and
returns, and it was not applicable to the assessment orders. The learned
Judge also noted that in the earlier affidavit filed before the Tribunal,
the appellant had not taken any such plea that the assessment orders were
not available, but within ten months thereafter in another affidavit before
the High Court it was being contended that the said documents were not
traceable. The learned Judge therefore, allowed the said petition invoking
Section 27 of the Act of 1996, and directed the appellant herein to produce
the documents sought for. Being aggrieved by this judgment and order the
present SLP has been filed.
14. We have heard Mr. Ravindra Srivastava, learned senior counsel
in support of this appeal, and Mr. Chander Uday Singh, learned senior
counsel for the respondent no. 1. Respondent no. 2 is a proforma
respondent. The 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 purchase which was referred
to arbitration. The arbitrator sent notices to the address of the
respondents on record twice, and on both occasions the registered notices
were returned to the arbitrator stating that the addressee was not
available. It was in these circumstances that the arbitrator ordered that
there shall be a publication of the notice in a newspaper. That having
being done, nobody appeared for the respondent thereafter also, and the
arbitrator made an ex-parte award. After the award was filed in court, and
notice was sent to the respondent, an objection was raised that the
arbitrator had no power to order service by means of publication in the
newspaper. The learned Single Judge who heard the matter, set aside the
award on the ground that the arbitrator should have gone to the court under
Section 43 of the Arbitration Act, 1940 (Act of 1940 for short), and
obtained an order from the Court for service by publication which had not
been done.
16. This order was challenged in appeal, and a Division Bench of
the High Court allowed the said appeal. The Division Bench held that the
there are two separate sections in the Act of 1940. One was Section 42
which provided service of notice by a party or arbitrator, and the other
was Section 43. Section 43 of the Act of 1940 reads as follows:-
“43. Power of Court to issue processes for appearance
before arbitrator – (1) The Court shall issue the same processes
to the parties and witnesses whom the arbitrator or umpire
desires to examine as the Court may issue in suits tried before
it.
(2) Person failing to attend in accordance with such
process, or making any other default, or refusing to give their
evidence, or guilty of any contempt to the arbitrator or umpire
during the investigation of the reference, shall be subject to
the like disadvantages, penalties and punishments by order of
the Court on the representation of the arbitrator or umpire as
they would incur for the like offences in suits tried before the
Court
(3) In this section the expression “processes” includes
summonses and commissions for the examination of witnesses and
summonses to produce documents.”
The Division Bench in paragraph 9 of its judgment noted that Section 42
provides for the service of a notice by the arbitrator on a party before he
proceeds to hear the case. On the other hand in paragraph 11, the court
held that 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 to a notice of the arbitrator is
concerned, there is a specific provision for proceeding in the event of
default of a party under Section 25.
We may refer to Sections 25 and 27 in this behalf which read as follows:-
“25. Default of a party.- Unless otherwise agreed by the
parties, where, without showing sufficient cause,----
(a) the claimant fails to communicate his statement of
claim in accordance with sub-section (1) of section 23, the
arbitral tribunal shall terminate the proceedings;
(b) the respondent fails to communicate his statement of
defence in accordance with sub-section (1) of section 23, the
arbitral tribunal shall continue the proceedings without
treating that failure in itself as an admission of the
allegations by the claimant.
(c) 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.”
“27.Court assistance in taking evidence.- (1) The arbitral
tribunal, or a party with the approval of the arbitral tribunal,
may apply to the Court for assistance in taking evidence.
(2) The application shall specify----
(a) the names and addresses of the parties and the
arbitrators.
(b) the general nature of the claim and the relief sought;
(c) the evidence to the obtained, in particular,----
(i) the name and address of any person to be heard as
witness or expert witness and a statement of the subject-
matter of the testimony required;
(ii) the description of any document to be produced or
property to be inspected.
(3) The Court may, within its competence and according to
its rules on taking evidence, execute the request or ordering
that the evidence be provided directly to the arbitral tribunal.
(4) The Court may, while making or order under sub-section
(3), issue the same processes to witnesses as it may issue in
suits tried before it.
(5) Persons failing to attend in accordance with such
process, or making any other default, or refusing to give their
evidence, or guilty of any contempt to the arbitral tribunal
during the conduct of arbitral proceedings, shall be subject to
the like disadvantages, penalties and punishments by order of
the Court on the representation of the arbitral tribunal as they
would incur for the like offences is suits tried before the
Court.
(6) In this section the 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, the Tribunal
can proceed ex-parte, as provided under Section 25 (c). At the same time,
it cannot be ignored that the Tribunal is required to make an award on the
merits of the claim placed before it. For that purpose, if any evidence
becomes necessary, the Tribunal ought to have the power to get the
evidence, and it is for this purpose only that this enabling section has
been provided.
20. The counsel for the appellant tried to take advantage of the
first sentence of paragraph 12 of the Delhi High Court judgment, which
reads as follows:-
“(12) Section 43 has no application where the party to an
arbitration agreement has to be summoned for appearance before
the arbitrator so that he may participate in the proceedings and
state his defense.”
We must however note, what the Division Bench has stated thereafter, in the
very paragraph which is to the following effect.
“The learned judge seems to have been misled by the
expression 'parties' appearing in section 43. The word 'parties'
is used in the sense where the party itself is desired to be
examined as a witness by the arbitrator or umpire. The
expression 'witnesses' used along with the word 'parties' makes
the meaning of the legislature abundantly clear. The principle
of construction is that words of the same feather flock
together.”
As can be seen from the paragraph, the paragraph itself says that Section
43 has no application for summoning a party to appear to participate in the
proceeding. It is meant for securing the presence of third persons as well
as parties as witnesses. This position cannot be said to be altered due to
the absence of these words and use of the words ‘any person’ in Section 27
of the Act of 1996.
21. It was contended that if the necessary documents are not
produced, at the highest an adverse inference may be drawn against the
appellant. That is a power, of course available with the Arbitral
Tribunal, and if necessary the same can be used. However, as observed by
the learned Arbitrator in her order dated 27.3.2007, the documents sought
in the present matter were required to arrive at the decision on the claim
of the respondent no. 1, since, the quantification in support of the claim
had been done by the respondent no. 1 on a theoretical basis. A
hypothetical calculation should not be resorted to when actual Sales Tax
Assessments are available, 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 the purposes of this Act
shall, save as provided in sub-section (3), be treated as
confidential; and notwithstanding anything contained in the
Indian Evidence Act, 1872 (1 of 1872), no court shall save as
aforesaid, be entitled to require any servant of the Government
to produce before it any such statement, return, account,
document or record or any part thereof, or to given evidence
before it in respect thereof.”
“Section 64 (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 the purposes of this Act
shall, save as provided in sub-section (3), be treated as
confidential; and notwithstanding anything contained in the
Indian Evidence Act, 1872 (1 of 1872), no court shall save as
aforesaid, be entitled to require any servant of the Government
to produce before it any such statement, return, account,
document or record or any part thereof, or to given evidence
before it in respect thereof.”
24. If we look at the words used in these two sections, they very
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.
It is a settled
principle of law that 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 bar therein against
a party to produce any such document. In Tulsiram Sanganaria and Another
v. Srimati Anni Rai and Ors. reported in 1971 (1) SCC 284,
a bench of three
Judges of this Court interpreted an identical provision in Section 54(1) of
the Income Tax Act, 1922, and held that the said provision created a bar on
the production of the documents mentioned therein by the officials and
other servants of the Income Tax Department, and made it obligatory on them
to treat as confidential the records and documents mentioned 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 an after thought, and this attitude of the Respondent in a way
justified the earlier order permitting an application under Section 27
passed by the Arbitral Tribunal.
The Assistant Commissioner of Sales Tax
of the concerned area was also joined as respondent so that he could be
directed to produce the required documents.
However, he reported that those
documents were old records, and were destroyed.
The learned Single Judge
did not pass any order against the respondent No.2 to produce the
documents, as sought.
However, the learned Single Judge rightly allowed
the petition as against the appellant in terms of prayer clause ‘A’,
directing the appellant to produce the documents which were sought by the
respondent no. 1.
26. In the circumstances, there is no merit in the appeal.
The appeal is, therefore, dismissed.
…………..……………………..J.
[ A.K. Patnaik]
……………………………..J.
[ H.L. Gokhale ]
New Delhi
Dated : September 23, 2013
-----------------------
24
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 8426 OF 2013
(@ out of SPECIAL LEAVE PETITION (CIVIL) NO. 28418/2012 )
Delta Distilleries Limited … Petitioner
Versus
United Spirits Limited & Anr. … Respondents
J U D G E M E N T
H.L. Gokhale J.
Leave Granted.
2. This appeal by Special Leave seeks to challenge the judgment
and order dated 20.7.2012 rendered by a Single Judge of Bombay High Court
allowing Arbitration Petition No.838 of 2011 filed by the respondent No.1
herein. The said petition sought to invoke the powers of the court under
Section 27 of the Arbitration and Conciliation Act, 1996 (herein after
referred to as the Act of 1996), which provides for seeking assistance of
the court in taking evidence. The said petition had been moved in
pursuance of the order dated 16.9.2011 passed by a three member Arbitral
Tribunal permitting the respondent No.1 to file such an application. The
learned Single Judge allowed the said petition, and thereby directed the
appellant to produce the documents as sought by the respondent No.1 before
the Arbitral Tribunal. This appeal 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 the
outstanding amount payable at the foot of the running account between them.
The respondent No.1 claimed that amongst others, amounts to the tune of
Rs.1,22,30,692 and Rs.70,23,107.52 were due and payable to the respondent
No.1, whereas the appellant maintained that an amount of Rs.39,37,993 was
payable to the appellant.
According to the first respondent, the appellant
had obtained from the Sales Tax Department set-off/refund on the sales tax
paid on packaging material, and such set-off/refund operated to reduce the
sales tax liability of the appellant, which was ultimately being borne by
the respondent No.1.
The respondent No.1 therefore, claimed that it was
entitled to the benefit of the said set-off/refund, and accordingly debited
the appellant for the amount of set-off/refund.
5. It was the case of the first respondent that although the
appellant had accounted for some of these entries in its accounts, it did
not account for a major portion of the same.
Clause 14 of the agreement
between the parties provided that any dispute or difference arising or relating to or connected with the said agreement, was to be referred to arbitration.
The above dispute was, therefore, referred to the Arbitration
of Hon’ble Mr. Justice D.M. Rege, former Judge of Bombay High Court.
However, the Learned Judge resigned as arbitrator, and thereafter the
proceedings were continued before another arbitrator Hon’ble Mrs. Justice
Sujata Manohar, former Judge of the Supreme Court of India.
6. Thereafter, the advocates of the respondent No.1 gave a notice
to the advocate on record of the appellant on 17.3.2007, calling upon them
to give inspection and to produce the following documents before the
learned Arbitrator:-
(a) All sales tax returns filed by the appellant with the sales tax
authorities for the assessment years 1995-1996 to 2001-2002.
(b) All sales tax assessment orders passed with regard to the appellant
for the above-mentioned period, and all appellate orders, if any passed in
any appellate proceedings arising out of the same.
(c) The objection, if any, filed by the appellants against the Notice in
Form 40, and proposed order at pages 123 & 124 of Volume VI of the
documents filed in the arbitration, the order, if any, passed thereon, and
the appellate proceedings, if any, therein.
(d) The letter dated 26th May 2000 mentioned in the letter 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 produce the documents mentioned at Sl.
Nos.(a) to (c) in the notice dated 17.3.2007.
The learned Arbitrator by
her order dated 27.3.2007 allowed the application only to the extent of the
assessment orders relating to the period 1995-1996 to 2001-2002 and the
appellate orders mentioned in paragraph 5(b).
The prayer for producing the
sales tax returns mentioned in paragraph 5(a) was not entertained.
Similarly, the prayer to produce the documents as sought in paragraph 5(c)
was not entertained.
The learned Arbitrator held in paragraph 4 of her
order as follows:-
“4. …. The documents in paragraphs 5 (a) and 5 (b) relate
to Sales Tax Returns filed by the Respondents for Assessment
Years 1995-1996 till 2001-2002 and Sales Tax Assessment Orders
passed in respect of the Respondents for this period including
any Appellate Orders. One of the claims made by the Claimants
in these proceedings against the Respondents related to the
benefit of any sales tax set-off granted to the Respondents in
connection with the goods in question which, according to the
Claimants, should accrue to their benefit. Therefore, Sales Tax
Assessment Orders relating to the period in dispute passed in
respect of the Respondents are relevant for the purpose of
determination of this aspect of the dispute. Mr. Savant,
learned counsel for the Respondents has contended that these
Sales Tax Assessments are not relevant because in any case, the
Claimants have quantified the set-off which they are claiming,
and hence, it is not necessary to look at Sales Tax Assessments
to ascertain the quantum of set-off. However, the
quantification is done by the Claimants on the theoretical basis
that full set-off must have been granted to the Respondents and
hence, 75% of the value of the set-off until May 2000 and the
full value of such set-off thereafter should be considered as
having accrued for the benefit of the Claimants. A hypothetical
calculation on such basis should not be resorted to when actual
Sales Tax Assessments are available which show the quantum of
set-off allowed. This is in the interest of both the parties.
Hence, the argument of Mr. Savant cannot be accepted.”
9. The appellants were dissatisfied with the order passed. In
their subsequent correspondence they made certain allegations against the
learned Arbitrator, who therefore, resigned from the said proceeding. The
parties therefore, appointed 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 to
inspect the said sales tax assessment orders in order to
ascertain the quantum of set off. I say that, the Claimants’
demand of sales tax set off to an extent of 75% and somewhere
also 100% is completely vague and arbitrary and that the same is
completely de hors the contents of the agreement dated
25.03.1997. I therefore say that, disclosure of any such sales
tax assessment orders shall be completely detrimental to the
rights and interest of the Respondent Company.”
10. In view of this affidavit of the Chairman of the appellant, the
Tribunal noted that the party in possession of the concerned documents was
refusing to produce them, even though it had been directed to do so. The
Tribunal vide its order dated 16.9.2011, held that the earlier order dated
27.3.2007 passed by the previous arbitrator could not be reviewed, nor did
the Tribunal have any jurisdiction to do so. The Tribunal, therefore,
permitted the respondent No.1 to apply to the court under Section 27 of the
Act of 1996, and to seek production of the sales tax assessment order for
the period 1995-1996 to 2001-2002, including any appellate orders in
support thereof.
The Tribunal observed as follows:-
“7.……One would have expected the Respondent to obey the
directions of this Tribunal and produce the above said
documents. However, in as much as they have not been produced
for more than four years and now there is categorical statement
by the Chairman of the Respondent Company that they will not
produce these documents, the Tribunal is compelled to exercise
the powers under Section 27 of the Act and grant permission to
the Claimant to apply to the Court for production of the
documents from the Respondent and/or the Sales Tax
Authorities……”
11. Pursuant to the said permission granted by the Tribunal, the
respondent No.1 filed the Arbitration Petition before the Single Judge of
Bombay High Court invoking the powers of the Court under Section 27 of the
Act of 1996, to seek a direction to the appellants to produce the earlier
mentioned assessment orders and appellate orders. The Assistant
Commissioner of Sales Tax, Pune was joined as respondent No. 2, and a
direction to produce those documents from his records was as well sought.
The appellant herein, opposed the said Arbitration Petition. Now for the
first time, in paragraphs 5 and 6 of the reply the appellants stated as
follows:-
“5. The 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
43 of the Arbitration Act, 1940. A judgment of the Delhi High Court in the
case of Union of India v. Bhatia Tanning Industries reported in AIR 1986
Delhi 195, on the said Section 43 was relied upon to submit that the said
section applies only to calling witnesses, and not for giving any direction
to the parties. It was further submitted that at the highest, an adverse
inference may be drawn against the appellant under Order 21, Rule 11 of
Code of Civil Procedure (hereinafter referred as CPC). Reliance was also
placed on the provision of Section 71 of Maharashtra Value Added Tax Act,
2002 (hereinafter referred as the Maharashtra Act) which is pari materia
with Section 64 of the Bombay Sales Tax Act, 1959, and it was contended
that the assessment orders were confidential, and could not be directed to
be produced. The Assistant Commissioner of Sales Tax who was respondent
No.2 to the Writ Petition (and who is respondent No. 2 to this appeal
also), submitted that the old record of the relevant period was not
available with the Sales Tax Department, and was already destroyed. In any
case it was submitted that in view of the above referred Section 71, such a
direction could not be issued.
13. The learned Judge repelled all these arguments. He held that
the appellant was misreading the judgment of Delhi High Court, and that it
could not be anybody’s case that a party in a proceeding can not be
examined as a witness. With respect to Section 71 of the Maharashtra Act,
the learned Judge held that it barred only the production of statements and
returns, and it was not applicable to the assessment orders. The learned
Judge also noted that in the earlier affidavit filed before the Tribunal,
the appellant had not taken any such plea that the assessment orders were
not available, but within ten months thereafter in another affidavit before
the High Court it was being contended that the said documents were not
traceable. The learned Judge therefore, allowed the said petition invoking
Section 27 of the Act of 1996, and directed the appellant herein to produce
the documents sought for. Being aggrieved by this judgment and order the
present SLP has been filed.
14. We have heard Mr. Ravindra Srivastava, learned senior counsel
in support of this appeal, and Mr. Chander Uday Singh, learned senior
counsel for the respondent no. 1. Respondent no. 2 is a proforma
respondent. The 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 purchase which was referred
to arbitration. The arbitrator sent notices to the address of the
respondents on record twice, and on both occasions the registered notices
were returned to the arbitrator stating that the addressee was not
available. It was in these circumstances that the arbitrator ordered that
there shall be a publication of the notice in a newspaper. That having
being done, nobody appeared for the respondent thereafter also, and the
arbitrator made an ex-parte award. After the award was filed in court, and
notice was sent to the respondent, an objection was raised that the
arbitrator had no power to order service by means of publication in the
newspaper. The learned Single Judge who heard the matter, set aside the
award on the ground that the arbitrator should have gone to the court under
Section 43 of the Arbitration Act, 1940 (Act of 1940 for short), and
obtained an order from the Court for service by publication which had not
been done.
16. This order was challenged in appeal, and a Division Bench of
the High Court allowed the said appeal. The Division Bench held that the
there are two separate sections in the Act of 1940. One was Section 42
which provided service of notice by a party or arbitrator, and the other
was Section 43. Section 43 of the Act of 1940 reads as follows:-
“43. Power of Court to issue processes for appearance
before arbitrator – (1) The Court shall issue the same processes
to the parties and witnesses whom the arbitrator or umpire
desires to examine as the Court may issue in suits tried before
it.
(2) Person failing to attend in accordance with such
process, or making any other default, or refusing to give their
evidence, or guilty of any contempt to the arbitrator or umpire
during the investigation of the reference, shall be subject to
the like disadvantages, penalties and punishments by order of
the Court on the representation of the arbitrator or umpire as
they would incur for the like offences in suits tried before the
Court
(3) In this section the expression “processes” includes
summonses and commissions for the examination of witnesses and
summonses to produce documents.”
The Division Bench in paragraph 9 of its judgment noted that Section 42
provides for the service of a notice by the arbitrator on a party before he
proceeds to hear the case. On the other hand in paragraph 11, the court
held that 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 to a notice of the arbitrator is
concerned, there is a specific provision for proceeding in the event of
default of a party under Section 25.
We may refer to Sections 25 and 27 in this behalf which read as follows:-
“25. Default of a party.- Unless otherwise agreed by the
parties, where, without showing sufficient cause,----
(a) the claimant fails to communicate his statement of
claim in accordance with sub-section (1) of section 23, the
arbitral tribunal shall terminate the proceedings;
(b) the respondent fails to communicate his statement of
defence in accordance with sub-section (1) of section 23, the
arbitral tribunal shall continue the proceedings without
treating that failure in itself as an admission of the
allegations by the claimant.
(c) 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.”
“27.Court assistance in taking evidence.- (1) The arbitral
tribunal, or a party with the approval of the arbitral tribunal,
may apply to the Court for assistance in taking evidence.
(2) The application shall specify----
(a) the names and addresses of the parties and the
arbitrators.
(b) the general nature of the claim and the relief sought;
(c) the evidence to the obtained, in particular,----
(i) the name and address of any person to be heard as
witness or expert witness and a statement of the subject-
matter of the testimony required;
(ii) the description of any document to be produced or
property to be inspected.
(3) The Court may, within its competence and according to
its rules on taking evidence, execute the request or ordering
that the evidence be provided directly to the arbitral tribunal.
(4) The Court may, while making or order under sub-section
(3), issue the same processes to witnesses as it may issue in
suits tried before it.
(5) Persons failing to attend in accordance with such
process, or making any other default, or refusing to give their
evidence, or guilty of any contempt to the arbitral tribunal
during the conduct of arbitral proceedings, shall be subject to
the like disadvantages, penalties and punishments by order of
the Court on the representation of the arbitral tribunal as they
would incur for the like offences is suits tried before the
Court.
(6) In this section the 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, the Tribunal
can proceed ex-parte, as provided under Section 25 (c). At the same time,
it cannot be ignored that the Tribunal is required to make an award on the
merits of the claim placed before it. For that purpose, if any evidence
becomes necessary, the Tribunal ought to have the power to get the
evidence, and it is for this purpose only that this enabling section has
been provided.
20. The counsel for the appellant tried to take advantage of the
first sentence of paragraph 12 of the Delhi High Court judgment, which
reads as follows:-
“(12) Section 43 has no application where the party to an
arbitration agreement has to be summoned for appearance before
the arbitrator so that he may participate in the proceedings and
state his defense.”
We must however note, what the Division Bench has stated thereafter, in the
very paragraph which is to the following effect.
“The learned judge seems to have been misled by the
expression 'parties' appearing in section 43. The word 'parties'
is used in the sense where the party itself is desired to be
examined as a witness by the arbitrator or umpire. The
expression 'witnesses' used along with the word 'parties' makes
the meaning of the legislature abundantly clear. The principle
of construction is that words of the same feather flock
together.”
As can be seen from the paragraph, the paragraph itself says that Section
43 has no application for summoning a party to appear to participate in the
proceeding. It is meant for securing the presence of third persons as well
as parties as witnesses. This position cannot be said to be altered due to
the absence of these words and use of the words ‘any person’ in Section 27
of the Act of 1996.
21. It was contended that if the necessary documents are not
produced, at the highest an adverse inference may be drawn against the
appellant. That is a power, of course available with the Arbitral
Tribunal, and if necessary the same can be used. However, as observed by
the learned Arbitrator in her order dated 27.3.2007, the documents sought
in the present matter were required to arrive at the decision on the claim
of the respondent no. 1, since, the quantification in support of the claim
had been done by the respondent no. 1 on a theoretical basis. A
hypothetical calculation should not be resorted to when actual Sales Tax
Assessments are available, 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 the purposes of this Act
shall, save as provided in sub-section (3), be treated as
confidential; and notwithstanding anything contained in the
Indian Evidence Act, 1872 (1 of 1872), no court shall save as
aforesaid, be entitled to require any servant of the Government
to produce before it any such statement, return, account,
document or record or any part thereof, or to given evidence
before it in respect thereof.”
“Section 64 (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 the purposes of this Act
shall, save as provided in sub-section (3), be treated as
confidential; and notwithstanding anything contained in the
Indian Evidence Act, 1872 (1 of 1872), no court shall save as
aforesaid, be entitled to require any servant of the Government
to produce before it any such statement, return, account,
document or record or any part thereof, or to given evidence
before it in respect thereof.”
24. If we look at the words used in these two sections, they very
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.
It is a settled
principle of law that 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 bar therein against
a party to produce any such document. In Tulsiram Sanganaria and Another
v. Srimati Anni Rai and Ors. reported in 1971 (1) SCC 284,
a bench of three
Judges of this Court interpreted an identical provision in Section 54(1) of
the Income Tax Act, 1922, and held that the said provision created a bar on
the production of the documents mentioned therein by the officials and
other servants of the Income Tax Department, and made it obligatory on them
to treat as confidential the records and documents mentioned 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 an after thought, and this attitude of the Respondent in a way
justified the earlier order permitting an application under Section 27
passed by the Arbitral Tribunal.
The Assistant Commissioner of Sales Tax
of the concerned area was also joined as respondent so that he could be
directed to produce the required documents.
However, he reported that those
documents were old records, and were destroyed.
The learned Single Judge
did not pass any order against the respondent No.2 to produce the
documents, as sought.
However, the learned Single Judge rightly allowed
the petition as against the appellant in terms of prayer clause ‘A’,
directing the appellant to produce the documents which were sought by the
respondent no. 1.
26. In the circumstances, there is no merit in the appeal.
The appeal is, therefore, dismissed.
…………..……………………..J.
[ A.K. Patnaik]
……………………………..J.
[ H.L. Gokhale ]
New Delhi
Dated : September 23, 2013
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