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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

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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  

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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  

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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:-

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(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  

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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  

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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   

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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:-

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“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  

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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  

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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  

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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.

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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.  

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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  

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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.   

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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.”

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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”,  

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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  

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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.  

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(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  

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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   

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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  

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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  

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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   

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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  

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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.

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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  

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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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