Full Judgment Text
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PETITIONER:
INTERNATIONAL AIRPORT AUTHORITY OF INDIA
Vs.
RESPONDENT:
K.D. BALI & ANOTHER
DATE OF JUDGMENT29/03/1988
BENCH:
MUKHARJI, SABYASACHI (J)
BENCH:
MUKHARJI, SABYASACHI (J)
RANGNATHAN, S.
CITATION:
1988 AIR 1099 1988 SCR (3) 370
1988 SCC (2) 360 JT 1988 (2) 1
1988 SCALE (1)631
CITATOR INFO :
R 1988 SC2232 (13)
D 1991 SC 933 (11)
ACT:
Arbitration Act, 1940-Whether a party to arbitration
proceedings can seek revocation of authority of the
arbitrator appointed under sections 5 and 11-Of-on
apprehension in the mind of such a party about bias of the
arbitrator-Determination of the question.
HEADNOTE:
%
This petition for special leave was against the
judgment and order of the High Court of Bombay, rejecting
the application for revocation of the authority of the
respondent No. 1, the sole arbitrator under sections 5 and
11 of the Arbitration Act, 1940 (’The Act’).
The petitioner invited tenders for the construction of
the terminal building of a new international passenger
complex (Phase II) at the Bombay Airport. The respondent No.
2, a partnership firm, submitted a tender which was accepted
and a formal agreement followed, with a provision in the
agreement for settlement of disputes through a sole
arbitrator appointed under clause 25 of the conditions of
contract by the competent authority.
Certain disputes arose in which the petitioner sought
claims amounting to Rs.85 lakhs. The respondent No. 2-the
contractor-approached the petitioner to refer the disputes
to arbitration. The Chief Engineer of the petitioner
appointed respondent No. 1 as the arbitrator and made a
reference with regard to the claim of Rs.85 lakhs. The
respondent No. 2 asked the Chief Engineer to refer further
disputes to the arbitrator and, accordingly, on 16th May,
1986, a second reference was made with regard to 11 further
points of dispute with claims amounting to Rs.1.17 crores.
On 23rd December, 1986, the Chief Engineer made reference
No. 3 to the Arbitrator with regard to claim amounting to
Rs.5.81 crore. Thereafter, by applications of 8th and 9th
June, 1987, the petitioner expressed objections to the
references Nos. 2 and 3 made by the Chief Engineer
contending that the references were null and void, being
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irregularly made, and took preliminary objections before the
arbitrator to the arbitration proceedings, being lack of
jurisdiction of the arbitrator on the ground that he was not
validly appointed so far as references Nos. 2 and 3 were
concerned. On 7th
371
August, 1987, the petitioner made an application before the
arbitrator under section 13(b) of the Act with the request
to state the matter before him for the opinion of the Court
as special case.
The arbitrator by his order dt. 3rd October, 1987,
rejected the said application and the preliminary objections
of the petitioner. Thereafter, the petitioner alleging that
the arbitrator had formed his own opinion regarding the
matters in issue, filed an appliction before the High Court
for the revocation of the authority of the arbitrator on the
ground of apprehension in the petitioner’s mind about bias
of the arbitrator. The High Court by its judgment and order
dt. 2nd February, 1988, rejected the application of the
petitioner. The petitioner then moved this Court for relief
by special leave.
Dismissing the petition for special leave, the Court,
^
HELD: It was necessary to reiterate first what are the
parameters by which an appointed arbitrator can be removed
on the appliction of a party. It is well-settled that there
must be purity in the administration of justice as well as
quasi-justice involved in the adjudicatory process before
the arbitrator. Once the arbitrator enters on an
arbitration, he must not be guilty of any act which can
possibly be construed as indicative of partiality or
unfairness. It is not a question of the effect which a
misconduct on his part had in fact upon the result of the
proceeding, but of what effect it might possibly have
produced. It is not enough to show that even if there was
misconduct on his part, the award was unaffected by it and
was in reality just; the arbitrator must not do anything
which is not in itself fair and impartial. In the words of
Lord O’Brien, L.C.J, there must be a real likelihood of bias
and not a mere suspicion of bias before proceedings can be
quashed on the ground that the person conducting the
proceedings is disqualified by interest. The purity of
administration requires that the party to the proceedings
should not have apprehension that the authority is biased
and is likely to decide against the party, but it is equally
true that it is not every suspicion felt by a party which
must lead to the conclusion that the authority hearing the
proceedings is biased, as held by the High Court. The
apprehension must be judged from a healthy, reasonable and
average point of view and not on a mere apprehension of any
whimsical person. It cannot be and should never be in a
judicial or quasi-judicial proceeding that a party who is a
party to the appointment could seek the removal of an
appointed authority or an arbitrator on the ground that the
appointee being his nominee had not acceded to his prayer
about conduct of the proceedings. It is the reasonableness
and apprehension
372
of an average honest man that must be taken note of. There
was no substance found in the alleged grounds of
apprehension of bias, examined in this light. [378D-G; 379D-
H; 380A-B]
The High Court had examined five circumstances advanced
before it. The first was that the arbitrator did not record
the minutes of the meetings after September 29, 1987. The
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petitioner insisted that the arbitrator should record the
minutes setting out the entire oral arguments advanced on
behalf of the petitioner. This was not a reasonable request
and the arbitrator rightly declined to do that. This was no
basis of any reasonable apprehension of bias. [380C-E]
The next circumstance urged was that the preliminary
objections raised by the petitioner were rejected without a
speaking order. It was not necessary for the arbitrator to
record a long reasoned order on the preliminary objections,
and indeed the law does not demand writing such a long
order. In any case, it would be open to the petitioner to
file a petition under section 33 of the Act if the
petitioner felt that the arbitrator had no jurisdiction to
entertain the reference. It would be open to the petitioner
to challenge the award to be declared by the arbitrator,
including on ground of jurisdiction. [380E-H]
The third circumstance was that the petitioner had
filed an application under section 13(b) of the Act calling
upon the arbitrator to state a special case for the opinion
of the Court and the failure of the arbitrator to raise the
question of law was indicative of bias. This argument could
not be accepted. Section 13(b) confers power on the
arbitrator to state a special case but it does not make it
obligatory on the part of the arbitrator to state a special
case as soon as the party desires it. In this case, the
petitioner itself agitated the issue of jurisdiction and
other questions of law before the arbitrator. Once having
done so, it was not proper for the petitioner to ask the
arbitrator to state a special case. This was no ground for
bias. [381A-C]
The fourth ground was that the first reference,
involving a claim for Rs.85 lakhs, was heard for a
considerable time, while the arguments in respect of the
second and third references covering claims of Rs.1.17
crores and Rs.5.81 crores were concluded by the respondent
No. 2 within one and one-fourth of a day. The length of the
time taken is no indication of either speeding up or any
abuse of the proceedings. The Court agreed with the High
Court that there is no rule which requires that the length
of the argument should depend upon the magnitude of the
claim made. [381D]
373
The other point urged by the petitioner was that the
venue of arbitration was changed and this change was without
the consent of the petitioner. Change of venue would in no
manner indicate that the arbitrator was prejudiced against
the petitioner. This was solely a fallacious ground to make
out a case of alleged bias. [381E-G]
The other ground was that as, since 9th June, 1987, the
petitioner had not paid for the air-ticket of the arbitrator
from Delhi to Bombay and for his residential accommodation,
the respondent No. 2 must be providing for the air-ticket
and the hotel accommodation for the arbitrator, and the
arbitration was likely to be biased. As rightly pointed out
by the High Court, the petitioner, after the 9th June, 1987,
seemed to have decided that the arbitrator should not
proceed with the reference and in order to frustrate the
arbitration proceedings, started raising all sorts of
frivolous and unsustainable contentions. Having realised
that the arbitrator was not willing to submit to its
dictates, the petitioner declined to contribute for the air-
ticket, etc. No party should be allowed to throw out the
arbitration proceedings by such tactics, and if the
arbitrator did not surrender to the pressure, he could not
be faulted nor could the proceedings of the arbitrator be
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allowed to be defeated by such a method. [381G-H; 382B-D]
Another ground made was that there was a loss of
confidence. There was no reasonable ground for such a loss
of confidence. Every fancy of a party cannot be a ground for
removal of the arbitrator. [382D]
The Court was in agreement with the learned Judge of
the High Court expressing unhappiness over the manner in
which attempts had been made to delay the proceedings.
[382G]
The Court found no ground to conclude that there could
be any ground for reasonable apprehension in the mind of the
petitioner for revocation of the authority of the arbitrator
appointed by the petitioner itself. While endorsing and
fully maintaining the integrity of the principle ’justice
should not only be done, but should manifestly be seen to be
done’, it is important to remember that the principle should
not be led to the erroneous impression that justice should
appear to be done than it should in fact be done. There was
no reasonable ground of any suspicion of bias of the
arbitrator. The conduct of the arbitrator did not fall
within the examples given and principles enunciated in the
instances of cases where bias could be found in the
Commercial Arbitration by Mustill and Boyd, 1982, Edn.
[383A-C]
374
Russell on Arbitration, 18th Edition, page 378, Re
Brion and Brien, [1910] 2 I.R. 83, 89; The King (De Vesci)
v. The Justices of Queen’s Country, [1908] 2 I.R. 285; The
Queen v. Rand & Ors., [1986] 1 Q.B. 230; Ramnath v.
Collector, Darbhanga, ILR 34 Pat. 254; The Queen v. Meyer
and Ors., [1875] 1 Q.B. 173; Ekersley and Ors. v. The Messey
Docks and Harbour Board, [1894] 2 Q.B. 667; Gallapalli
Nageswara Rao v. The State of Andhra Pradesh, [1960] 1 SCR
580; Mineral Development Ltd. v. State of Bihar, [1960] 2
SCR 609; Ranjit Thakur v. Union of India & Ors., A.I.R. 1987
SC 2386 and R.V. Camborne Justices Ex parte Pearce, [1954] 2
All. E.R. 850, 855 referred to.
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Special Leave Petition
(Civil) No. 2545 of 1988.
From the Judgment and Order dated 2.2.1988 of the
Bombay High Court in Arbitration Petition No. 234 of 1987.
G. Ramaswamy, Additional Solicitor General, K.V. Kini,
S. Bharthari and P.H. Parekh for the Petitioner.
K.S. Cooper, D. Karkali, R. Karanjawala and Mrs. M.
Karanjawala for the Respondents.
The Judgment of the Court was delivered by
SABYASACHI MUKHARJI, J. After hearing the parties fully
we had by our order dated 10th March, 1988 dismissed the
special leave petition under Article 136 of the
Constitution. We stated therein that we would indicate the
reasons by a separate judgment later. We do so by this
judgment.
This is a petition for leave to appeal under Article
136 of the Constitution from the judgment and order of the
learned Judge of the High Court of Bombay dated 2nd
February, 1988. By the impugned judgment the learned Judge
has rejected the application for revocation of the authority
of respondent No. 1, Shri K.D. Bali, sole arbitrator under
sections 5 and 11 of the Arbitration Act, 1940 (hereinafter
called ’the Act’). In order to appreciate the contentions
raised, it may be stated that the International Airport
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Authority of India which was the petitioner in the High
Court and is the petitioner herein had invited tenders for
the work of construction of terminal building of new
international passenger complex (Phase II) at the Bombay
Airport at
375
Sahar, Bombay. Respondent No. 2, M/s. Mohinder Singh and
Company, a partnership firm having registered office at
Delhi and carrying on business in Bombay submitted a tender
and it was accepted for the value of Rs.7,26,31,325. A
formal agreement followed on 22nd January, 1982. It is not
necessary to refer to the clauses of the agreement for the
present purposes. It may be reiterated, however, that there
was provision in the agreement for settlement of disputes
through appointment of sole arbitrator under clause 25 of
the Conditions of Contract by the competent authority.
Certain disputes arose in which the petitioner sought claims
amounting to Rs.85 lakhs. Respondent No. 2 contractor
approached the petitioner by letter dated 22nd February,
1985 to refer the disputes with regard to claims amounting
to Rs.85 lakhs to the arbitration. One Shri K.K. Sud, the
Chief Engineer of the petitioner by his letter appointed
respondent No. 1 as the arbitrator and made the reference
with regard to the claim of Rs. 85 lakhs on 23rd February,
1985. On 8th March, 1985, it appears from the narration of
the events in the judgment impugned that the arbitrator gave
directions to the parties regarding submission of pleadings.
Respondent No. 2 filed pleadings within time, but the
petitioner filed its pleadings after a delay of two and a
half months. On 17th March, 1986 respondent No. 2 addressed
a letter to the Chief Engineer asking for reference of
further disputes to the arbitration and accordingly on 16th
May, 1986 a second reference was made referring 11 further
points of dispute. A third reference was sought by
respondent No. 2 on 22nd May, 1986 in respect of seven more
claims but the petitioner informed on June 12, 1986 that the
third reference was premature. It appears that in respect of
the second and third references the assertion of the
petitioner was that these disputes were not referable to the
arbitrator. The arbitrator had directed the parties to
submit their statements in respect of second reference and
though respondent No. 2 submitted its claim within the
stipulated period, the petitioner had again delayed doing so
according to the learned Judge and according to the
assertions of respondent No. 2 for a period of three months.
On 16th May, 1986 the Chief Engineer made reference No. 2
with regard to claims amounting to Rs.1.17 crores to the
arbitrator. On 23rd December, 1986 the Chief Engineer of the
petitioner made another reference being reference No. 3 to
the arbitrator with regard to claims amounting to Rs.5.81
crore. The petitioner by its applications of 8th and 9th
June, 1987 expressed its objections to the references Nos. 2
and 3 made by the Chief Engineer as according to the
petitioner the said references were null and void as these
were irregularly made. On 26th June, 1987 the petitioner by
its written submissions took preliminary objection before
the arbitrator
376
to the said arbitration proceedings, being lack of
jurisdiction of the arbitrator on account of the fact that
he was not validly appointed as far as references Nos. 2 and
3 were concerned. The petitioner by its application dated
3rd August, 1985 noted that respondent No. 1 had not noted
the minutes of the meeting dated 10th of June, 1985
correctly. The petitioner by its application on 15th of
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June, 1987 requested respondent No. 1 not to proceed with
the arbitration proceedings till its preliminary objections
regarding jurisdictional aspects were decided and also made
it clear that it was appearing under protest in the
proceedings before him. The petitioner on 17th June, 1987
made oral submissions before respondent No. 1 with regard to
its preliminary objections. Respondent No. 1 directed the
petitioner to submit the rest of its submission by way of
written submissions. The petitioner by its applications
dated 22nd and 25th June, 1987, respectively objected to
respondent No. 1 directing it to make submissions by way of
written submissions and thus hurrying up the proceedings. On
26th June, 1987 the petitioner submitted written submissions
to respondent No. 1. Respondent No. 1 by his order dated
27th June, 1987 directed that further proceedings would be
undertaken only after the extension of time. Respondent No.
2 applied for enlargement of time and the same was granted
by the High Court. On 7th August, 1987 application under
section 13(b) of the Act was made before the arbitrator with
a request to state the matter before it as Special Case for
the opinion of the Court.
The arbitrator by his order dated 3rd October, 1987
rejected the said application of the petitioner and also
rejected the preliminary objections of the petitioner at the
same time. On 14th October, 1987 the petitioner by its
letter noted the fact that it has sent the minutes of the
meeting with regard to the proceedings held on 28th and 29th
September, 1987 to the arbitrator as directed by him. In the
said letter the petitioner also protested against the
arbitrator’s decision of changing the venue of the
proceedings and also the inconvenient dates being fixed by
him. The petitioner by its letter dated 11th October, 1987
conveyed its concern to the arbitrator that he has been
rushing through the proceedings. On 16th December, 1987 the
petitioner alleging apprehension that respondent No. 1 had
formed his own opinion regarding the matters in issue. The
petitioner approached the High Court with the instant
application. This application was rejected by the High
Court. The learned Judge changed the date fixed for hearing
of the application for extension of time by enlarging the
time to make the award by 15th February, 1988.
377
The main contention for the revocation of the authority
of the arbitrator was about the alleged apprehension in the
mind of the petitioner about bias of the sole arbitrator.
The learned Judge of the High Court was unable to accept any
ground for alleged apprehension. It is apparent as the
learned Judge noted that respondent No. 2 had complied with
the directions of the arbitrator about the conduct of the
proceedings but the petitioner went on seeking adjournments
after adjournments. Respondent No. 2 complained to the
arbitrator on 4th May, 1987 about the delaying tactics
adopted by the petitioner and thereupon the arbitrator
directed that the hearing would take place on 8th and 9th
June, 1987 and no further adjournment would be granted.
After this direction was given by the arbitrator, the
petitioner addressed a letter dated 25th May, 1987 to the
arbitrator objecting to the jurisdiction in respect of the
second and third references. The objections to the
jurisdiction raised by the petitioner were, that the claim
made in the second and third references were barred by
principles analogous to Order II Rule 2 of the Code of Civil
Procedure, the Chief Engineer had no authority to refer the
disputes to the arbitration, the claims made by respondent
No. 2 were beyond the stipulated period of 90 days and
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therefore were not arbitrable and the time for declaring the
award having expired, the Arbitrator could not continue with
the arbitration proceedings. On 8th June, 1987 as mentioned
hereinbefore the learned advocate for the petitioner orally
made submissions on the issue of jurisdiction and thereafter
sought adjournment till June 9, 1987 for filing written
submissions. On 9th June, 1987 apart from filing written
submissions further oral arguments were advanced and
thereafter an adjournment was sought beyond June 1987. This
adjournment was sought because the time to declare the award
was expiring by June, 1987. The hearing was adjourned till
June 17, 1987 and again the petitioner’s advocate argued on
preliminary objections about jurisdiction. The arguments
were advanced on the next adjourned dates, that is, June 26
and June 27, 1987. It further appeared that as the time for
making the award had expired and the petitioner did not
consent to the extension of time, respondent No. 2 filed
petition to the High Court of Bombay for extension of time
on June 21, 1987. Thereafter the petitioner made an
application before the arbitrator under section 13(b) of the
Act calling upon the arbitrator to state special case for
the opinion of the High Court on certain alleged legal
objections. In the meanwhile the petition for extension of
time filed in the Bombay High Court was granted and the time
for declaring the award was extended till January 15, 1988.
Thereafter the arbitrator fixed the hearing on September 28,
1987 and the advocate for the petitioner again reiterated
the preliminary objections to the jurisdiction of the
arbitrator and
378
insisted upon the arbitrator, passing an order on the
application under section 13(b) of the Act. The arbitrator
rejected the preliminary objections by his order dated 3rd
October, 1987 and also the application for stating special
case to the High Court under section 13(b) of the Act. The
Petitioner’s advocate thereupon sought adjournment of the
hearing and accordingly hearing was adjourned on several
dates. Ultimately, the arbitrator fixed the hearings on 30th
October, 1987 and 31st October, 1987. The hearing was
postponed to 2nd November, 1987 and on that day the
petitioner’s advocate remained absent. Thereafter the
hearing proceeded on 6th November and 11th November, 1987 as
well as on 13th, 18th and 19th November, 1987. Respondent
No. 2 concluded arguments, while the arguments on behalf of
the petitioner were advanced on December 3, 1987. The
arguments further proceeded on December 8 and 9, 1987.
Thereafter on December 17, 1987 the present petition was
filed for revocation of the appointment of respondent No. 1
as the sole arbitrator. In our opinion, the above narration
gives a glimpse how a party can try to prolong a proceeding.
Several points were taken in support of the application
for revocation. It was sought to be urged that the
petitioner had lost confidence in the sole arbitrator and
was apprehensive that the arbitrator was biased against the
petitioner. It is necessary to reiterate before proceeding
further what are the parameters by which an appointed
arbitrator on the application of a party can be removed. It
is well settled that there must be purity in the
administration of justice as well as in administration of
quasi-justice as are involved in the adjudicatory process
before the arbitrators. It is well said that once the
arbitrator enters in an arbitration, the arbitrator must not
be guilty of any act which can possibly be construed as
indicative of partiality or unfairness. It is not a question
of the effect which misconduct on his part had in fact upon
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the result of the proceeding, but of what effect it might
possibly have produced. It is not enough to show that, even
if there was misconduct on his part, the award was
unaffected by it, and was in reality just; arbitrator must
not do anything which is not in itself fair and impartial.
See Russell on Arbitration, 18th Edition page 378 and
observations of Justice Boyd in Re Brien and Brien, [1910] 2
I.R. 83 at p. 89. Lord O’Brien in The King (De Vesci) v. The
Justices of Queen’s Country, [1908] 2 I.R. 285 observed as
follows:
"By bias I understand a real likelihood of an
operative prejudice, whether conscious or
unconscious. There must in my opinion be
reasonable evidence to satisfy us that there was a
real likelihood of bias. I do not think that their
379
vague suspicions of whimsical capricious and
unreasonable people should be made a standard to
regulate our action here. It might be a different
matter if suspicion rested on reasonable grounds
was reasonably generated and but certainly mere
flimsy grounds elusively generated and morbid
suspicions should not be permitted to form a
ground of decision."
(Emphasis supplied)
See The Queen v. Rand and others, [1866] 1 Q.B. 230; Ramnath
v. Collector, Darbhanga, I.L.R. 34 Pat. 254; The Queen v.
Meyer and others, [1875] 1 Q.B. 173 and Eckersley and others
v. The Mersey Docks and Harbour Board, [1894] 2 Q.B. 667.
In the words of Lord O’Brien, LCJ there must be a real
likelihood of bias. It is well settled that there must be a
real likelihood of bias and not mere suspicion of bias
before the proceedings can be quashed on the ground that the
person conducting the proceedings is disqualified by
interest. See in this connection Gullapalli Nageswara Rao v.
The State of Andhra Pradesh, [1960] 1 SCR 580 and Mineral
Development Ltd. v. State of Bihar, [1960] 2 SCR 609.
Recently this Court in a slightly different context in
Ranjit Thakur v. Union of India and others, A.I.R. 1987 S.C.
2386 had occasion to consider the test of bias of the Judge.
But there must be reasonableness of the apprehension of bias
in the mind of the party. The purity of administration
requires that the party to the proceedings should not have
apprehension that the authority is biased and is likely to
decide against the party. But we agree with the learned
Judge of the High Court that it is equally true that it is
not every suspicion felt by a party which must lead to the
conclusion that the authority hearing the proceedings is
biased. The apprehension must be judged from a healthy,
reasonable and average point of view and not on mere
apprehension of any whimsical person. While on this point we
reiterate that learned counsel appearing for the petitioner
in his submissions made a strong plea that his client was
hurt and had apprehension because the arbitrator being the
appointee of his client was not acceding to the request of
his client which the petitioner considered to be reasonable.
We have heard this submission with certain amount of
discomfiture because it cannot be and we hope it should
never be in a judicial or a quasi-judicial proceeding a
party who is a party to the appointment could seek the
removal of an appointed authority or arbitrator on the
ground that appointee being his nominee had not acceded to
his
380
prayer about the conduct of the proceeding. It will be a sad
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day in the administration of justice if such be the state of
law. Fortunately, it is not so. Vague suspicions of
whimsical, capricious and unreasonable people are not our
standard to regulate our vision. It is the reasonableness
and the apprehension of an average honest man that must be
taken note of. In the aforesaid light, if the alleged
grounds of apprehension of bias are examined, we find no
substance in them. It may be mentioned that the arbitrator
was appointed by the Chief Engineer of the petitioner, who
is in the service of the petitioner.
The learned Judge had examined the five circumstances
advanced before him. The first was that the arbitrator did
not record the minutes of the meetings after September 29,
1987. The learned Judge found that there was no merit in
this complaint. After 29th September, 1987 the petitioner’s
advocate orally made submissions that the arbitrator had no
jurisdiction to entertain the dispute. The advocate for the
petitioner also desired to file written arguments and the
arbitrator did not object to the same. In spite of it, the
petitioner insisted that the arbitrator should record the
minutes setting out the entire oral arguments advanced on
behalf of the petitioner. This in our opinion was not a
reasonable request to make and the arbitrator had rightly
declined to do so. This is no basis of any reasonable
apprehension of bias.
The next circumstance urged was that the preliminary
objections raised by the petitioner were rejected without a
speaking order. It was not necessary for the arbitrator to
record a long reasoned order on the preliminary objections
and indeed the law does not demand writing such a long
order. In any case, it will be open to the petitioner to
file any petition in the Court under section 33 of the Act,
if the petitioner felt that the arbitrator had no
jurisdiction to entertain the reference, but the petitioner
did not choose to adopt that course and proceeded to argue
for a considerable length of time, the issue of jurisdiction
before the arbitrator. The arbitrator was not bound to give
a reasoned order at every stage of the proceedings. The
arbitration proceedings would then never come to an end. It
was not in dispute that the terms of reference required the
arbitrator to give reasons for the award to be declared. It
would be, therefore, always open for the petitioner to
challenge the award to be declared by the arbitrator
including on the ground of jurisdiction. The learned Single
Judge of the High Court has so held and we are in agreement
with him on this point.
381
The third circumstances was that the petitioner had
filed application under section 13(b) of the Act calling
upon the arbitrator to state a special case for the opinion
of the Court on the question of law and the failure of the
arbitrator to raise this question of law was indicative of
the bias. We are unable to accept this argument. Section
13(b) confers power on the arbitrator to state special case
but it does not make it obligatory on the part of the
arbitrator to state a special case as soon as the party
desires to do so. In the instant case the petitioner itself
agitated issue of jurisdiction before the arbitrator and by
its conduct submitted the question of jurisdiction and other
questions of law for determination of the arbitrator. Once
having done so, it was not proper for the petitioner to ask
the arbitrator to state a special case. This, in our
opinion, is no ground for bias.
The fourth ground was that the first reference, where
the claim involved was Rs.85 lakhs, was heard for a
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considerable time, while the arguments in respect of second
and third references, which covered the claim of Rs.1.17
crores and Rs.5.81 crores were concluded by respondent No. 2
within one and one fourth of a day. The length of the time
taken is no indication either of speeding up or of any abuse
of the proceedings. We agree with the learned Judge that
there is no rule which requires that the length of argument
should depend upon the magnitude of the claim made.
The other point sought to be urged by the petitioner
was that the venue of the arbitration was changed from
conference room at Santacruz Airport, Bombay, to the
conference room at Indian Merchants Chambers at Churchgate,
Bombay. It is the claim of the petitioner that this change
of venue was without the consent of the petitioner. It
appears from the affidavit filed before the High Court that
the venue was changed because of disturbance at the
conference room at Santacruz and this fact was known to the
petitioner all along. Change of venue in no manner would
indicate that the arbitrator was prejudiced against the
petitioner and no prayer was made to the arbitrator not to
change the venue. This is solely a fallacious ground to make
out a case of alleged bias. The other ground was that the
petitioner and respondent No. 2 used to share the costs of
the air ticket of the arbitrator from Delhi to Bombay and
back. It was submitted that since 9th June, 1987 the
petitioner has not paid for the ticket and also not provided
for residential accommodation at Santacruz Airport. It was
further submitted that respondent No. 2 must be providing
the air-ticket and also hotel accommodation to the
arbitrator and the receipt of these facilities was enough,
according to the petitioner, to
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establish that the arbitration was likely to be biased. It
is said that the petitioner made these allegations because
the petitioner declined to contribute for the costs of the
air-ticket and providing for the accommodation. The
petitioner obstructed at all stages of the proceedings of
arbitration, what the arbitrator did he did openly to the
knowledge of the respondents. As the learned Judge has
rightly pointed out the petitioner after 9th June, 1987
seems to have decided that the arbitrator should not proceed
to hear the reference and in order to frustrate the
arbitration proceedings started raising all sorts of
frivolous and unsustainable contentions. Having failed and
realised that respondent No. 1 was not willing to submit to
the dictates of the petitioner, the petitioner declined to
contribute for the air-ticket and providing for
accommodation. No party should be allowed to throw out the
arbitration proceeding by such tactics and if the arbitrator
has not surrendered to pressure in our opinion, the
arbitrator cannot be faulted on that score nor the
proceedings of the arbitrator be allowed to be defeated by
such method.
There was another ground sought to be made before us
that there was a loss of confidence. We find no reasonable
ground for such loss of confidence. Every fancy of a party
cannot be a ground for removal of the arbitrator. It was
alleged that there were counter claims made by the
respondents. These counter claims have not yet been dealt
with by the arbitrator. Our attention was drawn to page 188
of Volume II of the paper book where a counter claim had
been referred to. It appears that the petitioner has
separately treated these counter claims. These counter
claims have not yet been considered by the arbitrator. That
is no ground for any apprehension of bias. An affidavit was
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filed before us that on 6th March, 1988 a letter was served
indicating the dates for hearing as 7th to 10th March, 1988.
It appears that the matter was adjourned thereafter but
by merely making an application for adjournment and refusing
to attend the arbitration proceeding, a party cannot
forestall arbitration proceeding.
We are in agreement with the learned Judge of the High
Court expressing unhappiness as to the manner in which
attempts had been made to delay the proceeding. There is a
great deal of legitimate protest at the delay in judicial
and quasi-judicial proceeding. As a matter of fact delay in
litigation in courts has reached such proportion that people
are losing faith in the adjudicatory process. Having given
our anxious consideration to the grounds alleged in this
application,
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we find no ground to conclude that there could be any ground
for reasonable apprehension in the mind of the petitioner
for revocation of the authority of the arbitrator appointed
by the petitioner itself. While endorsing and fully
maintaining the integrity of the principle ’justice should
not only be done, but should manifestly be seen to be done’,
it is important to remember that the principle should not be
led to the erroneous impression that justice should appear
to be done that it should in fact be done. See the
observations of Slade, J. in R. v. Cambore Justices Ex parte
Pearce, [1954] 2 All. E.R. 850 at 855. We are satisfied from
the facts mentioned hereinbefore that there is no reasonable
ground of any suspicion in the mind of the reasonable man of
bias of the arbitrator. Instances of cases where bias can be
found in Commercial Arbitration by Mustill and Boyd, 1982
Edn. The conduct of the present arbitrator does not fall
within the examples given and the principles enunciated
therein.
The petition for leave to appeal, therefore, fails and
it is accordingly dismissed.
S.L. Appeal dismissed.
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