JUDGMENT : R.C. Patnaik, J. - On the application filed by the opposite party, the Additional Subordinate Judge, Phulbani, having revoked the appointment of Sri B.N. Sahu, a retired Chief Engineer, as an arbitrator, by order dated 31-1-1980 passed in M.J.C. No. 53 of 1979, the Petitioner has appealed to this Court by way of revision. 2. The facts in brief: The Petitioner undertook execution of "Construction of Main Dam and Mead regulator of Kakalbaki Minor Irrigation Project" in the district of Phulbani by executing an agreement No. 5 F-2 of 1972-73. Disputes having arisen, Sri D. Patra, a Superintending Engineer was appointed by the Chief Engineer as arbitrator under the provisions of Clause 23 of the agreement. Sri Patra, having delayed in entering into the reference, on motion by the Petitioner in M.J.C. No. 6 of 1978, was removed by the Additional Subordinate Judge, Phulbani, and Sri B.N. Sahu, a retired Chief Engineer, was appointed arbitrator by order dated 26-10-1978. Sri Sahu, the arbitrator entered into the reference and proceeded with the hearing of the case. During the pendency of the proceeding before him, the Petitioner filed an additional claim. It was agreed by the parties that the additional claim should be decided by the arbitrator' in a separate proceeding and the proceeding for the original dispute claim should be disposed of separately and early. Sri Sahu entered into the second reference on 17-9-1979 and the Petitioner filed his claim but the opposite party sought an adjournment for filing its objection. The arbitrator passed his award in the first reference and in due course the same was made a rule of the Court by the Additional Subordinate Judge in Title Suit No. 13 of 1979. An appeal carried to this Court by t he opposite party was dismissed on 10-10-1980 in Misc. Appeal No. 133 of 1980. The conclusion is that the award was not found to be tainted with any infirmity either by the trial Court or by this Court. 3. However, while the reference for the additional claim of Rs. 1,35,032.00 was pending adjudication before the arbitrator, the opposite party filed an application before the Additional Subordinate Judge for removal of Sri Sahu, the arbitrator. The grounds urged by the opposite party was that out of the total claim of Rs.
3. However, while the reference for the additional claim of Rs. 1,35,032.00 was pending adjudication before the arbitrator, the opposite party filed an application before the Additional Subordinate Judge for removal of Sri Sahu, the arbitrator. The grounds urged by the opposite party was that out of the total claim of Rs. 23,51,411.00 claimed by the Petitioner in the first reference, the arbitrator passed an award in favour of the Petitioner for Rs. 11,23,873,00 (including interest). In view of the huge amount and high rate of interest awarded by the arbitrator in the first reference, the opposite party apprehended that the said arbitrator would not act fairly and should be removed. The learned Additional Subordinate Judge comparing the value of the work done and paid, the amount claimed by the Petitioner, the amount for which the award was passed and the amount for which the additional claim was filed held: ...the contractor claimed quite a heavy amount before the arbitrator and got an award for an amount which he would not have got had he completed the project with all his men and material. Therefore the decision of the arbitrator is found to create an apprehension in the mind of the Petitioner that the case of the department would not be fairly dealt by the arbitrator in relation to the matters which are still pending for adjudication nor his decision would be judicious. This apprehension on the part of the Petitioner therefore entitles him to an order revoking the authority of the present arbitrator in as much as the same is indicative of bias on the part of the arbitrator towards the department. 4. On a short point this order could be quashed, namely that having regard to the fact that the award passed by the arbitrator in the first reference having already been made a rule of the Court which had been confirmed by this Court, it was not open to the Additional Subordinate Judge to make any comments on the merit/correctness of the first award. In that case the opposite party challenged the award by filing objection but its objection was held untenable both by the trial Court and in appeal by this Court. It was not open to any party in such circumstances to impugn the award or to evaluate the same critically.
In that case the opposite party challenged the award by filing objection but its objection was held untenable both by the trial Court and in appeal by this Court. It was not open to any party in such circumstances to impugn the award or to evaluate the same critically. It was not open to the opposite party having lost in its attempt at direct assault, to attack the same by an indirect way. It was equally in appropriate for the Additional Subordinate Judge to make any comments on the award which had already become a rule of the Court no long at the order making it a rule of the Court, stood. 5. Sri S. Patnaik, learned Counsel for the Petitioner placed the legal principles relating to removal/ revocation of authority of arbitrator and submitted that on the ground urged on behalf of the State, the arbitrator could not be removed nor his authority revoked. He referred to Russel on the Law of Arbitration (19th Edition). At page 163 four grounds upon which leave to revoke could be given are enumerated: (1) Excess or refusal of jurisdiction by arbitrator; (2) Misconduct of arbitrator; (3) Disqualification of arbitrator; and (4) Exceptional cases. He relied also on a decision of the Supreme Court in Amarchand Lalitkumar Vs. Shree Ambica Jute Mills Ltd., their Lordships of the Supreme Court held: Before the Court exercises its discretion to give leave to revoke an arbitrator's authority, it should be satisfied that a substantial miscarriage of justice will take place in the event of its refusal. In considering the exercise by the Court of the power of revocation, it must not be forgotten that arbitration is a particular method for the settlement of disputes. Parties not whishing the law's delays know, or ought to know, that in refusing a dispute to arbitration they take arbitrator for better or worse, and that his decision is final both as to fact and law. In many cases the parties prefer arbitration for these reasons. In exercising its discretion cautiously and sparingly, the Court has no doubt these circumstances in view, and considers that the parties should not be relieved from a tribunal they have chosen because they fear that the arbitrator's decision may go against them.
In many cases the parties prefer arbitration for these reasons. In exercising its discretion cautiously and sparingly, the Court has no doubt these circumstances in view, and considers that the parties should not be relieved from a tribunal they have chosen because they fear that the arbitrator's decision may go against them. The grounds on which leave to revoke may be given have been put under five heads: (1) Excess or refusal of jurisdiction by arbitrator; (2) Misconduct of arbitrator; (3) Disqualification of arbitrator; (4) Charges of fraud; and (5) Exceptional cases. They further held: ...it is not necessary to show that the arbitrator is in fact biased and it is enough to show that there is a reasonable ground for apprehension that the arbitrator will be biased. But the reasonable ground must be established to the satisfaction of the Court to which an application for leave to revoke authority of an appointed arbitrator is made. 6. The apprehension must be real, not fanciful, such apprehension as a prudent man, in the facts and circumstances of the case, would entertain. 7. It is strange that an application on the grounds stated in an earlier paragraph was filed by the opposite party. After the award became a rule of the Court and was confirmed by this Court, the only possible conclusion/inference in law was that the award was just and correct and was not the outcome of favour or bias. The ground did not come under any of the needs enumerated above for removal of an arbitrator. The plea of the opposite party for removal of Sri Sahu is without any substance and the learned Additional Subordinate Judge failed to appreciate the law. 8. In the result, the order removing Sri Sahu as arbitrator is annulled. Sri Sahu should dispose of the proceeding as expeditiously as possible. The revision is accordingly allowed with costs. Hearing fee is assessed at Rs. 200/- (Two hundred). Final Result : Allowed