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1989 DIGILAW 233 (KER)

Pioneer Shopping Complex (P) Ltd. v. Silpi Construction Contractors

1989-06-21

RADHAKRISHNA MENON

body1989
Judgment :- 1. Advocate Sri. M.A. George took notice on behalf of the 1st respondent. The reasons stated hereunder would show that there was no need to issue notice to respondents 2 and 3. 2. This motion concerns an arbitration before two senior members of the bar. The petitioners seek leave of the court to revoke appointment of the joint arbitrator (the 2nd respondent herein) appointed by the 1st respondent. This petition is laid under Ss.5 and 11 of the Arbitration Act. 3. From the pleadings it is clear that the main ground for the revocation of the authority of the arbitrator is the alleged apprehension in the mind of the petitioner about the bias of the joint arbitrator. Substantiating this ground, the petitioners have made the following averments in the affidavit filed along with the petition:-- "The petitioners now reliably understand that the joint Arbitrator, the second respondent herein nominated by the first respondent and the counsel appearing for the first respondent have intimate professional relationship that there are reasons to believe that the Arbitrator nominated by the respondent the second respondent will not be able to discharge his duties in an impartial and fair manner. The petitioners reliably understand that there are arbitration proceedings pending, other than the present proceedings, in which they are appearing as the Arbitrator nominated and Counsel by/for one and the same party. On further enquiry the petitioners understand that for the last about 15 years or more they had been acting together as a team in many arbitration proceedings, one as the Arbitrator nominated by the party and the other acting as the Counsel for the same party. I reliably understand that M/s. Travancore Cochin Chemicals Ltd. had filed O.P. (Arb.) NO.46/82 before the Subordinate Judges' Court, Parur, seeking to revoke the authority of Sri. S A. Nagendran as an Arbitrator nominated by a contractor in the disputes that arise between M/s. Travancore Cochin Chemicals Ltd., and the said contractor Sri. C.K. Govindankutty Nair. The petitioner in the said O.P.(Arb.)No.46/82 pointed out that the counsel Sri. M.A. George who was appearing for the contractor in said proceedings, was simultaneously acting as an Arbitrator nominated by another contractor, V.T. Abraham in which Sri. S. A. Nagendran was acting as the Counsel for the said V.T.Abraham. C.K. Govindankutty Nair. The petitioner in the said O.P.(Arb.)No.46/82 pointed out that the counsel Sri. M.A. George who was appearing for the contractor in said proceedings, was simultaneously acting as an Arbitrator nominated by another contractor, V.T. Abraham in which Sri. S. A. Nagendran was acting as the Counsel for the said V.T.Abraham. When it was pointed out before the court that there would be a total failure of justice when the Arbitrator and the Counsel inter-change their positions, in simultaneous pending proceedings, the Arbitrator Sri. S.A. Nagendran resigned as the Arbitrator and the Subordinate Judges' Court, Parur relieved him from the duties of Joint Arbitrator and appointed another nominee of the contractor as the Arbitrator. I reliably understand that there are certain arbitration proceedings even now pending in which Sri. S.A. Nagendran is appearing as Counsel for the party for whom Sri. M.A. George, the counsel herein, has been nominated as the Arbitrator." 4. The first respondent has disputed the correctness of the above statements. It has specifically been stated in the counter affidavit thus:- "It is totally mischievous and irresponsible for the petitioners to suggest that for the last about 15 years or more the 2nd Respondent and the Counsel for this Respondent are acting together as a team in many arbitration proceedings, one as the Arbitrator nominated by a party and the other acting as counsel for the party and it is prayed that this Honourable Court may be pleased to take appropriate" Regarding the statements in respect of Arbitration O.P.46/82, it has been stated thus in the counter affidavit:- "With reference to Para.6, it is submitted that the 2nd Respondent has resigned from the post of Arbitrator when objections were raised by M/s. TCC Ltd. regarding his being the Arbitrator in the case relating to O.P.(Arb.) No.46 of 1982 before the Sub Court, Parur, maintaining the highest traditions of the profession. It was only a coincidence that in a contemporaneous proceeding Sri. It was only a coincidence that in a contemporaneous proceeding Sri. V.T. Abraham had nominated Counsel for this Respondent as a Joint Arbitrator in his case with M/s. FACT Ltd., and as soon as that position emerged the 2nd Respondent has resigned as Arbitrator in the reference between C.K.G. Nair and M/s. T.C.C. Ltd. The Counsel for this Respondent is not accepting any nomination as Arbitrator for the last more than 5 years and it is totally false that there are certain arbitration proceedings even now pending in which Counsel for this Respondent is the Arbitrator and the 2nd Respondent is the Counsel..." 5. The bias suggested in the petition thus is one, arising from the alleged professional relationship between the joint arbitrator, the 2nd respondent and the counsel representing the 2nd respondent. There is however, nothing there to show that the apprehension of bias in fact arises from a relationship between the joint arbitrator and the 1st respondent or from the relationship between him and the subject matter of the dispute. 6. The above narration of facts requires to be kept in view while considering the motion seeking to revoke the appointment of the 2nd respondent on the ground of bias. The petitioners have no case that the facts of the case warrant any order under S.11 and therefore the petition is treated as one falling under S.5 only. S.5 reads: "5. Authority of appointed arbitrator or umpire irrevocable except by leave of court.--The authority of an appointed arbitrator or umpire shall not be revocable except with the leave of the Court, unless a contrary intention is expressed in the arbitration agreement." This section provides that the authority of an appointed arbitrator or umpire is irrevocable except by leave of court, unless it be, that a contrary intention is expressed in the arbitration agreement. A question would immediately arise, what are the grounds for granting leave to revoke? Generally stated, they are: (1) excess or refusal of jurisdiction by arbitrator (2) Misconduct of arbitrator, (3) disqualification of arbitrator and (4) exceptional cases. (See Russel on Arbitration, 19th edition, page 163 and M/s. Amarchand v. Ambica Jute Mills (A.I.R. 1966 S.C 1036). 7. The allegations in the petition at most constitute the ground "misconduct of arbitrator". A mere apprehension of bias however, would not constitute a ground for removal of the arbitrator. (See Russel on Arbitration, 19th edition, page 163 and M/s. Amarchand v. Ambica Jute Mills (A.I.R. 1966 S.C 1036). 7. The allegations in the petition at most constitute the ground "misconduct of arbitrator". A mere apprehension of bias however, would not constitute a ground for removal of the arbitrator. Only such bias that amounts to misconduct, which makes it imperative, if justice was to be done, that the arbitrator shall be removed from his position as arbitrator. (See Catalima v. Norma, 61 Lloyd's List Law Reports 360). 8. To hold that the bias alleged amounts to misconduct, it should be shown that the facts proved would lead a reasonable person, not knowing the arbitrator's true state of mind, to think it likely that there was bias. Such bias could be defined as 'a predisposition to decide for or against one party, without proper regard to the true merit of the dispute'. (See Mustill & Boyd, Commercial Arbitration 1982 edition and Secretary to Government, Transport Dept, Madras v. Munuswamy, (A.I.R. 1988 S.C. 2232). The Supreme Court has also observed that "there must be reasonable apprehension of that predisposition. The reasonable apprehension must be based on cogent materials". That test therefore is "would a reasonable man who is fully appraised of the facts and circumstances of the case would feel a serious apprehension of the bias". By way of illustration; if the arbitrator makes remarks during the course of the hearing suggesting that he holds preconceived views as to the general truthfulness of the witnesses of the opposite party. In such cases it could be held that the arbitrator has expressed an actual bias amounting to misconduct and in such cases if justice was to be done, the arbitrator should be removed from his position as arbitrator. (See Catalima's case) 9. Considered in the light of the above principles, it cannot be said that the apprehension of bias alleged by the petitioners is sufficient to remove the 2nd respondent from his position as arbitrator. From the facts stated above it is clear that there is no specific allegation of bias attributed to the 2nd respondent. There is nothing on record to show that there exists any kind of relationship between the 2nd respondent and the opposite party; the 1st respondent who nominated him. From the facts stated above it is clear that there is no specific allegation of bias attributed to the 2nd respondent. There is nothing on record to show that there exists any kind of relationship between the 2nd respondent and the opposite party; the 1st respondent who nominated him. Nor for that matter is there anything to show that there is any kind of relationship between the 2nd respondent and the subject matter of the dispute. The only allegation is that the 2nd respondent has some professional relationship with the counsel for the 1st respondent. It is interesting to note in this context that the said relationship in any event, had come to an end in 1984. It is an admitted fact that since 1984 there are no such instances where the 2nd respondent has been appearing for parties in the company of the counsel for the 1st respondent. 10. Under these circumstances, I am constrained to observe that the allegations in the petition are made without any regard for the truth of the matter, without any regard to the unique status, an arbitrator occupies in the law of arbitration. The allegations to say the least, are reckless. There are no materials supporting the plea of apprehension of bias which would constitute a ground for removal of the 2nd respondent. It is pertinent to note in this context that in the event of any disagreement between the arbitrator in regard to the making of the award, the matter would go before the umpire who is none other than a retired judge of the Supreme Court. 11. The petition, to my mind, is nothing but an abuse of the process of the court. It should in this connection be remembered that the 2nd respondent was appointed as a joint arbitrator on the agreement of parties. The petition for the reasons stated above is dismissed with costs which I fix at Rs.2,500/-Issue photostat copy on usual terms.