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1993 DIGILAW 152 (BOM)

City and Industrial Development Corporation of Maharashtra Ltd. v. Jayantilal Shivlal Mehta

1993-03-16

S.M.JHUNJHUNUWALA

body1993
JUDGMENT - S.M. JHUNJHUNUWALA, J. :---This is a petition for revocation of the authority of Jamshed Burjor Aga, the sole arbitrator under section 11 of The Arbitration Act, 1940, (hereinafter called `the Act'). 2. On 11th March 1980 the petitioner who is a Corporation established by the State of Maharashtra for the purpose of providing housing in the various parts of the State particularly at Vashi in New Bombay, entered into a contract for construction of 11 buildings with the respondent who is a contractor engaged in construction of buildings on the terms and conditions mentioned therein read with special conditions of contract. Arising out of or in relation to the said contract, according to the respondent the petitioner became liable to pay to the respondent certain amounts which the petitioner did not pay and denied its liability in respect thereof. Disputes and differences arose which were to be settled as per the terms of the contract and ultimately by making reference to arbitration as provided therein. Since the petitioner was not agreeable to finalise an agreed arbitrartor in the matter, the respondent filed Arbitration Suit No. 129 of 1986 in this Court under section 20 of the Act to file arbitration agreement in this Court and to make reference to arbitration in accordance therewith. On 14/17th July 1987, Sujata Manohar, J., holding that there exists a valid, subsisting and binding arbitration agreement between the petitioner and respondent, ordered the same to be filed in this Court and made reference to arbitration. Since the petitioner and respondent were unable to appoint an arbitrator by consent, this Court appointed the said J.B. Aga, Architect and past President of Indian Institute of Architects, as sole arbitrator. The petitioner preferred an appeal against the said order which was dismissed by the Division Bench of this Court on 16th August 1991. 3. On 8th October 1991 the said arbitrator addressed a letter to the petitioner and respondent with copies thereof endorsed in favour of their respective advocates directing the respondent to file statement of claims on or before 31st October 1991 and directing the petitioner to file reply thereto by 30th November 1991. Along with his letter dated 30th October 1991, the respondent submitted his statement of claims to the said arbitrator with copy thereof served upon the petitioner at its registered office which was received by the petitioner on 31st October 1991. Along with his letter dated 30th October 1991, the respondent submitted his statement of claims to the said arbitrator with copy thereof served upon the petitioner at its registered office which was received by the petitioner on 31st October 1991. By his letter dated 30th October 1991 the said arbitrator directed the petitioner to file its reply to the statement of claims of the respondents by 30th November 1991 and directed the respondent to file his rejoinder, if any, by 15th December 1991. Though the petitioner was served with the copy of the statement of claims of the respondent on 31st October 1991, the Superintending Engineer (Vashi) of the petitioner (SEV for short) addressed a letter dated 22nd November 1991 to the said arbitrator with copy endorsed in favour of the respondent stated that copy of the statement of claims of the respondent was not received by the petitioner and as such the petitioner was unable to file reply thereto and requested for reconsideration of date earlier fixed by the said arbitrator for filing reply of the petitioner. By his advocate's letter dated 29th November 1991, the respondent informed the said arbitrator that copy of respondent's statement of claims was already served upon the petitioner on 31st October 1991. Since the petitioner did not file reply to the statement of claims of the respondent till 21st January 1992, the respondent addressed a letter dated 21st January 1992 to the said arbitrator with copies endorsed in favour of the petitioner and its advocate to proceed further in the matter on the assumption that the petitioner was not inclined to file a reply to the statement of claims of the respondent. By its letter dated 20th January 1992, the petitioner intimated to the said arbitrator with copy of statement of claims of respondent delivered at the registered office of the petitioner was not received by SEV and it appeared to have been lost in transit. By the said letter, the petitioner requested the said arbitrator to direct the respondent to furnish a copy of the statement of claims of the respondent to the petitioner and to fix fresh date for submission of written reply of the petitioner. By the said letter, the petitioner requested the said arbitrator to direct the respondent to furnish a copy of the statement of claims of the respondent to the petitioner and to fix fresh date for submission of written reply of the petitioner. By his letter dated 30th January 1992, the said arbitrator directed the respondent to furnish a copy of the statement of claims to the petitioner and extended time till 29th February 1992 for the petitioner to file its written reply thereto and to 16th March 1992 for the respondent to file his rejoinder, if any. By his letter dated 5th February 1992 addressed to the said arbitrator, the respondent informed the said arbitrator that copy of the statement of claims was served upon the petitioner on 31st October 1991 and an acknowledgement in respect thereof was also obtained from the petitioner. However, as desired by the said arbitrator and to avoid further delay, the respondent had forwarded a further copy of the statement of claims along with the annexures and exhibits to the petitioner which was received by the petitioner on 5th February 1992. On 24th February 1992, the said arbitrator addressed a letter to the petitioner as also the respondent by which time for the petitioner to file written reply to the statement of claims of the respondent was extended till 30th March 1992 and for the respondent to file the Rejoinder, if any, till 15th April 1992. 4. On 23rd March 1992, SEV addressed a letter to the respondent with copy endorsed in favour of the said arbitrator requesting the respondent to arrange for inspection of documents referred to and relied upon by the respondent in the statement of claims of the respondent and also to furnish further and better particulars of various items of claims as listed in the statement forwarded therewith. The petitioner filed a written reply to the statement of claims of the respondent as also its counter-claim with the said arbitrator and copy whereof was received by the respondent on 30th March 1992. By his letter dated 15th April 1992 the respondent requested for extension of time to file rejoinder to the written reply of the petitioner and to file reply to the counter-claim of the petitioner till 11th May 1992 which the said arbitrator extended. By his letter dated 15th April 1992 the respondent requested for extension of time to file rejoinder to the written reply of the petitioner and to file reply to the counter-claim of the petitioner till 11th May 1992 which the said arbitrator extended. On 11th May 1992, the respondent submitted his rejoinder and allowed the petitioner to inspect the documents in possession of the respondent with prior appointment. By his letter dated 21st May 1992, the SEV intimated to the respondent the list of documents of which inspection was desired by the petitioner. According to the respondent the documents mentioned in the said list were not relied upon by him in the statement of claims and as such the respondent was not bound to give inspection thereof to the petitioner. The said arbitrator adjourned the hearing of the said reference fixed on 26th May 1992 to 3rd July 1992 at the request of the petitioner and intimated the adjourned date of hearing to the petitioner and respondent vide his letter dated 21st May 1992. The petitioner made further request to the said arbitrator to postpone the hearing fixed on 3rd July 1992 and accordingly the said arbitrator adjourned the hearing to 22nd July 1992 and due intimation in respect thereof was given to the petitioner and the respondent. 5. After completing inspection of the documents offered by the petitioner, the respondent along with his letter dated 22nd July 1992 submitted further annexures CA-43 to CA-47 and further Exhibits C-201 to C-205 to his said statement of claims. On 22nd July 1992, hearing of the said reference took place before the said arbitrator and the question as to whether the respondent was liable to give inspection of the documents demanded by the petitioner vide its said letter dated 21st May 1992 was discussed. After hearing the petitioner and the respondent through their learned Counsel the said arbitrator directed the petitioner to file written arguments on or before 12th August 1992 and also directed the respondent to file his written arguments in reply on or before 27th August 1992. By his letter dated 12th August 1992, the SEV objected to additional annexures and exhibits on the ground that the same sought to enhance the claims of the respondent. By his letter dated 12th August 1992, the SEV objected to additional annexures and exhibits on the ground that the same sought to enhance the claims of the respondent. By his letter dated 18th August 1992 addressed to the said arbitrator and copy endorsed in favour of the petitioner, the respondent, inter alia, clarified that the respondent was restricting the claims against the petitioner as per the statement of claims already filed and that the respondent was not enhancing his claims against the petitioner by putting reliance on the said additional annexures and exhibits. As per the directions given by the said arbitrator in the meeting held on 22nd July 1992, the SEV submitted written arguments. The respondent also submitted written arguments. The next hearing before the said arbitrator was fixed on 22nd September 1992, due intimation was given to the petitioner and the respondent by the said arbitrator. At that hearing held on 22nd September 1992, the said arbitrator informed the parties and their respective advocates that he would give decision on the points raised by the petitioner regarding inspection and also pertaining to additional annexures and exhibits on 28th September 1992. Accordingly hearing took place on 28th September 1992 whereat the SEV and the learned Counsel of the petitioner were present. The respondent and his learned Counsel could not remain present as they were held up in the way in view of Rasta Roko agitation on the Highway on that day, which fact was communicated by the learned Counsel for the respondent to the said arbitrator over the telephone. In the meeting held on 28th September 1992 the said arbitrator handed over copy of his decision to the learned Counsel for the petitioner. The said arbitrator also handed over a copy of his decision to the respondent and his learned Counsel on that day when they called on him in the later part of the day for the reasons stated hereinabove. 6. The said arbitrator in his said decision held that the documents mentioned in the petitioner's letter dated 21st May 1992, in respect whereof inspection was demanded by the petitioner from the respondent, have not been referred to or relied upon by the respondent in his statement of claims and as such the respondent could not be directed to give inspection thereof to the petitioner. The said arbitrator further held that the petitioner was not entitled to a fishing enquiry in respect of the said documents. So far as the documents referred to and relied upon by the respondent in the statement of claims were concerned, the said arbitrator held that the petitioner had confirmed that the respondent had allowed inspection thereof to the petitioner. As regards the said annexures CA-43 to CA-47, the said arbitrator held that the same have been submitted by the respondent after the petitioner giving inspection of the documents between 8th June 1992 to 17th June 1992 and as such the petitioner was at liberty to submit its comments on the said annexures within a period of 10 days from the receipt of the said letter dated 28th September 1992. The said arbitrator fixed further hearings of the reference on 6th October 1992 and 10th October 1992 and directed that if the respondent wanted to lead any oral evidence the respondent might do so. He further directed that if the respondent was not leading any oral evidence and if the petitioner intended to lead oral evidence, the petitioner might do so at the hearing fixed on 6th October 1992. He further directed that if both the petitioner and the respondent were not leading any oral evidence, the respondent might start his argument on the merits of his claim. He further directed that if either party wanted any postponement of the hearing on any justifiable and valid ground to the satisfaction of the said arbitrator, he would grant the postponement only if both the parties would give consent for enlargement of time by four months beyond 28th January 1993. Thereafter, the meeting before the said arbitrator took place on 6th October 1992 whereas the respondent and his learned Counsel attended. The petitioner and its learned Counsel could not attend since according to the petitioner, intimation in respect of the meeting fixed on 6th October 1992 was received late. The said arbitrator adjourned the hearing of the reference to 22nd October 1992. By his letter of 7th October 1992 the SEV requested the said arbitrator to postpone the hearing of the reference to the last week of the month of November 1992. The said arbitrator adjourned the hearing of the reference to 22nd October 1992. By his letter of 7th October 1992 the SEV requested the said arbitrator to postpone the hearing of the reference to the last week of the month of November 1992. By the said letter the petitioner informed the said arbitrator that the petitioner would give consent to extend the period for making the award by the said arbitrator by four months beyond 28th January 1993 in the next meeting which according to the petitioner was to be held in the last week of November 1992. On 12th October 1992 the SEV addressed further letter to the said arbitrator by which the petitioner communicated to the said arbitrator that the question pertaining to enlargement of time to make the award by the said arbitrator beyond 28th January 1993 would be considered in the meeting to be held in the last week of November, 1992. The said arbitrator intimated to the parties that the meeting which was scheduled to be held on 22nd October 1992 would be held on 27th October 1992 in place and stead of 22nd October 1992. Since 24th to 27th October 1992 were declared holidays on account of Diwali, the SEV requested the said arbitrator by the letter of 26th October 1992 to postpone the hearing of the reference to November 1992. The said letter was delivered to the said arbitrator in the meeting held on 27th October 1992 and according to the request made by the petitioner, the said arbitrator adjourned the hearing of 27th October 1992 to 24th, 25th and 26th November, 1992 with the consent of the petitioner and respondent. The present petition has been filed on 14th December, 1992. 7. Mr. The present petition has been filed on 14th December, 1992. 7. Mr. Tulzapurkar, the learned Counsel appearing for the petitioner, has submitted that by reason of following acts on the part of the said arbitrator, the petitioner has become apprehensive that the said arbitrator is biased against the petitioner : (i) not considering objection taken by the petitioner for not-taking the additional annexures and exhibits filed by the respondent on record; (ii) causing delay in dispatch of the notice in respect of the meeting which was fixed on 6th October 1992; (iii) imposition of condition for enlargement of time to make the award; and (iv) fixation of further hearing of the reference on 6th October, 1992 despite granting liberty to the petitioner to submit its comments on the said annexures CA-43 to CA-47 within 10 days of the receipt of the said letter dated 28th September, 1992. The respondent has denied the allegations pertaining to the alleged bias of the said arbitrator against the petitioner in the detailed affidavit affirmed on 30th November 1992 and filed in the proceedings of this petition. According to the respondent, the said arbitrator has not acted in a manner so as to cause any apprehension in the mind of the petitioner that he is biased against the petitioner. Mr. Dwarkadas, the learned Counsel appearing for the respondent, has submitted that the entire conduct of the proceedings by the said arbitrator show that he has acted fairly and honestly without doing slightest favour to the respondent and that the alleged apprehension on the part of the petitioner is frivolous, baseless and of no legal consequence whatsoever. 8. It is correct that there must be purity in administration of justice as well as in administration of quasi justice as are involved in the adjudicatory process before arbitrators. It is also correct that justice should not only be done, but should manifestly and undoubtedly be seen to be done. However, mere imagination of a ground cannot be an excuse for apprehending bias in the mind of an arbitrator. Apprehension simpliciter in the mind of the petitioner without any tenable ground cannot be a justification for removal of the said arbitrator. The test for bias is whether a reasonable intelligent man, fully appraised of all the circumstances, would feel a serious apprehension of bias. Apprehension simpliciter in the mind of the petitioner without any tenable ground cannot be a justification for removal of the said arbitrator. The test for bias is whether a reasonable intelligent man, fully appraised of all the circumstances, would feel a serious apprehension of bias. Suspicion of unreasonable and whimsical people cannot be made standard to regulate normal human conduct. Apprehension, if any, is required to be judged from a healthy reasonable and average point of view and not on mere apprehension of whimsical person. Existence of reasonable evidence that there was a real likelihood of bias is necessary to conclude that the said arbitrator is biased against the petitioner. There is no evidence on record to conclude that there is real likelihood of the said arbitrator being biased against the petitioner. Law on this point is now settled by the Apex Court of this Country in the case of (International Airport Authority of India v. K.D. Bali and another)1, reported at A.I.R. 1988 S.C. 1099 as also in the case of (The Secretary to the Government, Transport Department, Madras v. Munuswamy Mudaliar and others)2, reported at A.I.R. 1988 S.C. 2232 on which reliance has been placed by Mr. Dwarkadas. Mr. Tulzapurkar has put reliance on the case of (Metropolitan Properties Co. (F.G.C.) Ltd. v. Lanion and others)3, reported in (1969)1 Q.B. 577. In that case also the emphasis has been on right minded persons and appearance of a real likelihood of bias. (emphasis supplied). 9. In the instant case, as facts narrated above establish, the said arbitrator has given ample opportunity to the petitioner acceding to the requests made by the petitioner for adjournment of the hearings of the said reference time and again. If the said arbitrator honestly intended to adjudicate upon the disputes within the statutory period prescribed and also intended to accede to the request of the petitioner for further adjournment of the hearing of the said reference provided the petitioner agreed to enlarge the time to make the award, it cannot be said that the conduct of the arbitrator was such so as to cause apprehension in the mind of the petitioner that the arbitrator was biased against the petitioner. The hearing fixed on 6th October 1992 was adjourned by the said arbitrator as the notice in respect thereof was received late by the petitioner. The hearing fixed on 6th October 1992 was adjourned by the said arbitrator as the notice in respect thereof was received late by the petitioner. The said arbitrator has acted in fairness to both parties before him in adjourning the hearing fixed on 6th October 1992. As borne out by the letter dated 28th September, 1992 addressed by the said arbitrator to the petitioner and the respondent, the said arbitrator, after hearing the learned Counsel appearing for the petitioner and the respondent, has decided the issues pertaining to inspection of documents demanded by the petitioner and annexures CA-43 to CA-47, which decision has admittedly been communicated to the parties on 28th September 1992. The alleged apprehension of the petitioner that the additional annexures and exhibits relied upon by the respondent might enhance the claims of the respondent against the petitioner has been belied by the unequivocal statement made on behalf of the respondent that the respondent was restricting his claims against the petitioner as per the statement of claims originally filed. In the circumstances, I find no merit in the petition and as such, the petition is dismissed with costs. C.C. expedited. Petition dismissed. *****