Koneru Venkataratnam v. Union of India, Ministry of Law and Justice
2001-04-28
S.B.SINHA, V.V.S.RAO
body2001
DigiLaw.ai
S. B. SINHA, C. J. ( 1 ) VIRES of Section 13 (2) of the Arbitration and Conciliation Act, 1996 (for short the act ) is in question. The said question arises under the following circumstances. ( 2 ) THE petitioner herein had entered into a hire purchase agreement for purchasing a vehicle with the 2nd respondent. Allegedly disputes and differences arose between the parties and the petitioner with a view to give quietus thereto handed over the possession of the vehicle in question on 24-8-1998. The 2nd respondent, however, for resolution of the disputes and differences between them appointed the 3rd respondent herein as arbitrator. The 3rd respondent issued a notice dated 28-6-1998 which reads thus: please take notice that the petitioner has made the above reference to me, the copy of which is enclosed herewith, for deciding the claim arising out of the hire purchase agreement dated 22-12-1997 and I having accepted the said reference posted the above matter for your appearance before me in my office at the above address on 10-8-1999 at 4. p. m. , for answering the claim of the petitioner and also for enquiry. Please note that you are also at liberty to file objections or written statement to the claim of the petitioner. If you fail to appear on that day, the above matter will be heard and decided ex parte in your absence. ( 3 ) A telegram was issued by the petitioner questioning his appointment stating: client Koneru Venkatratnam instructions arbitration proceedings 165/99 regarding ICDS Limited manipal Enquiry 10-8-1999. But hire purchase agreement copy not received with your notice you are not arbitrator as per agreement clause since agreement form was taken signed blank when form filled up with sole arbitrator name not known even till today petitioner dealing entirely at vijayawada no cause of action at udipi or Manipal petitioner is having branch at Vijayawada petitioner suppressed fact of liquidation of account giving quietus to the account by accepting delivery of vehicles at vijayawada and returned promotes blank signed N. J. Stamps Cheques blank Signed so no dispute at all calling for arbitration attempt filing statement of claim false and fraudulent Sections 12,13 apply client do not accept any proceedings you are standing counsel for the petitioner usually unfit to be arbitrator do not proceed drop any action else seeking legal action Akkapeddi Srinivasa Rao advocate.
( 4 ) THE learned counsel appearing on behalf of the petitioner inter alia submits that the provisions of Section 13 of the Act must be held to be ultra vires as in terms thereof the jurisdiction of the arbitrator can be questioned only within 15 days. The learned counsel submits that as the 3rd respondent happens to be standing counsel for the 2nd respondent he must be held to be biased. In any event, contends the learned counsel, as the petitioner has questioned his jurisdiction it is wholly unlikely that the 3rd respondent herein shall grant any relief to him. ( 5 ) SECTIONS 12 and 13 of the Act read thus: grounds for challenge: (1) When a person is approached in connection with his possible appointment as an arbitrator, he shall disclose in writing any circumstances likely to give rise to justifiable doubts as to his independence or impartiality. (2) An arbitrator, from the time of his appointment and throughout the arbitral proceedings, shall, without delay, disclose to the parties in writing any circumstances referred to in sub-sec. (1) unless they have already been informed of them by him. (3) An arbitrator may be challenged only if (a) circumstances exist that give rise to justifiable doubts as to his independence or impartiality, or (b) he does not possess the qualifications agreed to by the parties. (4) A party may challenge an arbitrator appointed him, or in whose appointment he has participated, only for reasons of which he becomes aware after the appointment has been made. Challenge procedure: (1) Subject to sub-section (4), the parties are free to agree on a procedure for challenging an arbitrator. (2) Failing any agreement referred to in sub-section (1), a party who intends to challenge an arbitrator shall, within fifteen days after becoming aware of the constitution of the arbitral tribunal or after becoming aware of any circumstances referred to in subsection (3) of Section 12, send a written statement of the reasons for the challenge to the arbitral tribunal. (3) Unless the arbitrator challenged under sub-section (2) withdraws from his office or the party agrees to the challenge, the arbitral tribunal shall decide on the challenge. (4) If a challenge under any procedure agreed upon by the parties or under the procedure under subsection (2) is not successful, the arbitral tribunal shall continue the arbitral proceedings and make an arbitral award.
(4) If a challenge under any procedure agreed upon by the parties or under the procedure under subsection (2) is not successful, the arbitral tribunal shall continue the arbitral proceedings and make an arbitral award. (5) Where an arbitral award is made under sub-section (4), the party challenging the arbitrator may make an application for setting aside an arbitral award in accordance with Section 34. (6) Where an arbitral award is set aside on an application made under sub-section (5), the Court may decide as to whether the arbitrator who is challenged is entitled to any fees. ( 6 ) SECTION 12 is analogous to article 12 of the unsettled model rule. Sub-section (1) of section 12 provides that a prospective arbitrator shall disclose to the parties in writing any circumstances likely to rise justifiable doubts as to his impartiality or independence. ( 7 ) SUB-SECTION (3) enumerates the grounds upon which the appointment of an arbitrator can be challenged which are restricted to the existence of a circumstance that gives rise to justifiable doubts as to his independence or impartiality or in possessing the qualification agreed to by the parties. If an appointment of the arbitrator is to be challenged on the ground of bias, an appropriate application may have to be filed under the provisions of the said Act. Section 13 merely lays down the procedure therefor. If a party does not agree to a procedure as regards challenging the jurisdiction of the arbitrator, in terms of sub-section (1) of Section 13 it is required to do the same within 15 days after becoming aware of the constitution of the arbitration tribunal and for the said purpose it is required to send a written statement of the reasons to it. ( 8 ) SUB-SECTION (4) of Section 13 provides that if such challenge is not successful, the arbitrator shall continue the arbitration proceedings and make award. No ground far less any reasonable ground has been raised by the petitioner to declare the said provision as ultra vires. In fact the Division bench of this Court in M. Mohan Reddy vs. Union of India held the said provisions to be intra vires. Furthermore, the question as to whether the present arbitrator has bias or likelihood of bias is essentially a question of fact.
In fact the Division bench of this Court in M. Mohan Reddy vs. Union of India held the said provisions to be intra vires. Furthermore, the question as to whether the present arbitrator has bias or likelihood of bias is essentially a question of fact. The petitioner in a writ petition, without undergoing the procedure laid down under the said Act cannot raise the said question. ( 9 ) WHETHER a claim subsists or not despite handing over possession of the vehicle is per se arbitrable. In Union of India vs. L. K. Ahuja the Apex Court in a case under Section 20 of the Arbitration Act, 1940 held that in order to entitle for a reference under Section 20 there must be an entitlement to a. . . . . difference or dispute with respect to the same. ( 10 ) ONLY because the 3rd respondent allegedly happens to be the standing counsel for the 2nd respondent ipso facto may not mean that he is disqualified himself. In Coal Mines vs. Union of India the calcutta High Court noticed that having regard to the decision of the Court of appeal in Regina vs. Gough thus: that test was applied in Reg. vs. Mulvihill (199) 1 WLR 438 when a judge tried a robbery case where the loser was a bank in which he held shares, the Court distinguishing between the role of the Judge and the jury. The Topping test, if one can use that abbreviation, was also applied in reg vs. Morris (orse, Williams ) (1990) 93 Cr. App. R. 102 by this Court. During a trial on indictment for theft from Marks and Spencer Plc. It emerged that one of the jurors was an employee of that organization though working at a different branch. In quashing the conviction the Court held that the Judge when asked to discharge the juror had not gone into the question of the appearance of bias. It is difficult to discover any basis on which these two lines of authority can-live together. Mr. Moran has submitted that a distinction can be drawn between the test to be applied in jury cases and that which is appropriate for Magistrates Courts or other inferior tribunals entrusted with fact finding responsibilities.
It is difficult to discover any basis on which these two lines of authority can-live together. Mr. Moran has submitted that a distinction can be drawn between the test to be applied in jury cases and that which is appropriate for Magistrates Courts or other inferior tribunals entrusted with fact finding responsibilities. We feel we must accept this distinction because there is no other way of reconciling most of the authorities, though it is difficult to understand why the test of bias should be any different in considering the position of a Magistrate compared with that of juror. The only case which cannot be fitted into this dichotomy is the one last cited, namely Reg vs. Morris (orse william), in which giving the judgment of the Court 1 applied the topping test (1983) 1 WLR 119 to the position of a jurof. The decision in Reg. vs. Morris (orse. Williams), 93 Cr. App. R. 102 cannot stand with that of the five-Judge Court in Reg. vs. Box. , (1964) 1 O. B. 430; and, having regard to the decision of the House of Lords in Reg. Spencer (1987) A. C. 128, Reg. vs. Morris (orse Williams) should not be followed to the extent that it applies the topping test to trials on indictment. Accordingly, the appeal fails on this point because of the application of the real danger test to jury trials in cases of bias. It is, therefore, not necessary to decide whether (a) the application of the Topping test would have caused a different result, or (b) whether there was in fact any bias. ( 11 ) THIS aspect of the matter has also been recently considered by the Apex Court in Kumaon Manal Vikas Nigam Ltd. vs. Girja shankar Pant. ( 12 ) KEEPING in view the fact that the petitioner has not raised the question before the arbitrator, in terms of the provisions of the said Act, we are of the opinion that the contention that the impugned Act is ultra vires cannot be acceded to. ( 13 ) FOR the aforesaid reasons, the Writ petition is dismissed. No costs.