ORDER 1. This petition is directed against the order dated 28/30.3.2012 passed by respondent No.2. The petitioner preferred an application under section 12 of Arbitration and Conciliation Act, 1996 (for short, the ‘Act) for restraining the arbitrator to conduct the arbitration proceedings. The arbitration application (Annexure P/10) was filed on the ground of bias. The main attack of the petitioner on the ground of bias is the alleged conduct of the arbitrator. In the said application it is stated that the arbitrator was appointed pursuant to Supreme Court’s order dated 23.7.2010. The arbitration proceedings were belatedly started by the arbitrator after sending various reminders by the petitioner. The first meeting was conducted on 7.3.2011 wherein the arbitrator fixed a time-schedule for conducting and completing the arbitral proceedings. The petitioner submitted its claim within the time limit. The respondent did not adhere to the time limit and prayed for time beyond the time schedule fixed by the arbitrator. The arbitrator in spite of objection of petitioner granted time to file statement of defence by the respondent. The said time was granted up to 15.9.2011 but within said time also the statement of defence was not filed. The objection of petitioner is that time was generously extended in favour of the respondent for filing its defence statement. It is further stated that the matter was fixed on 2.1.2012 and statements of witnesses were recorded. On 6.2.2012 time was again extended in favour of the respondent to file statement of defence. On the strength of these allegations, it is stated that the arbitrator is extending undue favour to the respondents. It is also stated that because of unnecessary delay in conducting the proceedings, the petitioner is required to pay Rs.10,000/- on each meeting, which is a sheer waste for no valid reason. On the strength of these allegations/factual backdrop, it is alleged that the petitioner has justiciable doubt in respect of independence and impartiality of the arbitrator. Thus, the basic ground of challenge is the reasonable likelihood of bias on the basis of aforesaid factual backdrop. 2. I have heard Shri Dudawat, learned counsel for the petitioner at length. 3.
On the strength of these allegations/factual backdrop, it is alleged that the petitioner has justiciable doubt in respect of independence and impartiality of the arbitrator. Thus, the basic ground of challenge is the reasonable likelihood of bias on the basis of aforesaid factual backdrop. 2. I have heard Shri Dudawat, learned counsel for the petitioner at length. 3. Shri Dudawat cited (2010) 2 SCC 385 (NBCC Limited vs.J.G.Engineering Private Limited) and also (2006) 127 DLT 646 (Indira Rai vs. Vatika Plantations (P) Ltd.); ¼2009½ 162 DLT 441 (Arun Ka Thpalia vs. J.M.Mukhi); and, ¼2011½ 181 DLT 504 (Delhi Chemical and Pharmaceuticals Works Pvt.Ltd. vs. Himgiri Realatirs Pvt.Ltd.) in support of his contentions. 4. There was a long debate in the legal circles regarding bias. The bias is described by Lord O’ Brien CJ in Rex v. Justice of County Tyrone (1909) 2 IR 763, as under:- “By bias, I understand a real likelihood of a 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.” “Thus, the real question is not whether a person is really biased. It is difficult to prove the state of mind of a person. Therefore, one has to see whether there is reasonable ground for believing that the person was likely to have been biased-mere suspicion is not enough.” (A.K.Kraipak v. Union of India, AIR 1970 SC 150 ). It is further held by Lord Denning in Metropolitan Properties Co. (FGC) Ltd. v. Lannon (1969) 1 QB 577 as under:- “There must be circumstances from which a reasonable man would think it likely or probable that the arbitrator would, or did, favour one side favourably at the expense of the other. The court will not enquire whether he did, in fact, favour one side favourably. Suffice it that reasonable person might think he did. The reason is plain enough. Justice must be rooted in confidence and confidence is destroyed when right-minded people go away thinking “That judge/arbitrator was biased.” Again in Locabail (UK) Ltd. v. Bayfield Properties Ltd. ¼2000½ QB 451, the Court of Appeal was of the view that “danger of bias will depend on the facts, which may include the nature of the issue to be decided.
Justice must be rooted in confidence and confidence is destroyed when right-minded people go away thinking “That judge/arbitrator was biased.” Again in Locabail (UK) Ltd. v. Bayfield Properties Ltd. ¼2000½ QB 451, the Court of Appeal was of the view that “danger of bias will depend on the facts, which may include the nature of the issue to be decided. A real danger of bias might for instance arise if there is a personal friendship or animosity between the Judge and any member of the public involved in the case, or if the Judge were closely acquainted with any member of the public involved, particularly if the credibility of that individual could be significant in the decision of the case. The circumstance of each case have to be taken into consideration.” The decision in Locabail’s case was referred with approval by the Supreme Court in Kumaon Mandal Vikas Nigam Ltd. v. Girja Shankar Pant ( 2001 (1) SCC 182 ). It was held: “The test, therefore, is as to whether a mere apprehension of bias or there being a real danger of bias and it is on this score that the surrounding circumstances must and ought to be collated and necessary conclusion drawn there from – in the event however the conclusion is otherwise inescapable that there is existing a real danger of bias, the administrative action cannot be sustained; If on the other hand, the allegations pertaining to bias is rather fanciful and otherwise to avoid a particular court, Tribunal or authority, question of declaring them to be unsustainable would not arise. The requirement is availability of positive and cogent evidence.....” (Emphasis Supplied) In 2002 (1) All.E.R. 465 (Porter v. Mangill) the House of Lords referred to the judgment of the Court of Appeal in Re Medicaments and related Classes of Goods No.2 (2001 (1) W.L.R. 700), in which the Court had taken the view that the test laid down in R. v. Gough (supra) required a modest adjustment. Lord Hope, in the House of Lords approved the modification of the real danger test which had been pronounced in the Medicaments case and deleted from it the reference to a real danger.
Lord Hope, in the House of Lords approved the modification of the real danger test which had been pronounced in the Medicaments case and deleted from it the reference to a real danger. As a result, in considering the question as to whether an arbitrator, is liable to be disqualified in the facts of a given case on the ground of bias, the test to be applied is whether the circumstances are such as would lead a fair minded and informed observer to conclude that there was a real possibility that the arbitrator was biased. In Kumaon’s case (supra) the Apex Court held that it is well settled that an arbitrator is liable to be disqualified only if from the surrounding circumstances the decision is inescapable that there exists a real danger of bias. There has to be positive and cogent evidence. The circumstances should be such as would lead a fair minded and informed observer to conclude that there was a real possibility that the Judge or Tribunal was biased. In para 35 of the judgment this view was taken. 5. Thus, the Apex Court has followed the “real danger test”. This view of Supreme Court in Kumaon’s case (supra) is consistently followed by Supreme Court in 2006 (1) JLJ 91 = ¼2004½ 8 SCC 788 (M.P.Special Police Establishment vs. State of MP and others). The relevant portion reads as under:- “The question in such cases would not be whether they would be biased. The question would be whether there is reasonable ground for believing that there is likelihood of apparent bias. Actual bias only would lead to automatic disqualification where the decision-maker is shown to have an interest in the outcome of the case. The principle of real likelihood of bias has now taken a tilt to “real danger of bias” and “suspicion of bias”. This view is again followed by Supreme Court in (2010) 13 SCC 427 (Oryx Fisheries Private Limited vs. Union of India and others). It is apt to quote para 34 in this regard, which reads as under:- “34. A somewhat similar observation was made by this Court in Kumaon Mandal Vikas Nigam Ltd. v. Girja Shankar Pant2. In that case, this Court was dealing with a show-cause notice-cum-charge-sheet issued to an employee.
It is apt to quote para 34 in this regard, which reads as under:- “34. A somewhat similar observation was made by this Court in Kumaon Mandal Vikas Nigam Ltd. v. Girja Shankar Pant2. In that case, this Court was dealing with a show-cause notice-cum-charge-sheet issued to an employee. While dealing with the same, this Court in para 25 (SCC p. 198 of the Report) by referring to the language in the show-cause notice observed as follows: “25. Upon consideration of the language in the show-cause notice-cum-charge-sheet, it has been very strongly contended that it is clear that the officer concerned has a mindset even at the stage of framing of charges and we also do find some justification in such a submission since the chain is otherwise complete.” After para 25, this Court discussed in detail the emerging law of bias in different jurisdictions and ultimately held in para 35 (SCC p. 201 of the Report), the true test of bias is: “35. The test, therefore, is as to whether a mere apprehension of bias or there being a real danger of bias and it is on this score that the surrounding circumstances must and ought to be collated and necessary conclusion drawn therefrom - in the event however the conclusion is otherwise inescapable that there is existing a real danger of bias, the administrative action cannot be sustained:” 6. Recently, same view is followed by Supreme Court in ¼2011½ 10 SCC 106 (Lalit Kumar Modi vs. Board of Control for Cricket in India and others). Para 40 of this judgment reads as under:- “40. We have noted the submissions of the petitioner with respect to his apprehensions. However, as far as the propositions of law are concerned, we cannot take a different view in the present case from the law laid down in the judgment of the Constitution Bench of this Court in M.P. Special Police Establishment v. State of M.P. ¼2004½ 8 SCC 788, and the judgment of four Judges in T.P. Daver v. Lodge Victoria, AIR 1963 SC 1144 . As held in M.P. Special Police Establishment (supra), a mere apprehension of bias cannot be a ground for interference. There must exist a real danger of bias.
As held in M.P. Special Police Establishment (supra), a mere apprehension of bias cannot be a ground for interference. There must exist a real danger of bias. And, following T.P. Daver v. Lodge Victoria, though such domestic inquiries have undoubtedly to be fair, a member of a society cannot stretch the principle of fairness to the extent of demanding a tribunal consisting of outsiders, on the basis that the society members are biased against him.” (Emphasis Supplied) 7. Thus, the basic test shows that the principle is whether a prudent man in the factual backdrop can come to the conclusion that the arbitrator is acting with bias. The test is not only reasonable likelihood but is the real danger of bias. 8. In view of the aforesaid legal principle, it is to be seen whether as per the allegations mentioned in the application under section 12 of the Act (Annexure P/10) the said test is fulfilled. The entire allegation is founded up on fact that the arbitrator has not adhered to the time schedule and is delaying the proceedings. He is granting time leisurely to the respondent. There is no other basis for alleging bias. In para 13 of the said application, the petitioner himself stated that he has serious doubt in respect of independence and impartiality of the arbitrator. Mere doubt without any cogent basis cannot be a ground for directing the arbitrator to recuse himself or to change the arbitrator. 9. In the considered opinion of this Court, although the arbitrator has fixed a time schedule for completing the proceedings, on the request of the respondent he granted certain adjournments. Merely because certain adjournments are granted by the arbitrator, it cannot be presumed or concluded that he is biased against the petitioner or favouring the respondent. In the proceedings before the court also this kind of events take place. In the discretion of the court, many times after granting final opportunity to file reply, yet another opportunity is granted to a party to file its response. This kind of exercise of discretionary power does not lead to any presumption of bias or spite. However, such a presumption can be drawn if the adjournments are granted unnecessarily for unreasonable long time. In the judgments of Delhi High Court cited by Shri Dudawat, the inference was drawn because the delay was four years ( Arun Ka Thpalia vs. J.M.Mukhi) (supra).
However, such a presumption can be drawn if the adjournments are granted unnecessarily for unreasonable long time. In the judgments of Delhi High Court cited by Shri Dudawat, the inference was drawn because the delay was four years ( Arun Ka Thpalia vs. J.M.Mukhi) (supra). In other case also the delay was running in years. In the present case the time schedule itself was fixed on 7.3.2011. There is no improper, inordinate or long delay because of adjournments granted by the arbitrator. Thus, in the aforesaid factual backdrop, I am unable to hold that a real danger theory is applicable because of the aforesaid conduct and nature of proceedings conducted by the arbitrator. The Apex Court has also repeatedly held that whether the arbitrator is biased or not depends on the facts and circumstances of a particular case. No straight-jacket formula can be laid down. The other judgments cited by Shri Dudawat (NBCC Limited) (supra) has no application in the facts and circumstances of this case. 10. On the basis of aforesaid analysis, this Court is of the considered opinion that petitioner could not establish real danger of bias against the arbitrator. Since no case is made out by the petitioner against the arbitrator, interference is declined. Petition is dismissed. No costs.