2002 (8) TMI 777 - HC - Companies Law

Issues Involved:
1. Challenge to the arbitral award on grounds of arbitrator's participation and alleged bias.
2. Alleged denial of fair opportunity and violation of natural justice.
3. Legality of the rejection of applications under sections 12(3) and 33 of the Arbitration and Conciliation Act, 1996.
4. Alleged misconduct of the arbitrator.
5. Compliance with procedural fairness and statutory obligations by the arbitrators.

Issue-wise Detailed Analysis:

1. Challenge to the arbitral award on grounds of arbitrator's participation and alleged bias:
The appellant challenged the arbitral award dated 18th September 1998, arguing that one of the arbitrators, Mr. S.K. Poddar, acted on behalf of the respondent, thus compromising his impartiality. The appellant contended that Mr. Poddar's involvement in drafting the agreement and his previous legal representation for the respondent were not disclosed, raising justifiable doubts about his independence and impartiality.

2. Alleged denial of fair opportunity and violation of natural justice:
The appellant claimed that he was denied a fair and proper opportunity to participate in the arbitration proceedings, which violated the principle of natural justice. The appellant pointed to the non-service of notice before closing the proceedings and argued that this defiance of section 18 of the Arbitration and Conciliation Act, 1996, amounted to a denial of natural justice.

3. Legality of the rejection of applications under sections 12(3) and 33 of the Arbitration and Conciliation Act, 1996:
The appellant's application challenging the mandate of Mr. S.K. Poddar under section 12(3) was filed within the statutory period of 15 days from becoming aware of the circumstances affecting his independence. However, the Arbitral Tribunal rejected this application, and the appellant argued that this rejection constituted "misconduct." The rejection of the petition under section 33 was also contested.

4. Alleged misconduct of the arbitrator:
The appellant alleged that Mr. S.K. Poddar's involvement in drafting the agreement and his non-disclosure of this fact amounted to misconduct. However, the court found no evidence suggesting Mr. Poddar's lack of independence or integrity. The court noted that the mere fact that Mr. Poddar drafted the agreement did not constitute sufficient grounds for doubting his impartiality, especially since both parties had consented to his appointment.

5. Compliance with procedural fairness and statutory obligations by the arbitrators:
The court emphasized that the arbitrators had taken all necessary steps to ensure procedural fairness. The appellant was given repeated opportunities to present his case and cross-examine witnesses. The court found that the appellant's conduct, including repeated requests for adjournments and failure to pay arbitrators' fees, indicated an attempt to delay the proceedings. The court held that the arbitral tribunal acted within its rights to proceed ex parte when the appellant failed to cooperate.

Conclusion:
The court dismissed the appeal, affirming the trial judge's decision. The court found no violation of the principle of natural justice or any misconduct by the arbitrators. The appellant's challenges to the arbitral award and the tribunal's procedures were deemed without merit. The interim order was vacated, and no order as to costs was made.

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