1988 (3) TMI 409 - SC - Companies Law

Rejection of the application for revocation of the authority of respondent No. 1, sole arbitrator under sections 5 and 11 of the Arbitration Act, 1940 - Held that - Appeal dismissed . As in agreement with the Judge of the High Court expressing unhappiness as to the manner in which attempts had been made to delay the proceeding. Having given our anxious consideration to the grounds alleged in this application, no ground found to conclude that there could be any ground for reasonable apprehension in the mind of the petitioner for revocation of the authority of the arbitrator appointed by the petitioner itself. While endorsing and fully maintaining the integrity of the principle justice should not only be done, but should manifestly be seen to be done , it is important to remember that the principle should not be led to the erroneous impression that justice should appear to be done that it should in fact be done. As satisfied from the facts that there is no reasonable ground of any suspicion in the mind of the reasonable man of bias of the arbitrator.

Issues Involved:

1. Revocation of the authority of the sole arbitrator.
2. Alleged bias of the sole arbitrator.
3. Jurisdictional objections to the arbitration references.
4. Procedural conduct of the arbitration proceedings.
5. Change of arbitration venue.
6. Payment of arbitration costs.

Issue-wise Detailed Analysis:

1. Revocation of the Authority of the Sole Arbitrator:

The petitioner sought to revoke the authority of the arbitrator, alleging bias and procedural unfairness. The High Court rejected this application, noting that the arbitrator was appointed by the petitioner's own Chief Engineer and that the petitioner failed to provide substantial grounds for the alleged bias. The Supreme Court upheld the High Court's decision, emphasizing that mere suspicions or dissatisfaction with the arbitrator's decisions do not warrant revocation. The Court reiterated that there must be a "real likelihood of bias" and not just "mere suspicion of bias."

2. Alleged Bias of the Sole Arbitrator:

The main contention for revocation was the alleged apprehension of bias. The petitioner argued that the arbitrator's actions indicated partiality. However, the Court found no merit in these claims. The arbitrator's refusal to record minutes of oral arguments, rejection of preliminary objections without a detailed order, and the decision not to state a special case for the High Court were all within his discretion and did not indicate bias. The Court emphasized that the apprehension of bias must be judged from a "healthy, reasonable, and average point of view" and not from the perspective of "whimsical, capricious, and unreasonable people."

3. Jurisdictional Objections to the Arbitration References:

The petitioner raised objections to the second and third arbitration references, arguing that they were not validly made and were barred by principles analogous to Order II Rule 2 of the Code of Civil Procedure. The arbitrator rejected these objections, and the petitioner did not pursue the matter under section 33 of the Arbitration Act. The Court noted that the arbitrator was not required to provide a detailed reasoned order at every stage and that the petitioner could challenge the award on jurisdictional grounds after it was declared.

4. Procedural Conduct of the Arbitration Proceedings:

The petitioner accused the arbitrator of rushing the proceedings and not accommodating their requests for adjournments. The Court found that the petitioner had repeatedly sought adjournments and had delayed the proceedings. The arbitrator's actions, such as fixing hearing dates and rejecting unreasonable requests, were found to be appropriate and did not indicate bias. The Court criticized the petitioner's attempts to prolong the arbitration and obstruct the process.

5. Change of Arbitration Venue:

The petitioner objected to the change of venue from Santacruz Airport to Indian Merchants Chambers, claiming it was done without their consent. The Court found that the change was due to disturbances at the original venue and was known to the petitioner. The change of venue did not indicate bias or prejudice against the petitioner.

6. Payment of Arbitration Costs:

The petitioner stopped sharing the costs of the arbitrator's air tickets and accommodation, alleging that respondent No. 2 was providing these and thus influencing the arbitrator. The Court dismissed this claim, noting that the petitioner had obstructed the proceedings and that the arbitrator's actions were transparent and known to both parties. The refusal to contribute to costs was seen as another tactic to delay the arbitration.

Conclusion:

The Supreme Court dismissed the petition for leave to appeal, finding no reasonable grounds for the alleged bias or procedural unfairness. The Court emphasized the importance of maintaining the integrity and efficiency of the arbitration process and criticized the petitioner's attempts to delay and obstruct the proceedings. The decision of the High Court to reject the application for revocation of the arbitrator's authority was upheld.

← Previous Next →