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TMI Blog2000 (9) TMI 978X X X X Extracts X X X X X X X X Extracts X X X X ..... ole arbitrator, on 10-4-1997 by the petitioner. We may note here that respondent No. 1 is an ex-director of the petitioner and is also a member of the Indian Council of Arbitration. Respondent No. 1 entered upon the reference and issued notices to parties inviting claims. It appears that during the course of arbitration proceedings the petitioner developed some apprehensions about the manner and conduct of the arbitration proceedings by the sole arbitrator. The petitioner levelled charges of prejudice and bias against the arbitrator and desired that the arbitrator should recluse himself from the arbitration. However, the arbitrator rejected this prayer and continued with the arbitration proceedings. The petitioner does not want him to continue as arbitrator. Its apprehension is that arbitrator would not act impartially. 3. The challenge regarding vires of section 13(3) and (4) is based mainly on the ground that there is no provision in the Act for removal of an arbitrator by the Court, though such a provision was contained in section 11 of the Arbitration Act, 1940. Secondly, it is submitted that no remedy is available to the aggrieved party under the Act for challenging the aw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r becoming aware of the constitution of the arbitral Tribunal or after becoming aware of any circumstances referred to in sub-section (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 other 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 sub-section (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 such 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." "34. Application for setting aside arbitral award. (1) Recourse to a Court against an arbitral award may be made only by an application for setting aside such award in accorda ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... challenging an arbitrator. According to sub-section (2), failing an agreement between the parties, a party who intends to challenge an arbitrator shall within 15 days after becoming aware of the constitution of the arbitral Tribunal, send a written statement of the reasons for the challenge to the arbitral Tribunal. Sub-section (2) makes a reference to sub-section (3) of section 12 of the Act which contains the grounds on which an arbitration can be challenged. The grounds include justifiable doubts about the independence or impartiality of the arbitrator. Sub-section (3) of section 13 contains the next step and provides that in such a situation either the arbitrator withdraws himself or the other party agrees to the challenge. Failing both, the arbitral Tribunal is required to decide on the challenge. As per sub-section (4) if the challenge to the arbitrator as above is not successful, the arbitral Tribunal shall continue the arbitral proceedings and make an arbitral award. Sub-section (5) gives a right to the party challenging the arbitrator to make an application for setting aside the arbitral award in accordance with section 34. 7. The Legislature was more than cautious whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tment and is sought to be removed by the present enactment cannot be allowed to be introduced to entertaining writ petitions in the absence of any provision in the new Act in this respect. A statute is an edict of the Legislature and the conventional way of interpreting or construing a statute is to seek the intention of its maker. A statute is to be construed according "to the intent of them that make it" and "the duty of judicature is to act upon the true intention of the Legislature - the mens or sententia legis ". 8. The function of the Courts is only to expound and not to legislate. Entertaining such a petition would amount to encouraging ingenuous methods to introduce that very provisions by judicial interference which the Legislature has deliberately done away with. This would be doing violence to the mandate of the Legislature. Legislation in a modern state is actuated with some policy to curb some public evil or to effectuate some public benefit. The legislation is primarily directed to the problems before the Legislature based on the information derived from past and present experience. When the purpose and object or the reason and spirit pervading through th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s argument was that although sub-section (5) of section 13 prescribed that party challenging the arbitration may make an application for setting aside an arbitral award in accordance with section 34, reading of section 34 would show that no provision is made to challenge the arbitral award on the ground of bias or partiality of the arbitral Tribunal. He further submitted that arbitral award can be set aside only on the grounds mentioned in section 34 and in the absence of a provision enabling the party to challenge arbitral award on the ground of bias of an arbitral proceeding, such a ground would not be entertained within the parameters of section 34 and, therefore, the aggrieved party is in fact rendered without remedy and this makes sections 13(3) and 13(4) as unconstitutional. We are unable to agree with this contention of the counsel for the petitioner. This way say so on two grounds: First, sub-section (5) of section 13 provides that an aggrieved party can challenge the arbitrator and seek the relief of setting aside of such an arbitral award in accordance with section 34. Clause ( b ) of sub-section (2) of section 34 empowers the Court to set aside an award where the Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h of the parties the opportunity of adequately presenting their case. The decision must be in consonance with this spirit and the Tribunal should act with a sense of responsibility. It cannot be imagined that Legislature intended not to make bias as one of the grounds of challenge to the arbitral award. We are, therefore, of the view that it will be difficult to exclude a challenge on account of bias and prejudice on the part of the arbitrator from the purview of sub-clause ( ii ) of clause ( b ) of sub-section (2) of section 34. If the allegations of bias and prejudice are not established, no Court will countenance such allegations. If a Court is satisfied that there is merit in such allegations, the award will have to be set aside. In our view, the relevant provisions of the Act, referred to above, are sufficient to enable an aggrieved party to challenge an arbitral award on the basis of allegations of bias and prejudice on the part of an arbitrator and it cannot be said that such a party is without any remedy under the Act. Thus we find no merit in the contention that section 13(3) and (4) are ultra vires the Constitution of India on account of there being no provision in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provision of the Court interference was avoided. Rather section 5 was inserted which provides that there will be no judicial intervention. We have already noted that a party having grievances against an arbitrator on account of bias and prejudice is not without remedy. It has only to wait till the arbitral award comes and it can challenge the award on various grounds including bias and prejudice on the part of the arbitrator. Before the stage of challenge of award under section 34 comes, sub-sections (1), (2) and (3) of section 13 envisage a situation where the arbitrator may on his own recluse himself on objection being taken qua his functioning as an arbitrator or where both the parties agree to his removal as per procedure accepted by them. If both fail, the arbitrator is required to decide on the challenge to his functioning as an arbitrator levelled by a party. The arbitrator is expected to be a fair person and if he finds that there is substance in the allegations, an arbitrator is expected to dispassionately rule on such an objection. Failing all this the last resort for an aggrieved party is the challenge under section 13(5) read with section 34. Thus going on with the e ..... X X X X Extracts X X X X X X X X Extracts X X X X
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