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TMI Blog2012 (12) TMI 1257X X X X Extracts X X X X X X X X Extracts X X X X ..... maintain the time schedule and the progress of the work was not observed. The Contractor was directed to push up the progress of work but that also it failed to do. The Contractor was notified that if it failed to take any action to show requisite progress by 30th of April, 1991, action against it under Clause 3 of the agreement would be taken. Still there was no requisite progress in execution of the work by the Contractor. On May 8, 1991, the Corporation resorted to action under Clause 3 of the contract, rescinded the contract and adopted further course by giving unexecuted work to another contractor. The disputes, thus, having arisen between the parties, the Contractor moved the court of Sub Judge, First Class, Chandigarh, for appointment of the arbitrator in terms of Clause 25A of the contract. 3. On the application made by the Contractor for appointment of the arbitrator, the Sub Judge, on May 13, 1992, ordered that matter in dispute may be referred for arbitration as per Clause 25A of the agreement and, accordingly, as per the agreement and the statement of parties, the Sub Judge ordered the Chief Engineer of the Corporation to act as an arbitrator as provided under Clause 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arma, learned counsel for the Contractor, strenuously urged that the Contractor had reasonable apprehension of bias on the part of the arbitrator as the action of cancellation of contract was taken by the Executive Engineer at the behest of the arbitrator as he was the Chief Engineer of the Corporation. He referred to the inspection made by the Chief Engineer along with other Engineers of the Corporation on October 26, 1990 and the opinion formed by the Chief Engineer on the basis of the inspection that the work was not being carried out by the Contractor in accord with the time schedule. He also referred to conduct of the arbitral proceedings by the arbitrator, particularly concluding the arbitration proceedings in a short span of about 49 days and that too when the Contractor's application for his removal was pending before the Court. In support of his submission that the arbitrator was biased against the Contractor, the learned counsel also referred to post arbitral conduct of the arbitrator in contesting the Appeal before this Court and filing counter affidavit in opposition to the Appeal. 12. Mr. Rajeev Sharma would highlight two aspects, viz., (i) the arbitration agreeme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as in full knowledge of the fact that the Chief Engineer is under full control and supervision of all civil engineering affairs of the Corporation, yet it agreed for resolution of disputes between the parties by him as an arbitrator. It is a fact that the Chief Engineer inspected the progress of the work given to the Contractor along with other engineers of the Corporation on October 26, 1990. In the course of inspection, the slow progress of the work was brought to the notice of the Contractor on that date. There was nothing unusual about it and, as a matter of fact, on the contract being terminated on May 8, 1991, it was the Contractor who made an application for appointment of arbitrator in terms of Clause 25A of the agreement as it was well aware that the inspection by the arbitrator did not disqualify him to be arbitrator. In the application for appointment of arbitrator, no allegation of any bias or hostility was made against the named arbitrator, i.e., Chief Engineer of the Corporation, rather the Contractor prayed for appointment of arbitrator in terms of the arbitration Clause 25A. When the application came up for consideration before the Sub Judge on May 13, 1992, the adv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hows that photocopy of the arbitration agreement was produced before the court. AW-1, who was examined by the Corporation, in his deposition before the arbitrator, has stated that photocopy of the agreement was tendered to the arbitrator. Merely because copy of the agreement was not found by the District Judge in the record of the arbitral proceedings, it cannot be assumed that copy of the agreement between the parties was not placed for consideration before the arbitrator. 19. The arbitrator in his award has awarded interest in the sum of Rs. 1,40,150/- upto December 31, 1991 on the amount of secured advance paid to the Contractor for the period the amount remained unutilised although the Corporation had claimed the interest on that count in the sum of Rs. 1,69,878/-. With regard to award of unutilized amount of secured advance, the arbitrator observed in the award that the exact amount of award will depend upon the actual unutilised amount of secured advance till realisation. On ascertaining the total amount of unutilised secured advance, it was found to be Rs. 9,63,635.25/-. 20. The District Judge in the appeal preferred by the Contractor in challenging the judgment and decre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t enough. 23. The observations of the Lord Atkinson in Bristol Corporation (supra), relied upon by the learned counsel for the Contractor, instead of supporting his argument, go fully against the Contractor. In Bristol Corporation (supra) Lord Atkinson stated thus : "...If a contractor chooses to enter into a contract binding him to submit any disputes which arise between him and the engineer of the persons with whom he contracts to that engineer to arbitrate on, then he must be held to his contract; whether it be wise or unwise, prudent or the contrary, he stipulated that a person who is the servant of the persons with whom he contracted shall be the judge to decide upon matters upon which, necessarily, that engineer or arbitrator has himself formed an opinion. But though the contractor is bound by that contract, still he has a right to demand that, notwithstanding those pre-formed views of the engineer, that gentleman should listen to argument, and should determine the matters submitted to him as fairly as he can, as an honest man; and if it be shown in fact that there is any reasonable prospect that he will be so biased as not to decide fairly upon those matters, then the cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... diction of the Superintending Engineer at that time to begin with, who, however, could not complete the arbitration because he was transferred and succeeded by a successor. In those circumstances on the facts stated no bias can reasonably be apprehended and made a ground for removal of a named arbitrator. In our opinion this cannot be, at all, a good or valid legal ground. Unless there is allegation against the named arbitrator either against his honesty or capacity or malafide or interest in the subject-matter or reasonable apprehension of the bias, a named and agreed arbitrator cannot and should not be removed in exercise of a discretion vested in the Courts under S. 5 of the Act. 12. Reasonable apprehension of bias in the mind of a reasonable man can be a ground for removal of the arbitrator. A predisposition to decide for or against one party, without proper regard to the true merits of the disputes is bias. There must be reasonable apprehension of that predisposition. The reasonable apprehension must be based on cogent materials. See the observations of Mustill and Boyd, Commercial Arbitration, 1982 Edition, page 214. Halsbury's Laws of England, Fourth Edition, Volume 2, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stand bound by it unless a good or valid legal ground is made out for his exclusion. 30. Except raising the vague and general objections that the arbitrator was biased and had predisposition to decide against the Contractor, no materials, much less cogent materials, have been placed by the Contractor to show bias of the arbitrator. No sufficient reason appears on record as to why the arbitrator should not have proceeded with the arbitral proceedings. The test of reasonable apprehension of bias in the mind of a reasonable man is not satisfied in the factual situation. 31. We may now deal with the submission of the learned counsel for the Contractor that bias on the part of the arbitrator is also reflected from the fact that he has contested the present Appeal and filed the affidavit in opposition. What would have the arbitrator done when he has been personally impleaded as respondent in the Appeal and the allegations of bias have been made against him. He was left with no choice but to rebut the allegations by filing his affidavit. The arbitrator did what any other person in his place would have done in the circumstances. 32. The view taken by the High Court does not suffer from ..... X X X X Extracts X X X X X X X X Extracts X X X X
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