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TMI Blog1993 (1) TMI 253X X X X Extracts X X X X X X X X Extracts X X X X ..... ot accepted by the defendant. As a result of the same, the plaintiff was prevented from completing the contract within the specified time. The plaintiff had completed the work worth nearly Rupees seven crores, when the defendant illegally and without any justification terminated the contract by letter dated 10-7-1991 and seized the plaintiff's plant and equipments. As per Clause 70 of General Conditions of Contract, read with Clause 7(b) of the tender, all disputes between the parties after written notice by either party to the contract to the other, was required to be referred to the sole arbitration of an engineer officer to be appointed by the Engineer-in-Chief. The plaintiff addressed to the defendant invoking the above provisions and requested for appointment of an arbitrator. The defendant, however, failed to take any action. Stating thus that the defendant and the Engineer-in-Chief had lost their right to nominate an arbitrator in terms of the above clause and that a party cannot be an arbitrator in his own cause, the plaintiff moved the Court in the suit. The defendant resisted the claim before the learned single Judge stating inter alia that tenders for construction were i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ace until alternative arrangements have been finalised by the Government to get the works completed by or through any other contractor or contractors or agency or agencies. Provided always that commencement or continuance of any arbitration proceeding hereunder or otherwise shall not in any manner militate against the Government's right of recovery from the contractor as provided in condition 67 hereof. If the arbitrator so appointed resigns his appointment or vacates his office or is unable or unwilling to act due to any reason whatsoever, the authority appointing him may appoint a new arbitrator to act in his place. The arbitrator shall be deemed to have entered on the reference on the date he issues notice to both the parties, asking them to submit to him their statement of the case and pleading in defence. The Arbitrator may proceed with the arbitration, ex parte, if either party, in spite of a notice from the Arbitrator fails to take part in the proceedings. The Arbitrator may, from time to time with the consent of the parties, enlarge the time up to but not exceeding one year from the date of his entering on the reference, for making and publishing the award. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as committed an error of law in infering bias without there being anything specific in this behalf brought on the record by any party and the reasonableness of the Court appointing an arbitrator merely for the reason of vague allegations of one of the contracting parties, learned counsel for the plaintiff-respondent has reiterated that the underlying principles of the doctrine of bias should give rise to a presumption that a contracting party, who in spite of a demand notice failed to appoint arbitrator would not act fairly in nominating one of its agents or officers and/ or the agent or officer nominated to act as arbitrator would not be impartial to be a judge of a cause where the dispute is of a great magnitude. He has submitted that it will not be possible for the appellants to suggest that the Court has no power to appoint independent arbitrator and if the Court has such power, it is the fit case in which this Court should appoint an arbitrator. He has, on that basis, submitted that it is not a case in which it can be said that the learned single Judge has passed any perverse or unreasonable order. This Court in appeal should not interfere with the impugned order. 3. We have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... judge in his own cause. It is the latter of the principles that has been applied to this case holding that in as much as the Arbitrator to be nominated under Clause 28 of the agreement is the Managing Director of the petitioner Corporation of his nominee, such a person cannot deal with the case in which one of the parties is the Corporation itself, fairly. In other words, the Corporation having terminated the contract, one of its officers, however high he may be placed, if he deals with that dispute and embarks on an adjudication whether the termination has been validly done or not, would be judging his own cause. Therefore, the principle of nemo judex non causa sua is said to be violated. For my part, such a principle founded upon the theory of natural justice cannot be made applicable to the contracts entered into between the parties otherwise, it is impossible to carry on business. Unless such a power is reserved to one of the contracting parties, he may not enter into the contract at all....' A Division Bench of this Court, however, in Union of India v. Coromandel Engineering Company, , of which Mohan, J. has also taken notice of, has stated, 'But we find that this view of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions. We must straightway come to the facts and state that for the reason of certain bias that may be flowing from the conduct of the Regional Manager, who according to the plaintiff/respondent, was ill disposed towards it, that would not be sufficient to discredit the arbitrator who may not be deemed to be biased only because another officer of the same Corporation acted somewhat prejudicially against the interests of the plaintiff-respondent". To state thus in the nutshell, the doctrine of bias on the principle nemo judex non causa sua is applied to the arbitrator only when the arbitrator is found to have done some act that would create apprehension or show the existence of bias. Merely for the reason that the arbitration clause assigned the task of nominating the arbitrator from amongst the engineers of the defendant-appellant, it will not be possible to say that any engineer nominated by him shall be deciding his own cause or that he shall be acting unfairly. Had attention of the learned single Judge, who decided the case only on 23-9-1992, been drawn to the authorities on the subject including the Bench decision of this Court in M/s Indian Oil Corporation Ltd. v. M/s. Poopat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ile. The order appointing an arbitrator has to naturally follow the filing of an award, once an arbitrator is appointed by the trial Court, it will mean that there is a direction also for the filing of the arbitration agreement. Without filing such an arbitration agreement, the order appointing an arbitrator by the Court is not legally possible. Therefore, we construe the order of the trial Court as one directing the filing of the arbitration agreement and the appointment of an arbitrator. It is in this view, we hold this appeal as maintainable as directed against an order directing the filing of an arbitration agreement, falling under Clause (iv) of S. 39 of the Arbitration Act." The Bench has then said (at page 124), "On a due consideration of the matter, we are of the view that the order of the trial Court, appointing an arbitrator of its choice, cannot be sustained in law especially in the face of the various clauses contained in the arbitration agreement. As already pointed out, the arbitration agreement contemplates the appointment of an arbitrator by the Managing Director of the Food Corporation of India, and if the appointment of such, an arbitrator is not possible, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot possible to presume any bias, we are of the opinion that parties must be asked to abide by the arbitration clause and for the said reason, the appellant must proceed to appoint an arbitrator in terms above mentioned. To facilitate the arbitration and an early disposal of the dispute between the parties, we desired to the appellant to give a list of names of the arbitrators nominated by the Engineer-in-Chief and serve a copy of the same upon the learned counsel for the plaintiff-respondent, so that, if possible, the Court could ensure appointment of a person nominated by the Engineer-in-chief, who was acceptable to the plaintiff-respondent as well. The appellant has filed a list of names and seved a copy thereof upon the learned counsel for the respondent-plaintiff. The respondent, however, has not shown any willingness of accepting one or the other of them as the sole arbitrator. As we have found already, it is no longer open to the plaintiff-respondent to deny any part of the agreement and if we have found that the defend ant-appellant is bound by the arbitration clause of the agreement, we have no reason to hold that the plaintiff-respondent is not bound by it. We propose to a ..... 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