Naresh Kumar Lamba vs Ashok Kumar Lamba & Ors

*      IN THE HIGH COURT OF DELHI AT NEW DELHI
%                                          Order delivered on: May 02, 2013
+                         Arb.P.No.253/2012

       NARESH KUMAR LAMBA                                    ..... Petitioner
                   Through             Mr.R.K.Uppal, Adv.
                          versus

       ASHOK KUMAR LAMBA & ORS               ..... Respondents
                   Through Mr.Neeraj Suri, Adv.
       CORAM:
       HON'BLE MR. JUSTICE MANMOHAN SINGH

MANMOHAN SINGH, J. (Oral)

1. The petitioner has filed the present petition under Section 11 of the Arbitration and Conciliation Act, 1996 for the appointment of an Arbitrator. Various facts have been stated in the petition.

2. The relevant facts, which are necessary to decide the present petition, are that a letter dated 31 st October, 2011 was issued by the petitioner through counsel addressed to the two respondents, namely, Ashok Kumar Lamba and Sunil Kumar Lamba to appoint an Arbitrator to solve the disputes in the partnership between the petitioner and the respondents within one month after receiving the said notice. The petitioner has also referred Clause 17 of the Partnership Deed wherein a clause of arbitration to appoint an Arbitrator in case of disputes between the parties, the Arbitrator could be appointed by the majority of the partners, thus the said notice was issued. Respondents No.1 & 2, admittedly, received the notice issued by the petitioner who gave the reply dated 11 th November, 2011 informing the petitioner having appointed Sh.Hukum Chand as a sole Arbitrator to adjudicate upon the disputes between them.

3. I have been informed by the parties that the Arbitrator granted time to the petitioner to file the reply to the statement of claim raised by respondent No.1. Learned counsel for the petitioner states that his client has given the letter dated 29th June, 2012 to the Arbitrator, requesting him not to proceed with the arbitral proceedings as the Arbitrator is one of the friends of the respondents. The other reason given by him is that he has filed the present petition for appointment of an independent Arbitrator.

4. A Division Bench of this Court in the case reported in 2011 (5) R.A.J. 7 Delhi, Progressive Career Academy Pvt. Ltd. Vs. FIIT JEE Ltd. held as under:

"20. A comparison of the provisions dealing with the challenge to the arbitrator's authority in the A&C Act and the UNCITRAL Model Law discloses that there are unnecessary and cosmetic differences in these provisions, except for one significant and far-reaching difference. The UNCITRAL Model Law, in Article 13(3), explicitly enables the party challenging the decision of the Arbitral Tribunal to approach the Court on the subject of bias or impartiality of the Arbitral Tribunal. However, after making provisions for a challenge to the verdict of Arbitral Tribunal on the aspect of bias, the UNCITRAL Model Law prohibits any further Appeal. It seems to us, therefore, that there is no room for debate that the Indian Parliament did not want curial interference at an interlocutory stage of the arbitral proceedings on perceived grounds of alleged bias. In fact, Section 13(5) of the A&C Act indicates that if a challenge has been made within fifteen days of the concerned party becoming aware of the constitution of the Arbitral Tribunal or within fifteen days from such party becoming aware of any circumstances pointing towards impartiality or independence of the Arbitral Tribunal, a challenge on this score is possible in the form of Objections to the Final Award under Section 34 of the A&C Act. Indeed, this is a significant and sufficient indicator of Arb.P.No.253/2012 Page 2 of 4 Parliament's resolve not to brook any interference by the Court till after the publication of the Award. Indian Law is palpably different also to the English, Australia and Canadian Arbitration Law. This difference makes the words of Lord Halsbury in Eastman Photographic Materials Co. all the more pithy and poignant.

21. In this analysis, we must immediately observe that the approach taken by one of us (Vikramajit Sen, J.) in Interstate Constructions is not correct as it transgresses and infracts the provisions of the A&C Act. Learned Single Benches have interfered and removed arbitrators obviously on pragmatic considerations, viz. the futility and idleness of pursuing arbitral proceedings despite lack of faith therein because of justifiable doubts as to the independence or impartiality of the arbitrators. Clearly, Parliament has also proceeded on the compelling expediency and advisability of expeditious conclusion of these proceedings. Relief against possible mischief has been provided by making clarification in Section 13(5) that apart from the challenges enumerated in Section 13(4), an assault on the independence or impartiality of the Arbitral Tribunal is permissible by way of filing Objections on this aspect after the publishing of the Award. We, therefore, affirm the approach in Pinaki Das Gupta, Neeru Walia, Ahluwalia Contracts (India) Ltd. and Newton Engineering and Chemicals Ltd. We are of the opinion that the Single Benches who interfered with the progress of the proceedings of the Arbitral Tribunal in the pre-Award stage fell in error. Humans often fall prey to suspicions which may be proved to be ill-founded on the publication of an Award. There is compelling wisdom in Parliament's decision to allow adjudication on grounds of bias, lack of independence or impartiality of the Tribunal only on the culmination of the arbitral proceedings.

22. Having arrived at the conclusion that curial interference is not possible at the pre-Award stage on the allegations of bias or impartiality of the Arbitral Tribunal Arb.P.No.253/2012 Page 3 of 4 on the one hand, and our understanding that the Appeals are not maintainable on the other hand, is any further relief to be granted? We think it expedient to abjure from passing any further orders for several reasons including - firstly, the reality that arbitration proceedings would inevitably have already come to an end in those instances where the arbitrator had been removed by orders of the Court, and secondly the availability of redress under Article 136 of the Constitution of India. All pending applications stand disposed of. The Referral Order is answered by reiterating that the statute does not postulate judicial interference in arbitral proceedings till the Award is published, whereupon Objections can be raised also on the platform of the alleged bias of the Tribunal. This challenge is possible provided the grievance is articulated in consonance with Section 13 of the A&C Act."

5. In view of the settled law on the subject, the present petition is not maintainable and thus, the same is dismissed. The interim order as passed in I.A.No.17408/2012 is vacated. The said application is also disposed of.

(MANMOHAN SINGH) JUDGE MAY 02, 2013 Arb.P.No.253/2012 Page 4 of 4