Capt. (Retd.) R.C. Verma vs Brgd. (Retd.) R.S. Thapar And ...
1992 Latest Caselaw 7 Del

ORDER

1. Capt. Retired R.C. Verma wants removal of the arbitrator namely Brig. Retd. R. S. Thapar, respondent No. 1 herein. The arbitrator was appointed by Chairman, Army Welfare Housing Organisation (hereinafter called as 'respondent No. 2'). Removal of the arbitrator has been sought inter alia on the grounds of misconduct and being biased on the part of the arbitrator.

2. To appreciate the facts of the case, the brief facts are that the petitioner was a Member of the Army Welfare Housing Organization (hereinafter called as 'respondent No. 3). He was allotted a Type TV flat at NOIGA in Phase XVII Scheme, which was subsequently cancelled by the respondent No. 3 on frivolous and false allegations without notice. The petitioner had already paid up to Keith December 1989 three installments. The total sum having paid by them amounted to Rs.2, 07,420/-. This amount was paid as per the schedule of payment of the respondent No. 3. For the 4th and 5th installments, petitioner was forced to borrow the sum from his relatives and friends because he suffered financial losses in his business. Col. Puri and Mrs. Puri being family friends of the petitioner loaned part payment of the said installments. Thus Pay Order/ Demand Draft received amount for the use of bona fide payment of the Installments due, but the respondent No.3 misconstrued the same as sale of the flat to Puri's which fact was denied by the petitioner. Respondent No. 3 instead of appreciating the case of the petitioner cancelled the allotment of the flat illegally and unjustifiably. The same was challenged by the petitioner in the High Court vide civil Writ Petition No. 1260/ 9 1. The Division Bench directed the respondent No. 3 to include the name of the petitioner in the draw of lots of the flats, which were to be held then. Further directions were given to respondents to appoint an arbitrator, as there existed an arbitration agreement between the parties.

3. The respondent No. 2 pursuance to the said direction appointed respondent No. I as the sole arbitrator with the reference as to adjudicate in the matter of arbitration of dispute between and regarding cancellation of registration of dwelling unit in NOIDA in view of the illegal sale of the same to Col. S. Puri.

4. The parties were directed to file their statement of the claim and the counter statement of claims. The petitioner, however, objected to the reference made by the respondent, because according to him the respondent gave a twist to the controversy between the parties. According to him the issue was not the illegal sale to Col. Puri but was "whether at all there had been a sale," and hence the petitioner challenged the reference by respondent No. 2. Correspondence was exchanged between the petitioner and the respondents. Respondent No. 2, however, intimated that the dispute and the question of reference will be framed by the sole arbitrator himself. This was so communicated by respondent No. 2 vide letter dated 6th August, 1991.

5. On 8th August, 1991, the arbitrator directed the petitioner to appear in person or through authorised representative for 19th August, 199 1, which was subsequently changed to 26th August, 1991. Liberty was granted to the petitioner to file his claim, which the petitioner did. It is the allegation of the petitioner that on 26th August 1991, when the petitioner and his counsel reached the office of the Secretary of Respondent No. 3, they were made to sit in the office. While the petitioner and his counsel were sitting, the arbitrator also joined them in the same office. The petitioner and his counsel were made to wait when the said Secretary took away the arbitrator with him. Subsequently, the said Secretary came back alone and asked the petitioner and his counsel to come and sit in the room, earmarked for arbitration proceedings. While the petitioner and his counsel were going to the said room, petitioner's counsel saw the arbitrator in one of the office rooms. On inquiry from the Secretary, he was told that the said person was not the arbitrator. On reaching the earmarked room, the arbitrator was not found there. This created a doubt in the mind of the petitioner's counsel who quietly left the room to find out the arbitrator. While searching the arbitrator, the petitioner's counsel opened the door of the room adjacent to the office of the Managing Director of respondent No. 3, which was meant probably for the visitors, and to his surprise he found the arbitrator being instructed by the counsel of respondent No. 3, Shri A. K. Tiwari, Counsel, Shri A. K. Tiwari wits instructing the arbitrator to give the award in favor of respondent No. 3, as the respondent No. 3 wanted to allot the flat to an Army widow. He also heard Mr. A. K. Tiwari, instructing the arbitrator to make a non-speaking award. This action of the arbitrator seeking instructions from the counsel of the opposite party infuriated the counsel for the petitioner. Therefore, they left the proceedings under protest. Immediately, thereafter the petitioner wrote a letter to the arbitrator giving out the details of the events, which according to him amounted to misconduct on the part of the arbitrator. Since the petitioner found that the arbitrator was mixed up with the respondent, he lost faith in him. Hence this petition for the removal of the arbitrator.

6. Notice of this petition was duly served on the respondents. Respondent No. 3 filed the reply challenging the allegation of the petitioner inter alia on the grounds that the petitioner has concealed vital and material facts. According to respondent No. 3, petitioner had never been interested to submit to the jurisdiction of the arbitrator. It was on account of the Division Bench order that. he had to submit and now he wants to wriggle out of the same by leveling false and malicious allegations against the arbitrator and the respondents. These allegations have been leveled according to the respondent with a mala fide intention. The conduct of the petitioner would fully demonstrate that he had been resisting the matter to be adjudicated by an arbitrator. The first hearing of the arbitration took place on 5th June, 1991 which was neither attended by the petitioner nor his counsel. Instead of attending the proceedings in person or through representative, the petitioner wrote a letter on 3rd June, 1991 raising false and frivolous objection about the subject matter of reference and also about the omission or the typographical mistake in mentioning the correct flat number. This fact was clarified by the arbitrator on 14th June, 1991 and directed the petitioner to join the arbitration proceedings. Again the matter was adjourned to July, 1991 but the petitioner did not attend the same. Rather on 16th July, 1991, he wrote another letter raising objection to the arbitration proceedings. These acts of the petitioner would show that he was resisting. The arbitration proceedings on one or the other pretext. Respondent No. 3 had objected before the arbitrator the delaying tactic adopted by the petitioner. Finding that the arbitrator may proceed further, the present story has been concocted by the petitioner with a predetermination to malign the arbitrator as well as the respondents.

7. I have heard Mr. Ravinder Sethi. Senior Advocate for the petitioner and Mr. A. K. Tiwari for respondent No. 3. 1 have also taken into consideration the various documentary evidence placed on ' record. The admitted facts on record are that the reference to arbitration was in pursuance to the writ filed by the petitioner bearing No. 1260/ 9 1. It is also an admitted fact that the case of the respondent No. 3 had all along being that the petitioner had sold this flat to one Col. Puri. The arbitrator was to adjudicate on this allegation made by the respondent No. 3. It is also an admitted fact on record that there are no allegations against the Appointing Authority i.e. respondent No. 2 the allegations are only against the arbitrator.

8. What the Court has to keep in 1 and before invoking the provision of Ss.5, 11 and 12 of the Arbitration Act is the conduct of the arbitrator and the likely prejudice going to be caused to the aggrieved party. The Court before accepting the plea of bias against the arbitrator must be satisfied that the substantial miscarriage of justice will take place In the events of his refusal to accept plea of bias. The only allegation against the arbitrator in this case as alleged that he was being briefed and advised by the lawyer of respondent No. 3 that he should give silent award in favor of respondent No. 3. However, there is nothing on record of this case where from it could be I inferred that the arbitrator had in fact been given such advise or that he by his conduct any way followed such an advice as is alleged to have been given by Shri A. K. Tiwari, Advocate of respondent No. 3. The Supreme Court in the case of Ranjit Thakur v. Union of India laid down that the test for determining likelihood of bias is whether a reasonable person in possession of relevant information would have thought that bias was likely and whether person concerned was likely to be disposed to decide the matter only in a particular way. The Court before accepting the plea of bias against arbitrator must be satisfied that substantial miscarriage of justice will take place in the event of its refusal to accept plea of bias. Admittedly in this case there is no agreement that the arbitrator will give a reasoned award. Therefore, the question of Mr. Tiwari asking the arbitrator to give a silent award does not arise. It is well settled principle of law that unless contrary intention appears in the agreement, the arbitrator is not bound to give reasoned award. Moreover, the proceedings had yet not initiated, the question of giving the award in favor of the respondent No. 3 at that stage did not arise. If at all the petitioner had appeared before the arbitrator and from arbitrator's conduct he found that the arbitrator was behaving in a particular way or that he was likely to dispose of the matter in that way, .then of course, petitioner was justified in coming to the Court and pointing the bias. But in the instant case the fear of the petitioner is ill founded. In such like cases, the Court must act cautiously and sparingly and not be guided by the fear of the applicant that the decision may go against it.

9. Section 11 of the Arbitration Act empowers the Court to remove the arbitrator in the following circumstances:

A. If the arbitrator fails to use all reasonable dispatch in (i) entering on and proceedings with the reference (ii) in making the award.

10. So far as A(i) &(ii) are concerned, it is not the allegation of the petitioner that the arbitrator has failed to use reasonable dispatch. The word "misconduct" does not necessarily imply anything in the nature of fraud involving moral turpitude. In fact, the word "misconduct" has not been defined nor it is easy to define what amounts to miss conduct of an arbitrator. The expression is of a very wide import, varying in its gravity and decree according to the act complained of. In fact the misconduct is a question of fact 'in each case to be ascertained from the entire proceedings. As already observed misconduct has a wider meaning but it does not necessarily imply moral turpitude. However, it includes any irregularity, which is not in consonance with general principal, or equity and good conscience and which ought to govern the conduct of the arbitrator upon arbitration proceedings. But what we have to see that by such a conduct or misconduct of the arbitrator, there is any possibility of substantial miscarriage of justice. From the allegation leveled in this case of 26th August, 1991, one can only say that these are only imaginations of the petitioner. No one can believe that the counsel of the respondent No. 3 would instruct the arbitrator before the start of the proceedings to give award in favor of respondent No. 3 If the arbitrator was so approachable then it was not difficult for respondent to have given any such instruction anywhere else at any time. Mr. Tiwari has denied the alleged dialogue between Mr. Tiwari and the arbitrator on oath and I see no reason to disbelieve Mr. TIwari's affidavit in this regard. Nor from the proceedings so far held before arbitrator, it can be inferred that there was connivance between the arbitrator and the respondent No. 3. The record shows that the arbitrator had in fact acted justly. I find neither merit in the allegations nor any misconduct on the part of the arbitrator. Even otherwise, as per the reply filed by respondent No. 3, respondent No.1 has since resigned as arbitrator vides is letter dated 31st August 1991. Nothing survives and the petition has otherwise also become in fructuous.

11. For all these reasons, I find no merit in this petition. The same is accordingly dismissed. However, in the circumstances of the case, parties are left to bear their own costs.

As the main petition stands disposed of no orders are required to be passed in IA 9670/91 hence the same also stands dismissed.

12. Petition dismissed.