J.K. Enterprise vs M/S. Win Medicare Limited
1998 Latest Caselaw 101 Del

ORDER

S.N. Kapoor, J.

1. This judgment shall dispose of two petitions Nos. OMP 6/95 & OMP 62/94 one for removal of arbitrators and another for extension of time.

2. The applicant in OMP No. 6/95 filed under Section 5 & 11 of the Arbitration Act seeks removal and revocation of the authority of the two Arbitrators in the following terms:

(a) revoke the authority of the Joint Arbitrators being the respondents No. 2 and 3 in the present application;

(b) to remove the Joint Arbitrators being the respondent Nos. 2 and 3 in the present application and to appoint a sole Arbitrator such as a Retd. Judge of this Hon'ble Court in their place and stead;

(c) in the alternative to direct the Umpire to enter into reference in terms of the letter dated 26.4.1994 being annexure A-12 of the present application; and

(d) to pass such further order and/or orders, direction and/or directions be given as your Lordship may deem fit and proper.

3. By notice dated 19th July, 1993 the two arbitrators appointed by the parties informed the parties that they have fixed the hearing for 30th July, 1993 for arguments and final disposal (vide annexure A-2) and on 30th July, 1993 the hearing continued and a major part of the counter claim for a sum of Rs. 37,72,848 of the respondent No.1 relating to claim No. 5 was allowed to be withdrawn. The arguments continued and case was adjourned from time to time. On 19th February, 1994 at the beginning of the meeting Shri Ramji Srinivasan, CoArbitrator strongly recommended the parties to reach a settlement in the matter in the presence of the Arbitrators then and there. The petitioner was not prepared for any talk of settlement. Shri Ramji Srinivasan was insisting for talk of settlement. The CoArbitrator Shri G.S. Chatterjee seemed to be in silent agreement. Shri Ramji Srinivasan, CoArbitrator was showing an uncalled for interest in the matter and an attempt was made by Shri Ramji Srinivasan to compel the proprietor to agree to one sided settlement to the detriment of the petitioner. Consequently due to strong resistance on part of the petitioner and his counsel the alleged settlement could not be forced through. After the session was over, Shri Ramji Srinivasan actually threatened the proprietor of the petitioner firm that since he has not agreed to settle the matter the petitioner would be taken to High Court and shall have to face the consequences thereof. Such utterances on the part of the arbitrator raised a reasonable apprehension of bias in the mind of the petitioner and the petitioner, therefore, reasonably apprehend that the learned Arbitrators are biased against the petitioners. On this basis the revocation of the authority of the arbitrator is sought.

4. On behalf of respondent it is contended that the allegations are completely vague. Terms of alleged settlement has not been disclosed and the alleged threat even if it is accepted as correct does not make out any case of threat. For, persuading the parties to settle the matter amicably to avoid any unnecessary dispute being taken to the Court, would not amount to any threat.

5. I have heard the learned counsel for the parties at length and gone through the record.

6.1 In support of his contention to revoke the authority of the Arbitrators learned counsel for the petitioner also relies upon the case of M/s. Amarchand Lalitkumar vs. Shree Ambika Jute Mills LTD., . In that case the Supreme Court took the following view:

".....It is true that on an application under S. 5 it is not necessary to show that the arbitrator is in fact biased and it is enough to show that there is a reasonable ground for apprehension that the arbitrator will be biased. But the reasonable ground must be established to the satisfaction of the Court to which an application for leave to revoke the authority of an appointed arbitrator is made.........Before the Court exercises its discretion to give leave to revoke an arbitrator's authority, it should be satisfied that a substantial miscarriage of justice will take place in the event of its refusal. In considering the exercise by the Court of the power of revocation it must not be forgotten that arbitration is a particular method for the settlement of disputes. Parties not wishing the law's delays' know or ought to know, that in referring a dispute to arbitration they take arbitrator for better or worse, and that his decision is final both as to fact and law...... In exercising its discretion cautiously and sparingly, the Court has no doubt these circumstances in view, and considers that the parties should not be relieved from a tribunal they have chosen because they fear that the arbitrator's decision may go against them. (See Russell on Arbitration 16th edition, page 54) The grounds on which leave to revoke may be given have been put under five heads:

1. Excess or refusal of jurisdiction by arbitrator.

2. Misconduct of arbitrator.

3. Disqualification of arbitrator.

4. Charges of Fraud.

5. Exceptional cases".

6.2 Learned counsel for the petitioner also relied upon the case of Uttar Pradesh Cooperative Federation Ltd. v. Sunder Bros, Delhi, . In this case the Supreme Court held as under: "....The party may be released from the bargain if he can show the selected arbitrator is likely to show bias or by sufficient reason to suspect that he will act unfairly or that he has been guilty of continued unreasonable conduct........or that it is for some reason improper that he should arbitrate in between the parties..........that the arbitrator will not act fairly and that it is for some reason improper that he should arbitrate in the dispute".

6.3 Learned counsel for the petitioner also relied upon the case of C.S. Rowjee v. State of Andhra Pradesh, . In this case the Court expressed advisability of filing of the petition and took the following view:

"....If those against whom allegations are made came forward to place before the Court either their denials or their version of the matter, so that the Court may be in a position to judge as to whether the onus that lies upon those who make allegations of mala fides on the part of authorities of the status of those with which this appeal is concerned, have discharged their burden of proving it. In the absence of such affidavits or of materials placed before the court by these authorities, the Court is left to judge of the veracity of the allegations merely on tests of probability with nothing more substantial by way of answer".

6.4 The learned counsel for the petitioner also referred to the case of M/s. Mohinder Singh and Co. vs. The Union of India and Ors., AIR 1972 J & K 63. In that case the J & K High Court on the peculiar circumstances of that case has held that the arbitrator Mr. V.V. Vaze had remarked during the course of the proceedings "this case has become very notorious in the Department" and in addition to this remark a letter was also sent mentioning further allegations of the arbitrator being prejudiced and influenced by the officials of the CPWD. The arbitrator returned and rejected the communication dubbing as irrelevant but did not contradict the insinuations contained therein. In such circumstances the J & K High Court held that the allegations made in the letter of Mr. Gajaria to this arbitrator remain unrebutted. This conduct on the part of the arbitrator is sufficient in the eyes of law to raise reasonable apprehension in the mind of the petitioner that he will not et a fair deal at the hands of the Arbitrator. Here in the instant case the things are otherwise for the letter dated 21st February, 1994 did not allege any bias against the arbitrator excepting strong recommendation of the arbitrator attributing in a specific sentence of one of the arbitrators I do not think that this judgment is of any help to the petitioners.

7.1 In so far as the specific denial (or total lack of denial) of allegations made in paragraphs 9 and 17 of the petition has not been replied by the Arbitrator and as such paras 9 and 17 of the petition, by the Arbitrators, learned counsel for the petitioner relies on O. 8, R. 3 CPC.

7.2 Learned counsel for the petitioner relied upon the case of R.P. Kapur and Ors. vs. Sardar Pratap Singh Kairon and Ors. . In that case serious allegations were made against the Chief Minister and on that basis it was held that the Chief Minister owed a duty to the Supreme Court to file an affidavit stating what was the correct position regarding the allegations so far as he remembered it and not to leave the refutation to the Secretaries and other officers but they speak from the records. This authority is of no help to the petitioners for apart from the records there are respondents, the proceedings singed by the arbitrators and the proceedings did take place in presence of the parties. The facts were totally different in that matter.

7.3 The arbitrators being a quasi judicial persons it is felt they were supposed not to take sides in proceedings of this kind and they generally do leave such kinds of matters in the hands of the court to be decided on the pleas of the parties. Therefore, the fact that the arbitrator has not filed any reply and on failure to file reply it should be deemed to be admitted, amounts to stretching O. 8 R. 3 CPC too far. If the arbitrator would have contested and disputed these allegations and made counter allegations; it would have caused, not only unnecessary delays, but a question of bias might have also arisen.

7.4 Moreover from the replies to para 9 of respondent No.1, it appears that there were some talks earlier between the parties at Calcutta expressing their willingness to settle the matter amicably and upon those facts being brought to the notice of the arbitrators at the very outset on 19th February, 1994 the arbitrators expressed their willingness to provide the parties yet another opportunity to settle the matter amicably. Circumstances indicate that the the petitioner levelled unfounded and baseless and malicious allegations against the arbitrator nominated by the respondent. Firstly, the arbitrator appointed by the petitioner was always a party to all the proceedings and has signed all the proceedings and documents. Secondly, though the petitioner claims that there was no scope of any settlement on 19th February, 1994 his subsequent letter dated 21st February, 1994 showed nothing to indicate his reservations regarding exploring the possibility of an amicable settlement or that it had opposed any such attempts of any settlement. Thirdly, no bias had been made out for while in its petition the petitioner does not disclose that the arbitrators were insisting upon the petitioner to agree to pay a sum of Rs. 3 lakhs to the respondent, but in the rejoinder it has come for the first time. Fourthly, undisputedly the arbitrators not only heard the matters on at least seven dates before 19-20 February, 1994 and according to the petitioners own case some of the claims were also withdrawn during the course of the arguments. Fifthly, the fact that there were some talks of negotiation (between 4th October, 1993 and 19th February, 1994) at Calcutta has not been disputed by the petitioner in his rejoinder, and thereafter on 19-20 February the petitioner did not appear. Sixthly, the letter (Annexure A7 at page 36-37) filed by the petitioner itself does not talk of any kind of threat except of strong recommendation for settlement and ultimately the settlement process failed. Seventhly, the minutes of the proceedings dated 19th February, 1994 (Annexure A8) does not disclose anything except the fact that an attempt was made to examine the possibility of some give and take in order to resolve the mutual dispute which failed. This is signed by both the arbitrators Shri Ramji Srinivasan and Shri G.S. Chatterjee, the arbitrator appointed by the petitioners. Eighthly, the petitioner as submitted by the learned counsel for the respondent just did not attend the proceedings on 8th, 9th, 10th and 11th April, 1994. Ninthly, the petitioner did not take any step immediately after 19th February, 1994 for this petition was moved only on 12th December, 1994 for the first time.

8. Supposing for the sake of the arguments that whatever was stated about the alleged threat was correct, could it be called threat causing reasonable apprehension of bias and prejudice specially in the abovementioned background? There cannot be any doubt about the proposition that the purity of justice requires that the party to an arbitration proceedings should not have an apprehension that the arbitrator is biased and is likely to decide against the party. But it is also true that it is not every suspicion felt by a party which must lead to the conclusion that the authority hearing the proceedings is biased. The apprehension must be judged form a healthy, reasonable and average point of view and not on mere apprehension of any whimsical person. Moreover while indorsing and fully maintaining the integrity of the principle justice should not only be done, but should manifestly be seen to be done, it is important to remember that the principle should not be led to the erroneous impression that justice should appear to be done than it should in fact be done. Taking into consideration the overall facts and circumstances it does not appear that there is any reasonable basis to form an opinion that any of the arbitrator was biased against the petitioner. The conduct of the petitioner himself during the period of his appearance and after 19th February, 1994 has been such which indicated only one thing that he wanted that the proceedings should always end in his favour and when he felt it could be otherwise also, he refused to cooperate in the arbitration proceedings. In every litigation there shall always be an apprehension of the matter being decided against one of the parties for the matter cannot be decided in favour of all participating in the proceedings but only in favour of one or the other party. None of the parties should expect that the arbitrator shall always accede to his prayer about the conduct or adjournment of the proceedings as held by the Supreme Court in International Airport Authority of India vs.K.D. Bali, it will be a sad day in the administration of justice if such be the state of law. In absence of any bias or any of the grounds, namely, (1) excess or refusal of jurisdiction by arbitrator (2) misconduct of the arbitrator, (3) disqualification of the arbitrator, (4) charges of fraud and (5) exceptional cases the authority of the arbitrators cannot be revoked.

9. Coming to the allegations of forging the minutes dated 19th February, 1994 mentioned in rejoinder if the allegations are read in the light of the letter of the petitioner dated 21st February, 1994, the allegations made in the rejoinder and the allegedly forged minutes, the minutes appear to be substantially supported by the letter dated 21st February, 1994 sent by the petitioner to both the arbitrators. Consequently, it is not possible to accept that these minutes had been forged.

10. For the foregoing reasons I find no force in this petition and petition to revoke the authority of the joint arbitrators is liable to be dismissed.

11. In the second petition No. OMP 62/94 the petitioner has sought enlargement of the time for making and publishing of the award by the Arbitrators and for issuance of directions to the respondent to participate in the arbitration proceedings without indulging in delaying tactics and to pass exparty ad interim orders in terms of the accusations made in the matter.

12. In this connection the contention of the petitioner M/s. Win Medi-Core is that several hearings were held and virtually all adjournments were sought by the respondent in a bid to delay the proceedings on the ground that their counsel was preoccupied. On 8th April 1994 the respondents contacted the coarbitrator Shri G.S. Chatterjee and informed that the wife of the respondent had met with a serious accident and was admitted to the I.C.U. and, therefore, could not reach Delhi and prayed that an adjournment be granted. Neither any written request nor any medical certificate was attached. On 16th April, 1994 it was also mentioned in the notice that the time for making and publishing of award was expiring on 20th April, 1994 and the parties were requested to agree to suitable extension of time by a further period of four months. Instead of extending the time of the latter the respondent sent letter dated 26th April 1994 alleging that the arbitra tors have failed to make and publish their award and therefore called upon the umpire to enter upon reference and adjudicate the claims and disputes between the parties. The Umpire is required to enter upon reference only where the arbitrators have allowed their time to expire without making an award or that they have stated in writing that they cannot agree. In the present case the arbitrators have not allowed the time to expire, it was the respondent who by the various tactics have forced the time to expire without enabling the arbitrators to hear the matter. The petitioners have already given their consent for extension.

13. It is apparent that the respondent is opposing the extension of time on the same lines on which OMP No. 6/95 was filed i.e. on the ground that in view of the acts and conduct of the learned arbitrators the respondent has lost all faith and confidence in the fitness and impartiality of the learned arbitrators and the respondent personally believe that it cannot get justice from the present arbitrators.

14. Under Section 28 of the Arbitration Act, 1940, the Court may, if it thinks fit, whether the time for making the award has expired or not and whether the award has been made or not, enlarge from time to time the time for making the award. In the case in hand the time has already expired. The powers of the court under Section 28 are vast and wide. It can enlarge the time before or after the time for making the award has expired; and after the award has been made; and even against the intention expressed in the arbitration agreement not to extend the time. Similarly, there is no restriction to grant extension of time even suo moto. But it has to be exercised with judicial discretion. In case the delay has occasioned on account of conduct of the party in seeking adjournments after adjournments the Court would not favour enlargement of time for a person should not take advantage of his own wrong. The Court has to satisfy itself that the extension of time is not likely to work injustice or wrong. Similarly where the arbitrators were prevented from making the award by an order of stay from the Court the time should certainly be extended. Where the conduct of the party in appearing before the arbitrator even after expiry of time for making the award without any objection is a material fact to be considered in favour of enlarging the time.

15. In the case in hand it may be noticed that reference was made to the two arbitrators. The respondent continued to participate in the arbitration proceedings even after expiry of the time and parties extended the time. The arbitrators issued notice on December 26, 1992. It is apparent from Annexure A-3 that it is M/s. J.K. Enterprises who sought adjournments on 10th May, 1993, 14th and 15 May, 1993 to date beyond 6th June, 1993. Annexures A-4, A-5, A-6 and A-9 show that the delay had occurred on account of the facts which were beyond the control of the arbitrators, the illness of the respondent, nonavailability of the counsel of the respondent and noncooperation of the respondent appear to be the main reason for delay in giving the award. In such circumstances it is apparent that it is a fit case where the time should be granted.

16. Accordingly time is extended to give award by four months. Both the parties are directed to appear before the arbitrators on February 2, 1998.

17. Accordingly while OMP No. 6/95 is dismissed OMP No. 62/94 is allowed. Parties are left to bear their own costs.