G. Vijayaraghavan vs M.D. Central Warehousing Corpn. & ...
2000 Latest Caselaw 688 Del

ORDER

Mukul Mudgal, J.

1. This petition, filed by the petitioner under Section 12 & 13 of the Arbitration & Conciliation Act, 1996 seeks to set aside the appointment of the respondent No. 2 as the Arbitrator and further seeks the appointment of a new & independent arbitrator to adjudicate the claims.

2. The main plea of the petitioner is based upon that Clause 19 of the Contract between the parties the relevant portion of which reads as follows:

"All disputes and difference arising out of or in any way touching or concerning this agreement whatsoever (Except the matter referred to in Sub-Clause 30 of Clause XXI and as to any matter the decision of which is expressly provided for in the contract) shall be referred to the Sole arbitration of any person appointed by the Managing Director, Central Warehousing Corporation, New Delhi. It will be no objection to any such appointment that the person appointed is an employee of the Corporation that he had to deal with the matters to which the contract relates and that, in the course of his duties as such employee of the Corporation, he has expressed views on all or any of the matter in dispute or difference."

3. It is the submission of the petitioner that the above quoted arbitration clause is unreasonable and one-sided and provides for appointment from a panel of arbitrators of respondent No.1. It is submitted that the arbitrator in question in the present case Shri R.K. Goel has been appointed as an arbitrator in number of disputes concerning respondent No.1 and therefore serious miscarriage of justice is apprehended. It is inter-alia submitted that the Clause providing for appointment of arbitrator suffers from lack of consensus-ad-idem. In support of its plea, the learned counsel for the petitioner has relied on the following observations of the Hon'ble Supreme Court in Nandyal Coop. Spinning Mills Ltd. Vs. K.V. Mohan Rao :-

"The decision relied on by the High Court in V. Raghunadha Rao Vs. State of A.P. (1988) 1 ALT 461 was in relation to the appointment of an Engineer of the Department, the party to the contract. In the dotted lines contract it was held that the consensus ad idem was absent and the element of bias would be inherent from the fact situation. It bears no relevance to the facts of the case. In Judicial Review of Administrative Action by S.A. de Smith (3rd Edn.) at P. 223 it is stated that "In a Private law an independent commercial arbitrator must observe strictly judicial standards". At P. 229 he further stated that "It is open to a party to lead evidence to prove that an independent arbitrator has shown altered bias in favour of the other party has prejudged the issue". Admittedly Yethiraj acted on earlier occasions as appellant's arbitrator. Justice must not only be done but seemingly appear to have been done. The arbitrator must not only be impartial but also be objective, circumspect and honest in rendering his decision. Many a time the award is not a speaking award which would inspire confidence for acceptance only when the above perspectives are present. Its invalidity would be tested on grounds available in law. Therefore, the respondent rightly objected to the nomination of Yethiraj. Such nomination, therefore, does not bind him. We find force in the stand taken by the respondent supported by Shri K. Madhava Reddy."

4. The petitioner has contended that in view of the above position of law laid down by the Hon'ble Supreme Court he is entitled to have the Arbitrator replaced.

5. The learned counsel for the respondent has in reply relied upon the following observations of the Hon'ble Supreme Court in B.S. Bindra Vs. Union of India AIR 1995 SC 2454:-

"It is settled law that Court cannot interpose and interdict the appointment of an arbitrator, whom the parties have chosen under the terms of the contract unless legal misconduct of the arbitrator, fraud, disqualification etc. is pleaded and proved. It is not in the power of the party at his own will or pleasure to revoke the authority of the arbitrator appointed with his consent. There must be just and sufficient cause for revocation. There is no general power for the Court to appoint an arbitrator unless the case falls within the relevant provisions of the Act for will the Court make an appointment where the arbitration agreement provides a method by which appointment is to be made, Clause 25A expressly provides appointment of the named officer by designation who was appointed in terms thereof and had entered upon the duties immediately. Revocation of the arbitrator's authority is exactly equivalent to removal which would be done on specified grounds like misconduct or omission to enter upon duties within time etc. Both parties by consent may revoke the authority of the arbitrator but that is not the case herein."

6. The learned counsel for the respondent has also relied upon the judgment of Hon'ble Supreme Court in M/s Amarchand Lalit Kumar Vs. Sh. Ambica Jute Mills Ltd. which has enumerated the following grounds on which the leave to revoke may be given:-

"a. Excess or refusal of jurisdiction by arbitrator.

b. Misconduct of arbitrator.

c. Disqualification of arbitrator.

d. Charges of fraud.

e. Exceptional cases."

7. The respondents' case is that the objection of the petitioner to the respondent No.2's appointment as arbitrator cannot be countenanced on the ground that the respondent was an arbitrator in other matters of the petitioner. He has submitted that it is open to the petitioner to challenge the actual bias of the arbitrator by leading evidence so that any of the grounds specified by Hon'ble Supreme Court in Amarchand Lalit Kumar's case (Supra) can be proved.

8. I am of the view that the decision reported as Amarchand Lalit Kumar Vs. Sh. Ambica Jute Mills Ltd. lays down the position of law applicable to the facts of the present case and is a judgment of 3 Hon'ble Judges. In light of the above judgment of 3 Hon'ble Judges of Hon'ble Supreme Court it is not necessary to consider the views expressed in B.S. Bindra Vs. UoI AIR 1995 SC 2454 and Nandyal Coop. Spinning Mills Ltd. Vs. K.V. Mohan Rao . I therefore do not consider it necessary to decide the question as to whether in circumstances which do throw bona fide doubts about the objectivity of an arbitrator such appointment can be revoked. In a given instance there may be facts such as an arbitrator consistently finding in favour of the party on whose panel he is borne which may in such circumstances vitiate the objectivity of such an arbitrator. In the present case I find that the record discloses no such facts.

9. In the present case all that the petitioner has submitted was that the respondent No.2 Shri R.K. Goel, was on the panel of arbitrators of respondent No.1-Corporation and had been an arbitrator for the respondent No.1 on other occasions without giving any other instance or incident of bias. Merely being on the panel of arbitrators is not ipso facto sufficient to impugn the impartiality and the objectivity of the respondent No.2 as arbitrator.

10. In the light of the aforesaid fact and in view of the proposition of law laid down by the Hon'ble Supreme Court in Amarchand Lalit Kumar's case (Supra), there is no merit in the present petition which is accordingly dismissed. All interim orders stand vacated. There shall be no orders as to costs.

11. The petition is accordingly disposed of.