Progressive Career Academy Pvt. ... vs Fiit Jee Ltd. & Ors.
2009 Latest Caselaw 4079 Del

             * IN THE HIGH COURT OF DELHI AT NEW DELHI

                                                                     Date of Reserve: 19.8.2009
                                                                 Date of Order: 9th October, 2009

OMP No. 297/2006
%                                                                                          09.10.2009

        Progressive Career Academy
        Pvt. Ltd. & Anr.                             ... Petitioner
                         Through: Mr. Chetan Sharma, Sr. Advocate with
                         Mr. S.K.Maniktala, Advocate

                   Versus


        FIIT JEE Ltd. & Ors.                          ... Respondents
                         Through: Mr. Anil K. Khaware, Advocate


JUSTICE SHIV NARAYAN DHINGRA

1. Whether reporters of local papers may be allowed to see the
judgment?

2. To be referred to the reporter or not?

3. Whether judgment should be reported in Digest?

ORDER

This petition has been preferred by the petitioner under Section 14

of Arbitration & Conciliation Act, 1996 for terminating the mandate of the

Arbitrator on the ground that the Arbitrator was biased and the request of the

petitioner to the Arbitrator for recusing himself on the ground of bias and pre-

judicial attitude had not been acceded to. It is prayed that the Arbitrator had lost

de facto and de jure authority and therefore he should be removed and another

independent Arbitrator be appointed by the Court.

2. On the applicability of Section 14 under the circumstances where

bias is alleged against the Arbitrator and the Arbitrator refuses to recuse himself

holding that he was not biased, there is conflicting opinion of the different

benches of this Court. In Newton Engineering and Chemicals Ltd. v. Indian Oil

Corporation Ltd. & Ors. 136 (2007) DLT 73 (decided by Reva Khetrapal, J. on

8.11.2006) this Court held that a conjoint reading of Sections 11, 12, 13, 14, 15 &

16 of Arbitration & Conciliation Act, 1996 implies that Section 13 of the Act

visualizes a 'Challenge Procedure' where the mandate of the Arbitrator is

challenged by one of the parties to the arbitration whereas Section 14 of the Act

deals with failure or impossibility of the Arbitrator to act on account of other

circumstances such as his inability to perform its functions on account of death,

resignation etc. The Court observed that unless the Arbitrator withdraws himself

from the office under Section 13(3) of the Arbitration & Conciliation Act, 1996 the

Court cannot entertain a petition under Section 14 and terminate the mandate of

the Arbitrator and appoint another Arbitrator. The court held as under:

24. To conclude, I have no hesitation in holding that there is no provision in the Act empowering this Court to terminate the mandate of the Arbitrator who has entered upon the reference and/or to substitute the same with an Arbitrator appointed by this Court. The necessary corollary is that the challenge to the appointment of the Arbitrator must be raised by the petitioner before the Arbitral Tribunal itself. If such challenge succeeds, the petitioner shall have no cause for

grievance left. If, however, the petitioner is unable to succeed before the Arbitral Tribunal, it shall have no option except to participate in the arbitral proceedings and if aggrieved by the arbitral award, to challenge the same in accordance with the provisions of Section 34 of the Act.

3. The same view is expressed more or less in Triad India v. Tribal

Co-operative Marketing and Development Federation of India Ltd. & Anr. 138

(2007) DLT 104 and in Surat Singh Virk & Anr. v. Fit Jee Franchise Networks Ltd.

FAO 37-38/2006 decided on 4th May, 2009.

4. The other view is seen from the judgments in Indira Rai and Anr. v.

Vatika Plantations (P) Ltd. 127 (2006) DLT 646, Alcove Industries Ltd. v. Oriental

Structural Engineers Ltd. & Anr. 2008 (1) Arb.L.R.393 (Delhi) wherein this Court

held that law stipulates bias as a disqualification to remain an Arbitrator. In a

given dispute it is not the existence of actual bias but the existence of such facts

and circumstances as are likely to give rise to justifiable doubts as to his

independence and impartiality and in appropriate cases, where there is a

reasonable apprehension of bias, the Arbitrator renders himself de jure, unable to

perform his functions and thus Section 14 of the Arbitration & Conciliation Act,

1996 would be attracted and his mandate can be terminated. The court in above

cases disagreed with the view that a party unsuccessful in his challenge under

Section 13, would only have the remedy of challenging the award finally under

Section 34 and observed that Section 14 confers enough power on the Court to

decide the controversy whether in view of the alleged bias the mandate of the

Arbitrator stands terminated or not. The same view has been taken by another

bench in National Highways Authority of India v. K.K.Sarin & Ors. 159 (2009)

DLT 314 wherein Court observed that a party alleging bias is required to first

follow the procedure in Section 12 and 13 and if unsuccessful, has choice of

either waiting till stage of Section 34 or he feels that the bias can be summarily

established or shown to the Court, can approach the Court immediately under

Section 14, seeking removal of the Arbitrator.

5. Considering the conflicting views in the above judgments and in

some more judgments, I consider that the matter should be referred to a larger

bench of this Court for setting at rest the legal controversy. The matter be placed

before Hon'ble the Chief Justice by the Registry for referring it to a larger bench.

October 09, 2009                                     SHIV NARAYAN DHINGRA, J.
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