Bombay High Court
Maharashtra State Electricity Board, ... vs A.S. Joshi And Anr. on 8 June, 1990
Equivalent citations: 1990(3)BOMCR140
JUDGMENT H. Suresh, J.
This is a petition filed by the petitioners for removing the first respondent as the sole a arbitrator, under section 11 of the Indian Arbitration Act, in respect of certain reference of disputes between the petitioners and the second respondents. Alternately, the petitioners pray that leave may be granted to the petitioners under section 5 of the Indian Arbitration Act to revoke the authority of the first respondent. Consequently, they pray that this Court may be pleased to appoint another fit and proper arbitrator to act as sole arbitrator in place of the first respondent.
2. The second respondents have not contested this petition. It is the first respondent who is the arbitrator who has contested this matter. He has been an arbitrator in several matters referred to by the petitioners and he says that many of his awards have been accepted by the parties without any challenge.
3. The relevant facts are as follows :
The very first meeting of the arbitration was held on March 19, 1987. In that meeting the fees of the arbitrator was fixed. The learned arbitrator furnished a statement of his charges and details of other reimbursable expenditure and the parties were directed to convey their consent to the above charges in writing in due course. The parties accepted the fees as claimed by the arbitrator. There is a letter given by the petitioners, dated April 16, 1987, consenting to the fees as claimed by the arbitrator.
4. The arbitration lingered on for nearly two years. Since the arbitration was still to continue for a further indefinite period, the learned arbitrator by his letter dated January 14, 1989 sought revision of his fees. He forwarded to the petitioners as also to the other side his revised scale of fees in the form of a schedule and requested the parties to acknowledge and confirm in writing acceptance thereof to enable him to submit his future bills accordingly. The initial reaction of the petitioners was that the matter would be considered by the competent authority who would take a decision on this. It appears that the competent authority was the Chairman of the petitioners. After some correspondence, the petitioners, by a letter dated March 1, 1989 informed the arbitrator that the revision in the scale of fees was not found acceptable by the competent authority and, therefore, they requested the arbitrator to continue the assigned work as the sole-arbitrator/co-arbitrator in the same scale of fees already approved by the petitioners. In connection with his correspondence the arbitrator fixed a meeting on March 17, 1989 at Pune. He expressly stated that he was calling the meeting to discuss the situation arising out of the said correspondence. The petitioners did not attend that meeting though they have some reason as to why they could not attend the same. Further correspondence took place. The gist of the correspondence is that the learned arbitrator persisted in his claim of higher fees while the petitioners stuck to their gun by saying that they would not agree. The arbitrator thought that he could persuade the petitioners if the petitioner's representative, with full authority to take a decision, attended the meeting. The petitioners would agree to send their representative to such a meeting but without full authority to decide on this particular question. Each party having taken a particular stand, it resulted in an "impasse", with no progress in the arbitration proceedings as such. However, the question, in this petition, is not that he demanded increase in his fees, but that the tone and the tenor of the language that he used in the correspondence leads to a belief in the mind of the petitioners that they may not get an unbiased verdict in the matter. Are they justified in entertaining such an apprehension?
5. Now, to some details in the correspondence. There is a letter (at Ex. N to the petition) in which the learned arbitrator says, unless on reconsideration, the petitioners think it proper to accede to his increased fees as requested, he would submit the bills as before and he would release the two awards already declared to be ready with him no sooner he received the payment and he would honour his commitments as the sole arbitrator in future in respect of the two half complete cases, but he would charge no fees for future hearings "as my protest against MSEB's action and until such time as MSEB reconsiders the situation and accepts the charges now demanded". To this, there is a reply dated March 30, 1989 from the petitioners who would not agree to avail of any concession as mentioned by the learned arbitrator and that, therefore, they say, that the arbitrator should not proceed with the hearing of the matter in case the arbitrator is not agreeable to accept the fees as fixed earlier. In rejoinder by a letter dated April 18, 1989 the learned arbitrator offers to discuss the entire issue of revision of fees, with "... any authorised representative of MSEB and the other contractors viz M/s. Surkan, Gannon Dunkerley AND R.M. Jog for finding an ON THE SPOT available and workable solution of the present IMPASSE if at all that is the intention of MSEB".
6. Perhaps before the receipt of the said letter, the petitioners wrote a letter dated April 25, 1989 in which they purported to convey that they would persume that the arbitrator would accept fees as already agreed to by MSEB and if not, the petitioners would attend' the arbitration proceedings under protest". This letter annoyed the arbitrator so much that by his reply dated April 28, 1989, he described the same as "discourteous, threatening and conditional above all". In that context he said ...
"No Arbitration Court (including this, with the undersigned as a Sole Arbitrator) can be expected to function correctly and impartially, as is expected of him, under such clearly unworkable/unacceptable conditions. "
He further added that it is unfortunate that the petitioners were making unfortunate and unwarranted attempts to question the very competence and jurisdiction of the sole arbitrator. He also said in that letter that he in desirous of resigning from the post of sole arbitrator/co-arbitrator at the earliest opportunity to maintain his self-respect as well as the dignity of the post of sole arbitrator/co-arbitrator, even though it may amount to not honouring some of his earlier commitments. He said that the final decision in this regard would be communicated on May 20, 1989 when a meeting has been fixed by him and the co-arbitrator. He hoped, it was for the petitioners and other contractors either to wholly accept the package of scale of fees incidentals as revised on January 14, 1989 or in the alternative, to ensure holding up one more common meeting of all concerned on May 20, 1989 and the matter could be sorted out on the basis of amicable/acceptable solution of the problem.
7. This is followed by a letter dated May 4, 1989 in which he said that if no acceptable solution emanated in the meeting on May 20/21, 1989, he shall be free to withdraw from all future proceedings of the different cases as also from the commitments he had directly or indirectly made while taking up the assignment. However for the purpose of taking a decision, he wanted an authorised representative with powers to take on the spot decision from the petitioners to attend the meeting. But, by a letter dated May 15, 1989 the Chief Engineer reiterated that it would not be possible for MSEB to depute such an authorised representative and that they are not agreeable to any revision of fees.
8. The meeting took place on May 20, 1989. What transpired in the meeting has been put on record by the arbitrator in a letter dated May 22, 1989. It says, inter alia, that the arbitrator took note of the ...
"Opportunities given by Shri Joshi to MSEB representatives (and in particular the request to their two chief Engineers) to present themselves for personal discussions on 17-3-89 and 20-5-89 for resolving the 'Impasse' (which, however, have not been availed of).
Unsatisfactory, dilatory and delaying attitudes depicted by MSEB in their various letters, (as already brought out in Shri Joshi's letter on 28-4-89) in spite of their letter of 15-5-89.
The actual need for revision in the scale of fees in the context of the ever rising costs of living particularly in view of MSEB having already approved such increases on two occasions in the past, and M/s. GDC and Surkan having readily agreed to the same."
If then mentions that he has taken an overall review of the actual progress of the arbitration proceedings with particular reference to honouring and completing the commitments undertaken by him and with regard to various matters pending before him. He ponders....
"However, thereafter some of the views expressed by MSEB's in their letters and specifically in their recent letters of 15-5-89 regarding only 'passive participation' in the next common meeting have set Shri Joshi thinking as to whether.
(a) Under the altered circumstances, it would be possible to ensure mutually acceptable solutions to the present Impasse, in the proposed personal discussions, in a 'Give and take' spirit, this being the underlying objective in convening of the proposed 4th common meeting, and,
(b) How far, it would be appropriate for Shri Joshi to honour the balance commitments with the same degree of confidence and dignity which he had all along been enjoying, until receipt of MSEB's letter of 1-3-89 and again of 15-5-89.
(c) In spite of Shri Joshi's very strong view on the subject and his personal reactions to MSEB's statements in the different letters, Shri Joshi has thought it worthwhile and appropriate to ensure holding of the proposed 4th common meeting, only in the context of specific requests to that effect made initially by GDC on 5-5-89 and thereafter by MSEB on 16-5.-89, and giving to all parties at disputes yet one more but final opportunity to sort out their differences if any, and complete the different proceedings, leading to the final declaration of Awards in all pending cases."
He then suggests a meeting to be held on June 10/11, 1989, again, for the purpose of taking a final decision that would be reached with full authority at their command from their respective organisations viz. the parties before him. He mentions that on his part, he was willing to make certain adjustments in his proposals in the spirit of "give and take". He also mentions that he would be putting in his actual letter of resignation on July 1, 1989, depending on the intermediate developments regarding resolving the "impasse" in the next common meeting.
9. The petitioners would not agree to send any person with full authority at their command for the purpose of taking a decision on the spot in the common meeting called by the arbitrator. The meeting takes place on June 10, 1989, and the minutes of the meeting have been recorded. The meeting lasted for about 2 hours but no decision could be taken. The minutes of the meeting show that the arbitrator also discussed whether he would resign or not but no decision was taken even on that question.
10. This is followed by a letter dated July 24, 1989 addressed by the arbitrator to the parties including the petitioners. In this letter he makes the following observations :
"In the mean time, I have freshly scrutinised the entire correspondence exchanged from 14-1-89 till now) and more particularly that between the undersigned and MSE Board, as also recapitulated the trend of 'Informal' discussions, held at the 17-5-89 and 10-6-89 meetings, with the persons present.
4. As a result, I have become singularly aware and conscious of the positive and strong UNDERCURRENT FOR CONTINUATION OF ARBITRATION PROCEEDINGS (a) preferably for all the cases at hand or (b) at least for the 4 Nos. partially heard cases before me.
5. This rather belated awakening is based on ---
(a) Spontaneous approvals from M/s. GDC and M/s. Surkan to the revision in fees, followed by payment of bills raised, as also the correspondence and 'Informal' discussions held.
(b) Easily understandable absence of any reacting or of the representative of M/s. R.M. Jog (they being not directly concerned with the issue.)
(c) Specific wordings to that effect in MSEB letters dated 1-3-1989, 30-3-1989, 12-4-1989, 25-4-1989 and 15-5-1989, even when most of these letters were primarily to convey MSEB's negation of the upward revision in the Scale of Fees proposed.
(d) MSEB's deputing in the end their C.E. Shri S.R. Joshi and other officers for the 10-6-1989 meeting, though their presence was not fully an Authorised One, as was expected by SA/CA and the 'Informal' discussions with them.
(e) The 'Informal' but 'confidential' and personal discussions held on the subject between the undersigned and my Co-Arbitrator colleague Shri G.L. Kulkarni on 20-5-1989 and 10-6-1989 which I do value most.
6. Full impact of this undercurrent for continuation of the proceedings (as distinct from the submission of my resignations) had some how eluded me during the March 1989 to June 1989 period, when I was on the one hand pressing for the revision in my fees and on the other hand trying to get relieved from the continuance of the proceedings themselves through the resignation process.
7. The concept of my possible resignation had merely centred round an early relief from the Arbitration work load, in view of my "advancing" age, as also extreme uncertainty regarding completion of the balance work load, I may add that the same may not be construed as any direct linkage/threat between the revision of fees issue and the resumption and completion of the Arbitration proceedings issue.
8. This is now to inform all contending parties that. I have come to the conclusion that submission of my resignation midway would not be the correct for me to adopt and it would be in the interest of not only the contending parties but also myself that I complete the assignments entrusted, even at the cost of some additional inconvenience to me for some more but still indefinite period. Any other course, if adopted, may have even amounted to or possibly construed as "Running Away" from the duties and responsibilities assigned to me in the fullest of confidence and I am certainly keen that such an impression, if at all it has been created in any quarters is not harboured any more.
9. Kindly note, therefore, that I have since geared myself for resuming and completing all the currently pending and balance assignments entrusted to me, which I have sincerely assessed to be capable of completion in a period ranging from 12 to 18 months from now, at the most"
This shows his great anxiety to complete the arbitration proceedings which are before him. He does not want to sustain in his conscience any possible accusation that he has run away from his duties. There are very few arbitrators who are so committed to the institution of arbitration as this arbitrator. I could discern this strain as he argued the matter, in person, before me. Of course, he laments upon the conduct of the petitioners when they refused to consider his request on which he wanted a decision after a meaningful discussion. In that context he says...
"h) MSEB actions when compared to those of the other contending parties in this regard to bring out the follows :
i) MSEB has persistently refused to accept the proposed revision, while their counter-parts have readily accepted the same.
ii) MSEB has settled the bills raised at lesser amounts than what were claimed (even though after due consent from SA/CA).
iii) MSEB had not deputed their representatives at the specific common meetings covered by SA/CA on 17-3-1989 and 20-5-1989.
iv) MSEB representatives who had attended the 10--6-1989 meeting, did not bring with them the requisite authority delegated to them for taking 'on the spot' decisions, as was specifically asked for repeatedly by SA/CA (thereby rendering the effort of convening the 4th Common Meeting totally futile, as stated in the minutes.") I need hardly add that all the above actions on MSEB side are seen in poor light in comparison to the corresponding actions of their counter-parts in the proceedings before me'.
The learned arbitrator also reminds the petitioners that they had agreed such an upward prevision on an earlier occasion. He makes an appeal to the petitioners to accept the revised and modified proposals in a give and take spirit for arriving at a solution on the dead-lock without any further hesitation or delay. With all this, the petitioners would not agree. Mr. Korde submits that after this observation by the arbitrator, when he sees the petitioners in "poor light" as compared to the second respondents, there can be no hope of an unbiased verdict from the arbitrator.
11. Finally, the learned arbitrator writes a letter to the Chairman, MSEB on August 22, 1989. He sets out the relevant facts and requested the chairman to spare some time for him for discussing the matter. This is replied to by the Chairman by his letter dated September 7, 1989, which, I think is a complete answer to all allegations of apprehension of bias. It says :---
"While acknowledging your above referred letter, it is to inform you that I have reviewed the issue in its entirety and I have come to the conclusion that the earlier decision communicated to you is proper and correct. I, therefore, request you to continue to act as sole arbitrator/co-arbitrator in respect of cases entrusted to you on the scale of fees as earlier agreed to between you and the parties i.e. MSEB and the concerned claimants. You are further requested to kindly confirm within a week from the date of receipt of this letter that you would act as sole arbitrator/co-arbitrator on the earlier agreed scale of fees. If you are not inclined to agree with the above proposal I regret to inform you that the Board would be constrained to take appropriate action to appoint fresh sole arbitrator/co-arbitrator in your place, as the case may be."
The arbitrator yielded and he wrote a reply dated September 11, 1989. The relevant portion is as follows :
"1. I am sorry to note the contents therein regarding M.S.E.B.'s continued adherence to the scale of my fees, in spite of detailed justifications I had given in support of revision in my various letters/ minutes of meetings.
2. I wish that you had given me an opportunity to discuss the matter with you personally as per request made to you on 22-8-89.
3. At the same time, with equal satisfaction, I note M.S.E.B.'s continuity of confidence in my discharging the duties and responsibilities, both as sole arbitrator and as co-arbitrator.
4. Now, that I have linked the issue of revision of my scale of fees and proceeding with the Arbitration hearings (as already intimated to all the parties), I wish to add that, I shall be conducting and completing all of my assignments with the same vigour and speed, as before. In fact, I would greatly appreciate if M.S.E.B. and all concerned parties jointly evolve a methodology for conducting the hearings on a case basis, or anything upto 7 days at a time, for expeditious completion of all entire arbitration process upto the declaration of all Awards."
As regards his claim of fees, this is what he mentions in the same letter.
"As regards the scale of fees, as MSEB is not agreeable to any increase, I now propose to leave this matter for appropriate decision thereon by the High Court, at Bombay, at the appropriate time. This would also cover the contents of para 17(a) & 17(b) of my letter of 24-7-89, addressed to all parties."
He then, proposes to fix a date of hearing after "de-linking" the issue", apparently meaning de-linking the issue relating to revision of scale of fees. I cannot understand as to how after these two letters, the petitioners could have preferred this petition either under section 11 or under section 5 of the Indian Arbitration Act. The learned arbitrator has categorically agreed to go on with the arbitration without demanding any revised fees as such from the parties. The Chairman of the petitioners did not complain about anything that the arbitrator said in the course of the correspondence earlier. On the contrary, he expressed complete confidence in the arbitrator when he requested him to continue to act as the sole arbitrator/co-arbitrator in respect of cases entrusted to him. It is true that the Chairman had made it clear that the scale of fees would be as earlier agreed to between the arbitrator and the parties. The arbitrator only stated in his reply that since the Chairman was not agreeable to any increase, he would leave the matter for appropriate decision thereon to the High Court at the appropriate time. Mr. Korde says that this cannot be construed as an acceptance of the proposal given by the Chairman of the petitioners. He says that this is clearly in the nature of a counter proposal. I do not agree. This has to be understood in its context. In para 4 of the said letter he has categorically stated that he is de-linking the issue of revision of scale of fees and that the he would proceed with the arbitration, not only as a matter of duty, but also because the Chairman has reposed faith and confidence in him in respect of the matters entrusted to him. He is conscious of the fact that the matters are pending before him for a long time and much time has been wasted on the question of revision of fees. He now wants to proceed with the arbitration with vigour and speed as he had shown earlier. But, still he hoped , and it was a pious hope and wish, that as and when the award is made, perhaps, at that time he would urge upon the Court to consider his claim of additional fees and see that the parties can be persuaded at that time. But it was no condition, nor was it a bargain or a counter-proposal. While he agreed to proceed with the arbitration, unconditionally, he relegated his claim for additional fees to the realm of hope.
12. It is clear that if the arbitrator seeks a revision of fees that cannot be considered as a legal misconduct at all. It is true, normally, the arbitrator fixes his fees and that scale of fees should last till the end of the arbitration. The original idea of the Arbitration Act was that the arbitration proceedings would be over normally within a period of four months and such a question of revision of fees would not normally arise. It is our experience today that arbitrations last for years together despite the best of efforts on the part of the arbitrators. In such circumstances, if an arbitrator seeks reasonable revision of fees, there can be no fault in that. Therefore, I must necessarily hold that there is no ground of any misconduct for the purpose of revoking the arbitration under section 11 of the Indian Arbitration Act.
13. Mr. Korde, on the other hand points out that it is not merely asking revision of fees to which the petitioners were not agreeable but the language used by the arbitrator will have to be considered. He submitted that the arbitrator has a grudge against the petitioners inasmuch as the petitioners would not agree to his demand for revision of fees. He submitted that the other party viz. respondent No. 2 has agreed to pay revision of fees which the arbitrator has taken into account and in that context he has observed that the petitioners are seen in "poor light" as compared to the other side. From this, Mr. Korde, wants me to infer that if this arbitrator is allowed to proceed with the matter it could be said that the petitioners would be under a legitimate apprehension that they may not get justice from him.
14. There are two answers to this contention. Firstly, there is no material whatsoever to hold that he has any bias in favour of the second respondent. Secondly he has not said a word on the merits of the case. All that he has said relates to his claim of revision of fees. He had tried to persuade the petitioners. He had also thought that if the petitioners would not agree he would walk out of arbitration. But this conscience was telling him that it would not be proper for him to walk out of arbitration but he must do his duty. At the same time he was hoping that he would ultimately persuade the petitioners if this representative sat with full authority to discuss and on a frank discussion they could be persuaded. The petitioners avoided this situation. They would agree to discuss without giving authority to the person who would come for the discussion. Such discussions had taken place but as it transpired, it was a meaningless effort. Even the Chairman, when he finally wrote the letter dated September 7, 1989 did not bother to hear the arbitrator, though requested by the arbitrator-sounds strange that the arbitrator himself should be denied the right to be heard. Despite this, the arbitrator finally agreed more as a matter of duty than anything else to accept the arbitration and complete the same, which is that the Chairman wanted him to do. The chairman had no apprehension in getting justice from the arbitrator, at that time. I can legitimately presume that the Chairman had gone through the correspondence. I can legitimately presume that the Chairman had also taken into account the various arbitration matters this arbitrator had conducted in the past. Therefore, with full knowledge of the entire situation if the Chairman had reposed faith in the arbitrator to complete the arbitrations which are pending before him, just because he says that he would appeal to the High Court with regard to his claim of fees, the petitioners cannot make a grievance that thereby they have an apprehension in getting justice. It is in this sense the petition becomes a malicious petition and to that extent the arbitrator is right when in his affidavit-in-reply he described the allegations as malicious and motivated.
15. Mr. Korde submitted that both the in the correspondence as also in the affidavit-in-reply the learned arbitrator has made various statements and they are in a laughed which is harsh and incisive and would certainly give rise to a reasonable apprehension of bias in the mind of the arbitrator. The correspondence, of course, brings out a strain of anger and anguish on the part of the arbitrator, - anger because the petitioners refuse to see reason in his claim, anguish because the arbitration proceedings are delayed on account of this. So also in the affidavit-in-reply when he thinks that the petition has been filed to malign him, and ultimately to remove him on the grounds which are not maintainable at all. But, otherwise, he has categorically stated in his affidavit-in-reply that he stands committed to maintain the same high standard of efficiency and integrity in this and the remaining matters all without fear and certainly out of a sense of a duty as an arbitrator voluntarily nominated by the respective contending parties.
16. Mr. Korde submits that for the purpose of revoking the arbitration on the ground of apprehension of bias, actual bias need not be proved. It is sufficient if there is reasonable apprehension of bias in the matter. He relied on the case of Koshy v. K.S.E. Board, . There is no quarrel with this proposition at all. But of course, it is equally well settled that in the absence of any legal misconduct, the authority of the arbitrator cannot be lightly revoked and it can be done only if the Court is satisfied that there is a genuine apprehension of bias as against a particular party. There is not an iota of allegation as against the arbitrator that he is interested in the other party. There is no allegation of any misconduct whatsoever as against the arbitrator. The only thing that he did was that he demanded revision of fees which the petitioners bluntly refused to consider. He persisted the matter little more than what ordinarily one would have done. Finally, his thought his duty to complete the arbitration was more important than his demand of fees, and he felt that because of his demand the arbitration proceedings should not be stalled.
17. I suggested to Mr. Korde that they could still proceed with the arbitration and by chance the award is made against the petitioners and if they want to challenge the same on any grounds, they could also be given liberty to challenge the award on the basis of such ground which may be available to them on the basis of this correspondence, referred to in the petition, and, therefore, it is not necessary that the authority should be revoked at this stage. Mr. Korde, after taking instructions submitted that his clients would not agree to the same. That does not means that I cannot grant such a liberty in invitum, mainly of course, to obviate any remote possibility of injustice on account of bias alleged herein, I, therefore, pass the following order :
Petition stands dismissed, with costs.
The petitioners will have the liberty, in the event of award being made against them and they desire to challenge the same, to add amongst other grounds a ground of bias on the basis of correspondence annexed to the petition.
On the application of Mr. Korde, interim order granted earlier, to continue for a period of four weeks from today.