Madras High Court
R.Gowrishanker vs Krishnamurty Chandra on 20 February, 2019
Equivalent citations: AIR 2019 (NOC) 301 (MAD.)
Author: M.Sundar
Bench: M.Sundar
1
IN THE HIGH COURT OF JUDICATURE AT MADRAS
RESERVED ON : 12.02.2019
DATE OF DECISION : 20.02.2019
CORAM
THE HON'BLE Mr.JUSTICE M.SUNDAR
O.P.No.107 of 2019
R.Gowrishanker .. Petitioner
Vs.
1.Krishnamurty Chandra
S/o.V.Krishnamurthy,
9/1, Shanti Niketan,
New Delhi-110 021
Also having office at
Real Time Technical Services Pvt. Ltd.,
3rd Floor, 39 Lavanya Towers,
4th Main Road, 8th Cross,
Malleshwaram,
Bangalore-560 055
2.Murtaza Soomar,
Sole Arbitrator,
A-126, Okhla Industrial Estate,
Phase-2, New Delhi-110 020. .. Respondents
This Arbitration original petition is filed under Section 34 of the
Arbitration and Conciliation Act, 1996 seeking to set aside the impugned
award passed by second respondent dated 15.08.2018.
For Petitioner : Mr.R.Murari, Senior counsel
for Mr.Niranjan Rajagopalan
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http://www.judis.nic.in
2
ORDER
Arbitral award dated 15.08.2018 made by a sole arbitrator has been assailed / put to challenge in the instant petition, which shall hereinafter be referred to as 'O.P' for the sake of brevity. Section 34 of 'The Arbitration and Conciliation Act, 1996 (Act 26 of 1996) [As amended by Act 3 of 2016]', which shall hereinafter be referred to as 'A and C Act', uses the term 'application' qua recourse against arbitral awards, but the nomenclature 'Original Petition' is being used by the Registry and therefore, though instant proceedings, without any doubt or dispute, is an application under section 34 of A and C Act, the same is being referred to as 'O.P' for the sake of convenience and clarity. Sole arbitrator who passed the arbitral award which is under challenge has been arrayed as second respondent before me in the instant O.P. Therefore, second respondent, besides being referred to as 'sole arbitrator' shall also be referred to as 'Arbitral tribunal' for the sake of convenience. Arbitral award dated 15.08.2018 which has been put to challenge and which is being sought to be set aside in the instant O.P made by second respondent / arbitral tribunal shall be referred to as 'impugned award' for the sake of brevity. Sole petitioner before me in the instant O.P is the claimant before the Arbitral tribunal and the first respondent before me in the instant O.P is the sole respondent before the arbitral tribunal. Therefore, 'petitioner and first respondent before me' in this O.P shall also be referred to as 'claimant and respondent before arbitral tribunal' interchangeably for the sake of convenience and clarity.
http://www.judis.nic.in 3 2 Epicentre of the dispute between petitioner and first defendant is an agreement captioned 'Memorandum of Agreement' dated 01.01.2013. Crux and gravamen of this agreement dated 01.01.2013 is, first respondent agreed to pay the petitioner a principal sum of Rs.6,52,25,671/- (Rupees six crores fifty two lakhs twenty five thousand six hundred and seventy one only) together with accrued interest for past debts. It was also agreed that this sum would be paid in two parts. One part is by way of cheques for a sum of Rs.3,22,25,671/- and the balance, i.e., the other part is by way of shares in a company which goes by the name 'Secure Earth Ltd.'. There are also covenants in this memorandum of agreement to the effect that such transfer of shares by respondent to the petitioner / claimant is based on the assumption that the shares so transferred will have a minimum value of Rs.3,30,00,000/- as on 31.12.2013 and a minimum value of Rs.4,30,00,000/- as on 30.6.2014. It has also been covenanted that the petitioner /claimant will have the option to call upon the first respondent to repurchase shares in the said company, i.e., Secure Earth Ltd. at a total price of Rs.3,30,00,000/- on 31.12.2013 or at a price of Rs.4,30,00,000/- on 30.6.2014. The modalities and manner in which such repurchase option can be exercised by the petitioner / claimant has also been adumbrated in the memorandum of agreement. There is a default clause in the event of refusal to repurchase and there is also an enabling clause for enforcement by seeking specific performance.
3 There is an arbitration clause in this memorandum of understanding. This arbitration clause is clause 7. A perusal of the arbitration http://www.judis.nic.in 4 clause reveals that parties have agreed for resolution of disputes by reference to a sole arbitrator and three arbitrators (one of whom can be chosen by parties) have been named.
4 Considering that the instant O.P is a challenge to an arbitral award, i.e., impugned award, suffice to say that arbitration clause was invoked and commencement of arbitration within the meaning of Section 21 of A and C Act was in July 2015. Suffice to say that consensus regarding one of the three named arbitrators acting as sole arbitrator could not be arrived at, resulting in a petition being filed in this Court under section 11(6) of A and C Act. This petition was O.P.No.634 of 2015. This petition under Section 11(6) came up before Hon'ble Chief Justice of this Court, i.e., Hon'ble Chief Justice Mr.Sanjay Kishan Kaul (as His Lordship then was) and it came to be disposed of on 09.09.2016. Parties had agreed that the second respondent in the instant O.P shall act as sole arbitrator. Order dated 09.09.2016 made by then Hon'ble Chief Justice of this Court reads as follows :
“The learned counsel for parties state that the parties have agreed that the arbitration should be held by the Sole Arbitrator Mr.Murtaza Soomar.
2.In view of the aforesaid, I appoint Mr.Murtaza Soomar, A 126, Okhla Industrial Estate, Phase 2, New Delhi – 110 020 as the Sole Arbitrator, to enter upon the reference and adjudicate the disputes inter se the parties.
The arbitration proceedings will be conducted under the aegis of the Madras High Court Arbitration Centre and the parties will be governed by the Rules of the Centre.
3.The Original Petition is, accordingly, allowed, leaving the parties to bear their own costs.” http://www.judis.nic.in 5 5 Sole arbitrator / arbitral tribunal so appointed entered upon reference on 26.9.2016, held arbitration proceedings in Chennai which is the agreed venue (even according to memorandum of agreement) and ultimately passed the impugned award. For the purpose of completion of facts, it is to be mentioned that there was an extension of time for arbitral tribunal and this was vide order dated 20.6.2018 made by a learned Single Judge of this Court in A.No.4426 of 2018.
6 Claim before Arbitral tribunal was under two heads. Considering that instant O.P is under Section 34 of A and C Act, on facts, suffice to say that a sum of little over Rs.6.52 Crores was to be paid by first respondent to the petitioner/ claimant under memorandum of agreement in two parts. One by way of cheques, i.e., post dated cheques and the other by way of shares with a repurchase covenant. According to claimant, post dated cheques were not honoured and the sum of Rs.3,22,25,671/- under such post dated cheques was claimed and this is under one head. According to the claimant / petitioner, first respondent refused repurchase of shares at the agreed sum of Rs.3.30 Crores (as of 31.12.2013) when called upon to do so and therefore, the value of repurchase being Rs.3,30,00,000/- was claimed under the second head of claim. With regard to both heads, interest at 12% per annum for six months compounded monthly and interest at the rate of 18% per annum from the 7th month to the date of reference to arbitration, i.e., 26.9.2016 was claimed. This interest component stood at Rs.47,19,85,500/-. Therefore, the total claim before arbitral tribunal was Rs.53,72,21,171/-. http://www.judis.nic.in 6 7 First respondent filed a defence statement before the arbitral tribunal inter-alia contending that amounts were agreed to be paid only subject to shares being sold in the market and performance of shares in the market at relevant points of time. It was also contended that first defendant did not personally guarantee repayment of said amounts. Circumstances under which memorandum of agreement dated 1.1.2013 was executed and memorandum of understanding dated 17.09.2009 preceding the same were also projected and set up as defence. Several other defences that internal journal entry indicating that amounts transferred to personal account of first respondent will not bind him, that claimant only took a commercial risk, that monies that were advanced by claimant were only for the benefit of companies which go by names Mascon Global Ltd., Madras Finvest Pvt. Ltd. and Synerfin Factors Pvt. Ltd. were all set up as defence. This was vide statement of defence dated 31.5.2017, to which claimant / petitioner filed a rejoinder dated 4.6.2017.
8 After elaborate examination of rival submissions, arbitral tribunal which, as mentioned supra had entered reference on 26.9.2016, framed as many as six issues. To be noted, before the arbitral tribunal, claimant / petitioner examined himself as C.W.1 and first respondent examined himself as R.W.1. Suffice to say, several exhibits were marked through them. Ultimately, after appreciation of oral and documentary evidence, vide impugned award, second respondent sole arbitrator held that claimant / http://www.judis.nic.in 7 petitioner is entitled to a sum of Rs.3,52,51,181/- (including interest upto the date of the award) and vide impugned award, future interest at the rate of 12% per annum on the remaining principal sum was also awarded. Considering the narrow compass on which instant O.P turns (which shall be alluded to infra), it is not necessary to delve further and plough more into these details.
9 It is the case of claimant / petitioner that he is not satisfied with the impugned award, his claim ought to have been acceded to fully and that the impugned award is liable to be set aside. Saying so, instant O.P has been filed.
10 Mr.R.Murari, learned senior counsel instructed by counsel on record for petitioner Mr.Niranjan Rajagopalan, was before me. Learned senior counsel submitted that post impugned award, petitioner came to know that second respondent sole arbitrator had joined the Board of three companies as a Director. According to learned senior counsel, these three companies are, 'Real Time Technical Services' ('RTTS' for brevity), 'C2C Innovations Pvt. Ltd.' ('C2C' for brevity) and 'Q4 Software Pvt. Ltd.' ('Q4' for brevity). Adverting to the petition in the instant O.P, it was submitted that second respondent / sole arbitrator joined the Board of RTTS on 25.10.2016, while he joined the Board of C2C on 30.10.2016, it was submitted that second respondent / sole arbitrator joined the Board of Q4 on 30.3.2017. It was submitted that all these three companies, i.e., RTTS, C2C and Q4 are controlled by first respondent and his family. It was also submitted that second respondent sole arbitrator has also been shown as a signatory to the bank accounts of these http://www.judis.nic.in 8 companies. Second respondent had also joined the Board of another company which goes by the name C2C-DB Systems Pvt. Ltd. is his say. Learned senior counsel submitted that though several grounds have been raised in the instant O.P, the same is pivoted and predicated primarily on this aspect of the matter, i.e., bias on the part of the sole arbitrator. To put it differently, it was the specific submission of the petitioner that the instant O.P is predicated on Section 34(2)(b)(ii) of A and C Act, i.e., it is in conflict with public policy of India.
11 Before I proceed further, it is to be noted that, what is public policy for the purpose of Section 34 of A and C Act is no more res integra. To be precise, it is not res integra post 23.10.2015 inter-alia owing to explanation added to Section 34(2)(b)(ii). In this context, it is to be noted that there are two explanations. Sub clause (i) of Explanation (1) is of utmost relevance. This sub clause clarifies that an award can be said to be in conflict with public policy if the award was induced or affected by fraud or corruption. Sub clause
(iii) of Explanation (1) which says that an award can be said to be in conflict with public policy if it is in conflict with the most basic notions of morality or justice is also of relevance.
12 Drawing his attention to this explanation, it was pointed out to learned Senior counsel that the case of the petitioner that he came to know that second respondent sole arbitrator had joined the Board of three companies which are said to be controlled by first respondent and his family http://www.judis.nic.in 9 can at best qualify only as perceived bias (in the absence of any material to support corruption or fraud).
13 Faced with the aforesaid situation, learned senior counsel in his usual fairness submitted that at the highest, petitioner can only complain of perceived bias. However, learned senior counsel went on to submit that bias and prejudice verge on corruption. In support of this argument advanced by him, a judgment rendered by a Hon'ble Division Bench of Delhi High Court in Bharat Heavy Electricals Ltd. Vs. C.N.Garg and others reported in 2000 (3) ARBLR 674 (Delhi) was pressed into service, but in my considered view, this C.N.Garg case law does not help the petitioner in advancing his case in the instant O.P as it was rendered on 29.09.2000 when the term 'public policy' was not explained in the A and C Act. It is also the considered opinion of this Court, this is not the only distinguishing feature qua C.N.Garg case and this other distinguishing feature shall be alluded to elsewhere infra.
14 Bias and prejudice are matters contrary to public policy and that the term 'public policy' connotes some matter which concerns public good and public interest. These principles are no doubt sanctus.
15 As already mentioned supra, in the instant case, it is only a case of perceived bias and it has not been escalated to fraud or corruption. Be that as it may, the most striking (another) aspect of the matter which distinguishes this case on factual matrix qua C.N.Garg is that the second respondent sole arbitrator was agreed upon by both parties (though there are three named arbitrator options in the arbitration clause) and sole arbitrator has made disclosures which shall be alluded to infra. To be noted, the order made by http://www.judis.nic.in 10 the then Hon'ble Chief Justice of this Court in a petition under Section 11(6) of A and C Act has already been extracted supra. This order is dated 9.9.2016. Immediately thereafter, on 26.9.2016, the sole arbitrator has made a disclosure of interest vide a letter dated 26.9.2016 addressed to the petitioner as well as first respondent. Considering the importance and significance of the same, I deem it appropriate to extract the entire letter which reads as follows :
26 Sep 2016 To
1.Mr.R.Gowrishanker 4/241, MGR Salai, Palavakkam Chennai 600 041 Claimant
2.K.Chandra 9/1 Shanti Niketan New Delhi 110021 Respondent Sirs, Sub: Arbitration in the matter of Dispute between Mr.R.Gowrishanker, Claimant and Mr.K.Chandra, Respondent in respect of the Memorandum of Understanding dated Jan 1, 2013 I had, on 25/9/16, received a letter from Mr.R.Gowrishanker informing me that the High Court of Judicature at Madras has, by order dated 09/09/16 in O.P.No.643 of 2015, appointed me as sole arbitrator in respect of the disputes/claim arising out of the Memorandum of Understanding dated 1/1/2013 between Mr.R.Gowrishanker and Mr.K.Chandra.
While accepting my appointment to act as the sole arbitrator, I would like to disclose that I am a businessman in New Delhi, that I am socially acquainted with Mr.K.Chandra and serve on the Board of some companies associated with him and thru him am also associated with Mr.R.Gowrishanker. I have no business http://www.judis.nic.in 11 or other relationship with either of them. I have no personal interest in the matter.
I am fixing a preliminary hearing at 5 pm on November 17th at the following address:
Hotel Lalit, Barakhamba Avenue, Connaught Place, Near Modern School, Fire Brigade Lane, Barakhamba, New Delhi, Delhi 110001 At the preliminary meeting, the modalities for conduct of the arbitration and completion of pleadings will be settled. The Arbitration proceedings will be conducted observing the fundamental principles of natural justice, consistent with the procedures laid down in Section 20, 22 to 26 of the Arbitration and Conciliation Act, 1996. The Madras High Court Arbitration Centre (Arbitration Proceedings) Rules, 2014 and on the basis of pleadings, documents and other materials produced by the claimant and respondents and submissions made. The Arbitration Proceedings will be conducted in English language. The parties are directed to remain present at the above mentioned time and place in person or through their Authorized Representative, failing which the arbitration will be conducted without further reference to the absent parties. The Claimant and the respondent should each deposit a sum of Rs.250,000/- towards Administrative Expenses on the first date of hearing.
(Murtaza Soomar) (Underlining made by Court to emphasis and highlight) http://www.judis.nic.in 12 The underlined portion of second paragraph of the letter is of immense significance.
16 With regard to perceived bias, emails dated 12.4.2017, 02.07.2017, 19.08.2017 and 20.04.2018 were adverted to. A perusal of these emails reveals that there is reference to one Sunil and one Vijay. In the hearing, it was submitted that Vijay refers to one Vijay Raman and Sunil refers to one Sunil Bhandari. It was also submitted that both of them worked with first respondent. It was also submitted that this Vijay Raman (Vijay) has passed on these emails to the petitioner. It is not clear as to why a person who works / is associated with first respondent should pass on emails to the petitioner / claimant. In my considered opinion, it is a matter of irony that the petitioner who is complaining of breach of trust / faith qua sole arbitrator is relying on emails which have been passed on to him in clear travesty of trust, which is verged on treachery. A complaint of breach of trust predicated on treachery is a classic of irony. Be that as it may, a perusal of these emails only reveals that at best / at the highest, the sole arbitrator is associated with some companies and projects. Also to be noted, it is the case of the petitioner that these companies are controlled by first respondent and his family.
17 It emerges from the narrative thus far that the clincher in the instant case is that the sole arbitrator was mutually agreed upon though there are named arbitrators (not just one, but three options) in the arbitration agreement between parties. Be that as it may, even the arbitrator chosen by consent (outside these three) made disclosures (extracted and reproduced supra). To be noted, when I refer to 'arbitration agreement' between parties, it http://www.judis.nic.in 13 is arbitration agreement within the meaning of Section 7 of A and C Act which in this case is in the form of a clause / covenant in the agreement (memorandum of agreement dated 01.01.2013), i.e., clause 7 of memorandum of agreement. Not only had the parties agreed on second respondent, he had also made clear disclosures and the entire letter has been extracted and reproduced supra. After agreeing upon the second respondent as sole arbitrator and after inviting the same by way of a consent order in a Section 11(6) petition before the then Hon'ble Chief Justice of this Court and after participating in arbitral proceedings (without making a whisper) after the sole arbitrator entered reference, to say that association of sole arbitrator with some companies which are said to be controlled by first respondent and his family leads to perceived bias is clearly a case of an afterthought. Most importantly, all these points are being raised only post impugned award. In other words, all these points were raised only after the impugned award did not accede to the claim of the petitioner wholly.
18 Submission that association of second respondent sole arbitrator with aforesaid four companies which are said to be controlled by first respondent and his family came to light post impugned award cuts both ways. While it may explain the filing of instant O.P by predicating the same on Section 34(2)(b)(ii) of A and C Act, pleading perceived bias, it also makes it appear a case of the age old adage 'these grapes are sour'. All these are propping up only after the impugned award has not acceded to the claim of the petitioner wholly. Obviously and axiomatically, if the claim of the petitioner http://www.judis.nic.in 14 had been acceded to wholly, none of these issues would have been brought up (at least by the petitioner). Further more, it is to be noted that it is not a case where second respondent sole arbitrator has dismissed the petitioner's claim. The petitioner's claim has been acceded to, albeit not wholly.
19 A submission was also made with regard to Section 12(5) of A and C Act. Section 12(5) of A and C Act takes us to the Seventh Schedule to A and C Act, where there is enumeration of as many as 14 kinds of arbitrator's relationship with the parties or counsel, two kinds of arbitrator's relationship to the dispute and three kinds of arbitrator's direct or indirect interest in the dispute. However, the consent order, dated 09.09.2016 made in the petition under Section 11(6) by the then Hon'ble Chief Justice of this Court and the subsequent disclosure letter by Arbitrator dated 26.09.2016 puts to rest this submission and douses the spark and heat in this plea. In any event, that section 12(5) of A and C Act read with Seventh Schedule is not absolute / not non negotiable and that it can be waived by parties is not in dispute before me. After all, arbitral tribunal itself is a creature of contract between parties and it is not a creature of any statute. Therefore, it is an inevitable sequittur that Section 12(5) read with Seventh Schedule to A and C Act is not absolute and it can be waived by parties is not in dispute before me. When it is not in dispute, the consent order dated 09.09.2016 in Section 11(6) petition and disclosure letter of sole arbitrator dated 26.09.2016 completely wipes out this perceived bias and same being verged on corruption argument.
http://www.judis.nic.in 15 20 As a last argument, a faint submission was made to say that annexure to the award refers to details of payment and there is reference to Rs.20 lakhs payment on 18.04.2016. A faint submission was made that it is relatable to a message sent from one smart phone to another (from a smart phone of one P.S.Thakur to second respondent sole arbitrator), wherein one P.S.Thakur has confirmed receipt of Rs.20 lakhs from the arbitrator. It also shows that it has been sent to the petitioner as per first respondent's instruction. This message reads as follows :
“I confirm receipt of 20 lacs from your account. I have further sent this to Mr Gowri Shanker as per Mr Chandra's instructions.
The IFSC code which Mr Gowri Shankar has mentioned ICICI0006033 was wrong. I made correction the correct IFSC Code is ICIC0006033 UTR number is :- HDFC R 52016041877134130 Please confirm that party has received the funds. P S Thakur”
21 It is submitted that this sum of Rs.20 lakhs paid out by arbitrator to one Mr.Thakur has been shown as details of payment in the annexure to the award. Who Mr.P.S.Thakur is and whether this message is relatable to the reference in the annexure are all in the realm of surmises and conjectures. The same applies to aforesaid Mr.Sunil Bhandari and Vijay Raman (Vijay). However, faint attempt was made to say that this error in the impugned award makes it liable to be set aside under Section 34(2A) of A http://www.judis.nic.in 16 and C Act. In the light of the factual matrix of this case, which have all been alluded to supra, the proviso to sub-section (2A) of Section 34 of A and C Act is a complete answer in the instant case. This proviso makes it clear that impugned award cannot be set aside on a mere erroneous application of law or by reappreciation of evidence.
22 In Associate Builders Vs. Delhi Development Authority reported in (2015) 3 SCC 49 (though this was rendered prior to 23.10.2015), the principle that arbitrator is the sole judge of quality and quantity of evidence before him was reiterated. To be noted, there is no change with regard to this aspect of the matter post 23.10.2015 and therefore, the principle in this regard laid down in the celebrated Associate Builders case can be safely relied on.
23 While on Associate Builders case, it is deemed appropriate to notice that explanation of the expression 'conflict with the public policy of India', occurring in section 34 of A and C Act as explained in the explanation thereto, includes 'contravention with the fundamental policy of Indian law'. Therefore, 'fundamental policy of Indian law' explained in ONGC Ltd. v. Western Geco International Ltd., reported in (2014) 9 SCC 263 and reiterated in Associate Builders can be usefully referred to and safely relied on though both judgments / case laws were rendered prior to 23.10.2015 (when there was no explanation to the expression 'conflict with the public policy of India' in Section 34 of A and C Act).
http://www.judis.nic.in 17 24 In Western Geco International case, Hon'ble Supreme Court laid down three distinct fundamental juristic principles and held that these three fundamental juristic principles must be understood to form part and parcel of the expression 'fundamental policy of Indian law'.
25 To be noted, these three juristic principles were held to be part of 'fundamental policy of Indian Law' by Hon'ble Supreme Court in Western Geco International with a caveat / rider that it is not an exhaustive enumeration of the purport of the expression 'fundamental policy of Indian law'. Be that as it may, three fundamental juristic principles so laid down are judicial approach, adherence to principles of natural justice and perversity /irrationality. A careful analysis of Western Geco International case law as reiterated in Associate Builders makes it clear that first of the three principles, i.e., judicial approach is to be tested by seeing whether the arbitral tribunal has shown fidelity to judicial approach, the second principle, i.e., natural justice is to be tested on the celebrated audi alteram partem rule / application of mind and the third juristic principle, namely perversity / irrationality should be such that it fails to pass Wednesbury principle of reasonableness. In other words, third juristic principle of perversity / irrationality should be tested on the touchstone of Wednesbury principle of reasonableness.
26 Though obvious and too well known, for the purpose of making this order comprehensive, it is to be noted that Wednesbury principle of reasonableness is the principle as laid down in the celebrated Associated Provincial Picture Houses Ltd. Vs. Wednesbury Corpn. reported in (1948) http://www.judis.nic.in 18 1 KB 223. Its equivalent being (1947) 2 All ER 680 (CA). None of these three juristic principles are attracted in the instant case. As already alluded to supra, there is no material qua fraud / corruption and it is only a case of perceived bias. The other limb of the explanation of 'conflict with the public policy of India' pertains to 'conflict with the most basic notions of morality or justice'. Both these limbs stand wiped out in the light of appointment under Section 11(6) by consent (on the teeth of three named arbitrators option in the arbitration clause itself) followed by a clear disclosure by the arbitrator coupled with the fact that all these are propping up post impugned award, i.e., after the sole arbitrator did not accede to the petitioner's claim in its entirety.
27 With regard to perceived bias, Encon Builders case [Bihar State Mineral Dev. Corpn. Vs. Encon Builders (I) Pvt. Ltd. reported in (2003) 7 SCC 418] was pressed into service, wherein Hon'ble Supreme Court had quoted with approval from the 22nd Edition of 'Russell on Arbitration'. A perusal of Encon Builders brings to light that besides drawing distinction between actual bias and apparent bias (actual bias is rarely established), Russell's view that pecuniary interest in one of the parties or otherwise being so closely connected with one of the parties is a disqualification qua an arbitrator has been referred to. While in the normal circumstances, there would not have been much difficulty for a petitioner to successfully advance such an argument, in the instant case, there are seven striking aspects of the matter, which prevent this principle of bias (that too perceived bias without any shred of material regarding fraud or corruption) from coming to the aid of the petitioner and they are as follows :
http://www.judis.nic.in 19
(i)The first striking aspect, as mentioned supra, is the consent order in section 11 (6) petition on the teeth of three named arbitrator options in the arbitration clause. To be noted, all three named arbitrators option are learned members of this Bar and one of them is a designated senior advocate;
(ii)Second striking feature is the disclosure letter of the arbitrator.
(iii)Third most striking feature is emails relied on, besides being from third parties to the proceedings, may require a mini trial to co-relate them with the individual concerned and come to any possible conclusion and even if done so, disclosure already made neutralizes it. To be noted, disclosure by the arbitrator clearly mentions that he is serving on the Board of some companies associated with first respondent. In fact, second respondent / arbitrator has even disclosed that he is associated with petitioner also through first petitioner.
(iv)The fourth striking aspect is that all these prop up post impugned award and the explanation as to the manner in which the petitioner laid his hands on these emails besides leaving much to be desired are least convincing with regard to establishing that petitioner gained knowledge only post award.
http://www.judis.nic.in 20
(v) More importantly, fifth striking aspect is, the disclosure letter makes it clear that second respondent has disclosed that he is serving on the Board of some companies which are associated with first respondent and through first respondent, he is also associated with the petitioner. To be noted, it is not a case of mere acquaintance, but an association. After having so agreed consciously, the petitioner predicating this petition on perceived bias ground (with no shred of material on fraud or corruption) post award, particularly after the award has not acceded to his claim in its entirety;
(vi)Sixth aspect is, as already mentioned, an arbitral tribunal is clearly a creature of contract, owing to which intention of parties is paramount. Parties intended to go before a sole arbitrator who is associated with the adversaries and who is serving on the Board of some companies associated with first respondent. After agreeing for creation of such an arbitral tribunal, perceived bias (admittedly with no shred of material to show fraud or corruption being inducement for making of the impugned award) clearly cannot be a ground, much less a ground that is strong enough for setting aside the impugned award under section 34 of A and C Act;
(vii)Seventh aspect, as alluded to elsewhere in this http://www.judis.nic.in 21 order is, it may require a mini trial qua emails. On a demurrer, even if emails alluded to elsewhere in this order are read as they are, it is all a matter of different hues and shades of an association. In other words, the petitioner is projecting different degrees, dimensions and dynamics of association (not just acquaintance) after mutually agreeing for the second respondent to act as a sole arbitrator knowing fully well about his association, not just with first respondent, but with the petitioner also.
28 Before concluding, I deem it appropriate to refer to a recent judgment of Hon'ble Supreme Court in State of Bihar Vs. Bihar Rajya Bhumi Vikas Bank Samiti reported in (2018) 9 SCC 472. Though Bhumi Vikas Bank Samiti case law is an authority for the proposition that sub- section (5) of section 34 of A and C Act is directory (being procedural) and not mandatory, in paragraph 26, Hon'ble Supreme Court has clearly emphasised the need for Courts to endeavour to adhere to time frame stipulated under sub-section (6) of section 34 of A and C Act.
29 Section 34(6) reads as follows :
“34.Application for setting aside arbitral award xxxxxxxxx (6)An application under this section shall be disposed of expeditiously, and in any event, within a period of one year from the date on which the notice referred to in sub-section (5) is served upon the other party.” http://www.judis.nic.in 22
30 Paragraph 26 of Bhumi Vikas Bank Samiti case reads as follows :
“26.We are of the opinion that the view propounded by the High Courts of Bombay and Calcutta represents the correct state of the law. However, we may add that it shall be the endeavour of every court in which a Section 34 application is filed, to stick to the time-limit of one year from the date of service of notice to the opposite party by the applicant, or by the Court, as the case may be. In case the Court issues notice after the period mentioned in Section 34(3) has elapsed, every court shall endeavour to dispose of the Section 34 application within a period of one year from the date of filing of the said application, similar to what has been provided in Section 14 of the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015. This will give effect to the object sought to be achieved by adding Section 13(6) by the 2015 Amendment Act.”
31 To be noted, Bhumi Vikas Bank Samiti case was rendered on 30.07.2018 by Hon'ble Supreme Court. Three weeks later on 20.8.2018, in Emkay Global Financial Services Ltd. v. Girdhar Sondhi reported in (2018) 9 SCC 49, Hon'ble Supreme Court reiterated the principles laid down in Fiza Developers and Inter-Trade Private Limited Vs. AMCI (India) Private Limited reported in (2009) 17 SCC 796. The principles in Fiza Developers case pertaining to Section 34 proceedings are to the effect that proceedings under Section 34 of A and C Act are summary being a special remedy under a special enactment and expeditious disposal is of utmost http://www.judis.nic.in 23 importance. To be noted, Emkay Global Financial Services Ltd. case was rendered on 20.8.2018, Hon'ble Supreme Court held that Fiza Developers principle is a step in the right direction with regard to expeditious disposal of section 34 petitions.
32 In the considered opinion of this Court, a careful analysis of the scheme of A and C Act and amendment brought to A and C Act on and with effect from 23.10.2015, Fiza Developers principle read in the light of Bhumi Vikas Bank Samiti and Emkay Global Financial Services Ltd. leads us to the proposition that the salutary principle and sublime philosophy underlining the scheme of A and C Act and proceedings under section 34 of A and C Act are such that Alternate Dispute Resolution (ADR) mechanism should be made effective and efficacious by following the sanctus principle of 'minimum judicial intervention'.
33 Owing to all that have been set out supra, instant O.P is dismissed as bereft of merits. Considering the nature of submissions made before me, I refrain from imposing costs.
20.02.2019 Speaking order Index : Yes vvk http://www.judis.nic.in 24 M.SUNDAR, J.
vvk order in O.P.No.107 of 2019 20.02.2019 http://www.judis.nic.in