Calcutta High Court (Appellete Side)
Himadri Chemicals & Industries Ltd vs Steel Authority Of India Ltd. & Anr on 11 April, 2012
Author: Dipankar Datta
Bench: Dipankar Datta
IN THE HIGH COURT AT CALCUTTA
CIVIL REVISIONAL JURISDICTION
Present : The Hon'ble Justice Dipankar Datta
C.O. 3371 of 2011
Himadri Chemicals & Industries Ltd.
Versus
Steel Authority of India Ltd. & anr.
For the petitioners : Mr. Jishnu Saha, Advocate
Mr. Samrat Sen, Advocate
Mr. Reetobroto Mitra, Advocate
Mr. Ashis Mukherjee, Advocate
Mr. Sandip Agarwal, Advocate
For the opposite party no.1 : Mr. Utpal Bose, Advocate
Mr. Saumya Ghosh, Advocate
Mr. Amitabha Ray, Advocate
Heard on : December 1, 8, 9 & 21, 2011, and January 13
& 18, 2012
Judgment on : April 11, 2012
1. The petitioner is the claimant in an arbitral dispute between it and the
opposite party no.1. The opposite party no.2 is in seisin of such dispute as
the sole arbitrator. According to the petitioner, the opposite party no.2 after
being appointed as an arbitrator did not in terms of the legislative mandate
contained in Section 12(1) of the Arbitration and Conciliation Act, 1996
(hereafter the Act) disclose to the parties the circumstances likely to give
rise to justifiable doubts as to his independence and impartiality. This was
despite the fact that the opposite party no.2 had been an officer attached to
the Durgapur Steel Plant of the opposite party no.1 for a substantially long
period of time. Once called upon by the petitioner, the arbitrator
responded. From the response it transpired that the opposite party no.2
had been appointed arbitrator by the Durgapur Steel Plant in as many as
seven arbitrations after his retirement, of which three were still continuing.
Enquiry made by the petitioner revealed that :
i) That the opposite party no.2 is being unusually favoured
by the opposite party no.1 with a large number of
arbitrations as their nominee arbitrator in references to
arbitration. The pending references are obviously
expected by the opposite party no.1 to conclude with the
awards being passed in its favour.
ii) It has become widely known in business and trade
circles particularly organizations that transact business
with the opposite party no.1 that the opposite party no.2
is pliable to the dictates of the opposite party no.1 and
after cursorily concluding the references made to him
makes and publishes awards which result in substantial
benefits to the opposite party no.1.
iii) The opposite party no. 2 is earning a substantial amount
of remuneration as arbitrator in the references made to
him by the opposite party no. 1. Between 2000 and 2009
he has been appointed as arbitrator in 7 arbitrations
each of which have and/or had a huge stake involved
therein. The substantial remuneration earned and/or
being earned by the opposite party no.2 from these
references made to him by the opposite party no.1
makes it difficult for the opposite party no.2 to give any
award against the opposite party no.1. The large number
of references made to the opposite party no.2 operates as
an inducement rendering it difficult for him to make any
award against the opposite party no.1.
iv) Doubt regarding lack of integrity of the opposite party
no.2 is manifest because during the currency of the
arbitration with Balaji Industrial Products Ltd., the
opposite party no.2 had accepted financial
inducement/rewards masquerading as consultancy
services and had ultimately been left with no alternative
but to resign.
2. In such circumstances, the petitioner on or about July 2, 2009 filed an
application under Sections 12 and 13 of the Act (hereafter the challenge
application) before the opposite party no.2 challenging his authority to
continue as arbitrator. It was claimed that during proceedings before the
opposite party no.2, it became manifest that he did not have the capacity
or faculty to conduct the same. He appeared to be wholly incapable of
comprehending the legal issues that arose out of the matter and when, in
course of argument such legal issues were adverted to, he was completely
flummoxed. The opposite party no.2, surprisingly, was also found
incapable of dictating the minutes of the meetings. Despite protest of the
petitioner, the representative of the opposite party no.1 dictated the
minutes and the opposite party no.2 merely signed the same. In fine, the
petitioner could sense that fair and proper proceedings could not be
conducted by the opposite party no.2. In such circumstances, the
petitioner filed two further applications before the opposite party no.2.
3. In the first of the two applications, dated July 30, 2009, the following relief
was claimed:
" a. An order be made to the effect that all minutes of the
arbitral proceedings shall be prepared and all orders
and/or directions passed in the same shall be made
by Mr. A.C. Mondal himself in the presence of the
parties at the conclusion of each day's sitting of the
arbitration.
b. An order be made granting the claimant leave to
cross-examine Mr. A.C. Mondal in connection with the
claimant's application under Section 12 and 13 of the
Arbitration and Conciliation Act, 1996 questioning his
lack of independence and impartiality and
consequently his ability to act as arbitrator."
4. In the subsequent application dated November 18, 2010, the petitioner
prayed for the following relief:
"e. That the venue of further and future sittings of
arbitration, if any, be shifted to a commercial venue at
Kolkata or to the Peerless Inn or any other commercial
venue at Durgapur.
f. Direction be given for sharing of the cost of such
arbitration by the parties equally;"
5. The second application dated November 18, 2010 was disposed of on
December 18, 2010 by the opposite party no. 2 recording that "(T)he
reasons stated by the Claimant and as shown in the application is not
acceptable or tenable. Hence I reject the application for change of venue".
According to the petitioner, the aforesaid extract was the only portion of
the minutes that was dictated by the opposite party no.2 and corroborates
its claim that he is incapable of assigning reasons in support of his order.
However, the first application filed on July 30, 2009 has not been disposed
of.
6. Insofar as the challenge application is concerned, the same is also pending
since the petitioner is yet to conclude its submissions before the opposite
party no.2.
7. It was at this juncture that the petitioner applied on January 6, 2011
before the District Judge, Burdwan under Section 14 of the Act. The
application was registered as Misc. Case No. 37 of 2011. According to the
petitioner, the said application was necessitated due to the following
reasons:
"a. The dejure inability of the Arbitrator to perform his
functions as an Arbitrator due to his manifest bias towards
the opposite party no. 1.
b. The defacto inability of the Arbitrator to perform his
functions in view of the opposite party no. 2 lacking the
necessary capability and faculties to conduct a quasi
judicial proceeding."
8. The petitioner prayed in the application that:
"a) The mandate of Mr. A.C. Mondal as Arbitrator in the matter of
arbitration of the disputes and differences that have arisen by
and between the petitioner and the respondent be terminated
forthwith and a new Arbitrator be directed to be appointed in his place and stead;
b) Pending disposal of the instant application, all further proceedings in arbitration be stayed until disposal of the instant application;"
9. Since the application under Section 14 of the Act was not being considered, the petitioner had the occasion to approach this Court in its revisional jurisdiction by filing an application under Article 227 of the Constitution. On behalf of the opposite party no.1, an objection regarding maintainability of the application under Section 14 of the Act was raised citing pendency of the challenge application before the opposite party no.2. This Court disposed of the said application on August 16, 2011 with a request to the learned District Judge to decide the objection regarding maintainability of the application under Section 14 of the Act as early as possible. It was observed that should the application be found maintainable, the learned Judge may proceed to hear the merits of the same so as to facilitate rendering of a decision before September 3, 2011, which was the next date fixed before the opposite party no.2. It was further recorded that in the event the learned Judge was unable to render his decision either on the question of maintainability or on the merits of the said misc. case before September 3, 2011, the opposite party no.2 shall not proceed further till such time the said misc. case is disposed of finally.
10. By an order dated August 24, 2011, the learned District Judge dismissed the said misc. case. It was held that the application under Section 14 of the Act was not maintainable since the challenge application is still pending before the opposite party no.2. The petitioner in this revisional application, presented on September 22, 2011, has assailed the said order.
11. Appearing in support of the revisional application, learned counsel Mr. Saha contended that the learned Judge completely erred in not appreciating that the twin grounds of de jure inability and de facto inability raised by the petitioner are mutually exclusive and based on separate and independent grounds. According to him, the de jure inability of the opposite party no. 2 stems from his manifest bias while his incapability to advert to complicated legal issues and his inability to dictate orders are the ingredients that make him de facto unable to perform the duties of an arbitrator. The learned Judge, it was contended, utterly failed to record his findings and conclusions on the issue of de facto inability of the opposite party no.2, which has the effect of vitiating the impugned order and is, accordingly, liable to be set aside on that ground alone.
12. It was further submitted that even on the point of de jure inability of the opposite party no.2, the learned Judge erred in dismissing the application on the ground of maintainability.
13. Mr. Saha forcefully argued that the opposite party no.2 has conducted himself in such a manner, right from reference of the dispute between the petitioner and the opposite party no.1 to him and till date, that there is a real danger of bias as distinguished from a mere likelihood of bias and, in the circumstances, the petitioner cannot be made to wait for a decision by the opposite party no.2 on the challenge application filed before him. According to Mr. Saha, the decision to be given by the opposite party no.2 is a foregone conclusion and it would be most unfair to compel the petitioner to complete the rituals.
14. It was further argued by Mr. Saha that pendency of an application under Sections 12 and 13 of the Act does not create a bar for an aggrieved party to approach the Court under Section 14 of the Act for an order that the mandate of the arbitrator has terminated. In support of his submissions, Mr. Saha relied on the Bench decision of the Gauhati High Court in State of Arunachal Pradesh v. Subhas Projects & Marketing Ltd. and anr., reported in 2007 (1) Arb LR 564 and the decision of a learned single Judge of the Delhi High Court in Alcove Industries Ltd. v. Oriental Structural Engineers Ltd., reported in 2008 (1) Arb LR 393.
15. In support of his contention that bias of the arbitrator would vitiate the arbitral proceedings pending before him, a host of decisions have been cited, viz.
1. Koshy v K.S.E. Board, reported in AIR 1984 Kerala 23;
2. Ranjit Thakur v Union of India, reported in (1987) 4 SCC 611;
3. State of West Bengal v Shivananda Pathak, reported in (1998) 5 SCC 513;
4. OPBK Construction Pvt. Ltd. v Punjab Small Industries & Export Corpn., reported in 2008(3) Arb LR 189 (P & H);
5. Raj Kumar Dua v Naresh Adhlakha, reported in 2010 (3) Arb LR 301 (Del);
6. Krishna Motor Finance (P) Ltd. v Iltush Ahammed, reported in 2011 (4) CHN 394;
7. SBP & Co. v Patel Engineering Ltd., reported in (2005) 8 SCC 618;
8. Lachoo Mal v Radhye Shyam, reported in AIR 1971 SC 2213;
9. Aswini Kumar Ghosh v Arabinda Bose, reported in AIR 1952 SC 369;
10. Rao Shiv Bahadur Singh v State of Vindhya Pradesh, reported in AIR 1953 SC 394;
11. Commissioner of Income Tax v S. Teja Singh, reported in AIR 1959 SC 352;
12. J.K. Cotton Spinning & Weaving Mills Co. Ltd. v State of Uttar Pradesh, reported in AIR 1961 SC 1170;
13. Mohammad Ali Khan v Commissioner of Wealth Tax, reported in AIR 1997 SC 1165;
14. Chhote Lal v Bansidhar, reported in AIR 1926 All 653;
15. Polavarapu Somarajyam v Andhra Pradesh Road Transport Corporation, Hyderabad, reported in AIR 1983 AP 407;
16. Supreintendant & Remembrancer L.A. West Bengal v Abani Maity, reported in AIR 1979 SC 1029;
17. Municipal Corporation of Greater Bombay v Indian Oil Corporation, reported in AIR 1991 SC 686; and
18. Booz Allen and Hamilton Inc. v SBI Home Finance Ltd & Ors, reported in (2011) 5 SCC 532.
16. He, accordingly, prayed for an order to set aside the impugned order and for a direction on the learned Judge to hear the application under Section 14 of the Act on its own merit.
17. Answering the contentions of Mr. Saha, Mr. Utpal Bose, learned counsel representing the opposite party no. 1 contended that the learned Judge did not commit error of jurisdiction or act illegally while holding the application under Section 14 of the Act to be not maintainable, resulting in dismissal of the misc. case. According to him, questions of partiality or bias or inability to address questions of law and fact have to be proved with cogent evidence and it is open to the petitioner to participate in the proceedings before the opposite party no.2 and to persuade him to recuse himself from the proceedings. Referring to the minutes of proceedings before the opposite party no.2, Mr. Bose contended that the opposite party no.2 could not be held to be at fault for non-disposal of the challenge application. He urged that it would be evident from the minutes that the petitioner has repeatedly chosen to obtain adjournments and wilfully did not conclude its submissions to enable the opposite party no.2 to dispose of the same; on the contrary, the conduct of the petitioner evinces an intention, for undisclosed reasons, not to proceed with its challenge and to indulge in forum shopping by moving an independent and separate application under Section 14 of the Act based on similar grounds raised in the challenge application. It was also pointed out that the opposite party no.2 had recorded that no other steps would be taken in the proceedings till the challenge application is disposed of. The crux of Mr. Bose's submission is that a party cannot abandon his application under Sections 12 and 13 of the Act and approach the Court under Section 14 thereof under any circumstances and that if the former application is disposed of holding against the applicant, he is obliged to take the point of bias of the arbitrator in proceedings that might be carried on the grounds provided in Section 34 of the Act.
18. Referring to the decision in Alcove Industries Ltd. (supra), Mr. Bose submitted that the same has been reversed in appeal by the Division Bench of the Delhi High Court while deciding FAO (OS) No. 128/2008 (Oriental Structural Engineers v. Alcove Industries Ltd.) vide judgment dated May 16, 2011 and hence cannot be cited as a precedent. Insofar as the Bench decision in Subhas Projects (supra) is concerned, it was contended that the ratio thereof would not be applicable in the present case since one of the parties to the dispute there had approached the Court under Section 14 of the Act without taking recourse to the challenge procedure envisaged in Sections 12 and 13 of the Act and it was in such circumstances that the application under Section 14 of the Act was held to be maintainable by the Gauhati High Court. The question that has arisen in the present application, according to Mr. Bose, did not arise for a decision before the Bench of the Gauhati High Court and, therefore, that decision would be of no assistance for the petitioner. He thus prayed for dismissal of the revisional application.
19. The Court has heard learned counsel for the parties.
20. The legal question that first arises for consideration on this revisional application is whether a party to an arbitral dispute is entitled in law to seek an order from the Court by approaching it under Section 14 of the Act that the mandate of the arbitrator has terminated because of his de jure and/or de facto disqualification to continue as such, despite pendency of an application filed by it under Sections 12 and 13 thereof before the arbitrator. If the answer to the above question is in the negative, nothing further needs to be done except for affirming the order under challenge. However, should the answer be in the affirmative, the next question that would exercise the consideration of this Court is whether the petitioner on facts and in the circumstances is entitled to any relief.
21. For the purpose of answering the questions that have arisen, it would be necessary to ascertain what Sections 12, 13 and 14 of the Act provide for. The same read as under:
"12. Grounds for challenge.--(1) When a person is approached in connection with his possible appointment as an arbitrator, he shall disclose in writing any circumstances likely to give rise to justifiable doubts as to his independence or impartiality.
(2) An arbitrator, from the time of his appointment and throughout the arbitral proceedings, shall, without delay, disclose to the parties in writing any circumstances referred to in sub-section (1) unless they have already been informed of them by him.
(3) An arbitrator may be challenged only if--
(a) circumstances exist that give rise to justifiable doubts as to his independence or impartiality; or
(b) he does not possess the qualifications agreed to by the parties. (4) A party may challenge an arbitrator appointed by him, or in whose appointment he has participated, only for reasons of which he becomes aware after the appointment has been made.
13. Challenge procedure.--(1) Subject to sub-section (4), the parties are free to agree on a procedure for challenging an arbitrator. (2) Failing any agreement referred to in sub-section (1), a party who intends to challenge an arbitrator shall, within fifteen days after becoming aware of the constitution of the arbitral tribunal or after becoming aware of any circumstances referred to in sub-section (3) of Section 12, send a written statement of the reasons for the challenge to the arbitral tribunal.
(3) Unless the arbitrator challenged under sub-section (2) withdraws from his office or the other party agrees to the challenge, the arbitral tribunal shall decide on the challenge.
(4) If a challenge under any procedure agreed upon by the parties or under the procedure under sub-section (2) is not successful, the arbitral tribunal shall continue the arbitral proceedings and make an arbitral award.
(5) Where an arbitral award is made under sub-section (4), the party challenging the arbitrator may make an application for setting aside such an arbitral award in accordance with Section 34.
(6) Where an arbitral award is set aside on an application made under sub-section (5), the Court may decide as to whether the arbitrator who is challenged is entitled to any fees.
14. Failure or impossibility to act.--(1) The mandate of an arbitrator shall terminate if--
(a) he becomes de jure or de facto unable to perform his functions or for other reasons fails to act without undue delay; and
(b) he withdraws from his office or the parties agree to the termination of his mandate.
(2) If a controversy remains concerning any of the grounds referred to in clause (a) of sub-section (1), a party may, unless otherwise agreed by the parties, apply to the Court to decide on the termination of the mandate. (3) If, under this section or sub-section (3) of Section 13, an arbitrator withdraws from his office or a party agrees to the termination of the mandate of an arbitrator, it shall not imply acceptance of the validity of any ground referred to in this section or sub-section (3) of Section 12."
22.Having regard to the scheme of the Act, there can be no two opinions that the object thereof is to provide to the disputing parties an alternate mechanism by which speedy and expeditious resolution of dispute(s) and/or difference(s) may be had by nominating unbiased adjudicators, called arbitrators. A person, who is free from bias and in whom the parties can repose faith and confidence, must conduct every process involving adjudication of claims and counter claims of the parties to the lis according to the applicable law does not admit of any doubt. The insistence is essentially a demand that natural justice ought to be complied with. That is what fair trial is all about. Two rules have been evolved by a process of judicial interpretation as representing the principles of natural justice - nemo debet esse judex in propria causa sua, i.e. no one shall be a judge in his own cause, and audi alteram partem, i.e. no one ought to be condemned unheard. These principles constitute the basic elements of a fair hearing. A corollary to the above principles has been deduced over the years, viz. justice should not only be done, but should manifestly be seen to have been done. Elementary though, these salutary principles are at times ignored leading to unnecessary legal tussles.
23.Importantly, even though a party may be heard in support of its claim or in defence to the claim of his opponent, such hearing would be of little avail and a mere pretence if the adjudicator is biased and predetermined to decide against it. It would be destructive of the concept of fair trial/hearing if a party is compelled to face a biased adjudicator. It is for this reason that appearance of bias is frowned upon. This Court entirely agrees with the observations in Subhash Projects (supra) that the pristine rule of adjudicative ethics rests on the premise that the arbitral tribunal permitted by law to try disputes and resolve controversies must not only be unbiased but must avoid even the appearance of bias and that independence and impartiality of an arbitrator being inseverable attributes to vest him with the legal authority to adjudicate differences between the parties, he would be de jure disqualified from discharging his functions once he renounces the above qualities.
24.The doctrine of necessity, however, has been recognized as an exception to the rule nemo debet esse judex in propria causa sua. That the arbitrator is not biased could be ruled by the arbitrator himself in terms of provisions contained in Section 13(3) of the Act and since none else other than the arbitrator could decide such point if approached under sub- section (2) of Section 13, the rule nemo debet esse judex in propria causa sua has to yield to the mandate of the statute.
25.More often than not, it is the parties who of their own volition agree to a common arbitrator being nominated for deciding their inter se disputes. Bare reading of clause (a), sub-section (3) of Section 12 of the Act reveals that if a party has justifiable doubt and apprehends that the arbitrator in whose appointment he has acquiesced lacks the quality of being independent or impartial, he is entitled to challenge the arbitrator by presenting an appropriate application before him as provided in Section 13(2). Similar recourse could be taken if the arbitrator were found to lack the qualifications agreed upon by the parties. Sub-section (4) of Section 12 places an embargo to a challenge being thrown in respect of reasons that would have otherwise disqualified the arbitrator from acting if the party throwing the challenge was aware of such disqualification prior to the appointment being made.
26.The Act imposes certain obligations on the arbitrator if an application under Section 13 of the Act based on any of the grounds specified in Section 12(3) thereof is presented before him. An arbitrator may, on a challenge being thrown questioning his independence and impartiality, recuse himself from the proceedings if he is of the opinion that it would not be fair, just and proper to continue proceedings although the party applying may even carry an unfounded impression of he being asked to face a biased adjudicator. That is what an arbitrator having self respect and esteem and not inclined to be dragged into a controversy, and who aims only to render justice to the disputing parties without any predilection, is normally expected to do. Nonetheless, the arbitrator also has the option of ruling that doubt that a party might have in relation to his independence and impartiality is unfounded and such an allegation is intended to avoid him since he may have expressed his mind in course of proceedings on particular issues of fact or law, which is not to the liking of that party, and in the process may nip in the bud a ploy of an unscrupulous party to get rid of an inconvenient arbitrator.
27.On reading the provisions of the Act, it does not appear to the Court that once a party has approached the arbitrator with an application under Sections 12 and 13 of the Act, a further application under Section 14 thereof would ipso facto or ipso jure be barred. Section 14 of the Act is an independent provision, not controlled either by Section 12 or Section 13 thereof. An application under Section 14 of the Act, despite pendency of an application under Sections 12 and 13 of the Act before the arbitrator, may be necessitated and could be maintained on very rare occasions where the arbitrator is found to be under such disability that he is unable to give his decision on the application under Sections 12 and 13 of the Act. It may not be possible to precisely indicate such situations and a decision must rest on the facts and circumstances of each case. However, without attempting to be exhaustive, if it is observed that an arbitrator is genuinely lacking in physical ability or mental alertness to discharge his obligations or is found to have left his last known address without intimation and is untraceable for quite some time or has been detained for custodial interrogation for a substantial period of time for commission of an offence and there is uncertainty regarding his release from custody, and the Court is of the opinion that the arbitrator has acquired de facto inability and hence cannot act without undue delay, there is no reason as to why necessary order terminating the mandate of the arbitrator may not be passed notwithstanding pendency of an application under Sections 12 and 13 of the Act before him. Such an order would be in furtherance of expediting decision on the arbitral dispute, which the parties thereto ought to always welcome. Similarly, if the arbitrator becomes de jure unable to function as such for any reason other than manifestation of lack of independence or impartiality for which he may have been approached to give his ruling, there is no reason as to why approach under Section 14 should be held to be barred on the specious ground that an application before the arbitrator is pending. However, the point of maintainability of the application under Section 14 has to be examined in the light of the grounds of challenge in both the applications and decision given accordingly. The occasions for interference may be few and far between, more as an exception rather than as a rule, but pendency of an application under Sections 12 and 13 of the Act does not operate as a bar to approach the Court under Section 14 thereof on valid and tenable grounds. This Court, therefore, is unable to accept the contention of Mr. Bose that whenever an application challenging an arbitrator under Sections 12 and 13 of the Act is pending, no application under Section 14 thereof would be maintainable. The legal question as formulated in paragraph 20 is answered accordingly.
28.In the present case, there could be no dispute that the petitioner agreed to the appointment procedure, if at all disputes and differences were to arise in future between it and the opposite party no.1 in relation to working out the contract, leading to the opposite party no.2 assuming jurisdiction as the arbitrator. According to the petitioner, it was only after the proceedings commenced that the opposite party no.2 by his biased conduct demonstrated that he was incapable of resolving the disputes between the parties in a fair, just and proper manner. Bias of an arbitrator is de jure inability to conduct proceedings and the petitioner having justifiable doubts regarding lack of independence and impartiality of the opposite party no.2 could have taken recourse to either of the two remedies that the Act provides, i.e. a challenge in terms of Sections 12 and 13 of the Act before the arbitrator himself or by presenting an application under Section 14 before the Court. It opted for the remedy made available by Sections 12 and 13 by presenting the challenge application before the opposite party no.2. Mr. Bose is right in his contention that the petitioner on various occasions participated in the proceedings before the opposite party no.2 to press the challenge application and, in the process, also obtained adjournments, at times on worthy but quite often on unworthy grounds and that the opposite party no.2 never demonstrated a non- cooperative attitude to delay a decision on the point raised by the petitioner. If indeed a party seeks to challenge appointment of the arbitrator or constitution of the arbitral tribunal on the ground of lack of reflection of independence or impartiality, he must choose between the fora provided by Section 13 and Section 14 of the Act. It has to be borne in mind that the petitioner did not approach the learned Judge with any claim that the opposite party no.2 has been suffering from such a disability that a decision on the challenge application cannot be rendered by him or that he has incurred de jure inability of a nature different from the one alleged in the challenge application. This Court is, accordingly, of the opinion that, in the circumstances, the petitioner having laid a challenge that is permissible under Sections 12 and 13 of the Act and the opposite party no.2 not being under any apparent disability to decide such challenge and the petitioner being at fault for delaying a decision on such application cannot midway turn around and decide not to pursue the challenge application, and then prefer an independent application under Section 14 of the Act before the Court, basically on the same ground raised in the former, urging that de jure inability of the arbitrator disqualifies him to continue proceedings. The learned Judge was right in not entertaining a challenge on the ground of de jure inability of the opposite party no. 2.
29.In view of the conclusion as above on the point of de jure inability, this Court does not consider it necessary to deal with the decisions cited by Mr. Saha on the point of bias of an adjudicator vitiating proceedings before him.
30.This Court now proposes to deal with the other point raised on behalf of the petitioner by Mr. Saha that the learned Judge failed to consider the factum of de facto inability of the opposite party no.2 in failing to comprehend issues of law and his utter inability to dictate orders, and that by not addressing the point has committed an error, which is liable to be corrected in revisional jurisdiction.
31.An arbitrator lacking qualifications agreed upon by the parties to the arbitral dispute would attract the wrath of clause (b), sub-section (3) of Section 12 of the Act. It could also be comprehended as de facto inability of such arbitrator to continue and conclude the proceedings. De facto inability of an arbitrator, as referred to in Section 14 of the Act, is not restricted to lack of agreed qualifications by the arbitrator only but are words of wide amplitude and capable of taking within its comprehension the claim of the petitioner that the opposite party no.2 is not possessed of the capacity or faculty to conduct the proceedings and even to dictate reasoned orders. This Court has no hesitation to observe that the allegation against the opposite party no. 2 can aptly be described in one word as a "shocker". Also, the opposite party no.2 may reasonably consider it to be an attempt to malign him. However, there could be no doubt that if the allegations of the petitioner were established, the opposite party would have to step down. Outsourcing of judgments/orders, which hitherto before were successfully kept under wraps, is now public and at least on one occasion the offender has been punished. Not too long ago, the Supreme Court upheld removal from service of a judicial officer on the ground that he did not prepare judgments on his own but used to get them prepared through somebody else before delivering judgments [see Ajit Kumar v. State of Jharkhand, reported in (2011)11 SCC 458].
32.Turning attention to the facts of the present case, Mr. Saha seems to be right in his contention that the learned Judge failed to exercise jurisdiction vested in him by not considering the aspect of de facto inability of the opposite party no. 2 while dismissing the application under Section 14 of the Act as not maintainable. The allegation of de facto inability was lost sight of by the learned Judge and to this extent the order impugned merits interference. In normal circumstances, this Court would have directed the learned Judge to hear the parties and decide afresh on the point of de facto inability. But having regard to the facts and circumstances that have come to light and the lapse of time since commencement of the arbitration, this Court has deemed it proper to consider the claim of the petitioner on the basis of the available meterials. Having scanned the minutes of the arbitration conducted by the opposite party no. 2 till date and the affidavits filed by the petitioner and the opposite party no. 1 before this Court, it appears that the materials on record are insufficient to uphold the petitioner's claim. The opposite party no. 1 in its counter affidavit has vehemently denied the petitioner's allegation. It is the specific case of the opposite party no.1 that the opposite party no. 2 is sufficiently experienced and competent to conduct proceedings; orders are dictated by him and not by any representative of the opposite party no.1, as wrongly alleged by the petitioner. That apart, the opposite party no. 2 has not been served with copy of the revisional application and, therefore, he did not have the opportunity to deal with the allegations levelled against him. Also, the applications filed by the petitioner in connection with its challenge application are yet to be disposed of by the opposite party no. 2. This Court, therefore, is of the further view that interference is not called for at this stage and ends of justice would be best served by issuing suitable directions.
33.The opposite party no.2 shall henceforth proceed with utmost expedition to decide the challenge application filed by the petitioner along with the other pending applications, without granting unnecessary adjournments. Without casting any stigma, it is observed that the opposite party no. 2 ought to dictate daily orders in the presence of the parties to dispel any doubt that the petitioner may have in regard to his competence. The order disposing of the challenge application, however, may be pronounced on an adjourned date. It would be desirable if such application is disposed of within four months from the date of receipt of a copy of this order.
34.No officer or staff of the opposite party no.1 shall interfere in the decision making process of the opposite party no. 2. If the same is prima facie established, such officer or staff shall make himself liable to disciplinary action by his employer.
35.Liberty of the petitioner to present a further application under Section 14 of the Act only on the ground of de facto inability of the opposite party no. 2 to continue as arbitrator, if such circumstance does exist, is reserved in the event its challenge application fails before the opposite party no.2. It is, however, clarified that the order disposing of the challenge application, if adverse to the petitioner, shall not afford it any ground to challenge the same unless the situation is ripe for it to approach the Court under Section 34 of the Act.
36.The revisional application, accordingly, stands disposed of, without order for costs.
Urgent photostat certified copy of this judgment and order, if applied for, may be furnished at an early date.
(DIPANKAR DATTA, J.)