Calcutta High Court
G.S. Cherra vs Hindustan Steelworks Construction ... on 25 January, 1995
Equivalent citations: (1995)2CALLT1(HC)
JUDGMENT Shyamal Kumar Sen, J.
1. This is an application for extention of time to file the award under Section 28 of the Arbitration Act. This application has been seriously opposed by the respondent on the ground that the Arbitrators have allowed the time to expire. Moreover it has been alleged that the Joint Arbitrators and in particular HSCL's nominee Arbitrator, Brigadiar V.K. Sawhney are totally biased in favour of the petitioner and against the respondent. The respondent has made the following allegations :-
(a) At every stage the arbitrators heckled Sri J. P. Singh, Law Officer of HSCL who conducted HSCL's case, by asking him irrelevant questions and making caustic remarks against HSCL.
(b) The remarks of the Arbitrators showed that they have prejudged the issues involved and accepted the claims of Cherra to be legitimate, when hearing of the reference was far from concluded.
(c) During cross-examination of HSCL's witnesses, the Arbitrators took up the cudgels for Cherra and constantly put forward unnscessary and probing questions with a view to demolishing HSCL's case.
2. It has been alleged on behalf of the respondent in the 38th meeting held on December 9, 1993 the Senior Counsel and Junor Counsel appeared for HSCL and started making submissions. In fact the Counsel argued for the entire duration of the meeting on the point of maintainability of the claim of interest. The Counsel had not completed their submission on interest when the proceedings were adjourned till January 27, 1994.
3. It has further been alleged that on January 23, 1994 a copy of the minutes of the meeting dated December 9, 1993 was made available for the first time to HSCL, from a perusal whereof it appears that the Arbitrators had deliberately prepared a wholly misleading minutes of the said meeting. Following allegations have also been made -
(a) Although HSCL's Counsel argued at length for the full duration of the meeting, the same was not recorded. Instead an incorrect impression was given that HSCL's Senior Counsel asked for some time without making further argument and the Arbitrators adjourned the hearing till 27th January, 1994, 28th January, 1994 and 29th January, 1994.
(b) The Arbitrators did not even record the fact that a Junior Counsel had also appeared on behalf of HSCL with the Senior Counsel and of course did not record his name.
(c) There was not even a whisper in the minutes of 9th December, 1993 that time was to expire on 31st December, 1993 and consent had been given by the parties for extension. As per the said minutes HSCL's Senior Counsel had prayed for some time and the Arbitrators adjourned the sitting till 27th January, 1994.
4. By its letter dated January, 25, 1994 the respondent requested the Learned Umpire to enter on reference in terms of paragraph 4, Schedule I of the Arbitration Act. Copies of the said letter were sent to the petitioner, his Advocate as well as to the Learned Arbitrators.
5. It has further been submitted, that in spite of receiving copies of the letter dated 25th January, 1994, the Joint Arbitrators went ahead to held the 39th meeting on January 27, 1994 in the absence of HSCL and when they had became functus- officio and then prepared a minutes of such meeting containing false and incorrect statements highly prejudicial to the respondent.
6. It has further been alleged that in the said minutes the Arbitrators recorded the following incorrect averments -
(a) That on 9th December, 1993 HSCL's Senior Counsel prayed for time to get himself acquainted with the facts of the case and 27th January, 1994 was fixed at his specific request.
(b) That HSCL's Counsel and Officer gave verbal consent ,on behalf of HSCL for enlargement of time for publishing the award for a further period of four months from December 31, 1993 and had assured that the said verbal consent would be confirmed in the next sitting in writing and requested the Joint Arbitrators not to record the consent given by them regarding the enlargement of time in the minutes of the meeting dated 9th December, 1993 ;
(c) That though the meeting of 27th January, 1994 was fixed at the specific request of HSCL's Counsel, no one turned up on HSCL's behalf and though HSCL assured Arbitrators that application for extension of time would be submitted on 27th January, 1994 the same had not been submitted that day.
7. It has further been alleged that the aforesaid allegations are false and have been recorded in the said minutes by way of afterthought which further indicates unholy alliance between the petitioner and the Arbitrators. As aforesaid HSCL's Counsel argued for the full duration of the meeting on 9th December, 1993 which was totally supressed in the minutes of both 9th December, 1993 and 27th January, 1994 and the allegations regarding prayer or adjournment are incorrect and false. Incidentally while the Arbitrators had observed in the minutes dated 9th Dceember, 1994 that HSCL's Counsel asked for some time, in the minutes dated 27th January, 1994 it was given out that HSCL's Counsel had specifically requested adjournment till 27th January, 1994. Further, there was no discussion at all on December, 9, 1993 regarding extension of time and no verbal consent to her assurance as alleeed or at all had been given on behalf of HSCL. Had HSCL in fact given such verbal consent or any assurance regardnig subsequent written consent for extension of time, nothing prevented the Arbitrators from recording the same in the minutes of the meeting dated December, 9, 1993 as had normally been done. In the 4th meeting dated 14th May, 1992 and 29th meeting dated 19th August, 1993 time had been extended on oral request, though written confirmation had been sought for by the arbitrators and in the 9th meeting dated 1st December, 1992 by oral consent time had been extended. The allegations regarding HSCL's request not to record the issue of consent in the minutes of the meeting dated December, 9, 1993 is also false. HSCL-has never made such a request in the past and there will be no good reason for HSCL to put in such unusual request and in any event the Arbitrators were not obliged to accede to such alleged request.
8. Learned Advocate General and Mr. K.S. Roy submitted that in view of the aforesaid acts and conduct of the arbitrators which amply demonstrated their bias against HSCL and also in view of the stand taken by HSCL in the present application, it would be highly prejudicial for HSCL if the present application is allowed and the matter goes back before the same Arbitrators.
9. It has been contended on behalf of the respondent that since the arbitrators were appointed and/or were: called upon to act by notice in writing, in February/March, 1988, the four months period stipulated in Rule 3 of the first schedule to the Arbitration Act started running from March, 1988 and upon the expiry of four months i.e. latest by August, 1988 the Arbitrators became functus officio.
10. It has been submitted on behalf of the respondent that the arbitrators in fact by accepting their appointment and communicating with each other about the reference entered into the reference in or about March/April 1988 and became functux officio in or about August/September 1988,
11. In this connection reliance was placed on the judgment and decision in the case of Harishankar Lal v. Sambhu Nath wherein the Supreme Court held that the arbitrators entered upon a reference as soon as they have accepted their appointment and have communicated with each other about the reference. It has been submitted on behalf of the respondent that in other words since the arbitrators became functus officio in or about August/September 1988, the proceedings held before them subsequently are void, invalid and nonest. Though this was the observation of the minority Judge Justice Rajeswar Dayal, there was no observation to the contrary in the majority Judgment and hence binding on the High Court.
12. Reliance was also placed on the judgment and decision in the case of Ghasilal Todo v. Bishwanath Kerwal wherein this Court held that when four months expired after the arbitrator was called upon to act in writing by notice, the arbitrator did not have jurisdiction to enter into the reference at any time thereafter and make a valid award within four months from the date of entering upon reference. It was further held that when the Arbitrators had not entered upon the reference and was called upon by a party to act time for making the award would have to be computed from the date he was called upon to act. Relying on the said decision HSCL submits that the said entering upon reference by the arbitration in June, 1990 is bad in law in asmuch as the arbitrators were called upon to act in Fubruary/March 1988. It follows that all subsequent proceedings held before the Arbitrators are bad in law.
13. It has further been submitted on behalf of the respondent that the contention of the petitioner that the respondent is estopped from contending that the arbitrators had become functus officio long ago by reason of respondent's subsequent participation in the arbitration proceedings cannot be accepted.
14. The contention of the respondent is that no question of estoppel arises in respect of statutory stipulations. Both Parties have referred to the case of State of Punjab v. Hardyal .
15. It has been argued on behalf of the petitioner that it is not open to the respondent to take the plea of misconduct of the arbitrators in this application under Section 28 for extension of time to file the award. Had the respondent been really aggrieved it could have moved an application for removal of arbitrators.
16. The contention of the respondent, on the other hand, is that such application was not made since time for publication of the award had already expired on December 31, 1993 and the arbitrators had became functus officio in view of the Rules 3 and 4 of the first schedule to the Arbitration Act and taking out an application for removal of the arbitrators would be meaningless since the time had already expired.
17. Reliance was placed on the judgment and decision in the case of Hindustan Steel v. Appejay Pvt. Ltd. wherein it was held that the authority of an arbitrator cannot be revoked when in law the arbitrator does not exist and/or cannot function. In other words if the arbitrator has became functious officio by reason of Rule 3 of the first Schedule to the Arbitration Act the question of relocation of authority of the arbitrator cannot arise.
18. It has been submitted on behalf of the respondent that the same principle should apply so far as removal of arbitrators are concerned and the question of removing arbitrators who did not exist in the eyes of law could not and does not arise.
19. Further contention of the respondent is that nobody has am automatic right to extension or enlargement of time for publication of the award.
Learned Advocate for the respondent relied upon the judgment and decision in the case of Anand Das v. Ram Bhusan Das reported in AIR 1933 Patna 566 (DB) wherein it was held that in applying its mind on an application for extension of time for the submission of the award the Court is entitled and indeed is bound, to take all the circumstances of the case into consideration including allegations of misconduct of arbitrators, without deciding whether those allegations are true or not in coming to the conclusion whether any good could be gained by giving further time or whether the arbitration is to be superseded.
20. Reliance was placed on the judgment and decision in the case of Dr. Hardit Singh v. Bhagat Jaswant Singh reported in AIR 1964 Punjab 277 wherein it was held that one of the parties to a suit pending before the Learned Subordinate Judge approached the Learned District Judge praying for transfer of the suit to the Learned District Judge's Court, under Section 24 of the Code of Civil Procedure, on the basis of certain allegations made against the Learned Subordinate Judge. The said prayer was opposed by the other party and the matter ultimately went before the Punjab High Court, where justice Dua held that the interest of justice would be best served if the case was transferred to the Court of the Learned District Judge.
21. It has been submitted that since the respondent has no confidence in the present arbitrator they should not bo compelled to appear before them since it is not expected to get impartial justice from the same arbitrators.
22. It has further been submitted that in the facts and circumstances of the case the Learned Umpire should be allowed to proceed with the matter, alternatively any retired High Court/Supreme Court Judge may be appointed as the Arbitrator to adjudicate upon the disputes and differences between the parties, and the time should not be allowed to proceed with the reference.
23. It is the contention of the Learned Advocate for the petitioner that the Arbitrators entered upon reference when they first apply their mind to the dispute. In this connection reliance was placed upon the judgment and full bench decision of this Court in the case of Ramanath Agarwalla v. Goenka and Anr. .
24. Several allegations have been made; alleging that the Arbitrators have become biased against the respondents.
25. The petitioner, however, contended that at no stage of the proceeding there was any correspondence showing either wrong recording of the fact in the minutes of the meeting or of any bias against the respondent. It is significant also that the respondent did not make any application for the removal of the arbitrators. On the other hand, the respondents gave and continued to give consent for extension of time to make and publish the award from time to time. It was submitted that after time for making the award has been extended by mutual consent of the parties no allegations against the arbitrators could be permitted to be made regarding the period prior to extension of time by mutual consent.
26. Learned Advocate for the petitioner relied upon the judgment and. decision in the case of Lucky Home Co-operative Group Housing Society Ltd. v. Shanti Developers & Promoters (India) Pvt. Ltd. and Anr. reported in 1994(1) Arbitration Law Reporter Page 370.
27. It has been submitted on behalf of the petitioner that in the absence of such evidence no reliance can be placed upon the allegations of bias. In this connection reliance was placed upon the judgment and decision of the Supreme Court in the case of Diwan Kumar Lohia and Anr. v. Durga Dutta Lohia and Ors. . In the aforesaid decision it has been laid down that the test of likelihood of bias is whether a reasonable person, in possession of relevant information would have thought that bias was likely. It has also been observed that the discretion to give leave to revoke an Arbitrators's authority has to be exercised cautiously and sparingly and while doing so the Court must bear in mind that Arbitration is a particular method for the settlement of disputes and parties should not be relieved from a Tribunal they have chosen because they fear that the Arbitrators' decision may go against them. It has also been held that in that case the inference that the Arbitrators while conducting the Arbitration proceeding has acted in a manner as to give rise to a reasonable apprehension in the mind of a party that he was biased could not be drawn on parusal of the proceeding conducted by the Arbitrator. The Arbitrators have all along accommodated the respondent. It has been contended that in the instant case the proceeding was adjourned, time was given again by the Arbitrators to suit the convenience of the patries and particularly respondent.
28. It has also been contended on behalf of the petitioner that while the letter dated 25th January, 1994 addressed to the Umpire was written on the ground that the arbitrators have failed to make and publish the award, the case made out in the affidavit-in-opposition is totally different namely bias of the Arbitrators against the respondent.
29. It has been submitted on behalf of the petitioner that the respondent did not file any application for removal of the Arbitrator. Only in the affidavit-in-opposition they are for the first time making allegations of bias against the Arbitrators. Upto 31st sitting they have not made any allegation against the Arbitrator and they were satisfied with the conduct of the proceeding and gave their consent for extension of time to make and publish the award from time to time. Upto 37th meeting the respondent had no grievance against recording of minutes by the arbitrators although on some occasions some minutes were prepared after the completion of the sitting. Only when the Counsel appeared on 9th December, 1993 the respondent thought it fit to make allegations against the arbitrator about wrong recording of the minutes of meeting held on 9th December, 1993. Further the fact that the sitting fixed on 9th and 10th December, 1993 was adjourned till 27th January, 1994 has been admitted by the respondent in their affidavit-in-opposition. The respondent is, however, cleverly and significantly silent as to whose instance the sitting fixed on 9th and 10th December, 1993 was adjourned. The respondent, however, has not denied that the sitting was adjourned at their instance as no other version regarding the ground for adjournment has been given in the affidavit-in-opposition. The respondent on the affidavit-in-opposition has also admitted that on 9th December, 1993 Senior Counsel and junior Counsel were briefed by the respondent. This will abundantly make it clear as to at whose instance sitting fixed on 9th and 10th December, 1993 were adjourned. The same was adjourned on the ground that Counsel for the respondent were engaged only on 9th December, 1993 and they were not ready for making argument. The respondent was allowed time and that the next date was fixed on 27th January, 1994. It has been submitted on behalf of the petitioner that the respondent however at the last moment taking wrongful advantage of its own wrong, laches and delaying tactics wrote a letter to the Learned Umpire on 25th January, 1994.
30. It has been contended that an application for removal can be made and maintained even after the arbitrator has become junctions officio. In this connection, reliance was placed on behalf of the petitioner to the judgment and decision of this Court in the case of Rabinda Kumar Lohia v. Durga Dutta Lohia reported in 85 CWN page 161.
31. There is no question according to the Learned Advocate for the petitioner of allowing the time to make an award to expire by the Learned Arbitrators since there is no default on the part of the arbitrators. The respondent was continuing with its argument and the petitioner had not even commenced its argument.
32. Learned Advocate for the petitioner relied upon the judgment and decision in the case of Eurrestra Industries Ltd. v. Karnataka Soap and Detergent Ltd. . Paragraph 6 of the said judgment at page 355 reads' as follows : -
"Shri Zaiwala, the Learned Counsel for the petitioner has invited my attention to the judgment of High Court of Calcutta in the case of Robindra Deb Manna v. Jogendra Deb Manna AIR 1923 Cal. 410, In this case it was held by Rankin J., that the Arbitrators should not be allowed to continue with the proceeding ad infinitum and the Court was bound to intervene after the Arbitrators themselves were proved incorrigible. There can be no dispute about the principles laid down in this case. However the said ratio has no application to the facts of this Case. The Court must have respect for the dignity of the domestic forum i.e. the Arbitrators and for the delicate task which the Arbitrators are called upon to perform. Unless the Court can judicially reach a conclusion that the Arbitrators are guilty of deliberate inaction or are prolonging the matter with ulterior motive or are unable to conduct the arbitration proceedings as expected of them or guilty of gross negligence, the Court cannot intervene so as to deprive the Arbitrators of their jurisdiction to complete the Arbitration proceedings and make the Award. It must be stated with all firmness as a matter of principle that the continuance or discontinuance of the Arbitration cannot be made to depend upon the unilateral wish or mood or whim of a party. A party cannot be relieved from his obligation to participate in the arbitrtion proceedings and abide by the award merely by making some sort of allegation against the arbitrators. I have no hesitation in rejecting the insinuations made in the petition against the Learned Arbitrators. I hold that the petitioner has failed to substantiate these allegations. I am not prepared to hold that the arbitrators have permitted frivolous cross-examination to go on and the Arbitrators are directly or indirectly guilty of any misconduct. There is no reliable material in support of these wild allegations. As a matter of fact, the Advocate for the petitioner had approched Shri Y. V. Chandrachud, the Learned Umpire, only on the ground that the Learned Arbitrators could not agree upon certain matters at the meeting held on 25th October, 1991 as recorded in the notes of evidence of witness Arun Malvi. Now as a matter of flourish, it is also argued that the Arbitrators have allowed their time to expire. Time fixed for the Arbitrators to make the award had already expired on 31st December, 1989. Very large number of Arbitration meetings were thereafter held with consent of parties. Parties proceeded with the Arbitration voluntarily and willingly in anticipation of obtaining consent order of extension from this Court. Can it be therefore said that the Arbitrators have allowed their time to expire as a result of any inaction or neglect on their part or otherwise? The answer obviously is in negative. At any rate, this Court has ample jurisdiction to extend the time for proceeding further with the Arbitration and making of the award. After taking an overall view of the matter, I have already extended time for the arbitrators to make the award upto 31st December, 1992."
33. It has also been contended on behalf of the petitioner that the decision of the Supreme Court in the case of N. Chellappan v. Kerala State Electricity Board is distinguishable and the principle decided therein do not apply to the facts of the instant case.
34. Further submission was made on behalf of the petitioner that the respondent participated in arbitration proceeding for a long time to be precise upto 38th sitting. The respondent did not raise any objection about illegality or irregularity allegedly committed by the Arbitrator at any point of time in course of the proceedings and participated in the proceeding and gave due consent for extension of Arbitration proceedings on different occasions. The respondents participated in the proceedings with full knowledge of all facts including the fact as to when the arbitrators entered upon reference and when the arbitrators appointed umpire.
35. In this connection, reliance was placed on the judgment and decision in the case of (1) Prasun Roy v. Calcutta Metropolitan Development authority , and (2) Radeshyam Kedia v. Sriniwets Pandit .
36. It has been submitted on behalf of the petitioner that time to make and publish the Award by the Joint Arbitrators be extended and the Arbitrators be directed to hold sitting day to day.
37. I have considered the respective submissions of the parties and decisions cited from the bar.
38. The arbitration clause in question in the contract, inter alia, provides as follows :
"Adjudication/Arbitration Arbitration : In the event of any question or disputes arising under these conditions or any special conditions of contract or in connection with this cotract (except) as to any matters the decision of which is specially provided for by those conditions), whether during the progress of the works or after their completion and whether before or after the determination, abandonment or breach of contract, the same shall be referred to the award of an Arbitrator to be nominated by the principal and an arbitrator to be nominated by the Associate or in case off the said arbitrators not agreeing then to the award of an Umpire to be appointed by the Arbitrators in writing before preceeding on the reference and the decision of arbitrators or in the event of their not agreeing, of the Umpire appointed by them shall be final and conclusive and the provisions of the Indian Arbitration Act, 1940, and of the Rules thereunder and any statutory modification thereof shall be deemed to apply to and be incorporated in this contract."
39. It is on record that the Joint Arbitrators nominated by the parties held their first sitting on 11th July, 1990 and entered upon reference on that date. In the said meeting before any other business was taken up the Joint Arbitrators intimated the parties that they had already appointed Umpire in terms of the Arbitration Clause. In fact the said Joint Arbitrators appointted Mr. P. N. Bhagwati, retired Chief Justice of India as Umpire in June, 1988 well before entering upon reference at the first sitting held on 11th July, 1990.
40. As no counter statement and counter claim as directed by the Ld. Joint Arbitrators in the first sitting could not be filed and as the respondent prayed for a extension of time to file the same which was granted by the Ld. Joint Arbitrators on a number of occasions, the second sitting of the Arbitration could not be effectively held before 22nd August, 1991, wherein it was recorded that inordinate delay has taken place on the part of the respondent in filing pleading-in-defence and counter claim. However, the Ld. Joint Arbitrators gave the respondent further time to file counter statement and counter claim by 15th September, 1991. By consent of the parties time to make and publish the award was extended till 10th November, 1991.
41. By Notice dated 5th March, 1992 further hearing in the Arbitration proceeding was fixed by the Ld. Joint Arbitrators on and from 3rd April, 1992 to 5th April, 1992. However, as late as on 1st April, 1992 the respondent addressed letter to Shri S. C. Sinha, one of the Joint Arbitrators in which the respondent intimated that "due to sudden exigencies of work" it would not be possible for the respondent to attend the sitting on 3rd April, 1992. No indication was given as to the "sudden exigency of work" in the said letter. The petitioner's advocate by letter dated 1st April, 1992 addressed to the Joint Arbitrators with copy to the respondent objected to the conduct of the respondent. However, the Learned Arbitrator inspite of the objection raised by the petitioner adjourned the hearing as prayed for by the respondent and the next date of hearing was fixed from 12th May, 1992 to 14th May, 1992.
42. The respondent at that time was required to disclose their documents. At the sitting held on 13th May, 1992 Shri J. Singh, Deputy General Manager (Law) of the respondent expressed inability to disclose and produce any document on behalf of the respondent and assured the Learned Arbitrators that positive steps will be taken regarding such production on the next date i.e. on 14th May, 1992. Even on 14th May, 1992 the respondent did not disclose any documents.
43. The meeting fixed on 24.9.1992 onward could not be held due to sudden illness of one of the Joint Arbitrators Shri S.C. Sinha. However, by consent of both the parties the next date of hearing was fixed on 20th October, 1992.
44. By a letter dated 12th October, 1992 the Advocate of the petitioner duly intimated the Joint Arbitrators as well as Shri J. Singh representative of the respondent about the aforesaid agreed dates of hearing from 20tih October, to 22nd October, 1992.
45. On 19th October, 1992 Shri J. Singh, representative of the respondent assured the Advocate of the petitioner that the meeting as scheduled will be held on 20th October, 1992. However, at about 3-30 p.m. the petitioner's advocate received a telephone call when the Advocate of the petitioner was informed that the sitting due to be held on and from 20th October, 1992 has been cancelled on the basis of a prayer made by the respondent before Brig. V. K. Sawhney on the ground that Board/G.M's meeting on the respondent was interferring with the dates of hearing.
46. By a letter dated 19th October, 1992 the Advocate of the petitioner objected to the postponment of hearing without any prior information and intimated the respondent that the petitioner has incurred heavy expenditure on account of last minutes cancellation of the meeting.
47. On the prayer of the respondent the meeting which was scheduled to be held on 20th October, 1992 was re-fixed on 1st December, 1992 and 3rd December, 1992.
48. By a letter dated 18/19.11.1992 the Deputy General Manager(Law) of the respondent requested the Joint Administrators not to hold the meeting fixed on and from 1.12.1992 on the ground that it has been decided by the competent authority to review all Libya Matters.
49. At the meeting held on 1.12.1992 the petitioner raised objection to the unreasonable request for adjournment made by the respondent on the alleged ground that competent authority is reviewing all Libya matter as the socalled competent authority' review has no bearing on the arbitration proceeding. The Learned Joint Arbitrator in the record of the minutes of the 9th meeting held on 1.12.1992 recorded their concern and displeasure about the manner in which the proceedings are being prolonged and agreed that the review of the competent authorities have no bearing on the case. The petitioner did not even take any adjournment. The displeasure recorded in the minutes of the said meeting was obviously with regard to the conduct of the respondent. The Learned Arbitrators nevertheless in order to give fullest opportunity to the respondent to present their case agreed to adjourn the hearing fixed from 1.12.1992 and the next hearing was fixed from 18.1.1993 to 22.1.1993.
50. At the 12th sitting held on 20.1.1993 examination of the witnesses produced by the respondent commenced.
51. Again the meeting fixed from 1.6.1993 to 4.6.1993 was adjourned on the prayer of the respondent.
52. Evidence of the witnesses having been concluded at the 25th sitting the respondent commenced its argument on and from 26th sitting held on 16th August, 1993 and such argument was still continuing when the present application was made.
53. The 37th sitting scheduled on 16th November, 1993 was adjourned. Shri J. Singh the respondent's representative was said to have fallen sick and the next date was fixed on 9th December, 1993 and 10th December, 1993.
54. On 9th December, 1993 at the 38th sitting Shri K.S. Roy, Learned Advocate for the respondent for the first time appeared before the learned Joint Arbitrators and submitted that as he was engaged on 9th December, 1993 itself he was not in a position to make any argument on behalf of the respondent and that he would require time to get himself acquainted with the facts of the case for arguing the case from the stage/point the argument of the respondent had been made and requested the Joint Arbitrators to fix the date for hearing not. before the 3rd week of January, 1994. As the time to make and publish the award was going to expire on 31st December, 1993 Shri K.S. Roy, learned Counsel and Shri J. Singh of the respondent gave their consent for extension of time to make and publish the award for a further period of four months from 31st December, 1993 and requested the Arbitrators to fix the next dates not before the 3rd week of January, 1994. However, both of them requested the arbitrators not to record such consent in the minute until a formal letter confirming such extension of time is submitted to learned Joint Arbitrators. The subsequent course of events amply demonstrate that such request was ingenuine and a part of deliberate trickery and device adopted on behalf of the respondent. The Advocate appearing for the petitioner gave his consent to such extension of time. On the prayer of the respondent and to suit the convenience of their counsel the hearing was fixed on 27th January, 1994 to 29th January, 1994.
55. Petitioner received a copy of the letter dater dated 25th January, 1994, written by Deputy General Manager Law of the respondent enclosing therewith a copy of the letter of the same date written by the said Deputy General Manager to Sri P.N. Bhagwati, retired Chief Justice who was appointed Umpire requesting the Ld. Umpire to enter upon reference since the Joint Arbitrators allegedly failed to make and publish the award within the prescribed date and had allegedly become functius officio.
56. By a letter dated 26th January, 1994 the petitioner's advocate apprised the learned Umpire about the correct position and situation and requested the Ld. Umpire to ignore the said letter. In the said letter it has been categorically stated that there was no laches and/or negligence and/or failure on the part of the Arbitrator to make and publish the award. Because of the frequent adjournments sought for by the respondent the proceeding was delayed. Argument of the respondent was going on and the petitioner have not even commenced its argument. The Joint Arbitrators, therefore, were not authorised of empowered to make any award at that stage. It was not possible for them to make any award then.
57. On 27th January, 1994 both the Ld. Arbitrators as well as the petitioner and his Advocate attended the venue of the arbitration meeting when both the letters of the Deputy General Manager (Law) of the respondent dated 25th January, 1994 addressed to the Ld. Umpire as well as the letter dated 26th January, 1994 of the Advocate of the petitioner were placed before the Joint Arbitrators. It transpired that the air ticket for Brig. V. K. Sawhney was provided by the respondent for coming to Calcutta from Delhi on 27th January, 1994. Purchase of air ticket for Brig. V. K. Sawhney, one of the Arbitrators from Delhi to Calcutta had been admitted by the respondent in paragraph 38 of the affidavit-in-opposition.
58. Considering the facts and circumstances of the case, in my view it cannot be said that the arbitrator took no steps after entering on reference in February/March, 1988 for more than 2 years when the first sitting was held on 11th July, 1990. The Arbitrator did not enter upon reference in February/March, 1988 as alleged. The Arbitrators entered upon reference only on 11th July 1990 as will appear from annexure 'A' to the petition read with the minutes of the first sitting held on 11th July, 1990.
59. With regard to the question of bias it appears to me that the allegations against the Arbitrators made in sub-paragraphs (a), (b) and (c) under paragraph 9 could not be substantiated.
60. It is significant that the respondent did not produce any document in support of the allegation made against the Arbitrators.
61. On the other hand, it appears from record, that the respondent gave and continued to give consent for extension of time to make and publish the Award from time to time. The contention of the respondent is that after time for making the award has been extended by mutual consent of the parties no allegation against the arbitrators could be permitted to be made regarding the period prior to extension of time by mutual consent.
62. In this connection I may take note of the judgment and decision in the case of Lucky Home Co-operative Group Housing Society Ltd. v. Shanti Developers & Promoters (India) Pvt. Ltd. and Anr. reported in 1994 (1) Arbitration Law Reporter Page 370.
63. The question of revocation of the authority of the arbitrator on the ground of bias on the part of the arbitrator was concidered by the Supreme Court in the case of Jiwan Kumar Lohia and Anr. v. Durga Dutta Lohia and Ors. . In paragraph 5 of the said judgment at page 189 it was held as follows :-
"5. The revocation of the authority of the arbitrator was sought by the respondent applicants before the High Court on the ground of bias on the part of the arbitrator. With regard to bias in relation to a judicial tribunal the test that is applied is not whether in fact a bias has affected the judgment but whether a litigant could reasonably apprehend (that a bias attributable to a member of the tribunal might has operated against him in the final decision of the tribunal (Manaklal v. Dr. Prem Chand, . In Ranjit Thakur v. Union of India ) this Court has laid down that "the test of likelihood of bias is whether a reasonable person, in possession of relevant information, would have thought that bias was likely" and whether the person concerned "was likely to be disposed to decide the matter only in a particular way."
These tests would also apply to an arbitrator. But while considering whether there is a reasonable ground for apprehension that the arbitrator will be biased, on an application under Section 5 of the Arbitration Act, 1940, the Court should be satisfied that substantial miscarriage of justice will take place in the event of its refusal of the said application. The discretion to give leave to revoke an arbitrator's authority has to be exercised cautiously and sparingly and while doing so the Court must bear in mind that arbitration is a particular method for the settlement of disputes and parties should not be relieved from a tribunal they have chosen because they fear that the arbitrator's decision may go against them. [See Amarchand Lalitkumar v. Shree Ambica Jute Mills Ltd. ].
64. In the instant case it appears that on most occasions adjournment was obtained on behalf of the respondent and the arbitrators to suit the convenience of the parties and particularly the respondent extended the time. In that view of the matter it cannot be said that there is a reasonable ground for apprehension on the question of bias upon arbitrator.
65. In the case of Robindra Kumar Lohia v. Durga Dutt Lohia and Ors. reported in 85 CWN 161 it was held that where a dispute is referred to the arbitrtation or arbitrators appointed by the parties but the arbitrators fail to make any award within the time allotted, the arbitrators remain arbitrators de facto, by virtue of the authority given to them by the parties but they cease to exist in law due to loss of jurisdiction which is dependent on the period of time allotted. On the expiry of the time, the arbitrators retain. their legal character and remain arbitrator de facto but not de jure and this character continues until death, resignation or removal.
66. It has been contended that even assuming that the arbitrators became fucntius officio only after 31st December, 1993, the respondent never made any application for removal of the arbitrator before 31st December, 1993.
67. In my view the contention of the learned Advocate for the petitioner cannot be said to be without any substance. Even if the time to make and publish the award by the arbitrators expired on 31st December, 1993 they retain their legal character and remain arbitrator de facto but not de jure and this Character continues until death, resignation or removal. The parties have not made any application for removal of the arbitrator before expiry of time to make and publish the award.
68. It has been urged on behalf of the respondent that the arbitrator has allowed the time to make the award expire and, as such Clause IV of the first schedule of the Arbitration Act cannot apply.
69. In my view the provision contending Clause IV of the first Schedule to the Arbitration Act does not apply since in the instant case it cannot be said that arbitrators have allowed the time to make the award expire.
70. In the case of Eurrestra Industries Ltd. v. Karnataka Soap and Detergent Ltd. it was held that unless the Court can judicially reach a conclusion that the arbitrators are guilty of deliberate inaction or are prolonging the matter with ulterior motive or are unable to conduct the arbitration proceedings as expected of them or guilty of gross negligence, the Court cannot intervence so as to deprive the arbitrators of their jurisdiction to complete the arbitration proceedings and make the award. A party cannot be relieved from his obligation to participate in the arbitration proceedings and abide by the award merely by making some sort of allegation against the arbitrators.
71. The judgment and decision in. the case of N. Chellappan v. Kerala State Electricity Board is clearly distinguishable. After the completion of the proceeding the arbitrators did not make the award within the time limit which was extended from time to time. In the instant case, the proceeding has not yet completed but the same is continuing. The Supreme Court judgment, in my view, was decided in a completely different context and, accordingly, the said decision cannot come in aid of the respondent.
72. In my view, the contention of the respondent cannot be said to be proper and valid, considering the facts and circumstances of the case, in my view, the interest of justice would be served if the time to make and publish award of the Joint Arbitrators is extended till 31st March, 1995.
73. The petitioner succeeds in this application. There will be an order directing the Joint Arbtrators to proceed with the reference as expeditiously as possible and the arbitrators are directed to make and publish award by 31st March, 1995. If necessary, the Joint Arbitrators will proceed with the reference and hold sitting every day in the week. The parties are directed to co-operate with the Arbitrators and not to pray for adjournment on unnecessary ground.
The adjournment will not be granted by the Arbitrators except for valid and sufficient grounds being shown.
The application, is accordingly, disposed of. Stay prayed for is refused.
All parties are to act on the operative part of the judgment on the usual undertaking.