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Arbitration O.P. No.2889 of 2014 was filed against the order passed by the Arbitrator dated 15.11.2014 dismissing the application filed by the petitioners under Section 12 of the Act. In the petition filed, in the said O.P. before the Court below, the petitioners stated that the wives of the 6th respondent-Arbitrator and the 4th petitioner are sisters, and the 1st respondent is their brother; while the petitioners are from Delhi, the sole arbitrator and the other respondents reside in Hyderabad; during the years 2007-2010, they had lent around Rs.20 crores to the respondents; as the said amount was not returned, they instituted proceedings for recovery under Section 138 of the Negotiable Instruments Act; as a counter-blast the respondents filed a police complaint in Cr. No.59 of 2012, two years after the petitioners had initiated proceedings against them; in their complaint, the respondents concocted a story that they had to recover Rs.2 crores from the petitioners who had played fraud on them; petitioners 3 and 5 were arrested by the CCS police, Hyderabad and, while in custody, they were forced by the respondents to agree to pay Rs.9 crores; under duress, the petitioners signed the settlement deed dated 30.04.2012, the letter of guarantee dated 30.04.2012, and the ratification deed dated 03.05.2012; the petitioners were not allowed to read the contents of these documents when they signed it; they were unaware of the contents of the aforesaid documents, including that the sixth respondent was appointed as a named arbitrator therein; after securing bail, and on reading the documents, they were shocked to learn that the 6th respondent was appointed as the named arbitrator; they filed an application, under Section 11(5) and (6) of the Act, which was dismissed by this Court by its order dated 15.03.2013; the petition, filed seeking review thereof, was also dismissed on 13.09.2013; the arbitrator issued notices dated 25.07.2012, and passed orders on 15.03.2013 and 13.09.2013 initiating arbitration proceedings; the petitioners filed an application under Section 12 of the Act before the Arbitrator; in the meanwhile, against the order of the High Court, they filed SLP(Civil)No.CC 4610-4611/2014 which was disposed of by the Supreme Court by its order dated 11.08.2014; during the pendency of the SLP, the petitioners came to know various facts, and filed an amended application under Section 12; parties are not required, in proceedings instituted under Section 12 of the Act, to prove that the sole arbitrator was biased; it would suffice if there are justifiable doubts about his impartiality for his mandate to be terminated; the arbitrator had appointed Sri G.S.Thakur, an Advocate, to assist him; the order of the High Court dated 15.03.2013 only enabled the arbitrator to take the assistance of an Advocate to assess the damages claimed by the parties; the entire proceedings were conducted by Sri G.S. Thakur, and the arbitrator was merely a mute spectator; the day-to-day orders and proceedings were recorded and dictated by the Advocate, and not by the arbitrator; the arbitrator is not capable of conducting proceedings himself; though the petitioners filed an application, the arbitrator dismissed it; the arbitrators bias is apparent; in some instances Sri G.S. Thakur refused to record the submissions and arguments raised by the petitioners; the orders drafted by the Advocate are non-operative in the eye of law; the arbitrator passed a non-speaking order without even considering the grounds taken by the petitioners in their application, and the amended application, filed under Section 12; the order is merely a verbatim extract of the application and counters filed by the parties, and reveals non-application of mind; the close association between the arbitrator and the other respondents have created justifiable doubts of his impartiality; this is apparent from the invitation cards of the marriage of the son of the sixth respondent-arbitrator and the son of the first respondent; the petitioners attended neither of the marriages; the arbitrator was listed, in the wedding invitation card of the son of the first respondent as among his near and dear; respondents 1 and 2 hosted the mehandi and cocktail functions of the son of the arbitrator; and these facts substantiate his bias, and his vested interest in the outcome of the arbitration.

In their counter-affidavit filed before the Court below, the respondents contended that the O.P, filed under Section 14(2) of the Act, was not maintainable; the dispute related back to the years 2005-2009 when they had advanced money to the petitioners who misused it; on being confronted, the petitioners acknowledged their mistake, and agreed to repay the said amount; the petitioners had, on their free will and consent, entered into the settlement deed dated 30.04.2012, and ratification deed dated 03.05.2012, acknowledging the debt of Rs.9.00 Crores, and had promised to repay the said amount in full and final satisfaction of the claim of respondents 1 to 5; the petitioners had also acted upon the said settlement, and had paid a part of the amount; for obvious reasons they violated the terms of the settlement, and subsequently dodged repayment of the amounts due; the petitioner did not make out any grounds for seeking termination of the mandate of the arbitrator; while exercising jurisdiction under Section 9 or 14 of the Act, the District Judge lacks authority to terminate the mandate of the arbitral tribunal, especially when the arbitrator is appointed with the consent of the parties; this fact has been confirmed by the High Court in its order in Arbitration Application No.54 of 2012 which, in turn, was confirmed by the Supreme Court by its order in SLP No.4610 and 4611 of 2014; an application, seeking termination of the mandate of the arbitral tribunal, cannot be filed during the pendency of arbitral proceedings, and should await passing of the award by the arbitrator; bias, as a ground, is available to the parties only while challenging the award under Section 34 of the Act; the Court is not empowered, in a petition filed under Section 14(2) of the Act, to terminate the mandate of the arbitral tribunal on grounds of bias; having voluntarily referred the dispute to the arbitral tribunal, and having agreed to be bound by the award, the petitioners are estopped from alleging bias against the arbitral tribunal; the petitioners themselves filed A.A.No.54 of 2012 seeking appointment of the arbitrator, for resolution of their disputes, in terms of the arbitration clause in the settlement deed dated 30.04.2012; the High Court, by its order dated 15.03.2013, appointed the nominated arbitrator for resolution of the dispute; aggrieved thereby, the petitioners filed SLP Nos.4610 and 4611 of 2014 which was also dismissed; though appointment of an advocate, to assist the sole arbitrator, is not in dispute, the manner in which the petitioners are trying to interpret the same is not tenable; the petitioners are trying to take advantage of the inadvertent reference to the words assessing the damage caused in the order of the High Court; in A.A. No.54 of 2012, the petitioners had sought appointment of an arbitrator to have the dispute, regarding the actual payments due to either party, decided by way of arbitration; it is not even their case that they had sought for damages from the respondents, or that the respondents had made a claim for damages against them; during the course of hearing, it was sought to be impressed upon the High Court that the sole arbitrator would require assistance of a competent advocate to conduct arbitration proceedings, and to pass the award; it is only, in such circumstances, that the High Court permitted the sole arbitrator to take the assistance of an advocate/legal counsel/ expert, if required; Section 6 of the Act provides for administrative assistance being taken by the arbitral tribunal for conducting the proceedings; on 26.10.2013 both parties and their counsel were informed by the sole arbitrator that he had sought the services of Sri G.S. Thakur, Advocate, to assist him in conducting arbitration proceedings till passing of the award; both the parties had consented thereto; subsequently around 20 sittings were held wherein both the parties and their advocates were present; Sri G.S. Thakur, Advocate was also present to assist the sole arbitrator; all this while, the petitioners were adopting all means to protract the matter seeking adjournments for filing their counter to the claim statement; when the petitioners realised that they could no longer drag on the matter, they came up with an application on 08.11.2014 seeking a direction that Sri G.S. Thakur, Advocate should not assist the sole arbitrator other than for assessing damages; this ground is an after-thought, and a last ditch effort to further protract proceedings; this ground was not raised by the petitioners, in the first instance, when Sri G.S. Thakur, Advocate was appointed to assist the sole arbitrator, or in the application filed by them under Section 12 of the Act; after considering the rival contentions, and assigning reasons, the arbitrator dismissed the said application; the arbitrator had attended the marriages of the children of the 2nd petitioner also; the arbitrator was, in fact, appointed at the instance of the petitioners alone; he was related as a brother-in-law both to the 4th petitioner and the 1st respondent; it is not the case of the petitioners that they were not invited to the wedding of sole arbitrators son, or that they had not attended the same; the 4th petitioner was present, along with the arbitrator, on the stage at his cousin brother-in-laws wedding on 26.12.2013; the photographs would show the proximity between the petitioners, and the sole arbitrator, and in general with the entire family even after the wedding of the son of the arbitrator in the year 2012; mere reference, to the surnames of the hosts, does not give rise to the presumption of involvement of the respondents, or their family members, more than that of the petitioners in the marriage of arbitrators son; on perusal of the docket proceedings, it is evident that the arbitrator had shown undue indulgence to the petitioners in liberally granting them adjournments, for filing their counter to the claim statement, till 13.12.2014; after giving more than 25 adjournments, the arbitrator was forced to forfeit their right to file the counter; the arbitrator has not directed the parties to be present; the petitioners had, themselves, chosen to appoint a lawyer from Delhi to contest the proceedings; the petitioners are not entitled to have the order dated 15.11.2014, passed by the arbitrator, set aside; the power to appoint an arbitrator, under the Act, is conferred only on the Chief Justice of the High Court, and none else; similar allegations were made even in the Section 11 application, filed by the petitioners before the High Court, attributing bias to the designated sole arbitrator; during the course of hearing, they did not press this issue before the Court; having waived the said allegations, it is not open to the petitioners to now re-agitate this issue before this Court; an application, to terminate the mandate of the arbitrator, cannot be maintained under Sections 14(2) and 15 of the Act during the pendency of arbitration proceedings; the arbitration application, filed by the petitioners under Sections 12 and 13 of the Act, was dismissed; the only recourse available to the petitioners is to challenge the said order in proceedings under Section 34 of the Act after the award is passed; and the O.P. was filed only to further delay and protract arbitration proceedings.

I.A. No.3040 of 2014 was filed by the petitioners herein, in O.P. No.2889 of 2014, seeking stay of all further proceedings in A.A No.1 of 2013 pending before the 6th respondent. The 6th respondent (the sole arbitrator) filed his counter affidavit therein denying the allegations as baseless, concocted, vexatious and devoid of truth. He submitted that the petition was neither maintainable in law nor on facts; he was not a party to the settlement deed, the ratification deed and the special power of attorney; they were subject to proof and relevancy in the arbitration proceedings between the parties; the order passed by him, under Section 12 of the Act, was in accordance with law; the contention that he had forced the petitioner to accede to the illegitimate demands of respondents 1 to 5 was not true; there were no merits in the petitioners allegations; as the matter had been referred to him by the High Court he had, with the assistance of Sri G.S. Thakur, Advocate, commenced proceedings on 13.07.2013; the petitioner entered appearance through Counsel; since then, proceedings were being conducted regularly in a fair and transparent manner without favouritism or bias towards any of the parties; 39 sittings have taken place till date, which were mostly attended by the petitioners with their Counsel; the matter is now coming up for marking of documents on behalf of respondents 1 to 5; under Section 6(1) of the Act, the arbitrator is entitled to seek guidance in discharging his legal obligations; in A.A. No.54 of 2012 dated 15.03.2013, this Court had appointed the 6th respondent as the sole arbitrator for resolution of the disputes; the petitioners Counsel, who appeared in A.A. No.54 of 2012, had requested that an Advocate/Legal Counsel may be appointed in assessing the damage caused; at the request of the petitioners Counsel, this Court had passed an order appointing him as the sole arbitrator for resolution of the disputes between the parties, i.e., the petitioners and respondents 1 to 5, in terms of the arbitration clause in the Settlement deed; this Court had directed him to take the assistance of an advocate/legal counsel for assessing damages; the arbitration application, filed by the petitioner, was allowed; proceedings were initiated pursuant thereto, and are being conducted regularly in accordance with law; the recall/review application No.493 of 2013 was dismissed as misconceived by this Court by its order dated 13.09.2013; it is false to allege that he was biased against the petitioners from the very commencement of arbitration proceedings; the petitioners filed an application under Section 12 of the Act on 23.02.2014, after 17 sittings in which they, along with their Counsel, were present; the allegations made in the Section 12 petition are not true and correct, and were concocted and created only to circumvent arbitration proceedings one way or the other; he has not committed any act detrimental to the interests of both the parties; he has performed the duty assigned to him till date in a fair, clear and transparent manner; the record would speak for itself regarding his fairness in conducting arbitral proceedings; the allegations, made in the Section 12 petition against him, are false; he had rightly passed the order, in the Section 12 petition, on merits and in accordance with law; respondents 1 to 5 filed their claim petition as long back as on 25.01.2014; the petitioners took a number of adjournments to file their claim petition, and to file their objections to the claim petition of respondents 1 to 5; they have not filed it deliberately till date; a copy of the day to day arbitration proceedings were served on the parties, in the presence of their Counsel, after obtaining their acknowledgment; the proceedings were signed by the parties, and their Counsel, who were present on that date; the matter is coming up for marking of the documents of respondents 1 to 5 who are the claimants/petitioners in the arbitration proceedings; the petitioner has not approached the Court with clean hands; they have suppressed true and correct facts, and have filed the Arbitration O.P. with all concocted and created grounds; he is a law abiding citizen and is not biased against any of the parties; the parties on either side are closely related to him; he would not commit any act detrimental to the interests of the parties; he would not show any favouritism to any party, and would act in accordance with the material placed before him; he would pass the award on merits, and in accordance with law; he undertook to comply with the directions, if any, to be passed in the interest of justice; the legal assistance, which was being provided to him by Sri G.S. Thakur, Advocate in the arbitration proceedings, are based on merits and as per law only; and the Advocate has not committed any act against the interest of any party, and is assisting and providing necessary legal advise sought for by him from time to time.

The distinction between Sections 12 and 13 on the one hand and Section 14 on the other, in immediately invoking the jurisdiction of the Court, is based on the ability or the capacity of the arbitrator to continue arbitral proceedings. The challenge to an arbitrator under Section 12(3)(a) of the Act, even if unsuccessful, does not disable or incapacitate the arbitrator from continuing arbitration proceedings. Section 14(1)(a) of the Act, however, relates to the inability/incapacity of the arbitrator to perform his functions, or where his performance is such as to needlessly delay early completion of arbitration proceedings. While the dejure or defacto inability of the arbitrator to perform his functions results in bringing arbitral proceedings to a grinding halt, needless delay in the early completion of arbitral proceedings is also a reflection of the arbitrators inability to complete arbitration proceedings expeditiously. It is for this reason that, unlike Section 13, Section 14 of the Act provides for the termination of the mandate of the arbitrator.