1. Heard Sri D.D. Kushwaha holding brief of Sri Om Prakash Lohia, learned counsel for the applicant, Sri Govind Saran, learned counsel for the respondents in Arbitration Application No. 16/2014, 17/ 2014 and 32/2014 and Sri Sudhir Bharti, learned counsel for respondents in Arbitration Application No. 33/2014.
2. Learned counsel for the parties agree that similar controversy is involved in all these four applications and as such all the applications are being heard together.
3. Briefly stated the facts of the Arbitration Application No. 16/2014 are that a notice dated 6th September, 2013 was given by the applicant to the respondent for appointment of an arbitrator to resolve certain dispute. The respondent appointed Sri D.K. Sinha, Deputy Chief Signal & Telecoms Engineer, Allahabad as sole arbitrator vide office memorandum dated 4th October, 2013 (Annexure -CA-1). The arbitrator sent communication regarding his appointment vide letter dated 31st October, 2013 and required the applicant to submit his claims within a month. Instead of submitting claim, the applicant sent a letter dated 28th October, 2013 requiring the arbitrator to comply with the provision of Sections 12, 19, 21, 22, 23 and 24 of the Act before proceeding further. The applicant did not submit any claim before the Arbitrator. Thereafter the applicant filed this application on 25th February, 2014 praying that an impartial sole arbitrator may be appointed under Section 11(6) of the Act.
4. The facts of the Arbitration Application No. 17/2014 are that on a notice dated 6th September, 2013 given by the applicant, the respondent appointed Sri Alok Chaturvedi, C.S.T.E. ( P&D), Office Central Organization for Railway Electrification, Nawaab Yusuf Road, Allahabad as sole arbitrator vide office memorandum dated 9th October, 2013 (Annexure -CA-1). The arbitrator gave the intimation to the parties including the applicant vide letter dated 15th October, 2013 ( Annexure CA-1) requiring the applicant to submit his claim within 30 days. Instead of submitting claim, the applicant has sent a letter dated 28th October, 2013 to the arbitrator requiring him to comply with the provision of Sections 12, 19, 21, 22, 23 and 24 of the Act before proceeding further. Thereafter the applicant has filed this arbitration application with the prayer that an independant impartial sole arbitrator be appointed under Section 11(6) of the Act.
5. The facts of the Arbitration Application No. 32/2014 are that the applicant sent a notice dated 24th September, 2013 to the respondent to appoint an arbitrator. The respondent no. 1 appointed Sri A.B. Saran, Deputy Chief Signal and Telecom Engineer, Central Organization for Railway Electrification, Nawab Yusuf Road, Allahabad as sole arbitrator vide office memorandum dated 18th November, 2013 (Annexure -18). The arbitrator sent a letter dated 4th February, 2014 ( Annexure No.19) to the applicant to submit his claim within a fortnight. Instead of submitting any claim the applicant sent a letter on 24th February, 2014 to the arbitrator requiring him to comply with the provision of Sections 12, 17, 19, 20, 22 and 24 of the Act. Thereafter the applicant has filed this application for appointment of arbitrator under Section 11(6) of the Act.
6. The facts of the Arbitration Application No. 33/2014 are that the applicant sent a notice dated 24th September, 2013 ( Annexure No.12) to the respondent no. 1 to appoint an arbitrator. Pursuant to this notice the respondent no. 1 appointed Sri R.P. Chandel, Deputy Chief Signal and Telecom Engineer, Railway Electrification, Jaipur as sole arbitrator vide office memorandum dated 11.11.2013. The arbitrator sent letter dated 22nd April, 2014 and 4th February, 2014 to the applicant requesting him to submit his claim within a fortnight. Instead of submitting any claim, the applicant has filed this application under Section 11(6) of the Act for appointment of an arbitrator.
7. Since, controversy raised by the applicants in all these four applications are similar and as such all these applications are being heard together with the consent of learned counsel for the parties.
8. Learned counsel for the applicants submits that after the arbitrators were appointed in all the aforesaid four cases, the applicants in each case gave notices to the arbitrator to first comply with the provision of Sections 12, 19, 20, 22, 23 and 24 of the Act but the arbitrator did not sent any reply and as such this Court has power to appoint arbitrator under Section 11(6). He drawn attention to one such notice dated 28th October, 2013 filed as Annexure No. 2 in Arbitration Application No. 16/2014 which is reproduced below : -
"Date 28.10.2013 Without prejudice To, The Sole Arbitrator ( Mr. D.K. Sinha, Dy. C.S.T.E., Core, Allahabad) In the matter of -
M/s Nampa Electrical (P) Ltd., Kolkata.
Ref: Purchase Order No. CORE/S/1801/7096/4894 Date 15.06.2010 for the supply of BFB Steel Structure.
Please note that before proceeding ahead with the Arbitration proceeding for which Yourgoodself has been nominated by the General Manager, CORE, Allahabad in above referred matter, Your goodself is required to grant time period to file the claims.
Further, Your goodself is also required to comply with the mandatory provisions of Section Nos. 12, 19, 20, 22, 23 and 24 before starting the further arbitration proceedings or else all the proceedings shall be nullity in the eyes of Law. So please note.
With due regards.
28th October, 2013 Kolkata.
For M/S NAMPA Electrical ( P) Ltd., sd/-
Director "
9. Learned counsel for the respondents submits that arbitrators in each of the aforesaid four cases have been appointed as per terms of agreement and they also sent the notice to the respective applicants to submit their claim but instead of submitting the claim the applicants have filed these applications. He submits that the case was heard at length on 11th September, 2014, 12th September, 2014 and 15th September, 2014 and the counsel for the applicants was confronted with the judgments relied by the respondents as well as the legal position as contained in Section 13 of the Act. He submits that these applications are wholly misconceived and are nothing but sheer abuse of the process of the Court, and therefore, these applications deserve to be dismissed with heavy cost.
10. I have carefully considered the submissions of learned counsel for the parties.
11. It is not in dispute that pursuant to the notices given by the applicants for appointment of an arbitrator, the respondents have appointed arbitrator in terms of the contract. It is also not in dispute that the arbitrators so appointed have sent notice to the respective applicants requesting them to submit their claims. It is also not in dispute that the applicants did not submit any claim before the concerned arbitrators, instead they sent a letter to the concerned arbitrator requiring him to comply with the provision of Sections 12, 19, 20, 22, 23 and 24 of the Act. On 15th September, 2014, this Court passed the following order : -
"1. Heard Miss Begum Noor Shama holding brief of Sri O.P. Lohia, learned counsel for the applicant and Sri Govind Saran and Sri N.C. Tripathi, learned counsel for the respondent.
2. This matter was heard at length on 11.9.2014. However, on the request of the learned counsel for the applicant, it was directed to be put up on 12.9.2014 for further hearing. Sri O.P. Lohia, learned counsel for the applicant was again heard at length on 12.9.2014. He again prayed that the matter may be taken up on Monday for further hearing.
3. Today, additional cause list has been revised. Now learned counsel for the applicant states that the matter may be taken up on 18th September, 2014, on which date he shall not seek any adjournment and shall conclude his argument.
4. Learned counsel for the respondent submits that the entire case of the applicant is wholly baseless. Arbitrator has been appointed who requested the applicant to appear and file his claim but he is deliberately avoiding his appearance and not filing his alleged claim. This application is nothing but an abuse of process of the Court. He submits that the argument of the applicant that in view of the provision of Section 12 of the Act, the appointment of arbitrator by the respondent is liable to be ignored and arbitrator may be appointed by this Court under Section 11(6) of the Act, is wholly misconceived and totally misleading. He submits that the legal position with regard to Section 12 of the Act has been well explained by Hon'ble Supreme Court in number of judgments including the judgment in the cases of Kokan Railway Corporation Ltd. & Others Vs. Rani Construction Pvot Ltd., (2002) 2 SCC 388 para 20, Ace Pipeline Contract (P) Ltd. Vs. Bharat Petrolium Corpn Ltd., (2007) 5 SCC 304 para 21 and 22, Indian Oil Corporation Ltd and others Vs.Raja Transport Private Ltd., (2009) 8 SCC 520 para 13, 14, 15, 29, 34, 35, 36, 37, 38 and 39, Ladli Construction Company Private Ltd. Vs. Punjab Police Housing Corporation Ltd. and others, (2012) 4 SCC 609 para 22, 23 and 28 in the judgment of this Court in the case of Jain Vs. M/s Wellwon Builders ( India) Pvt. Ltd., (2011) 85 ALR 406 para 25, 26 & 31. He submits that the challenge by the petitioner to the appointment of an officer of the department as per arbitration clause is wholly without substance in view of the law laid down by Hon'ble Supreme Court in the case of Indian Oil Corporation Ltd. (supra) and Ladli Construction Company Private Ltd. (supra).
5. As prayed put up on 18th September, 2014. It is made clear that, no further adjournment shall be granted on the next date fixed. "
12. The only ground pressed before this Court in all these four applications is that the arbitrator has failed to comply with the notice given by the applicants for observance of the provision of Sections 12, 19, 22, 23 and 24. In this regard, it is relevant to mention that immediately on receipt of notices by the applicants for appointment of an arbitrator in terms of agreement, the respondent no. 1 appointed the arbitrator and the arbitrators so appointed immediately sent intimation of their appointment to the applicants. In Application No. 16/2014, notice for appointment of arbitrator was given by the applicant on 6th September, 2013, the arbitrator was appointed on 4th October, 2013 and the arbitrator sent the intimation of his appointment to the applicant on 31st October, 2013 requiring him to submit claims. Even prior to receiving the intimation of appointment from the arbitrator, the applicant sent a notice dated 28th October, 2013 requiring the arbitrator to comply with the provision of Sections 12, 19, 20, 22, 23 and 24 of the Act.
13. In Arbitration Application No. 17/2014, notice for appointment of arbitrator was sent by the applicant on 6th September, 2013, the arbitrator was appointed on 9th October, 2013 and the arbitrator so appointed sent the intimation to the applicant on 15th October, 2013 to the applicant requesting him to submit his claims . In Arbitration Application No. 32/2014, the notice was given for appointment of arbitrator by the applicant on 24th September 2013, the arbitrator was appointed on 18th November, 2013 and the intimation was sent by the arbitrator to the applicant on 4th February, 2014. In Arbitration Application No. 33/2014, the notice for appointment of arbitrator was given by the applicant on 24th September, 2013, the arbitrator was appointed on 11th November, 2013 and the intimation to the applicant was sent by the arbitrator on 20th March, 2014.
14. Sections 12, 13, 19, 20, 22, 23 and 24 of the Act are reproduced below : -
"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 reason, 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 subsection (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 tinder any procedure agreed upon by the parties or tinder 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 untitled to any fees.
19. Determination of rules of procedure.
1. The arbitral tribunal shall not be bound by the Code of Civil Procedure, 1908 (5 of 1908). or the Indian Evidence Act, 1872 (1 of 1872).
2. Subject to this Part, the parties are free to agree on the procedure to be followed by the arbitral tribunal in conducting its proceedings.
3. Failing any agreement referred to in sub-section (2), the arbitral tribunal may, subject to this Part, conduct the proceedings in the manner it considers appropriate.
4. The power of the arbitral tribunal under sub- section (3) includes the power to determine the admissibility, relevance, materiality and weight of' any evidence.
20. Place of arbitration.
1. The parties are free to agree on the place of arbitration.
2. Failing any agreement referred to in sub-section (1), the place of arbitration shall be determined by the arbitral tribunal having regard to the circumstances of the case, including the convenience of the parties.
3. Notwithstanding sub-section (1) or sub-section (2), the arbitral tribunal may, unless otherwise agreed by the parties, meet at any place it considers appropriate for consultation among its members, for hearing witnesses, experts or the parties, or for inspection of documents, goods or other property.
22. Language.
1. The parties are free to agree upon the language or languages to be used in the arbitral proceedings.
2. Failing any agreement referred to in sub-section (1), the arbitral tribunal shall determine the language or languages to he used in the arbitral proceedings.
3. The agreement or determination, unless otherwise specified shall apply to any written statement by a party, any hearing and any arbitral award, decision or other communication by the arbitral tribunal.
4. The arbitral tribunal may order that any documentary evidence shall be accompanied by a translation into the language or languages agreed upon by the parties or determined by the arbitral tribunal.
23. Statements of claim and defence.
1. Within the period of time agreed upon by the parties or determined by the arbitral tribunal, the claimant shall state the facts supporting his claim, the points at issue and the relief or remedy sought, and the respondent shall state his defence in respect of these particulars, unless the parties have otherwise agreed as to the required elements of those statements.
2. The parties may submit with their statements all documents they consider to be relevant or may add a reference to the documents or other evidence they will submit.
3.Unless otherwise agreed by the parties, either party may amend or supplement his claim or defence during the course of the arbitral proceedings, unless the arbitral tribunal considers it inappropriate to allow the amendment or supplement having regard to the delay in making it.
24. Hearings and written proceedings.
1. Unless otherwise agreed by the parties, the arbitral tribunal shall decide whether to hold oral hearings for the presentation of evidence or for oral argument, or whether the proceedings shall be conducted oil the basis of documents and other materials: Provided that the arbitral tribunal shall hold oral hearings, at an appropriate stage of the proceedings, on a request by a party, unless the parties have agreed that no oral hearing shall be held.
2. The parties shall be given sufficient advance notice of any hearing and of any meeting of the arbitral tribunal for the purposes of inspection of documents, goods or other property.
3. All statements, documents or other information supplied to, or applications made to, the arbitral tribunal by one party shall be communicated to the other party, and any expert report or evidentiary document on which the arbitral tribunal may rely in making its decision shall be communicated to the parties."
15. Section 12 of the Act provides for grounds for challenge. Section 13 of the Act provides for procedure for challenge on the grounds mentioned in Section 12. Section 19 of the Act provides for determination of Rules of procedure by the arbitral Tribunal in conducting its proceeding. Section 20 provides for place of arbitration. Section 22 provides for the language to be used in arbitral proceedings. Section 23 provides for statements of claim and defence. Section 24 provides for hearings and written proceedings.
16. From perusal of the facts of the cases, it is evident that the applicants have not appeared before the Arbitrator, appointed in terms of agreement. They simply sent a letter to the arbitrator to comply with the provision of Sections 12, 13, 19, 20, 22, 23 and 24. So far as Section 12 is concerned, it merely provides for grounds of challenge and the procedure for challenge is provided in Section 13 of the Act. Undisputadely, the applicants have not invoked the remedy provided under Section 13 of the Act. They have not appeared before the arbitrator for determination of Rules or procedure or place of arbitrators or the language is to be used in arbitral proceeding. They have also not filed their statement of claims as required under Section 23 of the Act. They avoided completely their appearance before the arbitrator. On these undisputed facts, it appears that the applicants are really not interested in arbitration proceedings and have filed these applications to abuse the process of the Court.
17. In the case of Kokan Railway Corporation Ltd. & Others Vs. Rani Construction Pvt. Ltd., (2002) 2 SCC 388, the Constitution Bench of Hon'ble Supreme Court held as under :
" It might be that though the Chief Justice or his designate might have taken all due care to nominate an independent and impartial arbitrator, a party in a given case may have justifiable doubts about that arbitrator's independence or impartiality. In that event it would be open to that party to challenge the arbitrator nominated under Section 12, adopting the procedure under Section 13. There is no reason whatever to conclude that the grounds for challenge under Section 13 are not available only because the arbitrator has been nominated by the Chief Justice or his designate under Section 11. "
(Emphasis supplied by me)
18. In the case of Ace Pipeline Contract (P) Ltd. Vs. Bharat Petrolium Corpn Ltd., (2007) 5 SCC 304, Hon'ble Supreme Court held as under :-
"In the present case, in fact the appellant's demand was to get some retired Judge of the Supreme Court to be appointed as arbitrator on the ground that if any person nominated in the arbitration clause is appointed, then it may suffer from bias or the arbitrator may not be impartial or independent in taking decision. Once a party has entered into an agreement with eyes wide open it cannot wriggle out of the situation (by contending) that if any person of the respondent BPCL is appointed as arbitrator he will not be impartial or objective. However, if the appellant feels that the arbitrator has not acted independently or impartially, or he has suffered from any bias, it will always be open to the party to make an application under section 34 of the Act to set aside the award on the ground that arbitrator acted with bias or malice in law or fact."
(Emphasis supplied by me)
19. In the case of Indian Oil Corporation Ltd and others Vs.Raja Transport Private Ltd., (2009) 8 SCC 520, Hon'ble Supreme Court held as under :-
"Arbitration is a binding voluntary alternative dispute resolution process by a private forum chosen by the parties. It is quite common for governments, statutory corporations and public sector undertakings while entering into contracts, to provide for settlement of disputes by arbitration, and further provide that the Arbitrator will be one of its senior officers. If a party, with open eyes and full knowledge and comprehension of the said provision enters into a contract with a government/statutory corporation/public sector undertaking containing an arbitration agreement providing that one of its Secretaries/Directors shall be the arbitrator, he can not subsequently turn around and contend that he is agreeable for settlement of disputes by arbitration, but not by the named arbitrator who is an employee of the other party.
No party can say he will be bound by only one part of the agreement and not the other part, unless such other part is impossible of performance or is void being contrary to the provisions of the Act, and such part is severable from the remaining part of the agreement. The arbitration clause is a package which may provide for what disputes are arbitrable, at what stage the disputes are arbitrable, who should be the arbitrator, what should be the venue, what law would govern the parties etc. A party to the contract cannot claim the benefit of arbitration under the arbitration clause, but ignore the appointment procedure relating to the named Arbitrator contained in the arbitration clause.
It is now well settled by a series of decisions of this Court that arbitration agreements in government contracts providing that an employee of the Department (usually a high official unconnected with the work or the contract) will be the Arbitrator, are neither void nor unenforceable. We may refer to a few decisions on this aspect.
While the provisions relating to independence and impartiality are more explicit in the new Act, it does not mean that the old Act (Arbitration Act, 1940) enabled persons with bias to act as Arbitrators. What was implicit under the old Act is made explicit in the new Act in regard to impartiality, independence and freedom from bias. The decisions under the old Act on this issue are therefore not irrelevant when considering the provisions of the new Act. At all events, M. P. Gupta and Ace Pipeline are cases under the new Act. All the decisions proceed on the basis that when senior officers of government/statutory corporations/public sector undertakings are appointed as Arbitrators, they will function independently and impartially, even though they are employees of such Institutions/organisations.
The fact that the named arbitrator is an employee of one of the parties is not ipso facto a ground to raise a presumption of bias or partiality of lack of independence on his part. There can however be a justifiable apprehension about the independence or impartiality of an Employee-Arbitrator, if such person was the controlling or dealing authority in regard to the subject contract or if he is a direct subordinate (as contrasted from an officer of an inferior rank in some other department) to the officer whose decision is the subject matter of the dispute.
Where however the named arbitrator though a senior officer of the government/statutory body/government company, had nothing to do with execution of the subject contract, there can be no justification for anyone doubting his independence or impartiality, in the absence of any specific evidence. Therefore, senior officer/s (usually heads of department or equivalent) of a government/statutory corporation/ public sector undertaking, not associated with the contract, are considered to be independent and impartial and are not barred from functioning as Arbitrators merely because their employer is a party to the contract.
The position may be different where the person named as the Arbitrator is an employee of a company or body or individual other than the state and its instrumentalities. For example, if the Director of a private company (which is a party to the Arbitration agreement), is named as the Arbitrator, there may be valid and reasonable apprehension of bias in view of his position and interest, and he may be unsuitable to act as an Arbitrator in an arbitration involving his company. If any circumstance exists to create a reasonable apprehension about the impartiality or independence of the agreed or named Arbitrator, then the court has the discretion not to appoint such a person.
Subject to the said clarifications, we hold that a person being an employee of one of the parties (which is the state or its instrumentality) cannot per se be a bar to his acting as an Arbitrator. Accordingly, the answer to the first question is that the learned Chief Justice was not justified in his assumption of bias."
(Emphasis supplied by me)
20. In the case of Rakesh Jain Vs. M/s Wellwon Builders ( India) Pvt. Ltd., (2011) 85 ALR 406 para 16, 17 and 18, this Court considered the provisions of Sections 12 and 13 of the Act and held as under :-
"16 We then go to the other issue as to whether the Chief Justice or his delegate, exercising jurisdiction under Section 11(4) and 11 (6) of the Arbitration Act can decide the challenges as to the impartiality or otherwise of an Arbitrator when there are specific provisions under the Arbitration Act to that effect?
To answer the questions, we may point out that Section 12 of the Arbitration Act provides, that the appointment of an Arbitrator can be challenged only if circumstances exist that give rise to justifiable doubts as to his independence or impartiality, or he does not possess the qualifications agreed to by the parties. In the arbitration agreement, the Arbitrator was to be a sole Arbitrator. The part of that clause cannot be severed nor is there a prayer to that effect. Therefore, the parties including the applicant, had agreed for appointment of the sole Arbitrator. In terms of the agreement, the applicant was not to object to the appointment of the Legal Advisor of the Respondent as an Arbitrator. We are not really concerned with that issue now. Thus, the sole Arbitrator could have been appointed. From the part of the agreement sought to be severed, the intention of the parties was clear that it is the applicant who has to appoint the Arbitrator though on severance of the offending part, if any, there would be no procedure. At this stage, it may be pointed out that contracts of adhesion are not unknown to our law. Governmental contracts are one such class.
The applicant has not specifically categorized the objections for removal of the sole Arbitrator though our attention is sought to be invited to some of the averments made in the in the affidavit of the Respondents.
17. 25. Section 12(3) of the Arbitration Act, provides the ground for challenge of an Arbitrator and it reads as under:
12. Grounds for challenge.-(1) ... ...
(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.
Thus, on such a challenge being made, the same has to be decided by the arbitral Tribunal itself. The other provision is Section 13 of which Section 13(1) and 13(2) are relevant and they read as under:
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.
18. The Arbitration Act itself thus provides the mechanism by which an appointed Arbitrator can be removed, though on limited grounds. In the instant case, Justice U.C. Srivastava has been appointed as the sole Arbitrator. An Arbitrator cannot be removed by the Chief Justice or his delegate in exercise of powers under Section 11(4) and 11(6) as no such jurisdiction has been conferred to remove an Arbitrator appointed under an arbitration agreement. Section 11(6) of the Arbitration Act confers power on the Chief Justice or his delegate to give effect to the arbitration agreement for appointment of an Arbitrator when the applicant has still not taken any steps or the parties feel to agree to a procedure for appointment and/or if there be a procedure to follow the procedure and that is not being followed."
21. In the case of Ladli Construction Company Private Ltd. Vs. Punjab Police Housing Corporation Ltd. and others, (2012) 4 SCC 609 , Hon'ble Supreme Court held as under :-
"In Gullapalli Nageswara Rao and Others (supra) this Court restated the principle of natural justice that the authority empowered to decide the dispute must be one without bias towards one side or the other in the dispute. There can hardly be any doubt about this fundamental principle of natural justice. The question is - Whether on facts, the Contractor has been able to establish that the arbitrator was biased against it ? None of the circumstances pointed out by the Contractor leads to any inference that the arbitrator had any bias, personal or otherwise. No doubt, bias may be found in variety of situations and each case, where bias of adjudicator is alleged, has to be seen in the context of its own facts but a fanciful apprehension of bias is not enough."
22. From the perusal of the law laid down by Hon'ble Supreme Court and this Court in the aforenoted judgment it is clear that the contractor who alleges that the arbitrator is biased, has to point out the basis on which an inference may be drawn that the arbitrator had any bias, personal or otherwise. In the letter sent by the applicants after appointment of the arbitrator in terms of agreement, the applicants have not disclosed any circumstances which may even remotaedly indicate any foundation that the arbitrator so appointed is biased. Even no occasion has arisen for any such belief or apprehension inasmuch as the applicants have not filed any claim before the concerned arbitrator. Even if an arbitrator does not act independently or impartially, or he has suffered from any bias, it will always be open to the party to make an application under section 34 of the Act to set aside the award on the ground that arbitrator acted with bias or malice in law or fact as held in the case of Ace Pipeline Contract (P) Ltd. (supra) Once a party has entered into an agreement with eyes wide open it cannot wriggle out of the situation by contending that if any person of the respondent is appointed as arbitrator he will not be impartial or objective. The applicants have also not adopted the procedure as prescribed under Section 13 of the Act to challenge the nomination on the grounds mentioned in Section 12 of the Act. Once the procedure has provided under Section 13 of the Act, the same has to be followed.
23. In view of the above discussions, I do not find any merit in these applications which have been filed merely as an abuse of process of the Court. Under the circumstances, all these four applications are dismissed with cost of Rs.15000/- on each of the applicants. It shall be open to the applicants to approach the concerned arbitral Tribunal and file their claims within a month from today. If they do so the arbitral Tribunal shall proceed in accordance with law impartially without being influenced by any of the observations made in the body of this judgment Order Date :- 18.9.2014 Mukesh (Surya Prakash Kesarwani,J.)