BHARAT HEAVY ELECTRONICALS LIMITED Vs. C N GARG

JUDGEMENT

(1.) The petitioner has filed this petition challenging the vires of Section 13(3) and (4) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the Act). The petitioner has also made a prayer for a direction to remove respondent No. 1 from acting as Sole Arbitrator in the arbitration between the petitioner and respondent No. 2.

(2.) Briefly stated, the facts are that the petitioner and respondent No. 2 entered into a contract on 12th August, 1994 under which respondent No. 2 was entrusted with the work of erection and commissioning of 3 x 160 TPH Boiler at Panipat Oil Refinery of the Indian Oil Corporation Limited (for short IOCL). Disputes and differences arose between the parties. As per the terms and conditions of the contract, which contained an arbitration clause, respondent No. 1, Mr. C.M. Garg was appointed as the Sole Arbitrator, on 10th April, 1997 by the petitioner. We may note here that respondent No. 1 is an ex-director of the petitioner and is also a member of the Indian Council of Arbitration. Respondent No. 1 entered upon the reference and issued notices to parties inviting claims. It appears that during the course of arbitration proceedings the petitioner developed some apprehensions about the manner and conduct of the arbitration proceedings by the Sole Arbitrator. The petitioner levelled charges of prejudice and bias against the Arbitrator and desired that the Arbitrator should recluse himself from the arbitration. However, the Arbitrator rejected this prayer and continued with the arbitration proceedings. The petitioner does not want him to continue as Arbitrator. Its apprehension is that Arbitrator would not act impartially.

(3.) The challenge regarding vires of Section 13(3) and (4) is based mainly on the ground that there is no provision in the Act for removal of an Arbitrator by the Court, though such a provision was contained in Section 11 of the Arbitration Act, 1940. Secondly, it is submitted that no remedy is available to the aggrieved party under the Act for challenging the award on the ground of bias and prejudice on the part of the Arbitrator. Apart from challenging the constitutional validity of the aforesaid provisions, the petitioner has tried to make out a case that the Sole Arbitrator in the present case is biased and prejudiced against the petitioner and therefore, it is a fit case in which the Court should order his removal. The petitioner has given certain instances in the petition in a bid to make out a case of bias and prejudice on the part of the Arbitrator. The Arbitrator has filed a counter affidavit explaining the various allegations levelled against him and he has tried to show than the allegations are imaginary and baseless. Reply to the writ petition has also been filed by the contractor, respondent No. 2 who has also raised a preliminary question of maintainability of the writ petition. On merits it has been contended on behalf on 245 respondent No. 2 that the challenge levelled qua the constitutional validity of Section 13(3) and (4) of the Act is misconceived. According to the learned Counsel for respondent No. 2, the Act is a self-contained Code and provides machinery for dealing with allegations made against an Arbitrator. Our attention was invited to Section 34 of the Act which contains provision for setting aside an arbitral award. It is submitted that no interference is called for at this stage because if need be, the petitioner will have complete remedy by way of challenging the award on the grounds sought to be convassed now.