BHEL Vs. V.D. SWAMI AND COMPANY

JUDGEMENT

(1.) BY this petition under Section 34 of the Arbitration & Conciliation Act the petitioner (BHEL) has assailed an award dated 17.4.2001 passed by the Sole Arbitrator Mr. C.N. Garg on various grounds including ground of bias and mala fides. During pendency of arbitration proceedings before the Sole Arbitrator, the petitioner herein had filed an application before the Arbitrator requesting him to recuse himself from the proceedings complaining that he was biased against the petitioner and the petitioner was apprehensive that it would not get justice at the hands of the Arbitrator. It was alleged that the Arbitrator was favorably disposed towards the respondent/claimant and the Arbitrator himself used to argue the case on behalf of the claimant and would find faults with every document and every submission and even with the statute relied upon by the petitioner. It was also submitted that the Arbitrator shifted the venue of the arbitration on 17th and 18th July, 1998 to Chennai at the instance of claimant though the contract provided that proceedings would be held at Delhi. There was no ostensible nexus/basis in holding of proceedings at Chennai except that the Arbitrator wanted to develop intimacy with the top management of the claimant viz. M/s V.D. Swami & Company. It was also alleged that the head office of petitioner was in Delhi and it could conveniently arrange travel tickets for Arbitrator from Delhi to Chennai, yet the Arbitrator directed claimant to make his travel arrangements to Chennai, as the Arbitrator wanted to go to Chennai along with wife. He and his wife availed hospitality of the claimant at Chennai. The Arbitrator also charged double his daily fee than what he was charging at Delhi. The Arbitrator and his wife stayed in Hotel Savera. at Chennai booked by the claimant where consultant of the claimant was also staying in nearby room. As a matter of chance, the petitioner's DGM and the Counsel for petitioner had also stayed in the same hotel and on seeing the DGM and the counsel for petitioner in the hotel, the Arbitrator shifted to Residency. Hotel in Chennai on 16th July, 1998. He stayed with his wife even after the arbitration and enjoyed the hospitality of M/s V.D. Swami & Company (Claimant). It was also alleged that the learned Arbitrator during the proceedings was very courteous to the claimant and their consultant, but was very hostile to the petitioner and Counsel for the petitioner. He often shouted at the representatives of the petitioner, insulted them and repeatedly asked them to get out form the arbitration proceedings. He also tried to humiliate them in presence of the claimant's representatives and his behavior had been outrageous as he lost temper and shouted at the top of his voice during proceedings at petitioner.s representatives. Even prior to 18th July, 1998 proceedings also the Arbitrator had shown partisan approach. The petitioner in a polite letter dated 19.1.1998 had pointed out irregular conduct of arbitration proceedings the instances of shouting etc. were not written there, lest the Arbitrator should get annoyed further. It was noticed that the Arbitrator and the consultant of the claimant would sometimes laugh and ridicule the officers of the petitioner. The Arbitrator used to find faults in documents and letters presented to him pointing out the breaches of the contract on part of the claimant. When this evidence was read before the Arbitrator he made mockery of the officers at the use of works in the documents like bad workmanship, backlog, inadequate manpower, labour turnout, T&P, prolonged delays etc.

(2.) THERE were various other serious allegations made in this letter against the Arbitrator, conduct of the Arbitrator and insults shown to the petitioner and its officers. Suffice it to say that the petitioner/applicant gave a detailed account of the alleged irregular conducting proceedings by the Arbitrator and his biased attitude against the petitioner and favoring claimant.

(3.) AFTER vacation of stay of proceedings, the Arbitrator further proceeded with the arbitration and gave the impugned award which is subject matter of challenge by the petitioner on dual grounds, of bias as well as the award being contrary to the provisions of the contract.