NOVEL GRANITES LTD Vs. LAKSHMI GENERAL FINANCE LTD

JUDGEMENT

(1.) IT is an application to vacate the interim stay granted in application No.2925 of 2002 in O.P.No.507 of 2002. The O.P. has been filed to declare the appointment of the second respondent as an arbitrator as arbitrary and also to remove the present arbitrator and to appoint a retired judge of the High Court to act as an arbitrator. The petitioner in his affidavit has stated that the first petitioner has entered into a lease agreement on 17. 3. 1994 with the first respondent branch office at Pondicherry for the lease of 1994 Stanford Eder Hydraulic Excavator with Ashok Ley land, ALU 411 engine and all other implements and to purchase a machinery for a sum of Rs.53,76,000. Thereafter at the instance of the first petitioner, the lease agreement was converted into a Hire Purchase Agreement dated 31.12. 1998. There was some default in payment of the amount. Due to the alleged default committed by the first petitioner, the first respondent issued a legal notice on 22. 9. 2001. In the meantime, he invoked the Arbitration Clause in the Hire Purchase Agreement and appointed the second respondent as the sole Arbitrator. Thereafter, the second respondent sent a notice to the first petitioner fixing date of arbitration. The petitioner attended the hearings before the second respondent through counsel. One of the principal contention of the first respondent was that he ought to have repossessed the equipment long before and ought to have adjusted the amounts against the dues. The first petitioner in fact sent letters dated 13. 5. 2002 and 20. 5. 2002 asking the first respondent to sell the equipment. However, on the date of hearing held on 27. 5. 2002, the second respondent ignored the letters of the first petitioner and passed an order as if the first petitioner's counsel agreed for the surrender of the equipment. On 22. 7. 2002, the first petition engaged a new counsel to appear before the second respondent. The new counsel filed a petition asking for case papers and further time to study the same. The second respondent refused to accept the same. After furnishing copies of the case papers, the second respondent arbitrarily fixed the next hearing on

(2.) 8. 2002 though it was resisted stating that the time was inadequate for preparation. The pre-emptory and high handed manner in which the second respondent conducted the arbitration proceedings made the petitioner suspicious of the independency and impartiality of the second respondent as an Arbitrator. Further he has stated that on enquiry he came to know that the second respondent was a standing Arbitrator for the first respondent in a number of cases and he has also passed awards in favour of the first respondent. Therefore, the first petitioner has apprehension that the Arbitrator is not genuine. Hence, if the second respondent is continued as an Arbitrator it will lead to miscarriage of justice. Therefore, he filed this petition for the prayer as stated therein.

(3.) THIS argument of the counsel for the petitioner is not acceptable. There is no prohibition under the Act that a person cannot be appointed as the sole Arbitrator in more than one disputes by a company or a person. All that is required is that Arbitrators shall be appointed as per the terms of the agreement. There is no prohibition for the Companies to have a panel of Arbitrators who would be appointed in turn as an arbitrator as and when necessary. Such procedure cannot be said to be contrary to the provisions of Arbitration Act. Merely because one person has been appointed as an Arbitrator in more than one dispute by the Company, it cannot be said that he has become biased in favour of the company.