K C PALANISAMY Vs. KASTURI AND SONS LIMITED

JUDGEMENT

(1.) INVOKING the provision under section 14(2) of the Arbitration and Conciliation Act, 1996, the present petition is moved by the petitioners.

(2.) THE averment found in the petition reads as follows:-A commercial agreement dated 19.7.2004 came to be executed between the first petitioner on the one hand and the first respondent, the second petitioner and the second respondent on the other. THE first respondent raised a dispute that led to the constitution of an arbitral Tribunal consisting of third, fourth and fifth respondents. THE third respondent is the Presiding Arbitrator. THE fourth respondent was nominated by the first and second respondents and the fifth respondent was nominated by the first petitioner. During the arbitration proceedings, a consent award came to be passed on 9.4.2007. THE first petitioner could not further make payment as agreed. THE arbitrators proceeded to hold a hearing on 2.11.2007 to consider the effect of the breach of consent. After hearing, orders were reserved on 2.11.2007. THE first and second respondents sent a letter dated 7.12.2007 seeking to file additional documents and submit additional submissions. THE matter was re-opened by the Arbitrators at the instance of the first and second respondents. Whileso, on 5.6.2008, the fifth respondent, who was nominated by the first petitioner, telephonically informed the first petitioner that he was having some personal difficulties in proceeding with the arbitration and therefore, he wanted to resign. THE fifth respondent informed the first petitioner that he was, therefore, resigning. THE first petitioner immediately informed the Arbitral Tribunal, by his letter dated 5.6.2008, about the resignation of the fifth respondent and informed the Tribunal that he would immediately fill up the vacancy with another arbitrator. THEre was no denial on the part of the fifth respondent of his resignation. THE Presiding Arbitrator has minuted that the fifth respondent informed him that he was always willing to participate in the arbitral proceedings provided the venue was at Mumbai as his present health would not permit travel. THE petitioners were perplexed at the contrary stand indicated in the aforesaid proceedings. THE fifth respondent's withdrawal was accepted by the nominating authority. THE fifth respondent's volte face creates grave doubts in the minds of the petitioners as to his continued independence. THE facts and circumstances would cumulatively disclose that, ipso facto and ipso jure, the fifth respondent has become incapable of acting as an Arbitrator. THErefore, the petitioners pray for a declaration that the fifth respondent has ceased to be an Arbitrator to adjudicate upon the disputes between the petitioners and the first and second respondents arisen out of the agreement dated 19.7.2004.

(3.) MR.Aravind Dattar, learned Senior Counsel appearing for respondents 1 and 2 would submit that only minimum judicial interference is warranted under the scheme of Arbitration and Conciliation Act. This court has already held that for the grounds under section 12(3)(a) of the Act, the challenge procedure as contemplated under section 13 of the Act alone will have to be resorted to. In O.P.No.390 of 2008 filed by the first respondent, the Bench of this court directed the Presiding Arbitrator to ascertain whether the fifth respondent herein was willing to continue as arbitrator and on ascertaining such position to proceed with the matter in accordance with law. Further, there was no controversy for suitable remedies without exhausting the grounds of challenge under section 12 as per the procedure contemplated under section 13 of the Act. Section 14(2) of the Act cannot be invoked inasmuch as the fifth respondent has expressed his willingness to continue as arbitrator and has categorically stated that he had never resigned as an arbitrator. Therefore, there is no cause of action for the petitioners to approach this court under section 14(2) of the Act. He would contend for the foregoing reasons that the Original Petition does not merit consideration.