UNION OF INDIA Vs. TOLANI BULK CARRIERS LIMITED

JUDGEMENT

(1.) THIS is a petition filed under section 34 of the Arbitration and Conciliation Act, 1996 for setting aside the award dated 15th April, 1999. The facts that are relevant and material for deciding this petition are that the parties had entered into a charter party agreement dated 19th May, 1995 whereby the respondent chartered their vessel M. V. Prabhu Gopal to the petitioners to carry certain goods. The vessel discharged at two ports, the first was Vishakhapatnam where the vessel discharged part of the goods. The vessel discharged at the second port being Haldia, the balance of the goods. According to the respondents the vessel incurred demurrage charges at the discharge port for which the respondents made a claim amounting to Rs. 1,08,00,431/ -. On this amount of demurrage charge, dispute arose between the parties.

(2.) IN the agreement between the parties there was an arbitration clause. Therefore the disputes were referred to arbitration under the Act. The respondents invoked the arbitration clause and appointed Shri K. P. Patel as their arbitrator and also appointed Messrs Bhatt and Saldanha, as Advocates to represent them in the arbitration proceedings. The petitioners appointed Ms. J. K. Bhatt as their arbitrator and the two arbitrators appointed Mr. N. Sukumaran as the Presiding Arbitrator.

(3.) DURING the pendency of this arbitration proceedings the petitioners came to know that the son of Shri K. P. Patel, the arbitrator appointed by the respondents, was a partner in the firm of Messrs Bhatt and Saldanha, who were representing the respondents before the arbitrators. According to the averments in the petition they came to know of this fact on 5th February, 1999. They entered into correspondence with Messrs Bhatt and Saldanha for confirmation of this fact and when the fact was confirmed that the son of arbitrator Shri K. P. Patel is a partner of Messrs Bhatt and Saldanha, which was representing the respondents before the arbitrators the petitioners filed an application under sections 12 and 13 of the Act challenging the appointment of Shri K. P. Patel, as an arbitrator. That application was opposed by the respondents and the said application came to be decided by an order dated 23rd March, 1999.