UNION OF INDIA Vs. K.R. TRADERS

JUDGEMENT

(1.) By this appeal filed under section 37 of the Arbitration & Conciliation Act, 1996 (for short hereinafter referred to as Act), the appellant seeks to challenge the order and judgment dated 23rd October, 2008 passed by the District court, Pune rejecting the Arbitration Application filed by the appellant under section 34 of the Act. The appellants are hereinafter referred to as UOI and respondents are hereinafter referred to as Contractors for the sake of convenience. The UOI had impugned the award dated 19th June, 2005 made by the learned arbitrator allowing some of the claims with interest of the contractor and rejected the counter claims made by the UOI. The contractor was claimant in the arbitral proceedings and the UOI was respondent. Some of the relevant facts which are necessary for the purpose of deciding this appeal are as under:

(2.) Mr. Kumbhakoni the learned counsel appearing on behalf of the contractor submits that the learned arbitrator was appointed by consent of both the parties by this court. It was the case of the UOI that the learned arbitrator had given any advice to the contractor in the same matter. There is no bar in the arbitrator appearing and or representing the party in other matters if there is no conflict of interest. It is submitted that the allegations of bias or alleged apprehension on the part of the UOI about the independence or the impartiality of the learned arbitrator is totally unfounded and baseless. The UOI had raised the objection before the learned arbitrator by filing an application under section 12 and 13 of the Act raising doubt about the impartiality of the learned arbitrator. The learned arbitrator has considered this issue in the impugned award. The learned arbitrator rejected this objection on the ground that he had neither closely nor remotely associated with the contractor nor had represented it at any time in any proceedings. He was appointed by this court by consent of both the parties and found that the UOI had failed to make out any ground mentioned under section 12 of the Act and accordingly rejected the application filed by UOI. The District Judge in the impugned order and judgment has dealt with this issue elaborately. The District Judge rendered a finding that there was no statement made by UOI to the effect that the UOI was not aware at the time of appointment of the learned arbitrator that he was representing M/s. Chaman Construction Company against UOI in similar proceedings. It is held by the learned District Judge that no evidence was adduced on record by UOI that the learned arbitrator has actually represented M/s. Chaman Construction company in another arbitration proceedings against UOI. The learned District Judge held that even if the learned arbitrator had represented any other construction company against the UOI, it was not sufficient to give rise to the justifiable doubts as to the independence or impartiality and rejected the said objection raised by the UOI.

(3.) On perusal of section 12 of the Act, it is clear that the arbitrator is bound to disclose in writing that he was approached in connection with his possible appointment as arbitrator any circumstances likely to give rise to justifiable doubts as to his independence or impartiality. In my view, merely because the learned arbitrator had even if appeared in similar matter at some point of time against the UOI, for some other party before another arbitrator, such event would not give any rise to the justifiable doubts as to his independence or impartiality. There is no bar in the arbitrator accepting the brief of another client against one of the party in which he acts as arbitrator unless there is conflict of interest. The learned arbitrator thus was not liable to disclose any such circumstances to the parties. The learned arbitrator was appointed by consent of both the parties by the Hon'ble Chief Justice. The word used in section 12(3)(a) of the Act. are "justifiable doubts" and not mere doubts. It is not that every suspicion held by the party that must reach to the conclusion that the arbitrator in the proceedings is biased. In my view, even if the learned arbitrator had appeared in the another matter against UOI before another arbitrator and had canvassed similar type of claim, it was not sufficient in itself to disqualify such arbitrator or is not sufficient ground for revoking his authority. The relationship of the learned arbitrator in representing another contractor against the UOI in the other proceedings was of the professional nature and had ended much before he acted as arbitrator in the present proceedings. In my view the plea of bias raised by Union of India against learned Arbitrator was thoroughly misconceived and without any basis. The learned arbitrator as well as learned District Court has thus rightly rejected this untenable plea raised by the UOI. No fault can be found with the rejection of such plea raised by the UOI by the learned District Court as well as by the learned arbitrator.