VILAS S O LAXMANRAO KAWARE Vs. GANESH BUILDERS

JUDGEMENT

(1.) In this writ petition filed under Articles 226 and 227 of constitution of India, the petitioner challenges order passed by District Judge nagpur in Misc. Civil Application No. 593 of 2004 on 30 November, 2004 which is an application moved by him under section 14 of Arbitration and Conciliation act, 1996 (hereinafter referred to as the Act). I have heard Advocate Shri Jaiswal for the petitioner, Advocate Shri Gharote for respondents 2 and 7 (colluding with petitioner) and Advocate S. P. Dharmadhikari for caveator/contesting respondent.

(2.) The petitioner filed application under section 14 (2) of the Act contending that on account of "bias" and also on account of the fact that there is no dispute between parties now for adjudication, Arbitrator has become de jure and de facto unable to perform his functions and hence the arbitration proceedings pending before respondent number 17 Shri C. V. Kale, Advocate, should be closed. The present respondent number one, a builder has initiated arbitration proceedings before respondent number 17 for specific performance of a agreement dated 16th February, 1998 against present petitioner and respondents 2 to 16. The "bias" as pointed out in his application dated 4 October, 2004 by petitioner before the Arbitrator is that Advocate Madnani who appears for claimant builder is also the counsel for arbitrator in Arbitrator's personal case Special Civil suit No. 844/2003, C. V. Kale vs. R. C. Sawarkar before the Jt. Civil Judge, Sr. Division Nagpur and the son of Arbitrator is co-counsel with Advocate Madnani. Insofar as the other challenge is concerned, it is pleaded that the claimant builder has assigned his interest in suit property in favour of one Linkhouse Industries Ltd and it is contrary to the alleged agreement between parties. It is further contended that in view of such assignment, the claimant builder has lost his right in the agreement of sale dated 16-2-1998. It is further mentioned that the petitioner also has on 7th August, 2004 sold suit property in favour of Soham Co-operative society of Nagpur and has placed that society in possession. These landowners also do not have any title left in the suit property and therefore arbitration proceedings cannot proceed further. The applicant/petitioner contends that in view of this position the Arbitrator has become de jure and de facto unable to perform his function and mandate to Arbitrator has come to an end as contemplated by section 14 (1) (a) of the Act. It is the contention of petitioner that Arbitrator functioned as director for three years of Mr. N. Kumar group of companies and he was also Advocate for Mr. Jagdish Harchandani - one of the directors of kumar group of companies and that in January, 2004 Arbitrator drafted one agreement for Mr. Jagdish Harchandani appointing himself as Arbitrator in it. The Arbitrator has rejected all these challenges by his order dated 24-10-2004 and has directed arbitration to proceed further. The learned District Judge has negatived challenge to this order and rejected the application under section 14 of the Act filed before him by petitioner by passing an exhaustive order running into 44 pages considering the entire law on the point of "bias" and also the scheme of the Act by ultimately holding that the jurisdiction invoked by petitioner is not proper and remedy lies under section 34 of the Act.

(3.) Advocate for petitioner as also Advocate for respondents number 2 to 7 have assailed the order of District Judge on the ground that the learned District judge has not considered the "bias" by applying tests settled by law on the point and further that the facts warranting action under section 14 are entirely different and cannot form subject matter of section 12 or section 16 of the Act. Both of them have placed on record Xerox copies of relevant cases to show how "bias" is required to be considered by the Courts. Counsel for petitioner has relied upon the judgment of Apex Court in the case of Ranjit Thakur vs. Union of India, reported at (1987) 4 SCC 611 to point out test to determine "bias", and also judgment in the case of Koshy vs. K. S. E. Board, reported at AIR 1984 Kerala 23 to argue that actual "bias" of Arbitrator is not required to be proved but existence of circumstances which are likely to lead to "bias" are enough. He has also relied upon ruling of Full Bench of Allahabad High Court in the case of Hindu National school Management Trust Society vs. Deputy Director of Education, reported at air 1981 NOC 1 to point out meaning of "assign". The case of Commissioner, gift Tax, Madras vs. Getty Chettiar, reported at AIR 1971 SC 2410 and Anant trimbak vs. Vasant Pratap Pandit, reported at 7979 Mh. LJ. 755 = AIR 1980 bom. 69 are also cited to show the meaning of word assign. The judgment reported at 2000 (3) Mh. LJ. 690 has been cited in support of contention that "bias" is the ground to hold that de jure the Arbitrator cannot perform his functions. In the case of Nasiruddin vs. S. T. A. Tribunal, reported at AIR 1976 SC 331 and in Sales Tax Officer vs. Kanhaiya Lal, reported at AIR 1959 SC 135 are pressed into service to urge to give the full and natural meaning to the word assign used in document executed by respondent number one in favour of messers Linkhouse. Counsel for respondents number 2 to 7 has placed in a brief chart explaining the factual position as regards "bias" and assignment and has also relied upon case law in support of his contention. It is his contention that section 52 of Transfer of Property Act has no application to the transfers made by landowners in favour of Soham Cooperative Society as arbitration proceedings are not suit and are not pending before in the Court. He draws support from judgment of this Court reported in the case of Saurabh Kalani vs. Tata Finance ltd. , reported at 2003 (4) Mh. L. J. 810 = 2004 (7) R. A. J. page 120.