HANDA & CO Vs. STATE OF J&K

JUDGEMENT

(1.) THIS is an appeal by the contractor against an order of Jaswant Singh J. sitting singly rejecting the prayer of the appellant for removing the arbitrator under Ss. 5 and 11 of the Arbitration Act.

(2.) IT appears that the appellant was given a contract to construct a platform for the water conductor of water channel No. RD 37000 to 382000 on the terms and conditions mentioned in the agreement entered into between the contractor and the department. The appellant commenced the work, but before it was completed a number of disputes arose between the parties in connexion with the terms and conditions of the agreement resulting in a series of correspondence between the parties. When the dispute assumed serious proportions, the appellant sent a notice under S. 80 indicating his claim against the department and alleging further that the department had committed various breaches of the contract. This notice was given on 15 -1 -68 to the Secretary to the Government Works and Power and was referred to the department. The department after processing and analyzing the notice sent by the appellant sent a letter dated 15 -3 -68 addressed by the Chief Project Engineer Chenani Hydel Project to the Secretary to the Government Works and Power. The main stand taken by the Chief Engineer in his reply to the notice of the appellant was that as under the terms and conditions of the agreement all disputes had to be referred to the arbitration of the Chief Project Engineer these disputes could only be considered in the aforesaid arbitration proceedings. Thereafter the appellant made an application to the court on 18 -9 -68 praying that the Chief Project Engineer who was appointed as arbitrator under the agreement between the parties be removed and the appellant be relieved from his bargain, and a fresh arbitrator may be appointed. The respondents filed their objections and the learned judge examined a head clerk of the department as also Mr. Pandita, Chief Engineer himself and after considering the relevant materials came to the conclusion that as there was no positive bias proved against the Chief Engineer, no cogent ground for removing the arbitrator had been made out. Hence this appeal.

(3.) IN support of the appeal the learned counsel for the appellant submitted that the arbitrator had expressed himself rather too strongly on the merits of the case against the appellant and therefore it would be serious travesty of justice to allow the Chief Project Engineer to be an arbitrator to decide the dispute. It is no doubt well settled that where the parties have agreed to entrust their disputes to a particular domestic tribunal, they should not be lightly released from their bargain unless special circumstances showing bias or miscarriage of justice are proved to the satisfactions of the court. Even for the purpose of proving bias, it is not necessary to show actual bias in the mind of the arbitrator, but if the circumstances lead to a probability of the presence of bias in the mind of the arbitrator, that may be sufficient to relieve the party of its bargain In Messrs Amarchand v. Ambica Jute Mills, AIR 1966 SC 1036, 1042 the matter was considered at length by their Lordships of the Supreme Court who observed as follows: - "We now turn to the legal position which seems to us to be quite clear. Before the court exercises its discretion to give leave to revoke an arbitrators authority, it should be satisfied that a substantial miscarriage of justice will take place in the event of its refusal. In considering the exercise by the court of the power of revocation it must not be forgotten that arbitration is a particular method for the settlement of disputes. Parties not wishing the laws delays know or ought to know, that in referring a dispute to arbitration they take arbitrator for better or worse, and that his decision is final both as to fact and law. In many cases the parties prefer arbitration for these reasons. In exercising its discretion cautiously and sparingly, the court has no doubt these circumstances in view, and considers that the parties should not be relieved from a tribunal they have chosen because they fear that the arbitrators decision may go against them (See Russel on Arbitration 16th edition page 54). The grounds on which leave to revoke may be given have been put under five heads: -