IMPORTANT POINT
Actual bias denotes an arbitrator who allows a decision to be influenced by partiality or prejudice and thereby deprives the litigant of fundamental right to a fair trial by impartial tribunal.

JUDGMENT

S.B. Sinha, J.-The appellants before the High Court are in appeal before us against the judgment and order dated 10-9-1996 passed by the High Court of Patna, Ranchi Bench, Ranchi, in Misc. Appeal No. 176 of 1995 (R) dismissing an appeal preferred by the appellants herein purported to be in terms of Section 39(1)(i) of the Arbitration Act, 1940 ( the Act for short), against an order dated 11-9-1995 passed by the Subordinate Judge-VI, Ranchi, allowing Arbitration (Misc.) Case No. 39 of 1995 filed by the respondent herein.

2. The basic fact of the matter is not in dispute. Appellant No. 1 herein invited tender for removal of soil, sandstone, shale, conglomerates/coal etc. and stacking it up to a distance of 1 k.m. Pursuant to or in furtherance of the notice inviting tender issued by Appellant No. 1, the respondent herein submitted his tender which was accepted. According to the appellants, the respondent failed and neglected to produce 10,000 M.T. of coal per month and stack the same in the dump yard which was the subject-matter of the agreement dated 17-3-1992, as a result whereof the balance job was got done by another agency.

3. According to the appellants by reason of the aforementioned acts of omission and commission on the part of the respondent, it suffered a huge loss. The agreement of the respondent, however, was not expressly cancelled by Appellant No. 2 herein. The respondent herein allegedly invoked the purported arbitration agreement contained in the said agreement dated 17-3-1992.

4. Clauses 37, 59 and 60 which, according to the appellants, are relevant for the purpose of this case read thus:

"37. It will be at the absolute discretion of the Managing Director of the Corporation to terminate the agreement in the following events:

(a) If the excavation work is found to be unsatisfactory.

(b) If the agency be involved in any action involving moral turpitude.

(c) If the agency be involved in any action causing breach of peace indiscipline at the Mines or stops the work before the expiry of the agreement period.

(d) If the agency fails to comply with any of the terms and conditions contained herein or that would be mutually agreed upon for the execution of the work.

(e) If the agency fails to pay full wages to workmen as per prevailing act/awards from the management premises and in presence of Corporation authorised representative.

Before terminating the agreement, one month s notice under registered post on the address given in this agreement will be given to the agency without prejudice to the right and claim under the agreement and the corporation; will have the right to adjust such amount towards the financial loss that Corporation might incur due to such acts or commissions of the agency from bills or security deposit or earnest deposit or through other legal proceedings."

59. If during course of inspection or on reports of officers of the Corporation the Managing Director finds that the working operation are not carried out in a workman like manner or payments to workmen are not made timely and according to provisos of the rules and regulations he may impose fine on the agency up to a maximum of rupees five thousand at a time depending on the gravity of the violations.

60. In case of any dispute arising out of the agreement, the matter shall be referred to the Managing Director, Bihar State Mineral Development Corporation Limited, Ranchi, whose decision shall be final and binding."

5. The respondent also allegedly made claim against the appellants. The disputes were said to have been referred to Appellant No. 2 herein purported to be in terms of clause 60 of the said agreement. But who referred the said dispute and how it was done is not borne out from the records.

6. Allegedly, 22-6-1995 was the date fixed for hearing of the matter before Appellant No. 2 which was subsequently adjourned to 6-7-1995. The respondent herein que