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IN THE HIGH COURT OF BOMBAY
F.I. Rebello, J.
Mr. Hasmukhlal H. Doshi another..... Petitioners.
Versus
Mr. Justice M.L. Pendse others..... Respondents.
Arbitration Petition (LODG) No. 102 of 2000 in Arbitration Suit No. 1930 of 1987 Along with
Arbitration Petition (LODG) No. 104 of 2000 in Arbitration Suit No. 1928 of 1987 Along with Arbitration Petition (LODG) No. 105 of 2000 in Arbitration Suit No. 1926 of 1987, decided on 17-4-2000.
Advocates appeared :
Arvind Bobde with Kirit J. Hakani, in Arbitration Petition (LODG) No. 102, 104 and 105/2000 in Arbi. Suit No. 1930, 1928 ad 1926/1987, for the petitioners.
D.R. Zaiwala with S.R. Pandit and J.P. Dalal i/by Bachubhai Munim Co. in Arbitration Petition (LODG) No. 102/2000 in Arbi. Suit No. 1930/1987, for respondent Nos. 2 to 5, in Arbitration Petition (LODG) No. 104/2000 in Arbi. Suit No. 1928/1987, for respondent Nos. 2 to 4 and in Arbitration Petition (LODG) No. 105/2000 in Arbi. Suit No. 1926/1987, for respondent Nos. 2.
Sections 12 (3), 13 (3) and 14Challenge to appointment of Arbitrator-Decision by Arbitrator under Section 13 (3)-High Court cannot in petition under Section 14 decides that mandate of Arbitrator has been terminated-Remedy is under Section 34 by challenging the award.-Under Section 12 (3) of the Arbitration and Conciliation Act the challenge to the appointment of Arbitrator can be two fold. One if the circumstances give rise to justifiable doubts as to his independence of impartiality and second if he does not possess the qualifications agreed to by the parties. Under Section 13 if a challenge is thrown, there are two courses open to the Arbitrator. One to immediately withdraw from the office and the other to decide on the challenge. The importance of a challenge and decision under Sections 12 (3) and 13 (3) in the case of bias becomes important as bias can be waived, by a party participating in the proceedings even though aware of the circumstances of possible bias. The second could be that there may be circumstances under which a party in order to delay or to avoid an arbitration may move the Court under Section 14. Under Section 14 the Court, on the material before it, may be in a position to ex-" amine the real possibility of bias. There could be other situations in which the Court may have to gather material for the purpose of finding out whether in fact there was any real possibility of bias. In these circumstances, a decision under Section 13 (3) would throw light on the matter. An arbitrator confronted with material as to circumstances which give rise to justifiable doubt as to independence or impartiality would be the best person if circumstances so warrant to meet the contentions raised or to answer the same. There could be no dispute that bias may constitute a ground to hold that de jure the Arbitrator cannot perform his function. When a specific challenge is provided and the forum which has to decide the challenges is also provided, it would not be open to the High Court to decide and consider that the mandate of the Arbitrator has been terminated under Section 14. That challenge in a case where the Arbitrator decides the objections will have to be taken as a ground in a challenge to the Award under Section 34. The object seems to be to allow the, Arbitral proceedings to be concluded at the earliest. If the challenge is successful finally, the remedy is not lost as time is saved by virtue of Section 43 (4) of the Act. In the circumstances the extraordinary jurisdiction under Article 226 and/ or under Article 227 not exercised.
2.Respondents waive service. By consent, heard forthwith. All the petitions involve similar facts and common question of law and therefore are being decided by a common judgment.
3.The petitioners by Arbitration Petition (Lodg.) No. 102 of 2000 in Arbitration Suit No. 1930 of 1987 has prayed that the mandate of the Sole Arbitrator appointed by this Court by an Order dated 2nd August, 1996 stands terminated. Similar, relief is prayed for in Arbitration Petition (Lodg.) No. 104 of 2000 in respect of Arbitration Suit No. 1928 of 1987 where appointment was made by order of this Court dated 2nd August, 1996. The same relief has also been prayed for in Arbitration Petition (Lodg.) No. 105 of 2000 in Arbitration Suit No. 1926 of 1987 wherein appointment was done by an order dated 2nd August, 1996.
The petitioners have invoked section 14 of the Arbitration and Conciliation Act, 1996, hereinafter referred to as 'the Act'. It is contended that from the facts on record, circumstances have arisen, which give rise to justifiable doubt as to the independence or impartiality of the Arbitrator. In these circumstances, it is pointed out from the pleadings as set out in the petitions and supported by the documents, the petitioners have been able to make out a case of bias. This must specifically result, it is contended, in this Court exercising its jurisdiction under section 14 of the Act. Let me at this stage itself, point out, that I do not propose to set out the facts based on which the petitioners have based their contentions. The objections as to impartially are firstly, based on proceedings before the Arbitrator was appointed, which objections were known to the petitioners when they appointed the Arbitrator. The other objections are after a particular stage in the Arbitral proceedings. I say particular stage because before that the petitioners had reposed full faith in the Arbitrator and had called upon him to decide the matter on the material as it stood. The facts will be dealt with, if the need arises, after considering the contention raised on behalf of the respondents. Once a challenge is determined under section 13(3) of the Act, it is argued, this Court cannot in the exercise of its jurisdiction under section 14 of the Act, set aside or interfere with a decision of the Arbitral Tribunal taken under section 13 of the Act. It is contended that on a perusal of section 5 of the Act read with sections 12 and 13 any ground as contained in section 12(3) can only be a subject matter of a challenge under section 13 and once that challenge is decided and if not accepted the only remedy for a party aggrieved is to agitate the point whilst challenging the award under section 34 of the Act.
Meeting this contention on behalf of the petitioners, their Counsel contends that in so far as section 12 is concerned, it would deal with pre-referential challenges and not challenges arising in the course of arbitral proceedings. Even otherwise it is contended, considering the language of section 14, if an Arbitrator de jure or de facto is unable to perform his functions, this Court would have jurisdiction to entertain the petition. It is contended that petitioners had invoked the jurisdiction of this Court under section 14 of the Act, before the purported decision of the Arbitrator. The petitioners had not moved for removal of the Arbitrator in terms of section 12(3). All that was done was to raise objection about the impartiality of the Arbitrator and once the petitioners had invoked the jurisdiction of this Court, the mere fact that Arbitrator choose to decide the matter can be no answer. The decision would be a nullity in the eyes of law. The petitioners by invoking the jurisdiction of this Court have raised a plea of personal bias. Bias it is contended would vitiate every act and once that be the case, even if a decision is taken under section 13, that would be a nullity at law and this Court would still retain jurisd
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