IN THE HIGH COURT OF JUDICATURE AT PATNA
SANJEEV PRAKASH SHARMA, J.
CWJC No.7337 of 2022
(1.12.2022)
Bihar State Electronics
Development Corporation Ltd.
& Anr. ... Petitioners
vs.
State of Bihar & Ors. ... Respondents
Arbitration and Conciliation Act, 1996 – Section 12, 13 & 14 – Petitioner assailing the mandate of the arbitrator after the arbitration proceedings have already commenced – if the arbitrator becomes de jure or de facto unable to perform his functions after the arbitration has already commenced, his mandate shall be terminated by the court – if his de-jure inability is to be seen all the inabilities as contained in various provisions of the Act of 1996 would constitute de-jure disabilities, therefore, if the grounds mentioned in Section 12 are found to be existing during arbitration proceedings or the grounds as mentioned in the Schedule VII are existing or the grounds as mentioned in Section 29 are existing, an application can be filed claiming that the arbitrator has acquired a de-jure inability that is inability in accordance with law that is the law as existing in the Act of 1996 – therefore, an application under Section 14 of the Act of 1996 would be maintainable on the ground allegation of prejudice or bias of the arbitrator which may have come into existence during the course of arbitration – the question existing of bias for dis-allowing appointment of an arbitrator as a ground to declare an arbitrator de-jure disabled if he develops or is shown to have developed during the course of arbitration proceedings a bias or prejudice against any of the parties – a person may become de-facto disabled also during the course of proceedings if in fact some disability may have occured resulting in the convened arbitrator not being able to perform which may be on account of illness or absence or on account of any imparnment – such factual disabilities would also deny him to continue with the arbitrator proceedings and an order can be issued to terminate his mandate – in the persent case, the arbitrator was appointed by the High Court in the year 2007, whereafter proceedings have continued and evidence has also been recorded from time to time – the orders were passed relating to payment of fees but that has not in any manner interfered with the arbitration proceedings to go on from time to time – it is not a case where the arbitrator has restrained the petitioners from putting up their defence or in any manner initiated any proceedings which may be said to create a perception of prejudice or bias against the petitioner which is a state government orginazation – the insistence of a higher fees considering the claim and the work is a personal assessment of the arbitrator – writ petition is devoid of any merit and accordingly dismissed. (Paras 25 to 35).
2011 (8) SCC 380, 2009 (4) SCC 523, 2019 SCC online 6, 2020 (17) SCC 626, 2022 SCC Online MAD 6121, 2021 SCC online Del 3876, ARBLR 104 of Mad HC in Clarke Energy India Pvt. Ltd. Vrs. SAS EPC solution Pvt. Ltd., 2022 SCC Online SC 556, 1987 (4) SCC 611 Para 17 & 20 – Referred.
Sanjeev Prakash Sharma, J.—The petitioners has preferred this writ petition under Article 226 and 227 of the Constitution with the prayer to set aside the order and judgement dated 26.04.2022 passed by the Learned District Judge, Patna whereby an application filed by the petitioners under-section 14 of the Arbitration Conciliation Act, 1996 was rejected. Further prayer for allowing the application and declaring the mandate of the arbitrator to be terminated on the ground that he has become de-jure and de-facto unable to perform his functions effectively. The facts which are required to be noticed are petitioner is a Government Company and is the respondent party in the arbitrary proceedings initiated by the respondent no. 3. vide order dated 28.06.2017, this Court appointed one Hon’ble Mr. Justice (Retd.) Jayanandan Singh as sole arbitrator under Section 11 of the Act of 1996. An application under section 14 was preferred by the petitioner before the Arbitral Tribunal stating that they had lost the trust and confidence in the Arbitral Tribunal to get justice in impartial manner and that he had lost his mandate de-jure and de-facto to continue the arbitration proceedings. The same was considered by the Arbitrator and was rejected vide order dated 05.02.2022. The order was challenged by the petitioner before the Learned District Judge which was dismissed by the Learned District Judge vide his order dated 26.04.2022, upholding the order of the Arbitral Tribunal.
2. Learned counsel for the petitioner states that there was several circumstances which goes to show that the arbitrators mandate deserves to be terminated as he has become de-jure and de-facto unable to perform his functions.
3. Learned counsel submits that the sole arbitrator has acted in a manner which cannot be said to be fair and impartial. The request for reference of dispute was made by the claimant before this Court claiming an amount of Rs. 35.48 crores. However, after appointment of the arbitrator he submitted a claim of Rs. 188.28 crores. On 07.10.2017, the sole arbitrator directed to deposit a demand draft of Rs. 10 lakhs from both the parties which was not submitted on 07.10.2017, where after, last opportunity was given to deposit the amount as a first installment. The same was deposited after deducting T.D.S. on 16.01.2018 by the petitioner but the arbitrator directed the petitioner to deposit the remaining 10,000 amount also. The petitioners contention of the fees required to be paid as per the sixth slab of the IV Schedule as added vide amendment of 2015 was not accepted by the sole arbitrator. A review application was filed which too was rejected by the arbitrator and a cost of Rs. 25,000 was further imposed on the petitioner along with second installment of fees failing which the statement of defence was to be rejected. The claimant on the other hand readily agreed to pay the high fees and made payment of Rs. 21 lakhs to the sole arbitrator.
4. It is submitted that the petitioner had an apprehension of the sole arbitrator being prejudiced against the petitioner as it directed for rejecting the statement of defence if the fees is not deposited. Although, there is no such provision available to him under the Act of 1996. Imposing of cost for non-payment of fees also could not have made.
5. The said proceedings were challenged by the petitioner by filing writ application before this Court bearing CWJC No. 23934/2018. The Court granted an interim protection and vide order dated 17.10.2019 issued notices to the Secretary of the sole arbitrator. However, the sole arbitrator who is a former Judge of this Court, chose to appear himself before the Court.
6. Although, there is bar contained in Article 220 of the Constitution for him to appear before the same Court where he has been a Judge and the case was therefore adjourned. Learned counsel contended that the same reflects the obsession of the arbitrator for the higher fees. Thereafter, another writ petition CWJC No.
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