KOSHY, J. :- Main question to be decided in this case is the application of principles of natural justice and fair hearings in Arbitration proceedings. Appellant filed an application to set aside the award passed by the Arbitrator under Section 34 of the Arbitration and Conciliation Act. 1996 (herein referred to as the ·Act'). Various contentions were raised by the appellant. First contention was that there was no proper arbitration agreement. Second contention was that the arbitrator was not properly appointed and appellant never agreed for the arbitration or arbitrator. Thirdly it was argued that former junior of the arbitrator was appearing for the claimants and therefore there are circumstances to doubt the impartiality of the arbitrator as provided under S. 12(3) of the Act. Finally it was contended that arbitrator decided the matter ex parte and award was passed without issuing proper notice and hence there is violation of the principles of natural justice. The District Court found all these points against the appellant in the impugned order.

2. Section 7 of the Act mandates that there should be an agreement by the parties to submit to arbitration. Section 7(2) provides that an arbitration agreement can be in the form of an arbitration clause in a contract or in the form of a separate agreement but Section 7(3) mandates that an arbitration agreement shall be in writing but S. 7(4) provides that it can be by exchange of letters etc.

Sections 7(3) and 7(4) are as follows: Section 7(3) : An arbitration agreement shall be in writing.

Section 7(4) : An arbitration agreement is in writing if it is contained in -

(a) a document signed by the parties;

(b) an exchange of letters, telex, telegrams or other means of telecommunication which provide a record of the agreement; or

(c) an exchange of statements of claim and defence in which the existence of the agreement is alleged by one party and not denied by the other.

As held by the Apex Court in Smt. Rukmanibai Gupta v. The Collector, Jabalpur, (AIR 1981 SC 479) arbitration agreement is not required to be in any particular form. What is required to be ascertained is whether the parties have agreed to refer the dispute to arbitration. In this case, admittedly disputes arose between the parties in respect of business transactions between them. By Annexure- I and II letters produced along with the petition to set aside the award show that the respondent threatened initiation of legal proceedings, allegations and breach of contract by the appellant. But the respondent graciously offered that the dispute could be settled by reference for arbitration. If appellants agree for the same, appellant was asked to select one of the 3 arbitrators mentioned in the letter. Respondent requested the petitioners to intimate their concurrence and appoint the arbitrator within 30 days. Annexure-III letter dated 12-2-1998 was issued by the appellants in reply to Annexure-II. It is stated categorically in Annexure III as follows:

"If you wish to take this matter for arbitration, we are more happy to co-operate the same. We will appoint Mr. X (name is omitted by us), Advocate, Ernakulam as the Arbitrator."

In the light of the above, an unambiguous consent contained in Annexure-III written in response to Annexure-II, it cannot be contended that sole arbitrator was appointed without appellants consent or there is no agreement for arbitration by exchange of letters. On these facts, we are even unable to understand how a contention can be raised to the effect that there is no agreement for arbitration or the arbitrator. Therefore, first two contentions raised by the appellant are untenable.

3. With regard to the third contention, according to the appellant, the advocate appearing for the claimants was a former junior. It was also contended that the arbitrator erred in not disclosing to the petitioners the fact that counsel who appeared for the respondent was a former junior of the arbitrator. It is found