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IN THE HIGH COURT OF KERALA AT ERNAKULAM
K. Abraham Mathew, J.
T.P. Daison and Ors. – Appellant
Vs.
Varghese Jose T. and Ors. – Respondents
O.P.(C) No. 2333 of 2015 (O)
Decided On : 07-12-2015
Arbitration and Conciliation Act, 1996 - Sections 11, 17, 19, 27 - Constitution of India, 1950 - Article 227 - Proceedings - Tribunal - Arbitration - Appointment of - Finding of - Held, No provision to implement orders passed under S.17. S.19 of the Act declares that the tribunal is not bound by the Code of Civil Procedure and that subject to Chapter 5 of Act parties are free to agree on the procedure to be followed by tribunal in conducting its proceedings and in absence of an agreement between parties the tribunal may conduct proceedings in the manner it considers appropriate - It can be held that arbitral tribunal constituted under Arbitration and Conciliation Act 1996 has no attributes of a tribunal and hence has no trappings of a court - Chief Justice or person or institution designated by him cannot appoint an arbitrator in absence of an arbitration agreement between parties - Court hold that arbitral tribunal constituted by agreement of parties to a dispute and whose procedure and orders are governed by provisions of Arbitration and Conciliation Act 1996 is not a tribunal within meaning of Article 227 of Constitution of India - Necessary conclusion is that an arbitral tribunal under Arbitration and Conciliation Act 1996 is not one constituted by State and has not been invested with its judicial power
K. Abraham Mathew, J.
1. Petitioners are husband and wife. Respondents 1 and 2 also are husband and wife. All of them are partners of three firms. Disputes arose between the petitioners on the one side, and the respondents 1 and 2 on the other. The 3rd respondent Chartered Accountant, who was auditor of both parties, attempted to settle the disputes. It resulted in their executing Ext P1 agreement dated 27.12.2012, by which they appointed the third respondent their arbitrator to decide disputes that might arise between the parties as to the implementation of the agreement. There was an understanding that the third respondent would not continue to work as the auditor of both parties. Later, a dispute arose between the two parties. On 6.6.2014 the first petitioner sent Ext P2 letter to the third respondent requesting him to enter on arbitration. On 16.6.2014 the former sent Ext P3 reminder to him. By Ext P4 notice he informed both parties that the arbitration proceedings would be conducted on 19.7.2014. Thereafter, the petitioners learnt that the third respondent continued to work as the auditor of respondents 1 and 2. At the instance of the third respondent the other respondents filed O.S. No. 172 of 2014 in Sub Court, Thrissur and O.S. No. 4379 of 2014 in Munsiff Court, Thrissur, the subject matter of which was the dispute between the parties. The third respondent is not impartial. He did not complete the arbitration proceedings in order to help the other respondents. So the petitioners sent him Ext P6 'written statement' on 14.8.2014 challenging his impartiality as provided in Section 13(2) of the Arbitration and Conciliation Act. There was no response. On the other hand, he issued a notice to the petitioners informing them that the arbitral proceedings would be held on 13.2.2015. The petitioners sent Ext P7 communication to him requesting him to take a decision on the 'statement' filed by them challenging him. As no decision was taken on the 'statement', the petitioners did not participate in the arbitration proceedings. But the third respondent proceeded with the arbitration. The petitioners filed WP(C) No. 9081 of 2015 in this court in which the respondents raised a contention that the third respondent had already taken a decision on the written statement sent by the petitioners challenging his impartiality. The court directed the third respondent to issue a copy to the petitioners if such an order was passed. Thereafter, on 19.9.2015 the third respondent issued them Ext P9, which is said to be a copy of the order passed on 24.2.2015 to the effect that the third respondent refused to withdraw from the office of the arbitrator. The petitioners were not heard before the order was passed. In this Original Petition their prayer is to quash Ext P9 order and to issue a direction to the third respondent to consider and dispose of Ext P6 'written statement' filed by them challenging him as arbitrator after giving them an opportunity to be heard.
2. Sri. N.M. Madhu, learned counsel for respondents 1 and 2 submits that the third respondent is only a private judge and he is not a tribunal within the meaning Article 227of the Constitution of India and the Original Petition is not maintainable. On the other hand, Sri. T. Krishnanunni, learned senior counsel appearing for the petitioner submits that an arbitrator who is bound to act in accordance with the provisions of the Arbitration and Conciliation Act is a tribunal coming under the purview of Article 227.
3. The preliminary point arising for consideration is whether an arbitrator appointed by private parties is amenable to the supervisory jurisdiction of the High Court.
4. I shall first consider the decisions relied on by the learned counsel for respondents 1 and 2. In Ace Pipeline Contracts Private Limited v. Bharat Petroleum Corporation Limited (AIR 2007 SC 1764) the Supreme Court has made the following observation:
"Once a party has entered into an agreement with eyes wide o
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