KERALA HIGH COURT
K. ABRAHAM MATHEW, J.
T.P. Daison and another - Appellants
Vs.
Varghese Jose T. and others - Respondents
O.P. (C) No. 2333 of 2015
Decided on : 07.12.2015
Arbitration - Jurisdiction of High Court - Arbitration and Conciliation Act - Section 13(2), Section 17, Section 36, Section 37 - The court considered whether an arbitrator appointed by private parties is amenable to the supervisory jurisdiction of the High Court. The court examined various decisions and concluded that an arbitral tribunal constituted by the agreement of parties to a dispute and whose procedure and orders are governed by the provisions of the Arbitration and Conciliation Act, 1996 is not a tribunal within the meaning of Article 227 of the Constitution of India.
Fact of the Case:
Disputes arose between the petitioners, who are partners of three firms, and the respondents. The third respondent, appointed as an arbitrator, did not withdraw from the office of the arbitrator despite challenges to his impartiality. The petitioners filed a petition to quash the order and to issue a direction to the third respondent to consider and dispose of the challenge.
Finding of the Court:
The court dismissed the Original Petition, holding that the arbitral tribunal constituted by the agreement of parties and governed by the provisions of the Arbitration and Conciliation Act, 1996 is not a tribunal within the meaning of Article 227 of the Constitution of India.
Issues: The preliminary point arising for consideration was whether an arbitrator appointed by private parties is amenable to the supervisory jurisdiction of the High Court.
Ratio Decidendi: The court examined various decisions and concluded that an arbitral tribunal constituted by the agreement of parties to a dispute and whose procedure and orders are governed by the provisions of the Arbitration and Conciliation Act, 1996 is not a tribunal within the meaning of Article 227 of the Constitution of India.
Final Decision: The court dismissed the Original Petition, holding that the arbitral tribunal constituted by the agreement of parties and governed by the provisions of the Arbitration and Conciliation Act, 1996 is not a tribunal within the meaning of Article 227 of the Constitution of India.
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 arbitraral 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 227 of 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 the Supreme Court has made the following observation:
'Once a party has entered into an agreement with eyes wide open it cannot wriggle out of the situation that if any person of the respondent-BPCL is appointed as arbitrator he will not be impa
J.K. Iron and Steel Co. Ltd., Kanpur v. The Iron and Steel Mazdoor Union, Kanpur, (1955) 2 SCR 1315
The Engineering Mazdoor Sabha v. The Hind Cycles Ltd, Bombay, 1963 Supp(1) SCR 625
Associated Cement Companies Ltd., v. P.N. Sharma, (1965)2 SCR 366
All Party Hill Leaders Conference
A.C. Companies v. P.N. Sharma (AIR 1965 SC 1595)
Indo China Steam Navigation Company Ltd v. Jasjit Singh, Additional Collector of Customs
Durga Shankar Mehta v. Raghuraj Singh (AIR 1954 SC 520)
Bharat Bank Ltd. v. Employees of Bharat Bank (AIR 1950 SC 188)
State of Madhya Pradesh v. Vayam Technologies Ltd. (AIR 2014 MP 88)
Login now and unlock free premium legal research
Login to SupremeToday AI and access free legal analysis, AI highlights, and smart tools.
Login
now!
India’s Legal research and Law Firm App, Download now!
Copyright © 2023 Vikas Info Solution Pvt Ltd. All Rights Reserved.