Bias can be a valid ground for terminating the mandate of an arbitrator under Section 14 of the Arbitration and Conciliation Act, 1996.

Vijender Jain, J.

1. This is a third round of litigation between the parties. I need not go into order dated 28.04.2006 passed in Arbitration Case No. 13 of 2005 by the then Acting Chief Justice holding that the Chief Engineer of the respondent-Corporation had entered into an arbitration on 22.02.2001 and, therefore, he will continue to act as an arbitrator, as the respondent-Punjab Small Industries & Export Corporation Ltd. has supplied the vacancy in terms of the arbitration clause. It seems that this order of the then Acting Chief Justice was challenged by the applicant-petitioner by filing a special leave petition which was dismissed.

2. Thereafter, the applicant-petitioner filed a petition under Section 14 of the Arbitration and Conciliation Act, 1996 (hereinafter to be referred to as the Act) inter alia with the prayer to terminate the mandate of respondent No. 2-Chief Engineer and appoint an independent person as an arbitrator for adjudication of the claim of the applicant-petitioner. The matter was heard at length. I would not repeat the grounds as mentioned in the petition for termination of the mandate, although same were similar to the one what has been contended by learned Counsel for the applicant-petitioner in the present petition. Suffice it to say that the applicant-petitioner apprehended that in view of certain letters written by the Chief Engineer, who is also acting as an arbitrator, after his appointment as an arbitrator, has created an apprehension of bias in the mind of the applicant-petitioner and the applicant-petitioner could not expect a fair award from such an arbitrator. The notings of the Chief Engineer creating such apprehension are dated 05.03.2001 and 12.04.2001.

3. On 13.11.2007, when Arbitration Case No. 26 of 2007 earlier came up for hearing, it was argued before me by learned Counsel for the non-applicant-respondents that in view of specific provisions of grounds of challenge as contained in Sections 12 and 13 of the Act, it was proper for the applicant-petitioner to have challenged the award on the basis of the aforesaid sections and this Court should not terminate the mandate of the arbitrator. After hearing learned Counsel for the parties, I made the following orders:

I have heard counsel for the parties at length. I would not like to express any opinion on merits, in view of what has been argued before me and what is discernible from the record of this case at pages 101, 102, 128, 129 and the apprehension expressed by the petitioner at pages 86, 89 and 92. However, the object of the new Act is to minimise the interference of the courts in arbitration matters. Therefore, I allow the petitioner to approach the arbitrator by pointing out from the documents mentioned above for terminating the mandate/arbitral proceedings. The petitioner shall file an appropriate application before the arbitrator within one week from today. The arbitrator shall decide the application within four weeks and if any order detrimental to the interest of the petitioner is passed, the petitioner shall be at liberty to approach this Court again. Petition stands disposed of.

4. It seems that after this order, the applicant-petitioner filed an application before the arbitrator. The arbitrator passed an order on the application of the applicant-petitioner which is undated. According to the applicant-petitioner this order was received by it along with a forwarding letter sent by the arbitrator on 12.12.2007 and the same is to the following effect:

I have heard arguments of both the parties. There is no substance in allegations made by the claimant in his application dated 19.11.2007. Whatsoever views expressed by the undersigned as brought out in the said application were in the capacity of Chief Engineer and not as an arbitrator. Accordingly, application filed by the claimant is rejected. The undersigned shall continue to act as an arbitrator as per contract agreement and remain impartial. Sd/- Chief Engineer-cu