Failure to disclose relevant information during arbitration proceedings may raise reasonable grounds for suspicion of bias, justifying the appointment of a new arbitrator.

ORDER

B.N. Srikrishna and Tarun Chatterjee, JJ.

Leave granted.

Heard the parties.

The grievance made is that, when the arbitration was proceeding, the arbitrator, Respondent 4 was issued an order by the first respondent, Delhi Jal Board appointing him as a full time consultant on certain stipulated salary. This order was made on 5-5-2003 when the arbitration was proceeding. Immediately thereafter, on 14-5-2003, arbitration proceedings were continued and no information with regard to the order made was given by Respondent 4 to the appellant as required under Section 12 (2) of the Arbitration and Conciliation Act.

2. In the circumstances, we are of the view that the High Court was not justified in dismissing the petition by taking the view that it was mere suspicion on the part of the appellant. The appellant had reasonable grounds for entertaining a feeling that the arbitrator may be biased against it, whether in fact true or not.

3. In the circumstances, we are of the view that a fresh arbitrator needs to be appointed. Accordingly, we set aside the impugned judgment of the High Court and terminate the mandate of the arbitrator, Respondent 4.

4. Mr. Justice J.K. Mehra, retired Judge of the Delhi High Court is hereby appointed as arbitrator, subject to his consent to arbitrate upon the disputes between the appellant and Respondents 1 to 3. The arbitration proceedings shall be held at Delhi. The arbitrator shall decide about his fees on the first date of hearing. We are told that the pleadings in the arbitration proceedings are complete. The arbitrator shall permit the parties to file supplementary pleadings. Respondent 4 is directed to transmit the entire record of the arbitration proceedings relating to the dispute between the appellant and Respondents 1 to 3 to the newly appointed arbitrator within a period of four weeks from the day this order reaches him.

5. Parties are directed to appear before Mr. Justice J.K. Mehra on 10-4-2006 at 4.30 p.m. for further orders. No further notice in this regard be given to the parties as to the first date of hearing.

6. The appeal is accordingly allowed. No order as to costs.