IN THE HIGH COURT AT CALCUTTA ORDINARY ORIGINAL CIVIL JURISDICTION ORIGINAL SIDE AP No.483 of 2010 AP No.1121 of 2013 NIRANJAN LAL TODI -VERSUS- NANDLAL TODI AND OTHERS For the Petitioner: Mr Joy Saha, Adv., Ms Rakhi Shroff, Adv., Ms Debjani Ghoshal, Adv.For the Respondent No.1: For the Respondent Nos.2 & 3: Mr Reetobrata Mitra, Adv., Mr Manik Das, Adv.Mr Samit Talukdar, Sr Adv., Mr Shaunak Mitra, Adv., Mr Vivek Jhunjhunwala, Adv.Hearing concluded on: May 13, 2014.
BEFORE SANJIB BANERJEE, Judge Date: May 15, 2014.
SANJIB BANERJEE, J.
: – These petitions for the removal of an arbitrator are a sequel to a suit filed by the petitioner and his son in the year 2010 which was disposed of by allowing a plea under Section 8 of the Arbitration and Conciliation Act, 1996 carried by two of the defendants to the suit.
The object of the petitioner’s present exercise may be difficult to comprehend without reference to the suit and the order by which it was disposed of upon the subject-matter of the suit being recognised to be covered by an arbitration agreement.
The petitioner and his son instituted CS No.121 of 2010 against the three brothers of the petitioner, the members of the families of such brothers and the several companies, partnership firms and proprietorship concerns that made up the Todi joint family business.
The primary purpose of the suit was to challenge a memorandum of understanding executed by the petitioner and his brothers in the matter of the division of family assets.
The memorandum of understanding of January 31, 2004 provides for a named arbitrator to adjudicate upon “all disputes and differences, mode and manner of implementation of matters in respect of which the parties have amicably resolved and all other connected and incidental issues or matters arising out of or in relation thereto.” Clause 5 of the memorandum gives the arbitrator summary powers and dispenses with the obligation of the arbitrator to furnish reasons in support of the award.
The arbitrator is also given the liberty to dispense with oral evidence, to take the advice or assistance of chartered accountants or valuers as he would deem fit and even given the “power to proceed ex parte, if any of the parties after reasonable notice fails or neglects to appear before the arbitrator.” The arbitrator has been conferred the authority to issue directions for the “due fulfillment and implementation of the Award …” Clause 7 of the memorandum, which is the primary plank of the petitioner’s contention, provides as follows: “7.
The Arbitrator shall make and publish his Award within six months from the date of entering upon the reference under this agreement.
The Arbitrator shall have absolute power to extend the said period.” The earlier of the two petitions now falling for consideration was filed on August 25, 2010 at a time when the petition under Section 8 of the 1996 Act in CS No.121 of 2010 had ripened for hearing or may even have been taken up for final hearing.
Such earlier petition stood dismissed for default by an order of January 5, 2012 and a recent application for restoration of the earlier petition was dismissed on February 28, 2014, inter alia, on the ground that the petitioner took no interest in such petition and virtually abandoned the same on the impression that the “panacea for all the ills that the petitioner had suffered in this court would come from any order passed by the Supreme Court” in the petitions for special leave to appeal carried from the judgment and order of September 10, 2010 passed on the petition under Section 8 of the 1996 Act by which CS No.121 of 2010 stood disposed of and the subject-matter of the suit was required to be decided in couRs.of the pending arbitral reference.
The order of February 28, 2014 dismissing the application to restore AP No.483 of 2010 to the file was appealed against.
The appellate court commented on the “lackadaisical” conduct of the petitioner, noticed that the petitioner herein does not carry on any business in India, that he had two finance companies that are now in liquidation, that misfeasance proceedings are pending against him and that he now resides in Dubai.
The appellate court found the conduct of the petitioner herein to be “deplorable” but afforded him “one more opportunity” by making the following order: “Although we are not fully impressed with the ground, for interest of justice we allow this appeal and set aside the judgment and order dated February 28, 2014.” In the earlier of the two petitions, the petitioner has invoked Sections 14 and 15 of the 1996 Act in seeking the termination of the mandate of the named arbitrator on the grounds that the award has not been rendered within the period envisaged in the arbitration agreement; that the arbitrator has made no attempt to decide the two applications made by the petitioner under Sections 12 and 13 of the 1996 Act and a further application made under Section 16 thereof; and, that the arbitrator is biased.
The later petition has been filed in September, 2013 on the ground that the arbitrator had indicated his unwillingness to continue with the reference and on the further score of the perceived bias of the arbitrator against the petitioner.
The petitioner refers to a letter of October 13, 2009 issued to one of the four Todi brothers with copies marked to two brothers other than the petitioner.
The petitioner suggests that since the arbitrator had stepped down by issuing such letter or, at least, had expressed his unwillingness to continue with the reference, the arbitrator’s mandate has been determined or it should be terminated by court in the light of the several counts of grievance cited by the petitioner.
The petitioner complains of correspondence being exchanged between the arbitrator and the other brothers without copies thereof being marked to the petitioner.
Even an interim award has been passed by the arbitrator, laments the petitioner, without a copy thereof being afforded to the petitioner.
But it is the letter of October 13, 2009, which the arbitrator addressed to one of the Todi brothers and did not care to forward a copy thereof to the petitioner, that the petitioner lays the most emphasis on: “I am glad to note that transfer of 1/12th undivided share in the building at 2 Queen’s Park to Shri Shrawan Kumar Todi has been successfully implemented.
Now, I feel that practically all the matters of the arbitration have come to an end except some portion relating to Shri Niranjan Lal Todi.
In this view of the matter, I would like to decline to arbitrate any further and to get myself relieved from the office of the Arbitrator.” The petitioner says that in the light of the arbitrator’s attempt to lodge a fiRs.information report against the petitioner’s son as would be evident from the arbitrator’s letters of November 21, 2005 and November 25, 2005, the petitioner cannot expect a fair hearing before the arbitrator.
The arbitrator’s letter of November 21, 2005 complained of the petitioner’s son requesting the arbitrator to withdraw as arbitrator and threatening the arbitrator “of dire consequences personally including members of my family … if within 48 hours I do not accede to his threat he will cause bodily harm to me.” The petitioner points out that though the arbitrator entered upon the reference on February 18, 2004 pursuant to the agreement of January 31, 2004, he failed to make and publish his award within the period of six months which expired on August 18, 2004.
The petitioner claims to have applied before the arbitrator by way of a letter of October 14, 2005 for the arbitrator to withdraw himself from the reference as the arbitrator was “biased in favour of the other branches … and I do not expect justice from you”.
On January 4, 2006 the petitioner claims to have filed a supplementary application, again under Sections 12 and 13 of the 1996 Act, on the ground that “justifiable doubts exist with regard to the independence and impartiality” of the arbitrator.
On January 27, 2006 the petitioner applied under Sections 14 and 16 of the 1996 Act before the arbitrator on the ground, inter alia, that there was “no arbitration agreement between the parties and/or family members of the parties and/or the family members of the petitioner and/or with any companies, firMs.trusts or association.” The petitioner asserts that till the year 2006 the arbitrator convened only three meetings in the reference and, thereafter, till 2010, virtually abandoned the reference.
The petitioner insinuates that it was only after the petitioner instituted a suit in Alipore in February, 2010 that the arbitrator sought to revive the reference by a letter of April 6, 2010.
The petitioner responded to such notice by asserting that the arbitrator had become functus officio and that his mandate to proceed with the reference had terminated.
On May 10, 2010 the petitioner and his son launched CS No.121 of 2010 against 84 defendants, primarily claiming the assets and concerns referred to in schedules B, C, D and E to the plaint to be the joint properties of the four Todi brothers and their respective branches and for partition thereof.
The petitioner complains that the arbitrator did not issue any directions for pleadings to be filed and the petitioner came to be aware of the interim award passed by the arbitrator only in couRs.of the petitions before the Supreme Court for special leave to appeal against the order of September 10, 2010 by which CS No.121 of 2010 was disposed of and the subject-matter of the suit was required to be adjudicated upon in the arbitral reference.
The petitioner contends that, at any rate, in view of the petitioner’s perception as to the hostile dispensation of the arbitrator qua the petitioner as canvassed herein, the petitioner should not be subjected to a process of adjudication before such person.
The petitioner has carried a judgment reported at (2008) 4 Arb.
LR112(Cinevistaas Ltd v.
Prasar Bharati) for the proposition that if the arbitrator fails to act without undue delay, a case for the termination of the arbitrator’s mandate is made out under Section 14(1)(a) of the 1996 Act.
The principle requires no authority beyond the statute since Section 14(1)(a) of the 1996 Act enunciates that the mandate of an arbitrator shall terminate if he is unable to perform his functions or fails to act without undue delay.
A second judgment, reported at (2010) 2 SCC385(NBCC Limited v.
J.G.Engineering PVT.Ltd).is cited by the petitioner for the principle that upon the time limit fixed by the parties to an arbitration agreement for the reference thereunder to be completed expiring, the mandate of the arbitrator stands determined.
Apart from the fact that the arbitration agreement in the reported case did not authorise the arbitrator to extend the time for completion of the reference as recognised in such agreement, there is a serious doubt that the measure commended by the Supreme Court at paragraph 15 of the report for an arbitrator under the 1996 Act “to approach the Court for extension of time to conclude the arbitration proceedings” is in consonance with the statute.
After all, the 1996 Act does not carry a provision similar to Section 28 of the 1940 Act that conferred authority on the court to enlarge the time for making an arbitral award.
In any event, the judgment is distinguishable on facts since the arbitration agreement in the present case expressly confers authority, under clause 7 thereof, on the arbitrator to have “absolute power to extend the said period.” Further, such exclusive authority of the arbitrator to extend the time to complete the reference as recognised in the arbitration agreement in the present matter would have fallen foul of Section 28(2) of the 1940 Act; but in the successor statute not carrying any provision akin to Section 28 of the 1940 Act there can be no grievance with a clause in the arbitration agreement conferring authority on the arbitrator to enlarge the time for completing the reference without requiring the consent of all the parties to the arbitration agreement.
The fiRs.respondent brother of the petitioner in either petition submits that the disputes between such respondent and the petitioner have been resolved and no reference or adjudication in such regard is necessary.
The second and third respondent brothers of the petitioner oppose these petitions.
They submit that the conduct of the arbitrator has been beyond reproach, particularly given the recalcitrance of the petitioner and his shameless attempt to scuttle the implementation of the family settlement that the arbitrator is to oversee.
They refer to the lists of dates appended to the affidavits affirmed on their behalf in both matters and seek to demonstrate that, contrary to the allegations made by the petitioner and the accusations hurled against the arbitrator, it is the petitioner who has chosen not to participate in the reference and has resorted to means more foul than fair to derail the same.
The second and third respondents refer to their affidavit in the fiRs.matter where, at paragraph 11 thereof, they have referred to informal meetings being convened in couRs.of the reference as the arbitrator “tried his level best to see that the unimplemented portions of the family settlement are implemented and also tried to resolve disputes and differences amongst the parties.” They refer to the minutes of the meetings conducted by the arbitrator being prepared only when the parties demanded them; that “(s)ince it was a family matter the parties wanted to maintain secrecy”; and, the “parties including the petitioner agreed that the minutes of the meetings need not be drawn up and that the arbitrator should hold informal meetings with the individual parties so as to arrive at a settlement as quickly as possible.” As to the petitioner’s charge that no directions have been issued for filing pleadings, the second and third respondents place an initial letter of March 10, 2004 issued by the arbitrator to the four brothers to the effect that the petitioner was the only brother who had not responded to the arbitrator’s letter of February 18, 2004 and the petitioner was requested “to expedite your response.” The second and third respondents place another letter of the arbitrator issued to the four brothers on September 13, 2004 to the effect that the petitioner and his son “are simply asking (for) copies of Net Worth Statement and Memorandum of Understanding but not furnishing any other information including accounts, Points of Reference or claim …” The letter advised the petitioner “to furnish statement of claim or counter-claim, companies which you are entitled to, properties which have been allotted to you and all other relevant papers so that the arbitration proceedings can be expedited.” The second and third respondents rely on a letter of October 7, 2004 issued by the arbitrator to the petitioner which makes interesting reading: “You are the one of the signatories of the Memorandum of Understanding (MOU).Therefore, it is reasonable to presume that you have actual notice and knowledge of the contents of the MOU.
It may be that you have misplaced a copy of the same but your act cannot allow anyone to draw a conclusion that no such MOU in fact exists.
I have already sent a copy of the MOU.
I have not received any comment from you on the contents of the MOU.
It has been represented to me by your brothers all signatories including yourself have been enjoying the benefit flowing from the said MOU.
I request you to submit your claims/counter claims and contentions in the arbitration so that the matter could be concluded at the earliest.” The contesting respondents insist that it is the petitioner who is responsible for the reference not being concluded as it would be evident not only from the arbitrator’s letter of October 13, 2009 cited by the petitioner but also from the fact that the petitioner filed three applications before the arbitrator to wriggle out of the arbitration and time and again called upon the arbitrator to not proceed with the reference.
The second and third respondents refer to the arbitrator’s letter to advocate for the petitioner on November 25, 2005 calling upon advocate to furnish the petitioner’s contact details and the failure by advocate to respond thereto.
They refer to the arbitrator’s letter of October 24, 2005 requesting the four brothers to be present on October 31, 2005 in connection with the application made on behalf of the petitioner under Section 12 and 13 of the 1996 Act.
They say that by a subsequent letter of October 27, 2005 the arbitrator recorded that on October 26, 2005 the petitioner called the arbitrator on his mobile telephone and informed the arbitrator that it would not be possible for the petitioner to attend the hearing on October 31, 2005 and further requested the arbitrator to not proceed with the reference.
The opposing brothers of the petitioner say that these petitions are an unabashed attempt by a wrongdoer to frustrate an adjudication that he is aware is bound to go against him.
They maintain that the petitions are based on half-truth; there is deliberate suppression of material facts therein; and, a false impression has been sought to be given to court.
They question the propriety of the petitioner’s assertion that the arbitrator did not show any inclination to address the objections raised by the petitioner when the petitioner had sought and obtained adjournments in such regard and did not show any interest to pursue the same.
As to the alleged bias of the arbitrator against the petitioner, the contesting respondents refer to paragraph 3(nn) of their affidavit in the second matter where they claim that the petitioner had appointed the arbitrator “to be a director in one of his flagship companies, namely BCL Financial Services Private Limited, a nonbanking financial company in which an order of winding up was passed by this Hon’ble Court at the instance of the Reserve Bank of India.” The opposing brothers of the petitioner finally contend that all grounds now taken against the arbitrator were urged before the Supreme Court in couRs.of the substantial period that the petitions for special leave to appeal against the order dated September 10, 2010 passed in CS No.121 of 2010 remained pending before that court.
They suggest that the second paragraph of the Supreme Court’s order of dismissal of July 31, 2013 does not imply that the Supreme Court had accepted that the arbitrator had resigned or expressed his unwillingness to continue with the reference.
The arbitrator’s letter of August 14, 2013 is placed by the contesting respondents to emphasise on the arbitrator’s assertion that the submission made on behalf of the petitioner before the Supreme Court was incorrect.
Since the parties lay much stress on the Supreme Court order of July 31, 2013, for varying purposes, such short order is set out: “Heard Mr.Guru Krishna Kumar, learned senior counsel in support of these petitions and learned counsel appearing for the respondents.
We are not inclined to interfere.
The special leave petitions are dismissed.
We are informed by Mr.Guru Krishna Kumar that the main arbitrator is not inclined continue with matter.
If that is so, it will be open to the parties to apply to the High Court for appointment of another arbitrator.” Before the applicability of the legal provisions invoked by the petitioner is taken up for consideration, it is necessary to dwell on what the petitioner seeks to achieve by the present endeavour.
The petitioner is a party to a memorandum of family settlement that contains an arbitration agreement with unusual powers conferred on the arbitrator.
The petitioner has not urged that the petitioner has not executed the agreement of January 31, 2004.
It is also not the petitioner’s argument – at any rate, in couRs.of the present proceedings – that the extent of the authority conferred by the arbitration agreement contained in the memorandum of January 31, 2004 is illegal or contrary to the statute that it is governed by.
Indeed, the 1996 Act gives much more latitude to parties to an arbitration agreement than the predecessor enactment did and Section 5 of the 1996 Act commands that the extent of judicial intervention in matters governed by Part I of the Act pertaining to domestic arbitrations remains restricted to such as is provided for therein.
As noticed above, the 1996 Act does not preclude an arbitration agreement from reserving the exclusive authority of the arbitrator to enlarge the time to make and publish the award without reference to the parties; it contemplates that the parties to an arbitration agreement would be free to agree on a procedure for constituting the arbitral tribunal; it leaves the parties free to agree on a procedure for challenging an arbitrator; it provides for the parties to an arbitration agreement to preclude the arbitrator from ordering any or all interim measures; it leaves the parties free to agree on the procedure to be followed by the arbitral tribunal; it gives the parties a choice to decide when the arbitral proceedings would be deemed to commence; it respects the parties’ agreement whether to hold oral hearings for the presentation of evidence or for oral argument or whether the proceedings would be conducted on the basis of documents and other material; it gives the parties primacy in deciding whether expert opinion would be necessary; it leaves the parties free to record in the arbitration agreement whether a decision made by a panel of arbitrators would be governed by the majority or unanimity; and, it even dispenses with reasons to be stated in support of an award if the parties have so agreed.
The judgment and order of September 10, 2010, that the Supreme Court was not inclined to interfere with in the special leave petitions is now binding on the parties thereto as it has attained finality.
It is in such context that some of the observations from the judgment need to be noticed: “The essential grievance of the plaintiffs here is that the fiRs.plaintiff was given a raw deal in the MOU and that several business and assets have been formed and acquired from out of the family corpus subsequent to the MOU and the plaintiffs should get their share of such added business and assets.
The arbitration agreement has used words of the widest import.
Not only is the arbitration agreement for the purpose of determining the mode and manner of implementation of the MOU, but it would also cover “all other connected and incidental issues or matters arising out or in relation thereto.” “Whatever may be contained in the recitals leading up to the terms of the agreement of January 31, 2004 between the four brothers and their branches, the habendum clause is wide.
In any event, it appears that the second “and” in the fiRs.line of the ninth recital is disjunctive and covers the situations envisaged by the immediate phrases preceding and following it.
That is to say, that the ninth recital implies that the twin purposes of the arbitration are to resolve all disputes and differences; and, to arrive at the mode and manner of implementation of the matters in respect of which the parties have amicably resolved.
Even if the ninth recital is seen to give colour to the fiRs.clause of the agreement, the expression “all disputes and differences” in the ninth recital would imply the same thing as in the fiRs.clause of the agreement which is also in two distinct parts and uses words of the widest amplitude.
The fiRs.part of the opening clause of the agreement envisages that the reference would take care of “all disputes and differences, mode and manner of implementation of matters in respect of which the parties have amicably resolved…” The word “and” thereafter leads to the residuary part to be covered by the reference and is very wide as it encompasses “…all other connected and incidental issues or matters arising out of or in relation thereto.” … “Surely, the plaintiffs’ grievance that the MOU was unfair to the plaintiffs would be a matter that is connected to the MOU or incidental thereto.
Again, the plaintiffs’ claim that the family assets and business not included in the MOU or which were formed or acquired after the MOU should also be up for partition, is a matter arising out of or in relation to the MOU.” … “If the real cause for the plaintiffs coming to court is gleaned from the plaint, it would be evident that it is connected to the MOU, whether by reason of the failure to implement the terms thereof or the unfairness of the division contemplated thereby.
There is no additional cause of action in the suit which is beyond the sweep of the arbitration agreement.” “ … What must be appreciated is that this family intended its companies to be bound by the MOU of 1989.
Though the MOU contained words to the effect that the companies would be bound by the terms thereof, it does not appear to have been executed or signed on behalf of the companies.
What can be said then is that the four brothers understood that their signing the agreement would bind the companies.
Though, in the strict sense it may be said that the companies are not bound by the MOU since the document was not signed on their behalf, but that is not how a family settlement is read or understood in this country.
To the extent necessary to assess at the present stage, it is evident on a reading of the two primary documents and the plaint that the family companies are bound by the MOU and the four brothers or branches are accountable for the family companies and their assets in the matter of division thereof whether by barter or by some other equitable adjustment like owelty.
“The suit is essentially for partition of the family business and assets between the four branches by including not only what is mentioned in the MOU but also the other business and assets of the family not included therein.
Such matter is covered by the wide words of the arbitration agreement.
…” It is significant that the petitioner has not used an affidavit-in-reply in either matter to deal with the contents of the affidavits filed by the second and the third respondents.
No prayer has even been made at the hearing for any time to be afforded to the petitioner to deal with such affidavits.
In a sense, the contents of the affidavits filed by the second and the third respondents may be deemed to have been admitted by the petitioner.
More importantly, the glaring gaps in the petitioner’s case get filled up by the facts evident from the affidavitsin-opposition.
One would miss the wood for the trees if these petitions are decided on the limited legal grounds canvassed without reference to the game plan of this disingenuous petitioner.
Following the execution of the family settlement and the commencement of the arbitral reference, the petitioner impeded the expeditious working out of the family settlement by not participating in the arbitral proceedings or responding to the arbitrator’s letteRs.It does not behove the petitioner to complain of the failure of the arbitrator to conclude the reference within the period of six months as recognised in the arbitration agreement.
The arbitrator lamented in letters of March 10, 2004 and September 13, 2004 that the petitioner had frustrated the reference qua the business and properties allotted under the family settlement to the petitioner.
In fact, the arbitrator appeared to be at his wit’s end in issuing the letter of October 7, 2004 upon the petitioner apparently questioning the settlement recorded in the memorandum.
The petitioner was not available in India and chose to ignore the arbitral reference before asserting that the arbitrator had either lost his authority to continue with the reference or had disqualified himself by his conduct to do so.
In hindsight, even the suit filed by the petitioner and his son in 2010 has to be regarded as nothing but a ploy to frustrate the reference.
Understandably, the reference could not be meaningfully pursued in view of the uncertainty over it during the time that CS No.121 of 2010 remained pending.
The reference remained stayed by an order of Supreme Court during the pendency of the special leave petitions carried by the petitioner from the judgment and order of September 10, 2010.
It was only upon the special leave petitions being dismissed on July 31, 2013 that the petitioner applied for restoration of AP No.483 of 2010, that was dismissed for default on January 5, 2012, on August 8, 2013.
The restoration application spoke of the petitioner and his constituted attorney son apparently making an enquiry as to the status of AP No.483 of 2010 only on or about July 29, 2013.
Such date of July 29, 2013 was mentioned by design though the status report as to AP No.483 of 2010 was obtained by the petitioner or on his behalf from the computer section of this court on August 1, 2013.
August 1, 2013 was, of course, the day following the dismissal of the special leave petitions by the Supreme Court.
It may even not be uncharitable to the petitioner to infer that AP No.483 of 2010, which was filed when the hearing on the petition under Section 8 of the 1996 Act in CS No.121 of 2010 had already commenced, was brought to influence the outcome of the Section 8 petition by trying to demonstrate that the reference could not be pursued.
The second of the present petitions, AP No.1121 of 2013, was filed on September 20, 2013 to buttress the petitioner’s attempt to thwart the arbitral reference.
Since an arbitration agreement is consensual by its very nature and the choice of a named arbitrator may reflect the parties’ confidence in such adjudicator, neither an arbitration agreement nor the choice of an arbitrator reflected therein may be tinkered with by the court for the mere asking.
If the arbitration agreement pertains to a family settlement, which is accorded high legal status in this country, the court has to be even more cautious in removing a named arbitrator appointed by the parties to implement the settlement.
Indeed, an arbitration agreement may be so intertwined with the arbitrator named therein that the arbitration agreement may be regarded as frustrated or annulled upon the named arbitrator not being able to take up the reference.
It is, however, for the court to assess whether the choice of the personnel of the arbitrator was such that the parties agreed to arbitration only because the named arbitrator was expected to take up and conclude the reference.
As to whether the arbitration agreement and the personnel of the arbitrator are so closely connected that the former would fail without the latter is to be discerned from the arbitration agreement itself, the nature of the matrix contract governed by the arbitration agreement and the disputes that the parties thereto may have perceived would arise.
It is evident in the present case that the parties to the arbitration agreement had unreserved faith in the arbitrator.
The unusual, but permissible, authority that the parties armed the arbitrator which would indicate that the arbitration agreement was tailor-made for the named arbitrator and the object of the exercise was to ensure the quick and smooth implementation of the family settlement.
In the parties giving the ultimate discretion and authority to the arbitrator to adjudicate upon their disputes without assigning any reasons therefor, the parties have conferred an element of finality on the award (which, by definition, includes interim awards).so much so, that the award may be well nigh impossible to be annulled unless patent grounds of corruption are established.
It must be recognised that parties to an arbitration agreement would never denude themselves of the recouRs.to court against the arbitral award without having utmost faith and complete confidence in the arbitrator.
It is, thus, that the attempt of the petitioner to dislodge the arbitrator must be regarded as an attempt to scuttle the family settlement itself.
It appears from the arbitrator’s letter of October 13, 2009, and the submission of the fiRs.respondent herein, that most of the work required to be done by the arbitrator has been completed, save the matters concerning the petitioner.
It is evident that the petitioner has not accounted for the assets or properties which are in the possession or control of the petitioner or his branch or which have been allotted under the family settlement to the petitioner or his branch or which the petitioner or his branch is liable to disgorge for such assets and business to be allotted to the second or third respondent brotheRs.It is plain to see that the petitioner wishes not to answer for the assets and business for which he is accountable and enjoy assets and business of the family to which he may not be entitled.
There may also be little or no ground for the petitioner to pursue the application before the arbitrator challenging his jurisdiction to adjudicate upon the matters before him or taken up by him.
The judgment and order of September 10, 2010, which has now attained finality, stares in the face of the petitioner and cannot be wished away.
Though it is for the arbitrator to decide the applications lodged by the petitioner to derail the reference, the threepronged scheme devised by the petitioner to impede the reference – and, thereby, frustrate the family settlement – cannot be missed: applications before the arbitrator questioning his integrity and his authority, a partition suit including all matters that were covered by the family settlement and the present petitions to remove the arbitrator.
The arbitrator has not lost his authority to continue with the reference.
Though clause 7 of the arbitration agreement mandated the reference to be concluded within six months of its commencement, it also gave unbridled authority to the arbitrator to extend the time without reference to the parties.
The exercise of such authority by the arbitrator does not have to be expressly reflected on any stamp paper with the mumbo-jumbo of legalaise like a few “theretobefore’s” and “wherefor’s” being littered over pages of meaningless nothings to bemuse a lay person.
In the arbitrator having pursued the reference beyond the period of six months, the arbitrator is deemed to have exercised the authority that had been conferred on the arbitrator by the arbitration agreement.
What is important is the existence of the authority rather than the manner of exercise thereof.
Even in the complex world of jargons and inscrutable expressions that persons connected with law are partial to, the distinction between substance and form cannot be lost sight of.
And, in any event, it is this petitioner who has delayed the reference and now has the gall to camouflage his intransigence and present a case of conduct disqualifying the arbitrator to proceed with the reference.
Doubtless, this petitioner is aware of the misplaced generosity of judges in not appropriately rewarding vexatious litigants with commensurate costs.
There does not appear to be any bias or prejudice that the arbitrator harbours against the petitioner; at least none that would either be actionable or would excite the court to remove the arbitrator.
In any case, a charge of bias or prejudice made against an arbitrator named in the arbitration agreement has to be treated with extreme circumspection.
Further, if it is found, as in this case, that the arbitration agreement and the mandate of the named arbitrator would be co-terminus, the court would scarcely entertain a plea of bias or prejudice, particularly during the pendency of the reference.
Even if this was not a special person that the parties had deliberately and consciously anointed to iron out the creases left after the family settlement, the grounds of bias and prejudice are without basis.
It has now become fashionable that an apprehension of bias is expressed for a litigant to avoid a particular judge or an adjudicator and go forum-shopping.
The dexterous knave preys on a lesser breed of judges who do not have the mettle to tell between a mere allegation of bias and a reasonable apprehension thereof.
Many a judicial officer with a backbone resisting forumshopping has suffered observations made by questionable superiors that once prejudice was mentioned the judge should have recused himself from the matter.
It is the argument of such quality that the petitioner has brought on the ground of bias and prejudice.
The petitioner has left no stone unturned to subvert the arbitral reference.
Between him and his constituted attorney son, they appear to have attempted to intimidate the arbitrator; and the petitioner now cites the reckless allegations levelled by him in design to suggest that the arbitrator may not take to him too kindly.
There is no doubt that the petitioner had equal confidence in the arbitrator as did his brotheRs.The arbitrator was a director in the petitioner’s once flagship and now defunct finance company that has left a queue of depositors in the company court while he enjoys the sun in Dubai.
The petitioner expressed no reservation as to the arbitrator till the arbitrator called upon him to account for the assets and business under his possession or control.
Once he found it uncomfortable to enjoy the family assets and business without having to account therefor, he raised the bogey of bias and prejudice.
Rather than the arbitrator’s conduct, it is the petitioner’s approach which appears to be abominable.
To accede to the petitioner’s present plea would, in this case, not only wash out the arbitration agreement, it would also render the family settlement unimplemented and nugatory.
There is no legal basis to either petition.
Three provisions of the 1996 Act have been invoked by the petitioner in utter desperation.
The allegation on which the invocation of Section 14 of the Act is founded is the inability of the arbitrator to act without undue delay.
The count on which Section 15 of the Act has been pressed into service is the perceived withdrawal from office by the arbitrator.
Neither petition has any factual legs to stand on either score.
The delay in the arbitral reference has been engineered by the petitioner and is on his account, not the arbitrator’s.
The letter of October 13, 2009 did not amount to the arbitrator withdrawing from his office but only a desire to do so at a future date which the arbitrator has, in any event, clarified in his letter of August 14, 2013 where he described the submission attributed to the petitioner in the opening sentence of the second paragraph of the Supreme Court order of July 31, 2013 to be incorrect.
On the basis of the material as carried to court, the other brothers of the petitioner appear to have been patient with the arbitrator despite the arbitrator not invoking the powers conferred on him by the arbitration agreement to deal with the petitioner’s obduracy and truancy.
The petitioner’s reliance on Sections 14, 15 and 11 of the Act on the grounds other than the two referred to in the immediate preceding paragraph is completely misplaced.
The 1996 Act is a departure from the arbitration law as was understood under the 1940 Act.
The philosophy of the 1940 Act was that the court retained the power of supervision and superintendence over an arbitral reference to the extent not excluded by statute.
The ethos of the 1996 Act is that the court has such power as is expressly conferred by statute and Section 5 of the 1996 Act precludes judicial intervention except where so provided by the Act in matters pertaining to domestic arbitration.
This fundamental tweak in the approach makes the arbitration law in this country after the 1996 Act incompatible with the principles that reigned prior thereto in this branch of law.
It is in such context that the grounds of bias, prejudice and lack of jurisdiction of the arbitrator as canvassed by the petitioner have to be viewed.
Section 13 of the 1996 Act leaves the parties free to agree on a procedure for challenging an arbitrator.
In the absence of such agreed procedure, an arbitrator may be challenged within 15 days of the challenging party becoming aware of the constitution of the arbitral tribunal or becoming aware of the circumstances referred to in Section 12(3) of the Act.
Section 12(3) of the Act limits the scope of challenge to an arbitrator to the twin grounds: circumstances giving rise to justifiable doubts as to his independence or impartiality; or, the arbitrator not possessing the qualifications agreed to by the parties.
Section 13(3) of the Act gives the arbitral tribunal the authority to decide on the challenge.
The next subsection mandates that if the challenge is not successful, the arbitral tribunal shall continue with the arbitral proceedings and make an arbitral award.
It is only in couRs.of challenging the award under Section 34 of the Act that the challenger may renew before court the challenge originally canvassed under Section 12(3) of the Act.
Section 16 of the 1996 Act is a mirror-image of the procedure as recognised in Section 13 of the Act, but while Section 13 encompasses a challenge on the grounds of impartiality or qualifications, Section 16 embraces an objection on the arbitral tribunal’s jurisdiction.
The two species of challenge are qualitatively distinct, but follow an identical course.
Sub-sections (2).(3) and (4) of Section 16 of the Act indicate the timing of the objection as to jurisdiction, which covers even the existence or validity of the arbitration agreement.
Section 16(5) of the Act is similar to Section 13(4) thereof.
Section 16(6) of the Act is on the lines of Section 13(5) thereof, with the operative expression in either like provision being “such an arbitral award” which unmistakably refers to the arbitral award spoken of in the immediate previous sub-section in either case.
The focus of emphasis is that a challenge or objection canvassed under Section 13 or Section 16 of the Act, if rejected, is not amenable to an immediate further challenge.
The challenger or the objector has to await an arbitral award to be rendered before carrying the challenge or objection to court; or, if the challenger or objector is fortuitous in the arbitral tribunal rendering an interim award, the challenge or objection can be canvassed in proceedings for annulment of the interim award which, by dint of the definition in Section 2(1)(c) of the 1996 Act, is capable of being subjected to proceedings under Section 34 thereof.
It follows, a fortiori, that a challenge or objection which is yet undecided by the arbitral tribunal cannot, ordinarily, be carried to court to short-circuit the reference.
It would defy logic that if the rejection of the plea is incapable of immediate challenge and has to await the arbitral award, even during the pendency of the challenge the plea can be simultaneously pursued in court.
In the context of the challenge which has been fashioned herein by the petitioner, Section 11 of the 1996 Act has not even the remotest connection therewith.
Section 11 of the Act is only a default mechanism to secure the constitution of an arbitral tribunal.
Even when the court is called upon to decide a controveRs.as to the termination of the mandate of an arbitrator under Section 14(2) of the Act, the substitute or replacement arbitrator has to be appointed according to the rules that were applicable to the appointment of the arbitrator being replaced.
Section 15(2) of the Act commands thus.
Section 11 of the Act leaves the parties to an arbitration agreement free to agree on a procedure for appointing the arbitrator or arbitratORS.Section 11(5) of the Act mandates that when there is no agreed procedure for appointing an arbitrator if the parties fails agree on the arbitrator within 30 days from receipt of a request by one party from the other party to so agree, the appointment shall be made, upon the request of a party, by the Chief Justice or any person or institution designated by him.
As is evident, even if the arbitration agreement does not recognise a procedure for appointing a sole arbitrator, it is for the parties fiRs.to try and secure the appointment by agreement and only a failure in such regard will give rise to a cause of action to approach the appropriate Chief Justice or his designate.
Assuming that the mandate of the arbitrator in this case had stood determined on any ground or is declared to have been terminated by this court, the petitioner has to attempt a consensus of the parties as to a replacement before carrying a request under Section 11 of the Act to the Chief Justice or his designate.
Merely because the mandate of an arbitrator is terminated, it does not follow that a right accrues to any of the parties to the arbitration agreement to immediately make a request for the appointment of a substitute arbitrator to the relevant Chief Justice or his designate without fiRs.seeking to identify another arbitrator by agreement between the parties.
The present petitions are unmeritorious and border on the scandalous.
They have been filed to stall the arbitral reference during their pendency with the aim of obtaining an order that would scuttle not only the reference but even the family settlement.
As noticed above, these petitions are not a one-off exercise by the petitioner and must be seen to be a continuation of the tactics at derailing the reference employed before the arbitrator, the filing of an elaborate suit with 84 defendants in the year 2010 and the resurrection of a petition abandoned in the year 2012 by applying for restoration after the Supreme Court’s dismissal of the special leave petitions.
AP No.483 of 2010 and AP No.1121 of 2013 are dismissed.
For the petitioner’s efforts in flogging a still-born hORS.and wasting considerable court time in the process, the petitioner will pay costs assessed at 10,000 GM to the respondent Nos.2 and 3 and the West Bengal State Legal Services Authority in equal measure.
Certified website copies of this judgment, if applied for, be urgently made available to the parties, subject to compliance with all requisite formalities.
(Sanjib Banerjee, J.)