TMI Blog2003 (8) TMI 381X X X X Extracts X X X X X X X X Extracts X X X X ..... e Respondent. JUDGMENT S.B. Sinha, J. - The appellants before the High Court are in appeal before us against the judgment and order dated 10-9-1996 passed by the High Court of Patna, Ranchi Bench, Ranchi, in Misc. Appeal No. 176 of 1995 (R) dismissing an appeal preferred by the appellants herein purported to be in terms of section 39(1)( i ) of the Arbitration Act, 1940 ( the Act for short), against an order dated 11-9-1995 passed by the Subordinate Judge-VI, Ranchi, allowing Arbitration (Misc.) Case No. 39 of 1995 filed by the respondent herein. 2. The basic fact of the matter is not in dispute. Appellant No. 1 herein invited tender for removal of soil, sandstone, shale, conglomerates/coal etc. and stacking it up to a distance of 1 km. Pursuant to or in furtherance of the notice inviting tender issued by Appellant No. 1, the respondent herein submitted his tender which was accepted. According to the appellants, the respondent failed and neglected to produce 10,000 M.T. of coal per month and stack the same in the dump yard which was the subject-matter of the agreement dated 17-3-1992, as a result whereof the balance job was got done by another agency. 3. According ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e disputes were said to have been referred to Appellant No. 2 herein purported to be in terms of clause 60 of the said agreement. But who referred the said dispute and how it was done is not borne out from the records. 6. Allegedly, 22-6-1995 was the date fixed for hearing of the matter before Appellant No. 2 which was subsequently adjourned to 6-7-1995. The respondent herein questioned the validity of clause 60 of the agreement by a letter dated 15-7-1995. 7. It thereafter filed an application under section 33 of the Act in the Court of the Subordinate Judge-VI, Ranchi. The said application was allowed by the learned Subordinate Judge, by reason of an order dated 11-9-1995, whereby and whereunder, Appellant No. 2 was restrained from acting as an Arbitrator. The learned Judge further held that the clause 60 of the agreement cannot be construed to be an arbitration agreement. 8. Aggrieved thereby and dissatisfied therewith, the appellants preferred an appeal before the High Court. By reason of the impugned judgment, the said appeal was dismissed. The appellants are in appeal before us against the said judgment. 9. Mr. Dinesh Dwivedi, learned senior counsel appearing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is that having regard to the facts and circumstances of this case, the arbitration agreement could have been given effect to. We may, therefore, proceed on the basis that Clause 60 of the Contract constitutes an arbitration agreement. 14. A finding has been arrived at by the High Court that the Second Appellant was the only competent authority to arrive at his satisfaction that the agreement was liable to be terminated. By reason of the power conferred upon the Managing Director of Appellant No. 1 he is also entitled to impose fine on the contractor depending upon the gravity of violation of the agreement. 15. The respondent would contend that although the agreement was not expressly terminated, the work had illegally been re-allotted to another agency by the second appellant. The correctness or otherwise of the said decision on the part of the second appellant was in question. The High Court, therefore, arrived at a finding that as for all intent and purport the agreement was terminated by Appellant No. 2, he could not assume the role of an arbitrator. 16. There cannot be any doubt whatsoever that an arbitration agreement must contain the broad consensus between the pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such majority of cases, it is often emphasized that the challenger does not go so far as to suggest the arbitrator is actually biased, rather that some form of objective apprehension of bias exists. 4-032 Pecuniary interest . There is an automatic disqualification for an arbitrator who has a direct pecuniary interest in one of the parties or is otherwise so closely connected with the party that can truly be said to be a judge in his own cause. 5-052 Impartial. Section 33(1) of the Arbitration Act, 1996 states that the Tribunal must act "impartially". An arbitrator must also appear impartial and if there are justifiable doubts as to his impartiality this will provide a ground for his removal by the court under section 24(1)( a ) of the Arbitration Act, 1996 or may mean that the award can be challenged." 22. Mr. Dwivedi placed strong reliance in Munuswamy Mudaliar s case ( supra ). In that case an application under section 5 of the Act was filed. Furthermore, the fact of the said case is not applicable in the present case inasmuch as therein actual work by the contract did not start. In that situation, the risk and cost clause was invoked. The only contention raised the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thin its cognizance: it merely seeks to promote the sanctity of contracts, and for that purpose stays the suit. . . ." (p. 1046) 24. In the said case, the question of bias on the part of the arbitrator did not fall for consideration. 25. In Narain Prasad s case ( supra ), this Court was not dealing with an arbitration matter but with the conduct of the parties in relation to enforcement of a contract in a liquor vend. Therein the respondent filed a writ petition for coming out his contractual obligation and in the said fact situation obtaining therein this Court observed : ". . . A person who enters into certain contractual obligations with his eyes open and works the entire contract, cannot be allowed to turnround, according to this decision, and question the validity of those obligations or the validity of the Rules which constitute the terms of the contract. The extraordinary jurisdiction of the High Court under article 226, which is of a discretionary nature and is exercised only to advance the interests of justice, cannot certainly be employed in aid of such persons. Neither justice nor equity is in their favour. . . ." (p. 752) 26. In K.K. Modi s case ( supr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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