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TMI Blog2003 (8) TMI 381X X X X Extracts X X X X X X X X Extracts X X X X ..... ance 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 to the appellants by reason of the aforementioned acts of omission and commission on the part of the respondent, it suffered a huge loss. The agreement of the respondent, however, was not expressly cancelled by Appellant No. 2 herein. The respondent herein allegedly invoked the purported arbitration agreement contained in the said agreement dated 17-3-1992. 4. Clauses 37, 59 and 60 which, according to the appellants, are relevant for the purpose of this case read thus : "37. It will be at the absolute discretion of the Managing Director of the Corporation to terminate the agreement in the following events : a. If the excavation work is found to be unsatisfactory. b. If the agency be involved in any action involving moral turpitude. c.If the agency be involved in any action ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... use 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 on behalf of the appellants, would submit that the courts below committed manifest illegality in passing the impugned judgment insofar as they held that clause 60 of the agreement does not constitute an arbitration agreement as the same satisfies the definition thereof as contained in section 2(a) of the Act, insofar as it contains the following essential elements of an arbitration agreement, namely, (a) the agreement is in writing; (b) the agreement is to submit a present or a future difference; (c) dispute is to be referred to a named arbitrator; and (d) the decision of the arbitrator is final. 10. The learned counsel would contend that as the essential elements of arbitration are satisfied from clause 60 of the agreement, it was not necessary to specifically use the terminology 'arbitration' therefor and no par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 parties that the disputes and differences should be referred to a domestic Tribunal. The said domestic Tribunal must be an impartial one. It is well-settled principle of law that a person cannot be a judge of his own cause. It is further well-settled that justice should not only be done but manifestly seen to be done. 17. Actual bias would lead to an automatic disqualification where the decision maker is shown to have an interest in the outcome of the case. Actual bias denotes an arbitrator who allows a decision to be influenced by partiality or prejudice and thereby deprives the litigant of the fundamental right to a fair trial by an impartial Tribunal. 18. The case at hand not only satisfies the test of real bias but also satisfies the real danger as well as suspicion of bias. See Kumaon Mandal Vikas Nigam Ltd. v. Girja Shankar Pant [2001] 1 SCC 182. 19. In Judicial Review ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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 therein was that as the said clause was invoked by the Chief Engineer; the Superintending Engineer being an inferior authority to him would not be in a position to dispense with the justice effectively. It was, in that situation, held by this Court as under : "11. This is a case of removal of a named arbitrator under section 5 of the Act which gives jurisdiction to the Court to revoke the authority of the arbitrator. When the parties entered into the contract, the parties knew the terms of the contract including arbitration clause. The parties knew the scheme and the fact that the Chief Engineer is superior and the Superintending Engineer is subordinate to the Chief Engineer of the particular circle. In spite of that the parties agreed and entered into arbitration and indeed submitted to the jurisdiction of the Superintending Engineer at that time to begin with, who, however, could not complete the arbitration because he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h 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 (supra), clause 9 of a memorandum of agreement came up for consideration, which was in the following terms : "Implementation will be done in consultation with the financial institutions. For all disputes, clarifications etc. in respect of implementation of this agreement, the same shall be referred to the Chairman, IFCI or his nominees whose decisions will be final and binding on both the groups." 27. It was held that the same did not constitute an arbitration clause. Yet again in Tipper Chand's case (supra) whereupon reliance has been placed by Mr. Dwivedi, the following clause was not held to be an arbitration clause: "For any dispute between the contractor and the department the decision of the Chief Engineer PWD Jammu and Kashmir, will be final and binding upon the contractor." (p. 342) 28. As in the instant case, the test of bias on the part of Appellant No. 2 is fully satisfied, the impugned order is unassailable. As bias on the part of the sec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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