TMI Blog2002 (11) TMI 744X X X X Extracts X X X X X X X X Extracts X X X X ..... tion Co. (P) Ltd. (hereinafter referred to as 'the Contractor'), and the respondent Nos. 1 and 2, namely, Punjab Police Housing Corporation Limited and Executive Engineer (Civil), Punjab Police Housing Corporation Limited (hereinafter referred to as 'the Corporation') for construction of 240 houses Type II-A at Urban Estate, Ludhiana at an estimated cost of ₹ 273.84 Lakhs. The contract provided in Clause 2 that time was essence of the contract and the time allowed for carrying out work as entered in the tender shall be strictly observed by Contractor. The Contractor could not maintain the time schedule and the progress of the work was not observed. The Contractor was directed to push up the progress of work but that also it failed to do. The Contractor was notified that if it failed to take any action to show requisite progress by 30th of April, 1991, action against it under Clause 3 of the agreement would be taken. Still there was no requisite progress in execution of the work by the Contractor. On May 8, 1991, the Corporation resorted to action under Clause 3 of the contract, rescinded the contract and adopted further course by giving unexecuted work to anot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hallenged the common order dated May 8, 1995 passed by the Sub Judge, Chandigarh in appeal before the District Judge, Chandigarh. The District Judge dismissed the appeal on September 19, 1998. 9. Against these two concurrent judgments, the Contractor filed civil revision before the High Court which too was dismissed on November 25, 2002. As noted above, it is from this order that the present Appeal, by special leave, has arisen. 10. We have heard Mr. Rajeev Sharma, learned counsel for the Contractor, and Dr. Balram Gupta, learned senior counsel for the respondent Nos. 1 and 2 -Corporation. 11. Mr. Rajeev Sharma, learned counsel for the Contractor, strenuously urged that the Contractor had reasonable apprehension of bias on the part of the arbitrator as the action of cancellation of contract was taken by the Executive Engineer at the behest of the arbitrator as he was the Chief Engineer of the Corporation. He referred to the inspection made by the Chief Engineer along with other Engineers of the Corporation on October 26, 1990 and the opinion formed by the Chief Engineer on the basis of the inspection that the work was not being carried out by the Contractor in accord with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s or in six months from the payment of the final bill to the contractor or from the date registered notice is sent to the contractor to the effect that his final bill is ready for payment and his decision shall be final and binding and where the matter involves a claim for or the payment or recovery or deduction of money, only the amount, if any, awarded in such arbitration shall be recoverable in respect of the matter so referred. 15. The Contractor consciously agreed for the disputes between the parties to be referred for arbitration to the Chief Engineer of the Corporation. The Contractor, at the time of agreement, was in full knowledge of the fact that the Chief Engineer is under full control and supervision of all civil engineering affairs of the Corporation, yet it agreed for resolution of disputes between the parties by him as an arbitrator. It is a fact that the Chief Engineer inspected the progress of the work given to the Contractor along with other engineers of the Corporation on October 26, 1990. In the course of inspection, the slow progress of the work was brought to the notice of the Contractor on that date. There was nothing unusual about it and, as a matter of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ft with no choice but to proceed ex parte and conclude the arbitral proceedings. Merely because the award came to be passed on August 18, 1992, i.e., a day before the next date fixed before the Sub Judge, it cannot be said that the arbitrator concluded the proceedings hastily or he was biased. 17. The two aspects highlighted by Mr. Rajeev Sharma, learned counsel for the Contractor, regarding (i) nonavailability of the agreement before the arbitrator, and (ii) the award of return of unutilised amount of secured advance by him, as grounds of bias have no merit at all. 18. The order dated May 13, 1992 passed by the Sub Judge shows that photocopy of the arbitration agreement was produced before the court. AW-1, who was examined by the Corporation, in his deposition before the arbitrator, has stated that photocopy of the agreement was tendered to the arbitrator. Merely because copy of the agreement was not found by the District Judge in the record of the arbitral proceedings, it cannot be assumed that copy of the agreement between the parties was not placed for consideration before the arbitrator. 19. The arbitrator in his award has awarded interest in the sum of ₹ 1,40,1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of natural justice that the authority empowered to decide the dispute must be one without bias towards one side or the other in the dispute. There can hardly be any doubt about this fundamental principle of natural justice. The question is Whether on facts, the Contractor has been able to establish that the arbitrator was biased against it ? None of the circumstances pointed out by the Contractor leads to any inference that the arbitrator had any bias, personal or otherwise. No doubt, bias may be found in variety of situations and each case, where bias of adjudicator is alleged, has to be seen in the context of its own facts but a fanciful apprehension of bias is not enough. 23. The observations of the Lord Atkinson in Bristol Corporation (supra), relied upon by the learned counsel for the Contractor, instead of supporting his argument, go fully against the Contractor. In Bristol Corporation (supra) Lord Atkinson stated thus : ...If a contractor chooses to enter into a contract binding him to submit any disputes which arise between him and the engineer of the persons with whom he contracts to that engineer to arbitrate on, then he must be held to his contract; whether it b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on record that enables the Contractor to escape from the bargain that it made under the contract and have the disputes resolved through the process other than agreed. 27. In The Secretary to the Government, Transport Deptt., Madras Vs. Munuswamy Mudaliar and Others3, this Court stated :- 11... 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 was transferred and succeeded by a successor. In those circumstances on the facts stated no bias can reasonably be apprehended and made a ground for removal of a named arbitrator. In our opinion this cannot be, at all, a good or valid legal ground. Unless there is allegation against the named arbitrator either against his honesty or capacity or malafide or interest in the subject- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. It was not open to him to ignore the said clause of the agreement and to appoint another person as an arbitrator. Only if the arbitrator specified and named in the agreement refuses or fails to act the Court does get the jurisdiction to appoint another person or persons as the arbitrator. This is the clear purport of Sub-section (4). It says that the reference shall be to the arbitrator appointed by the parties... 29. Where parties enter into a contract knowing the role, authority or power of the Chief Engineer in the affairs relating to the contract but nevertheless agree for him to be arbitrator and name him in the agreement to adjudicate the dispute/s between the parties, then they stand bound by it unless a good or valid legal ground is made out for his exclusion. 30. Except raising the vague and general objections that the arbitrator was biased and had predisposition to decide against the Contractor, no materials, much less cogent materials, have been placed by the Contractor to show bias of the arbitrator. No sufficient reason appears on record as to why the arbitrator should not have proceeded with the arbitral proceedings. The test of reasonable apprehension of bi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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