Decided on December 13,1983



- (1.) THIS Rule arises; at the instance of Kailash Saving Units; Private Limited, hereinafter called the Company which felt aggrieved by order No. 21 dated 30. 11. 1978, passed by the learned Chief Judge, City Civil court, Calcutta, in Misc. Case No. 390 of 1977. The learned Chief Judge in passing that order was hearing an application under section 28 of the Arbitration Act, 1940 filed on behalf of the company for extension of time for making the award. The learned Chief Judge by his aforesaid order held that the appointment of the Arbitrator was invalid and was inclined not to exercise the discretionary power of the court under section 28 of the Arbitration Ad; and therefore refused the company's prayer for extension of time. Aggrieved by that order the present Rule was obtained.
(2.) BRIEFLY stated the petitioner's case is that this company granted loan to opposite party No. 1 Shanti Ranjan ghosh under a scheme known as Kuri scheme according to the rules and regulations of the company relating to the said scheme. Opposite Party No. 2 Smt. Dipika Ghosh wife of Shanti Ranjan ghosh was the guarantor for the due repayment of the loan. The rules and regulations of the scheme included an arbitration clause. In course of time a dispute arose between the parties and the petitioner by a letter dated 7th August, 1976 referred the said dispute to the arbitration of Shri Om Prakash Malhotra. This gentleman was the Managing Director of the company. The Arbitrator duly entered upon the reference on 9th August, 1976' and by a letter of the same date intimated to the opposite parties that the petitioner had referred to him the dispute and differemences between the company and themselves in accordance to the arbitration clause and called upon them to answer the claim-by 30th August, 1976 at 10 A. M. On that date the Company was represented by its employee Shri S. K. Karmakar but in spite of service of note no one appeared for the opposite parties. In the circumstances the arbitrator decided to give another chance to the opposite parties for the ends of justice and issued a letter dated 15th September, 1976 and called upon the opposite parties to appear peremptorily before him on the noon of 8th October, 1976 at the office of the company at 23a, Netaji Subhas Road, Calcutta. The opposite parties were also warned that their failure to appear before the arbitrator would lead to hearing of the arbitration proceeding ex-parte. Thereafter no further notice was given as there was no sufficient time for holding the meeting by the arbitrator. The time to make and publish the result of the award by the arbitrator expired on the 9th December, 1976. Talks of settlement were also going on between the parties and in the meantime an application under section 28 of the Arbitration Act, 1940 was filed before the court below for extension of time for making the award. The opposite parties who contested the proceedings filed their affidavit and urged several grounds opposing the prayer for extension or enlargement of time for making the award. The first ground urged was that the appointment of Shri Om Prakash Malhotra, Managing Director 9f the company was mala fide and illegal inasmuch as the Arbitrator cannot but support his own cause and thereby deny justice to the opposite parties. The next ground taken was that the application of the company contained mis-statement and untruth showing mala fide attempt to explain the delay in making the award. Therefore, the prayer for enlargement of time should not be granted.
(3.) THE learned Court below held that in view of the fact that the arbitrator was nobody else other than the managing director of the company himself there was a possibility of bias. He further held that the order recorded by the arbitrator on 8. 10. 1976 shows that the arbitrator somehow or other consciously or unconsciously identified himself with the petitioner company. In this connection, the use of the word 'so' by the arbitrator was taken exception of. Therefore, taking the facts and circumstances into consideration he passed the impugned order.;

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