M. Jaganadha Rao, C.J. - (1.) THIS is an appeal by Lucky Home Cooperative Group Housing Society Limited against the orders of the Learned Single Judge dated 4th March,1994 in OMP No. 64/92. The appellant before us was the petitioner in that application filed under Sections 5,8,11,12 and 31 of the Arbitration Act,1940. The 1st respondent was M/s Shanti Developers and Promoters(India) Pvt. Ltd., M- 4, Anupam Bhawan, Azadpur Commercial Complex, Azadpur, Delhi-110003 and the second respondent was Arbitrator Mr. A. Shankaran.
(2.) . The appellant prayed in that application that the authority of the Arbitrator be revoked and another Arbitrator, preferably a retired Judge of the Court be appointed for adjudication of the claims and counter claims of the parties. IA 9548/92 was also filed by the appellant in the said OMP and there was an interim order on 31st July,1992 in this appeal that the Arbitrator would not make and publish the award and that he could proceed with the matter and the appellant society was to participate in the proceedings. . The following are the facts: The first respondent- contractor was engaged in connection with the construction of 78 houses for the appellant Society. The contract was in the year 1988. Three years thereafter, disputes arose and the respondent-contractor moved a petition under Section 20 of the Arbitration Act for appointment of an Arbitrator, which was registered as Suit No. 479/91. This Court appointed the second respondent, Mr. A. Sankaran, as the Arbitrator on 18.2.91. He was Additional Director General, Central Public Witness .D. (Retired). The fee of the Arbitrator was fixed at Rs. 10,000.00 to be paid by the parties. In another order in IA 1045/91 passed on the same date, the Court appointed Mr. S.P. Kapil, retired Chief Engineer of Delhi Development Authority as Local Commissioner for carrying out certain measurements at the site in the presence of the parties or their representatives. . The Arbitrator entered on the reference on 9th March,1991. The contractor filed the statement of facts on 25th March,1991 and the petitioner society filed its statement of facts on 3rd June,1991. The preliminary hearing before the Arbitrator was held on 3rd July,1991. The time for making the award was extended by mutual consent upto 26th December,1991. Thereafter in IA 1520/91, further order were passed on 11th February,1991 extending the time by four months for passing of the award from the date of fresh first hearing to be given by the Arbitrator. The first date of hearing was fixed as 20th April,1992. The Local Commissioner who was appointed to carry out measurements of the construction made by the first respondent filed his report into Court on 20th April,1992. The Arbitrator permitted the parties to file their objections on or before 15th May,1992 and the reply to the objections was to be filed before 25th May,1992 and rejoinder to the reply before 5th June,1992. The parties were also directed to pay Rs. 300.00 each for getting photocopies of the measurement book and the case was adjourned to 13th July,1992 to be continued on 14th and 15th July,1992. . The first respondent filed objections against the Local Commissioner's report on 26th May,1992 but the appellant society did not file its objections till 5th June,1992 as directed by the Arbitrator. Accordingly the Arbitrator by his letter dated 5th June,1992 directed the appellant to file its objections as also reply to the objections to be filed before 19th June,1992. . The present OMP was filed at that stage by the appellant-society on 16th July,1992 praying that the authority of the Arbitrator be revoked and another Arbitrator be appointed to adjudicate the controversy preferably a retired Judge of this Court. Alongwith the said application several annexures were filed. According to the appellant, the Arbitrator had become disqualified on account of bias for the following reasons: (1)That on the hearing held on 20th April,1992 when the question of paying Rs. 300.00 each for supply of photo copies of the detailed measurements was being discussed, the appellant society contended that they would pay Rs. 300.00 only when the photo copies were actually supplied and they would not pay the amount initially. The contractor paid its Rs. 300.00. Thereupon the Arbitrator is alleged to have stated that Rs. 300.00 could be paid by the respondent/contractor on behalf of the petitioner "as the respondent has to get award of several lacs of rupees." Then the respondent immediately paid Rs. 300.00 more. In view of the above observations said to have been made by the Arbitrator, the appellant fears that the Arbitrator has made up his mind to make the award in favour of the respondent. (2)On 14.7.92, appellant filed list of witnesses. On 15th July,1992 it was represented by the respondent- contractor that they had nothing to argue except what was stated in the claims and that the matter be posted for arguments. The request of the appellant for adducing oral evidence was rejected by the Arbitrator and appellant's counsel was asked to proceed with the further arguments. This conduct of the Arbitrator showed that the Arbitrator was inclined in favour of the contractor. (3)That on 13th July,1992 the Arbitrator had stated that in this case his prestige was involved and he was meeting all expenses from his own pocket for coming to Delhi from Madras and was incurring other expenses and that this fact was confirmed by the petitioner to the learned Arbitrator on 14th July,1992(Annexure 'O'). This indicated the interest of the Arbitrator in the subject matter of the said case. (4)It is stated that in some other case the same Arbitrator was Arbitrator and a learned Single Judge of this Court removed the Arbitrator(Suit No. 222/91). One other aspect regarding the schedule of fee was raised and we shall deal with it at the end of this order. . The above are the grounds for removal of the second respondent as Arbitrator. . The learned Single Judge rejected these contentions of the appellant. He held that on 11.2.92, the time for the passing of the award was extended by consent of parties and hence the controversies prior to 11.2.92 could not be permitted to be raised. So far as the observation allegedly made on 20.4.92 by the Arbitrator that the contractor would get award of several lakhs of rupees and the contractor could pay Rs. 300.00 on behalf of the society. the learned Judge held that the observtion was denied by the arbitrator in his letter dated 5.6.92, and by the Contractor. Further, no objection in this behalf was raised on or soon after 20.4.92. Later the Society participated in the proceedings and filed this OMP on 16.7.92 only after the request for summoning the witnesses was rejected on 15.7.92. . The learned Judge directed a reasoned award should be passed and that the society be allowed to examine witnesses and there was no need to revoke the appointment of the Arbitrator. The application was accordingly dismissed. This appeal is preferred against the said order.
(3.) . In this appeal, we have heard the learned counsel for the appellant Society and for the respondent- contractor. . The respondents' counsel raised a preliminary objection that no appeal lies against the impugned order under Section 39 of the Act. But, in view of the order we propose to pass in this appeal, it is not necessary to decide the above objection. . The question whether an Arbitrator is liable to be removed on the ground of bias is to be decided on the basis of well-settled principles. They have been elaborated by the Supreme Court in International Airport Authority of India v. K.D. Bali (AIR 1988 SC 1099=1988(2) SCC 360). In that cas the allegation of bias was made on the ground that the Arbitrator was (a) not recording minutes of the meeting, (b) had not passed a reasoned order on a preliminary objection, (c) had not passed a reasoned order on a preliminary objection, (c) on his non-statement of case for opinion of Court, (d) on the arbitrary decision as to length of time of oral arguments (e) the other party providing hotel accommodation and an ticket (on the petitioner refusal to contribute) and (f) non-consideration of counter-claims (g) Change of venue. Even so, it was held that, on those facts, a reasonable apprehension of bias did not arise. Mere suspicion of bias was not sufficient. There must be a 'real' likelihood of bias. The Supreme Court said that the apprehension must be healthy and reasonable from an average point of view and not based on mere apprehension or vague suspicion of whimical, capricious and unreasonable people. In Jiwan Kumar Lohia v. Durga Dutt Lohia (AIR 1992 SC 188 = 1992 (1) SCC 50) it was again stated by the Supreme Court that the test of likelihood of bias as applied to a tribunal was whether a reasonable person, in possession of relevant information, would have thought that bias was likely and the tribunal was "likely to be disposed to decide the matter only in a particular way". That was the position in the case of judicial tribunals. However, in the case of Arbitrators, the Court must further be satisfied that "substantial miscarriage" of justice would take place in the event of refusal of the application for removal of the arbitrator filed under Section 5 of the Arbitration Act, 1940. The Supreme Court also observed that the discretion to grant leave to revoke the arbitrator's authority had to be exercised cautiously and sparingly. The Court must bear in mind that the Arbitrator could not be relieved of his duties merely because one party had a fear that the award might go against him. . In the light of the above principles, we shall examine each of the grounds on which the plea of bias is based. (A) So far as the first ground is concerned, it is as follows. On 20.4.92, when the Arbitrator wanted each party to pay Rs. 300.00 for getting a copy of the measurements taken by the Local Commissioner, the appellant Society stated that it would pay Rs. 300.00 only after photo copies were duly prepared. The respondent-contractor however deposited its share of Rs. 300.00. At that stage, it is the case of the appellant Society, that the Arbitrator observed that the Contractor could also pay Rs. 300.00 on behalf of the petitioner "as the respondent (contractor) was to get award of several lacs of rupees and thereupon the respondent immediately paid Rs. 300.00." It will be noticed that the contractor is claiming Rs. 1 crore and odd while the appellant Society was counter-claiming Rs. 2 crores. The attitude of the Society not to pay Rs. 300.00 in advance would mean that the photo-copies of measurements be prepared first by the Arbitrator at his expense and the Society would pay later. It looks to us that the expense involved was too small in the context of the huge claims. In any event,it is very important here to note that 2.4.92 was the first hearing. The proceedings of the Arbitrator dated 4.5.92 (p. 54 of paper book) show that both copies were collected by Shri Rajesh Aggarwal on 22.4.92 and by consent of parties, the next hearing dates were fixed for 13.7.92 etc. It is to be noticed that the appellant nowhere raised any objection on the above score but in fact participated in the proceedings and on 4.5.92 consented to further hearing. The objection was raised only on 9.5.92 by way of affidavits and petitions. If parties agree to continue the Arbitrator at a particular date of hearing of the case without raising any objection as regards any anterior action of the arbitrator, they must, in our view, be deemed to have waived their objections unless there be a proper explanation for not raising objection before further participating in the proceedings. In this case there is no such expalanation. Hence the objection musts be deemed to have been waived. Further the Arbitrator had, by his letter refuted the allegations in regard to the events dated 20.4.92 and the respondent too had filed his objections denying the same by way of supporting affidavits of those present on 20.4.92. In any event, when the stakes were in crores on each side and the appellant Society had refused to pay a paltry sum of Rs. 300.00 in advance towards copying expenses, the fact that the Arbitrator directed the Contractor to pay on behalf of the appellant Rs. 300.00, to be adjusted later, could not be treated as indication of any bias, - having regard to the stringent tests laid down by the Supreme Court. The first ground for attributing bias therefore cannot be accepted. (B) The second ground is that on 14.7.92, the appellant filed a list of witnesses and the Arbitrator did not allow witnesses to be examined by the appellant. It may be that the contractor was satisfied by producing documentary material and written objections to the measurements but if the appellant wanted to examine witnesses and the said request was refused, the Arbitrator, it is argued, must be deemed to be guilty of bias against the appellant. The question is whether refusal to grant permission to examine witnesses amounted to bias. ;