The Supreme Court has decide that it shall take up the issue as to whether Arbitrator increasing fees unilaterally against wishes of one party could lead to likelihood of 'bias' on his part.
A division bench of Justice B.R. Gavai and Justice Aravinda Kumar while adjudcating on Chennai Metro Rail Limited Administrative Building v. M/S Transtonnelstroy Afcons remarked that the issue will have 'wider ramifications' and thus required to be heard expeditiously.
Noting that a Special Bench is being constituted to take up Arbitration matters, the Court directed the registry to place the present one before the CJI led bench.
"Taking into consideration that the decision on the issue will have wider ramifications, the matter requires to be heard expeditiously...since a special Bench for taking up arbitration matters is being constituted, we direct the Registry to place the matter before the Hon’ble the Chief Justice of India for obtaining orders as to whether this matter can also be referred to the special Bench," the order reads.
In the present matter, the appellant has challenged a Madras High Court judgment on the grounds that the Court failed to set-aside the arbitral mandate owing to apprehensions of bias after the arbitrator had unilaterally increased their fees.
During the hearing, Additional Solicitor General N Venkataraman, appearing for the appellant, argued that if an arbitrator unilaterally increases the fees against the wishes of one of the parties, then there is likelihood of bias in the mind of the arbitrator against such a party. Reliance was placed on Union of India v Singh Builders Syndicate and Oil and Natural Gas Corporation Ltd. Vs. Afcons Gunanusa JV.
On the other hand, Senior Advocate CA Sundaram, appearing for the respondent, argued that if a case of the parties is based on bias, then it will be covered under Section 13 (challenge procedure) of the Arbitration and Conciliation Act, 1996 and could only be challenged after the award is passed by the tribunal. Reliance was placed on Supreme Court judgment in HRD Corporation (Marcus Oil and Chemical Division) Vs. Gail (India) Limited (Formerly Gas Authority of India Ltd.) [August 31, 2017]
It was his further submission that case of bias wouldn't lead to automatic termination of the mandate of an Arbitrator in terms of Section 14 (failure or impossibility to act) of the Arbitration and Conciliation Act.
The Court observed that though the cases cited by both sides presents contrary views, two of them is passed by two-judge bench and other is passed by three-judge bench and in light of that it requires fresh consideration.
The matter has thus been directed to be placed before Chief Justice of India DY Chandrachud, who will determine whether it will be heard by the special bench.
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