Arbitral award challenge fails where prior interim orders, alleged lack of notice, and company-law bar under section 446 do not justify interference.

An arbitral award is not liable to be set aside merely because the arbitrator had earlier continued an interim arrangement, where the parties had consented to the appointment, participated throughout, and no new bias or incapacity was shown. A challenge based on lack of notice or opportunity also failed because the record showed repeated chances to file a defence, multiple adjournments, and no breach of natural justice. Section 446 of the Companies Act, 1956 was held inapplicable in the absence of a winding-up order barring continuation of proceedings. The broader challenge under the Arbitration and Conciliation Act, 1996 likewise failed because interference is confined to statutory grounds.

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Issues: (i) Whether the arbitral award was liable to be set aside on the ground that the arbitrator was disqualified because he had earlier passed an interim order in the matter. (ii) Whether the award was vitiated for want of proper notice and opportunity to present the case after discharge of the petitioners' counsel and advocate. (iii) Whether the arbitral proceedings were barred by section 446 of the Companies Act, 1956 on the alleged appointment of a provisional liquidator and, more generally, whether any ground under section 34 of the Arbitration and Conciliation Act, 1996 was made out.

Issue (i): Whether the arbitral award was liable to be set aside on the ground that the arbitrator was disqualified because he had earlier passed an interim order in the matter.

Analysis: The prior order merely continued an ad interim arrangement already passed by consent. Appointment of the arbitrator had itself been made by the Chief Justice with consent of the parties, and the petitioners had participated throughout the proceedings with knowledge of the earlier order. Mere admission of the petition and continuation of an interim order did not amount to prejudging the merits or create disqualification. Section 12 did not assist the petitioners because no new ground of bias or incapacity, arising after appointment, was shown.

Conclusion: The challenge on the ground of arbitrator disqualification failed and was against the petitioners.

Issue (ii): Whether the award was vitiated for want of proper notice and opportunity to present the case after discharge of the petitioners' counsel and advocate.

Analysis: The record showed repeated opportunities to file a written statement, repeated waivers of notice, and several adjournments granted to the petitioners. The same advocates had been appearing throughout, and the withdrawal at the hearing stage was found to be a delayed attempt to stall the proceedings. The petitioners' conduct showed that they had sufficient notice and opportunity, and no violation of natural justice was established. The award did not disclose any ground of incapacity or procedural unfairness within section 34.

Conclusion: The challenge on the ground of denial of notice or opportunity failed and was against the petitioners.

Issue (iii): Whether the arbitral proceedings were barred by section 446 of the Companies Act, 1956 on the alleged appointment of a provisional liquidator and, more generally, whether any ground under section 34 of the Arbitration and Conciliation Act, 1996 was made out.

Analysis: Section 446 operates where a winding-up order has been made or, in the relevant context, where continuation of proceedings is attracted by the statutory bar. On the facts, no winding-up order had been passed, and the alleged provisional liquidation did not justify stopping the arbitration. The court accepted the arbitrator's view that section 446 was not attracted. The court further held that the petitioners' grievances did not fall within the limited grounds available under section 34, since the court does not sit in appeal over factual or legal findings of the arbitrator and interference is confined to jurisdictional or other statutory grounds.

Conclusion: The plea based on section 446 and the broader challenge under section 34 failed and was against the petitioners.

Final Conclusion: The arbitral award was sustained, and the petitions challenging it were dismissed because no legally sustainable ground for interference was established.

Ratio Decidendi: Under the Arbitration and Conciliation Act, 1996, an arbitral award cannot be set aside merely because the arbitrator earlier dealt with an interim matter or because a party later alleges procedural inconvenience; interference is confined to the statutory grounds, and section 446 of the Companies Act, 1956 is not attracted in the absence of a winding-up order barring continuation of the proceedings.

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