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        Companies Law

        2000 (9) TMI 978 - HC - Companies Law

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        Arbitration challenge procedure limits midstream court intervention; bias objections can still be raised against the final award. The Arbitration and Conciliation Act, 1996 was treated as a self-contained code limiting judicial interference during arbitral proceedings. A challenge to ...
                        Cases where this provision is explicitly mentioned in the judgment/order text; may not be exhaustive. To view the complete list of cases mentioning this section, Click here.
                          Provisions expressly mentioned in the judgment/order text.

                              Arbitration challenge procedure limits midstream court intervention; bias objections can still be raised against the final award.

                              The Arbitration and Conciliation Act, 1996 was treated as a self-contained code limiting judicial interference during arbitral proceedings. A challenge to an arbitrator must first be pursued within the arbitral process under section 13, and if it fails, the aggrieved party may later challenge the award under section 34. The absence of a provision for court removal of an arbitrator during pending proceedings did not make sections 13(3) and 13(4) unconstitutional. Bias or prejudice was not excluded from post-award review, because an award tainted by such grounds could be examined as contrary to public policy.




                              Issues: Whether sections 13(3) and 13(4) of the Arbitration and Conciliation Act, 1996 were ultra vires for not providing for court removal of an arbitrator during pending arbitral proceedings and for not expressly enabling a challenge to the award on the ground of bias or prejudice.

                              Analysis: The Act was construed as a self-contained code designed to minimise judicial interference in arbitral proceedings. Section 5 was treated as expressing a clear legislative mandate that courts shall not intervene except where the Act so provides. Under section 13, a challenge to an arbitrator is first to be dealt with within the arbitral process itself, and if the challenge fails, the proceeding continues and the aggrieved party may later seek to set aside the award under section 34. The Court held that the ground of bias or prejudice is not excluded from section 34, because an award affected by bias would be contrary to public policy and can be examined at the stage of challenge to the award. Sections 13(5) and 34 were read harmoniously so that the right conferred on the aggrieved party is not defeated by a narrow reading of section 34.

                              Conclusion: The absence of a provision for court removal of an arbitrator during the pendency of arbitration did not render sections 13(3) and 13(4) unconstitutional, and the petitioner had an effective remedy under section 34 to challenge any award on the ground of bias or prejudice.

                              Final Conclusion: The writ petition was not entertained on the merits of the alleged bias, as those objections were left open to be raised after the award, and the arbitral process was allowed to proceed without judicial interference.

                              Ratio Decidendi: Where the arbitration statute provides an internal challenge procedure and a later remedy to set aside the award, courts will not intervene midstream to remove an arbitrator, and bias-based objections may be examined when the award is challenged as being opposed to public policy.


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                              ActsIncome Tax
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