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Issues: (i) whether the arbitration agreement was valid and the arbitral tribunal was lawfully constituted so as to sustain the award; (ii) whether the objections based on alleged bias and lack of confidence in the arbitrators could be examined in proceedings under Section 34 after the challenge had been rejected by the tribunal; (iii) whether the award of interest at 18% per annum was legally sustainable.
Issue (i): whether the arbitration agreement was valid and the arbitral tribunal was lawfully constituted so as to sustain the award.
Analysis: The contracts and transaction documents contained an arbitration clause making the disputes subject to the rules, bye-laws and regulations of the U. P. Stock Exchange Association Ltd. The record showed that the appellant had been served with notices of the arbitral proceedings but chose not to file a defence or appear. The tribunal and the District Judge found that the dealings were carried on both in the appellant's personal capacity and through his concern, and that the tribunal was constituted in accordance with the agreed arbitral framework. Under the statutory scheme, an arbitral tribunal may rule on its own jurisdiction and, where a plea is rejected, the proceedings may continue to an award.
Conclusion: The arbitration agreement and the constitution of the arbitral tribunal were held valid, against the appellant.
Issue (ii): whether the objections based on alleged bias and lack of confidence in the arbitrators could be examined in proceedings under Section 34 after the challenge had been rejected by the tribunal.
Analysis: The appellant did not raise a proper written challenge supported by facts or evidence before the tribunal, and the notices sent on his behalf were not treated as a defence within the statutory procedure. The challenge to the arbitrators was considered and rejected by the tribunal. The Court held that the challenge mechanism under the Act is self-contained, that the tribunal's ruling on such a plea attains finality subject only to the limited grounds under Section 34, and that no material had been shown to establish actual or legally inferable bias. The Court also reiterated that interference under Section 34 is confined to the specific statutory grounds and cannot be expanded into a rehearing on merits.
Conclusion: The bias objection was rejected and could not invalidate the award in Section 34 proceedings.
Issue (iii): whether the award of interest at 18% per annum was legally sustainable.
Analysis: The award provided for interest at 18% per annum. The Court relied on the statutory rule governing post-award interest and held that the award of interest did not render the award illegal.
Conclusion: The grant of interest was upheld as legally permissible.
Final Conclusion: The award and the order refusing to set it aside were sustained, and the appeal was dismissed as lacking merit.
Ratio Decidendi: A challenge to an arbitral tribunal's jurisdiction or an arbitrator's impartiality must be pursued within the statutory challenge procedure, and once rejected, the resulting award can be disturbed under Section 34 only on the limited grounds expressly provided by the Act.
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