1. The petitioner had taken a contract for the construction of Samba-Battal Link Road in the year 1967 for 78,83,287.00 and an agreement No. I/EE-Jammu of 1967-68 was executed by the petitioner and the respondent No.2, Executive Engineer, Madhopur Central Construction Division, C.P.W.D., Madhopur. Certain disputes arose between the parties to this contract and one Shri T.B. Bhonsale. Supdtg. Engineer C.P.W.D. was appointed sole arbitrator for that dispute in terms of Clause 25 of the agreement. That gentleman gave his award and in pursuance of that award a decree for Rupees 11,52,792.13 was passed by my learned brother Jaswant Singh, J. on 27-5-1970 in favour of the petitioner against the Union of India. Further disputes arose between the parties, and the Chief Engineer vide his letter No. 24/55/68-A and C II (App-92/70) dated 13-8-1970 appointed Shri V.V. Vaze as the Arbitrator to decide the further disputes between the Union of India and the petitioner. The petitioner also on 23-7-1970 moved an application under Section 20 of the Arbitration Act for reference of certain claims of his to an Arbitrator. Notice of that application was given to the other side and by my order dated 4th September 1970. I referred the dispute, subject-matter of the petitioners claim to the same Arbitrator Mr. Vaze. The case of Union of India, which had been referred to Mr. Vaze by the Chief Engineer for arbitration was numbered by him as ARB/VVV/34 and the case of the petitioner referred to him by me was linked by the Arbitrator with the previous case namely ARB/VVV/34. Some proceedings were held by the learned Arbitrator and he numbered the latter case as ARB/VVV/38. Later on two applications were made before me, one on behalf of the Union of India on 4-1-1971 for the extension of four months time to the Arbitrator for making the award and another on behalf of the petitioner under Sections 5 and 12(2) of the Arbitration Act on 28-12-1970. Objections were filed by the Union of India to the application of the petitioner and the petitioner stated that his application under Sections 5 and 12 of the Arbitration Act, above referred to, may be treated as reply to the application for extension of time made on behalf of the respondents. It is just and proper that both these applications should be disposed of by the same order. The agreement out of which both these disputes arise is the same. The parties claim certain reliefs in terms of the same agreement. Both the disputes have been referred to the same Arbitrator, therefore, if no extension is given to the Arbitrator that will ipso facto result in the removal of the Arbitrator. If however, extension is granted to the Arbitrator to make his award, then the application of the petitioner under Sections 5 and 12 of the Arbitration Act has to be considered on its merits.

2. The extension application simply states that the Arbitrator has not been able to complete the Arbitration proceedings and give his award. The application for the revocation of the authority of the Arbitrator and for his removal and for the appointment of a new Arbitrator is a long one and the summary of its contents, so far as they are relevant to the present dispute, may be given as under:-

The petition starts with mentioning that the petitioner got the Samba-Batal Link Road, contract for a sum of Rupees 78,83,287.00. Then it partly quotes the Arbitration clause No.25 of the agreement which will be discussed in extenso in this judgment. Then it mentions the dispute between the petitioner and the Executive Engineer resulting in the appointment of Shri T.B. Bhonsale as the Arbitrator and his award for Rupees 11,52,792.13 which was made the rule of the Court on 27-5-1970 after great litigation between the parties. The petitioner further states that after the award of Mr. Bhonsale, the officers of the C.P.W.D. were not happy and they managed a letter No. 21011(4)/69-W dated 27-12-1969 from the Ministry of Health and Family Planning Works Housing and Urban Development (Works Div.) to all the Arbitrators and the Chief Engineer to record their reasons in case the amount of the award was in excess of 50,000,00. Shri V.V. Vaze was a Deputy Secretary in the Ministry of the respondent No.1 who was appointed as full time arbitrator in the Ministry of Works, Housing and Urban Development. According to the petitioner this directive was to fetter the powers and the independent judgment of the Arbitrator. As the petitioner put some claims, the C.P.W.D. to forestall the petitioner got Mr. Vaze appointed as a sole arbitrator by the Chief Engineer vide his office letter No. 24/55/68-A and C II (App-92/70) dated 13-8-1970. The case was registered by Mr. Vaze as ARB/VVV/34 and the petitioners case when referred to the Arbitrator was registered by him as ARB/ VVV/38. During the hearing of the, arbitration proceedings at Srinagar the Arbitrator observed "this case has become very notorious in the Department" which created apprehension in the mind of the petitioner that the propaganda carried on by the respondents had been conveyed to the Arbitrator. The petitioner conveyed his apprehension to the Arbitrator by means of his letter dated 20-11-1970 who returned it with the remark that the letter was irrelevant. The Arbitrator has agreed to give reasons for his award also which fact has been recorded by the Arbitrator in his proceedings dated 21-12-1970. Formerly there were four Engineers who worked as Arbitrators in such disputes and the intention was to have a trained person as an Arbitrator. Mr. Vaze had no technical knowledge of the subject and he "showed complete lack of elementary knowledge and understanding of the contract in question and the various items of work thereunder and consequently was not in a position to appreciate the various technical points involved in consideration of the disputed matters." The petitioner has apprehension that he will not get justice at the hands of the Arbitrator. It is, therefore, prayed that the court may grant leave to the petitioner to revoke the authority of the Arbitrator, remove him for misconduct committed by him and appoint any other person having technical and engineering qualifications and experience etc., as an Arbitrator. The grounds for such a request are contained in paragraph No.13 but the contents of these grounds are covered by the above summary.

3. Elaborate arguments were heard by me in this case and I have given my consideration to the facts of the case and considered all the circumstances.

The points that call for decision may be put as follows:-

(1) Whether I should grant extension of time to Mr. Vaze to continue the proceedings and give an award.

(2) Whether I should grant leave to the petitioner to revoke the Arbitrators authority.

(3) Whether I should remove the Arbitrator Mr. Vaze.

(4) Whether a new Arbitrator should be appointed.

(5) If so, who should be the new Arbitrator and who is competent to appoint him.

I shall now take up the points argued and refer to relevant portions of the record and the law on the subject.

4. Clause 25 of the agreement has been partly quoted by the petitioner in paragraph 2 of the petition : but there are some other portions of this clause which have been omitted by the petitioner. I will quote the clause in extenso and it reads as under :-

"Except where otherwise provided in the contract all questions and dispute relating to the meaning of the specifications, designs, drawings and instructions hereinbefore mentioned and as to the quality of workmanship or materials used on the works or as to any other question, claim, right matter or thing whatsoever, in any way arising out of or relating to the contract, designs, drawings, specifications, estimates, instruction, orders or these conditions or otherwise concerning the works, or the execution or failure to execute the same whether arising during the progress of the work or after the completion or abandonment thereof shall be referred to the sole arbitration of the person appointed by the Additional Chief Engineer. Central Public Works Department, in-charge of the work at the time of dispute or if there be no Additional Chief Engineer, the administrative head of the said Central Public Works Department at the time of such appointment. It will be no objection to any such appointment that the arbitrator so appointed is a Government servant, that he had to deal with the matters to which the contract relates and that in the course of his duties as Government servant he had expressed view on all or any of the matters, in dispute of difference. The arbitrator to whom the matter is originally referred being transferred or vacating his office or being unable to act for any reason, such Additional Chief Engineer or administrative head as aforesaid at the time of such transfer, vacation of office or inability to act, shall appoint another person to act as arbitrator in accordance with the terms of the contract. Such person shall be entitled to proceed with the reference from the stage at which it was left by his predecessor. It is also a term of this contract that no person, other than a person appointed by such Additional Chief Engineer or administrative head of the C.P.W.D. as aforesaid should act as arbitrator and, if for any reason, that is not possible, the matter is not to be referred to arbitration at all.

Subject as aforesaid the provisions of the Arbitration Act, 1940 or any statutory modification or re-enactment thereof and the rules made thereunder and for the time being in force shall apply to the arbitration proceedings under this clause (Fly leaft No.6/33)

The Arbitrator (s) may, from time to time with the consent of the parties enlarge the time, for making and publishing the award".

5. I might say that the contest in this dispute is between the C.P.W.D. represented by its Executive Engineer who signed the contract on behalf of the President of India and the petitioner.

6. At an earlier stage in this case Mr. Humar, Executive Engineer concerned, put in his written arguments dated 25-11-1970. In those written arguments at page 6 it is stated :-

"........ An arbitrator conversant with Civil Engineering practice and mode of measurement would be able to determine whether the work being carried out is or is not covering the measurements and whether there is any necessity for granting any stay till the measurements were taken in presence of two parties. The best course would therefore, be to direct the Chief Engineer to appoint a suitable arbitrator who would be familiar with the engineering practice and the modes of measurements (Shri V.V. Vaze not being a technical man may not be able to deal with this issue properly. When directed, the Chief Engineer will naturally appoint suitable person with professional knowledge in the subject)......"

The last portion of the Arbitration clause No.25 may be again quoted. It reads:-

"The Arbitrator (s) may, from time to time with the consent of the parties enlarge the time, for making and publishing the award."

which means that the Arbitrator can extend time provided both parties are agreeable to this course. In this case it is clear that both the parties are not agreeable. Therefore, the intention of parties seems to have been that time should be extended only if both agree. Here the petitioner is not at all agreeable to the extension of time; on the other hand he prays for permission to revoke the authority of the Arbitrator and for his removal Secondly the written argument made by Mr. Humar clearly connotes and supports the case of the petitioner that to understand the dispute between the parties and to give an effective award, the Arbitrator should be a person who is conversant with engineering and at the same time Mr. Humar makes no secret of the fact that Mr. Vaze is not a technical man and he may not be able to deal with the issues involved in the case properly. It is of importance to mention what are the disputes between the parties. They are given in separate charts and are as under:-

"Claims put by the petitioner:-

1.

For earth work in excavation claim for hard rock by blasting instead of ordinary soil soft rock etc:-

Rs.18,86,427.54

2.

Earth filling in banking of formation and back fills of all retaining walls abutments and wing walls

8,62,975.80

3.

Increase in labour wages

3,76,186.00

4.

Hire Charges of machinery lent by the department to the claimant petitioner

83,100.00

5.

For refund of excess charges for the bull dozers and air-compressors supplied to the claimant-petitioner by the department after borrowing the same from the Army Head-quarters

55,503.54

6.

For earth-work in foundations

19,521.14

7.

Providing and laying cement concrete 1:3:6 in all round hume-pipes and in walls

57,250.90

8.

Centering and shuttering in walls

8,600.00

9.

Laying 30" diameter hume-pipes with collars

11,657.81

Total

Rs.33,63,121.28

10.

Interest at 12 %

II Governments claim :-

1.

Claim of damage alleged to have been caused by the petitioner to the machinery hired by him from the Government

Rs.68,230.03

2.

For the alleged misuse and neglect of air-compressor

6,676.00

3.

Damages including labour charges of compressors

5,500.00

4.

Alleged shortage of compressors

1,719.19

5.

Transportation charges

4,494.22

6.

Cost of cement

15,866.93

7.

Cost of removal of slips

2,752.40

7,990.39

9,718.34

Total

Rs.1,16,947.48

7. From a cursory glance at these different items of dispute it is clear that all the items are technical matters pertaining to engineering and none of them is a matter which requires any legal knowledge. About Mr. Vaze in reply to para. 10 of the petition, it is stated that Mr. Vaze holds a degree of LL.M from Stanford (USA) University and has been a Judicial Officer in the State of Maharashtra for 10 years. It is further stated that he has studied for two years in an Engineering College and has passed the second year examination of Engineering.

8. During arguments it was vehemently stated by the counsel for the petitioner that in such cases an Engineer should be appointed as an Arbitrator and not a Law knowing man because there is hardly any law to be applied in this case. He referred me to some authorities on this point also namely A.I.R. 1955 Punjab 172 and A.I.R. 1961 Patna 228.

9. In A.I.R. 1955 Punjab 172 a Government Construction contract contained an arbitration clause concerning disputes arising out of it. Under that Clause, the dispute was to be referred to the sole arbitration of the Chief Engineer C.P.W.D. and if Chief Engineer was unable to act, to the sole arbitration of some other person appointed by the Chief Engineer willing to act as such arbitrator. The Chief Engineer after some time appointed the Superintending Engineer as an Arbitrator but the Court had appointed an Advocate as Arbitrator. The Divisional Bench of that court cancelled the appointment of the Advocate and upheld the appointment made by the Chief Engineer, and Soni, J., observed;-

"A qualified Engineer is surely better than a mere Advocate in settling disputes involving technical matters......."

Khosla J. further added:-

"Even if the view is taken that in this case there was refusal by the arbitrator and the court below had discretion to appoint a substitute, the discretion can be reviewed in appeal, and in the present case it is more in the fitness of things that an officer of the Public Works Dept. who knows contracts of this type and understands the points in dispute should act as the arbitrator and not an outsider........."

10. Similarly in A.I.R. 1961 Patna 228 it has been held by Raj Kishore Prasad, J. that though in appointment of an arbitrator under Section 8(2), the Courts discretion is unfettered and it need not consult the defaulting party, yet the discretion has to be exercised by the court properly and not arbitrarily. The Court makes an improper use of the discretion in appointing a pleader as Arbitrator where the appointment of a qualified engineer would be better for settling the dispute which involves technical matters. In that case the appointment of Sri Ram Bahadur Sinha, Pleader, as arbitrator was set aside and a qualified engineer was directed to be appointed as the arbitrator.

11. In this case it is not denied that prior to the appointment of Mr. Vaze as an Arbitrator in such cases qualified Superintending Engineers were appointed as arbitrators and there were four such persons Shri T.B. Bhonsale being one of them. The petitioner has imputed motives to the respondent in appointing Mr. Vaze but I do not accept all that is said or argued in this behalf by the petitioner. Mr. Amar Chand, the learned Addl. Advocate General, has on the other hand, argued that the appointment of a law knowing person as an arbitrator would be better because such a person would observe the principles of natural justice more properly than an Engineer, who would not be conversant with law. But I am not impressed with this argument. The real dispute between the parties is with respect to matters which clearly and solely are technical to be understood and appreciated by technical and qualified people in this behalf.

12. Now I shall take into consideration Section 28 of the Arbitration Act which gives unfettered powers to the court to grant extension. It is well settled law that extension of time is discretionary with the court, neither the arbitrator nor parties can claim it as a matter of right. But that discretion has to be exercised properly and after taking into consideration all the circumstances of the case. I may refer to the following authorities in this behalf :-

13. A.I.R. 1914 Sind 20 (1); A.I.R. 1957 Patna 633; A.I.R. 1963 Punjab 427 and A.I.R. 1962 Allahabad 97.

14. In A.I.R. 1914 Sind 20 (1) it has been said that:-

"the discretion given by Section 12, Arbitration Act is very wide and should be exercised on a consideration of all the circumstances of the case. The court is bound to consider whether the case is a fit one for granting the indulgence asked for."

15. In A.I.R. 1957 Patna 633 an award was made on 27-6-1947 and it was not filed in the court and therefore no notice of its filing was ever given. No application was made either by the arbitrator or the parties, for enlarging the time till the point was urged by the defendants in argument and after the close of arguments, the petition for extension of time was filed on 9th April, 1952 by the defendants. The Court below enlarged the time under Section 28 of the Arbitration Act it was held by the High Court that on the very face of it the order was unjust and improper.

16. In A.I.R. 1925 Sind 150 it was held that:-

"All the circumstances of the case must be taken into consideration by the Court when deciding under Section 12 of the Arbitration Act if the arbitrator should be granted the indulgence of having the time extended for making an award".

In A.I.R. 1963 Punjab 427 it was held that the court alone has the power to extend time and the parties cannot by consent confer jurisdiction after the expiry of four months. There the award which was made after four months was set aside by the Court.

17. In A.I.R. 1962 Allahabad 97 it was held that the power of granting extension rested with the court and was not controlled by the terms of the arbitration clause.

18. Allied with this question of extension is the question of alleged misconduct of the arbitrator Mr. Vaze in two ways firstly that he seemed to be prejudiced against the petitioner and that prejudice is attributed to him for his utterance calling the case a notorious one. It is argued that this fact is not denied by the other side that Mr.Vaze on 5-11-1970 during the course of discussion observed that "this case has become very notorious in the department." Thereupon Mr. Gajaria the advocate of the petitioner, addressed a letter to Mr. Vaze on 20-11-1970 which is Annexure VII to the petition. In this letter of 20-11-1970 Mr. Gajaria conveyed to Mr. Vaze that the remark was made by latter on 5-11-1970 and at that time his client "did not understand the implication of this observation but subsequently when he also came to know that some of the departmental officials who are connected and concerned with this work and the arbitration case including the first case in which award had been made by Shri T.B. Bhonsale, have been carrying on adverse propaganda in regard to this case in order to prejudice you against my client, which appear to have reached you as well, as you are a full time Government employee do come in contact with the said officials and also other officials of the Central P.W.D. quite frequently. On this account a very serious apprehension has been created in the mind of my client that you have become very much prejudiced against him as an arbitrator. I am therefore, addressing this letter to you on behalf of my client above mentioned in order to put the above facts on the record". According to the petitioner this letter was returned to the petitioner with the remark that it was irrelevant and it did not contain any prayer and therefore could not be kept on record. The reply to this allegation is contained in para 9 of the rejoinder of the respondents and among other things it recites:-

".........On this respondent No.3 observed that, on going through the statement filed by the claimant he found that there was another arbitration case which had taken place between the same parties and was connected with the same road. He further remarked that since that case had been dealt at length, its facts had by then become quite notorious and there should have been no difficulty for the Executive Engineer in himself preparing counter-statement of facts, particularly when he was defending the earlier case also. It was in this context that the arbitrator used the word "notorious" in connection with the case. By the word "notorious" he only meant welknown to the parties and nothing else. The petitioners petition dated 20-11-70 is also admitted........."

19. When this application under Sections 5 and 12 of the Arbitration Act was made by the petitioner, a notice of the same was sent to the Arbitrator Mr. Vaze. He was personally served but did not choose to appear, he neither made any statement nor put in any objections. He would have been the best person to explain in what circumstances he had used the expression "notorious". When he received the communication of the counsel for the petitioner dated 20-11-1970, he simply declined to entertain it and termed it as irrelevant with no prayer and refused to place it on the record. In his order, dated 2-12-1970 he says as under:-

"Shri G.T. Gajaria,. Advocate for the claimant has sent a communication the contents of which are not relevant to the proceedings before me nor is this forum the proper one to which such communication can be addressed. The claimant has not made any prayer in the communication nor has asked for any relief but has simply said that it is for record. The communication cannot be placed on record and is rejected as being not relevant to the matters in controversy between the parties. The communication may be returned to him."

20. In the first place the interpretation put on these remarks of the Arbitrator by the learned counsel appearing for the Union of India is far from convincing, and it is very difficult to guess or to conclude on what instructions this interpretation is put by Mr. Amar Chand on the remarks admittedly made by the Arbitrator. The Arbitrator was not represented by Mr. Amar Chand nor has Amarchand said that it was under instructions of the Arbitrator that he was explaining the words used by the Arbitrator. The Arbitrators own disposal of this letter of the counsel for the petitioner would indicate something to the contrary. He states therein that the communication is not relevant and has not been addressed to the proper forum. He has therefore returned it. Some inferences are inevitable from these proceedings. An allegation was made in the communication of Mr. Gajaria that the officers of the C.P.W.D. had been carrying on propaganda against his client, they had approached the Arbitrator also. He also had been prejudiced against him. He was a full time Government employee and used to come into contact with the officials who were responsible for this case and other officials of the C.P.W.D. a very serious apprehension had been created in the mind of the petitioner. The Arbitrator has not factually contradicted any of these allegations either in the disposal of this letter or before this court which conduct has to be interpreted as these allegations not having been refuted shall be deemed to have been admitted, or at least unrebutted.

21. The second allegation of misconduct against the Arbitrator is that the Deputy Secretary to the Government of India Mr. R. Mehta issued an office order No.21011(4)/69-M dated 27th December 1969 (Annexure V to the petition) which is in the following words:-

"The awards made by the S.Es. (Arbitration) on the disputes referred to them give no reasons for the conclusions reached and the decisions given. This is not a satisfactory state of affairs, especially when large or important issues are involved. Government have, therefore, decided that S.Es. (Arbitration) should be requested in the awards to be made hereafter to record their reasons for the decisions they give in all cases in which the amount in dispute are 50,000/- or above."

According to the petitioner, this directive was issued simply because the award of Mr. Bhonsale against the Union of India had irritated the Ministry. Under this directive the Arbitrators were required to give reasons if the dispute was for a sum of 50,000/-or more. This was a clear interference with the discretion and the independent judgment of the arbitrators. The Arbitrator in his order dated 23-12-1970 has also remarked:-

"As counsel are assisting me in this case and as the claims are fairly large, I have explained to both the counsel that upon receiving enlargement of time, I would proceed to frame issues and after allowing opportunity to lead evidence and address arguments make and publish a reasoned award. Parties may obtain a suitable enlargement of time from the competent court."

On the basis of the above two facts, the petitioners counsel argues that the Arbitrator has misconducted himself and should be removed. He has referred me in this behalf to Section 2 of the Arbitration Act which reads as under:-

"(1) The Court may, on the application of any party to a reference, remove an arbitrator or umpire who fails to use all reasonable despatch, in entering on and proceeding with the reference and making an award.

(2) The court may remove an arbitrator or umpire who has misconducted himself or the proceedings."

22. This brings me to the term "misconduct". An arbitrator can be removed if he has committed misconduct or has misconducted himself or the proceedings. What is understood by the term "misconduct" is "legal misconduct". "Legal misconduct" means misconduct in the judicial sense, not from the moral point of view nor does it involve imputations of personal turpitude and includes honest but erroneous breach of duty causing miscarriage of justice. Misconduct does not mean misconduct of a fraudulent character. It comprehends and includes action on the part of the arbitrator which is, upon the face of it, opposed to rational and reasonable principles that govern the procedure of persons who are called upon to decide upon matters in difference, (in dispute) referred by the parties. It includes cases where the Arbitrator has failed to perform essential duties which are caused upon him as an arbitrator because he occupies a judicial position. It will be wrong to say that there must be some misconduct in a moral sense on the part of the Arbitrator to enable the Court to remove the arbitrator. It has been held in A.I.R. 1937 Oudh 436 that :-

"Where the arbitrators though not partial to one party, cannot yet command the confidence of the other (opposite) party, it is wholly inequitable to compel that other party to submit themselves to their arbitration."

23. A Full Bench of Sindh Judicial Commissioners Court in A.I.R. 1924 Sind 75 held that:-

"The term misconduct has in the legal sense a wider significance than personal misbehaviour. Legal Misconduct means misconduct in the judicial sense of the word, not from a moral point of view and means some honest though erroneous breach of duty causing a miscarriage of justice".

There the Arbitrators had admitted improper evidence and were misled by it. It was held that:-

"They had committed an error of law patent on the face of the award and that this could amount to legal misconduct."

In A.I.R. 1933 Sind 68 it was held that:-

"In case of arbitration where a person is appointed by two parties to exercise judicial duties there should be ubberrima fidae on the part of all parties concerned in relation to his selection and appointment and every disclosure which might in the least affect the minds of those who are proposing to submit their dispute to the arbitrament of any particular individual, as regards his selection and fitness for the post ought to be made, so that each party may have every opportunity of considering whether the reference to arbitration to that particular individual should or should not be made."

24. The Arbitrator was removed in that case because he was found to be a brother of son-in-law of one of the parties. This was held to be a sufficient cause for his revocation.

25. In A.I.R. 1954 Calcutta 1 the Arbitrator awarded damages in excess of the controlled price at the black market rates. The award was set aside and the Arbitrator was held guilty of legal misconduct.

26. The Supreme Court in a recent authority reported as A.I.R. 1966 SC 1036 has also held that:-

"The difference between an application under Section 5 of the Arbitration Act and one under Section 34 is a difference as to the point of time when the application is made. If proceedings are commenced in Court, application is made under Section 34; if proceedings have not been commenced in court the application is made under Section 5. The object of both the sections is the same, namely to prevent arbitration. But different considerations would arise on an application to set aside an award on the ground that the arbitrator was biased. It is true that on an application under Section 5 it is not necessary to snow that the arbitrator is in fact biased and it is enough to show that there is a reasonable ground for apprehension that the arbitrator will be biased. But the reasonable ground must be established to the satisfaction of the court to which an application for leave to revoke the authority of an appointed arbitrator is made."

Their Lordships have further remarked that:-

"Before the court exercises its discretion to give leave to revoke an arbitrators authority, it should be satisfied that a substantial miscarriage of justice will take place in the event of its refusal. In considering the exercise by the Court of the power of revocation it must not be forgotten that arbitration is a particular method for the settlement of disputes. Parties not wishing the laws delays know, or ought to know, that in referring a dispute to arbitration they take the arbitrator for better or worse, and that his decision is final both as to fact and law. In many cases the parties prefer arbitration for these reasons. In exercising its discretion cautiously and sparingly, the Court has no doubt these circumstances in view, and considers that the parties should not be relieved from a tribunal they have chosen because they fear that the arbitrators decision may go against them. The grounds on which leave to revoke may be given have been put under five heads: (1) Excess or refusal of jurisdiction by arbitrator; (2) Misconduct of arbitrator; (3) Disqualification of arbitrator; (4) Charges of fraud and (5) Exceptional cases."

27. In another Supreme Court authority reported as A.I.R. 1967 SC 249 it was held that a party may be released from the bargain if he can show that the selected arbitrator is likely to show bias or by sufficient reason to suspect that he will act unfairly or that he has been guilty of continued unreasonable conduct. Consequently, an order of stay of suit under Section 34 will not be granted if it can be shown that there is good ground for apprehending that the arbitrator will not act fairly in the matter or that it is for some reason improper that he should arbitrate in the dispute between the parties. Although it is normal duty of the Court to hold the parties to the contract and to make them present their disputes to the forum of their choise, an order to stay legal proceedings in a Court of law will not be granted if it is shown that there is good ground for apprehending that the arbitrator will not act fairly in the matter or that it is for some reason improper that he should arbitrate in the dispute.

28. In another authority reported as A.I.R. 1952 Calcutta 294 it was held that though the ground that the arbitrator may commit a mistake in law is not by itself sufficient to induce the Court to revoke the authority of an arbitrator, yet the convenience and in-convenience of the parties must be balanced and their Lordships further held that:-

"Before everything it is important that parties get adjudication of their disputes in an impartial tribunal and in the situation of which no circumstance exists which tends to produce a bias in its mind."

Commenting under Section 5 of the Arbitration Act, their Lordships said that:-

"It is the most fundamental principle of justice that a judge or a tribunal should not decide a dispute if there is a probability that he would be biased in the case............

........... In applications under Section 5 and Section 34 all that is necessary is to show that there is a probability of bias or a reasonable prospect of bias or there is a reasonable apprehension of bias. Whether in fact the arbitrator was so biased is immaterial ......"

29. In another recent Division Bench of Allahabad High Court case reported as ATR 1970 All 31 their Lordships have held that:-

"It would also amount to denial of natural justice if in a case of this nature, the party is forced to submit to the arbitration of a person who has not only gone biased and became prejudiced against that party, but who has also expressed his opinion on the merits of the case against that party."

It is further observed in the same authority that:-

"In a proceeding under Section 20 therefore, if the plaintiff has succeeded in establishing reasonable apprehensions that the officer of the defendant corporation or his nominee named as arbitrator in the agreement may not act fairly and justly as arbitrator he is entitled to be released from the bargain."

30. A number of further authorities were considered by me in a recent case viz. M/s. Roshanlal Sethi v. State of Jammu and Kashmir, (Arb. Petn. No.30 of 1969) and the same view has been taken by a Division Bench of this Court in M/s. Handa and Co.v. State of Jammu and Kashmir, Letters Patent Appeal No.4 of 1969 decided on 9-9-1970 (J and K) where it is held that-

"......... Where the court is satisfied that the arbitrator is not expected to act fairly for any of the reasons given above, the Court has ample discretion to relieve the party from its bargain and remove the arbitrator,........"

31. It has been held in some cases that Arbitrators authority can be revoked only within two limits viz:-

(i) The court should not lightly relieve the parties from their bargain that follows from the sanctity the court attaches to contract: and

(ii) that the court should be satisfied that substantial miscarriage of justice will take place in the event of its refusal to grant leave.

32. In a recent authority viz: A.I.R. 1969 Orissa 280 it was held that when the arbitrator has proceeded a great deal in the arbitration proceedings, he may not be changed.

33. I have already mentioned the points that call for determination. I shall now proceed with each one of them in the light of the authorities above mentioned and the facts established in this case. I shall take up point No.1 whether I should grant extension of time to Mr. Vaze to complete the proceedings and make his award.

34. As already pointed out extension of time under Section 28 of the Arbitration Act is discretionary with the court. That discretion has to be exercised judicially and not capriciously and has to be taken after taking into consideration all the facts of the case. In my opinion the question of alleged misconduct or the removal of the arbitrator is linked with the grant or refusal of extension of time because if time is not extended the authority of the Arbitrator Mr. Vaze comes to an end. Therefore, in this case I shall consider first the question of extension of time simpliciter, then the question of alleged misconduct. In my opinion this is a case in which I should exercise my discretion in not extending the time and my reasons for this are as follows:-

35. In the agreement itself under Clause 25 quoted above there is an additional clause added which lays down that time may be extended for publishing the award with the consent of the parties. The petitioner has not agreed to this from the very beginning. Even the counsel for the respondent has before the Arbitrator stated that "the Government is equally uninterested in asking for extension". Refer interim order of the Arbitrator dated 23-12-1970 which means neither party at that stage was prepared to extend time. The petitioner sticks to this position although the respondents have changed their stand in the court.

36. The petitioner clamours that this arbitration can effectively be conducted and completed by a person having technical knowledge. That was the stand taken by the Executive Engineer (Mr. Humor) respondent, who is the real party, in his argument dated 25-11-1970 already reproduced. I have pointed out that the entire dispute in this case between the parties relates to matters, which are technical in nature and which can be solved and understood by gentlemen who are qualified engineers. It is admitted that Mr. Vaze is not an Engineer. His having read for two years in an Engineering Class cannot be considered as qualifying him for such a complicated task. Mr. Vaze is no doubt an LL.M but this case hardly raises any proposition of law which can be decided by him more effectively than a person not conversant with law. I have quoted authorities viz: A.I.R. 1955 Punjab 172 and A.I.R. 1961 Patna 228 where under similar circumstances lawyer arbitrators were removed and engineer arbitrators appointed.

37. About the alleged misconduct it has been discussed by me in somewhat detail that misconduct does not necessarily mean moral turpitude, dishonesty or any action which would be unethical or immoral but misconduct for the purpose of the Arbitration Act should be legal misconduct. The words of Section 11 clearly lay down that the arbitrator may misconduct himself or he may misconduct the proceedings. An arbitrator has a very important quasi-judicial or I should say judicial function to discharge. He must not only so conduct himself as to be unbiased but he must behave also in a manner which would not give any cause of grievance to either party. As rightly held in various authorities discussed by me even if the arbitrator is not partial to one party yet if he does not command the confidence of the other, he should not conduct the proceedings. Similarly it is not necessary to show that an arbitrator is in fact biased but it is enough to show that there is reasonable around for apprehension that the arbitrator will be biased.

38. In this case Mr. Vaze has made the following remarks in the course of the proceedings, "this case has become very notorious in the department". It is not denied that this statement was made by him. He was further approached by the counsel for the petitioner by means of his communication dated 20-11-1970 in which Mr. Gujaria made further allegations of the Arbitrator being prejudiced and influenced by the officials of the C.P.W.D. and therefore an apprehension had been caused in the mind of the petitioner about his impartiality. This allegation has not been controverted at any stage. The Arbitrator returned and rejected this communication dubbing it as irrelevant but did not contradict the insinuations contained therein. In these proceedings also the Arbitrator did not choose to explain his position or offer any comments in this behalf. The interpretation put on the words by the learned counsel for the respondents has already been commented upon; in my opinion to use very moderate language is not at all either imaginable or permissible. Therefore the allegations made in the letter of Mr. Gajaria to this Arbitrator, remain unrebutted. This conduct on the part of the Arbitrator is sufficient in the eyes of law to raise reasonable apprehension in the mind of the petitioner that he will not get a fair deal at the hands of the Arbitrator.

39. Much argument has been advanced on the office order issued by R. Mehta Deputy Secretary to the Government of India (Annexure V) already quoted above. It has been argued by the learned counsel for the petitioner that Mr. Vaze being a whole time employee of the Deptt. has submitted himself to these directions, which according to the learned counsel was issued only because of the dispute of the petitioner with the C.P.W.D. and which clearly was an interference with the independent judgment of an Arbitrator. It has been already pointed out that Mr. Vaze has agreed to give a reasoned award as contained in his order dated 23-12-1970. Mr. Amar Chand on the other hand has argued that the concerned letter was issued in the interest of fairness that the arbitrator should give reasons so that either party could understand the basis of an award and a reasoned award was a more lucid document than a cryptic one. I do not want to enter into any discussion about the propriety of these directions nor do I make any comment on the allegations of the petitioner that this direction was issued only to bring pressure on the Arbitrator because of his dispute with the C.P.W.D. But the submission of Mr. Vaze to this direction coupled with the other attendant circumstances already mentioned above does lend support to the proposition that Mr. Vaze should not continue as an Arbitrator. In this case.

40. The proceedings are yet in an initial stage and there are allegations of partiality, misconduct etc, against the arbitrator. It will not be fair to allow him to continue the proceedings in this atmosphere of suspicion and apprehension on the part of one of the parties at least. The claims made are very big and if Mr. Vaze gives his award against the petitioner such allegations shall necessarily be multiplied. It is important to mention that the petitioner does not want to avoid arbitration, he only prays that some other gentleman, a technically qualified gentleman, be appointed as was the practice heretofore.

41. All these things lead to the following conclusion:-

(a) I do not extend time in favour of the arbitrator to complete the award. The time is already over in both these cases namely Case No.ARB/VVV/34 (referred by the Additional Chief Engineer) and ARB/VVV/38 (referred by this court); in the former it expired on 14th Dec. 1970 and in the latter case on 16th Jan. 1971. The result is that the authority of Mr. Vaze to conduct these arbitration proceedings has come to an end and after the request for extension of time is turned down, he becomes functus officio.

42. Under Section 11(2) of the Arbitration Act, I remove Mr. V.V. Vaze as Arbitrator in these cases. The question of permitting the petitioner to revoke the authority of the Arbitrator need not be considered in view of the above two findings, although otherwise on facts this was a fit case in which such leave should have been granted.

43. By refusing to extend time or removing Mr. V.V. Vaze from the arbitratorship of these cases, the result that follows is that the reference is there but a new Arbitrator has to be appointed. Therefore, the important questions that remain now to be decided are as to who should be the arbitrator and who can appoint the new arbitrator. In this behalf the relevant portion of the agreement also has to be taken into consideration. Stress has been laid by the learned counsel for the respondents on the following words in Clause 25 of the agreement:-

"Except where otherwise provided in the contract all questions and disputes .........shall be referred to the sole arbitration of the person appointed by the Additional Chief Engineer, Central Public Works Department, in charge of the work at the time of dispute or if there be no Additional Chief Engineer the Administrative head of the said Central Public Works Dept. at the time of such appointment ............ The arbitrator to whom the matter is originally referred being transferred or vacating his office or being unable to set for any reason, such Additional Chief Engineer or administrative head as aforesaid at the time of such transfer, vacation of office or inability to act shall appoint another person to act as arbitrator in accordance with the terms of the contract. Such person shall be entitled to proceed with reference from the stage at which it was left by his predecessor. It is also a term of this contract that no person other than a person appointed by such Additional Chief Engineer or administrative head of the C.P.W.D. as aforesaid should act as arbitrator and. if for any reason, that is not possible, the matter is not to be referred to arbitration at all."

The learned Additional Advocate General for the respondents argued that it is only the Additional Chief Engineer or the Administrative head of the C.P.W.D. mentioned in this clause who is competent to appoint an arbitrator or any number of arbitrators in succession according to the circumstances from time to time. The court cannot appoint any Arbitrator itself. The argument when applied to this case would mean that if Mr. Vaze is removed, the second Arbitrator has to be appointed by the same authority. On the other hand it has been argued that this clause runs counter to the language of Sections 11 and 12 of the Arbitration Act. Under Section 11(2) the Court has power to remove an arbitrator. Sub-section (2) of Section 12 lays down:-

"Where the authority of an arbitrator or arbitrators or an umpire is revoked by leave of the Court, or where the Court removes an umpire who has entered on the reference or a sole arbitrator or all the arbitrators, the Court may, on the application of any party to the Arbitration agreement, either:-

(a) appoint a person to act as sole arbitrator in the place of the person or persons displaced, or

(b) order that the arbitration agreement shall cease to have effect with respect to the difference referred."

According to the learned counsel for the petitioner when an arbitrator is removed, there are two courses open to the court (1) to appoint a new arbitrator or (2) to supersede the reference.

44. According to him these provisions are mandatory and any agreement to the contrary would be of no consequence because of the well recognised principle of law that there can be no estoppel against law and any contract which mutilates against any provisions of law will not operate as a bar to the application of the law on the subject. It is argued that the words of this Section 12(2) are mandatory and they leave no scope for a contract to the contrary. The learned counsel has tried to show the mandatory nature of these provisions by comparison and contrast with some other provisions of the Arbitration Act. They have referred me to Sections 3 and 9 which, expressly lay down that:-

"........ unless a different intention is expressed therein ........."

In Section 12 the language is clear and unambiguous and does not leave any scope for a contract to the contrary. I would construe the clause like this. That it is the option of the Additional Chief Engineer, C.P.W.D. or the Administrative Head of the said Central Public Works Department to appoint an arbitrator in the first Instance. If that arbitrator is transferred, vacates office or is unable to perform his duties as envisaged in this section, the arbitration will be open and it will be for the said authority to fill in the vacancy so that the successor continues the proceedings and completes the reference. In my opinion this clause cannot refer to cases where the arbitrator has been removed by a Court. Removal of an Arbitrator is exclusively the job of a Court. Even the authority of the arbitrator cannot be revoked without the leave of the Court. The procedure and the grounds for the removal of the arbitrator are also mentioned in the Act. Therefore when the arbitrator is removed, the matter remains with the court and under Section 12 of the Act either the court can appoint a new arbitrator or supersede the reference itself. In that contingency it cannot be said that the court can or is expected to surrender its powers and delegate them to an officer however highly placed he be. If the arbitration clause is construed in the manner as suggested by the learned counsel for the respondents, I think that part of it which gives the authority to the Additional Chief Engineer to appoint a new arbitrator even in the case of the removal of one by the court, is contrary to the provisions of Section 12 and any contract entered into between the parties in that behalf cannot be enforceable. Therefore I hold that it is the court alone who can appoint a new arbitrator when the previous arbitrator is removed.

45. The learned counsel for the petitioner has further argued that subclause in clause 25 of the agreement which reads as under:-

"Subject as aforesaid the provision of the Arbitration Act, 1940 or any statutory modification or re-enactment thereof and the rules made thereunder and for the time being in force shall apply to the arbitration proceedings under this clause."

is redundant because the agreement must be within the four corners of the Act itself. The provisions of the Act would apply unless a contrary intention is saved in any particular matter. The Chief Engineer argues the learned counsel, has exercised an option of appointing the Arbitrator. This authority could be delegated to him under Section 4 of the Act, which permits the appointment of an arbitrator by a person other than the party to the agreement. Once the Chief Engineer had exercised the authority given to him of appointing an arbitrator his authority was over. When the arbitrator was removed under Section 11 of the Act the only authority empowered under the law to appoint another arbitrator in his place was the Court and not the Chief Engineer. The learned counsel has further argued that this is not a case covered by the Arbitration clause because the arbitration clause envisages cases where the original arbitrator appointed has been transferred or has vacated his office or is unable to act for any reason. The learned counsel has argued that this language of the arbitration clause is used to meet the contingencies of transfer or vacation of the office held by the arbitrator because of which he was appointed to act as arbitrator, or otherwise making it impossible for the Arbitrator to act for instance when he got so ill physically or mentally incapacitated to carry on the arbitration proceedings. The portion of the clause was never intended to be used for such a contingency as the one which has arisen in this case, namely when the arbitrator has been removed by the Court. I feel that the language of this clause is wide enough to cover cases like the present one, but on a point of law that course cannot be permitted in view of the clear language of Section 12 quoted above. In my opinion this provision in clause 25 other wise also has to be strictly construed. It says that if it is not possible for the nominee of the Additional Chief Engineer to act as arbitrator "the matter is not to be referred to arbitration at all". This language would suggest that it refers to cases where the matter has not yet been referred to arbitration. After it is once referred, except in the cases of vacation of office or similar circumstances, the question of its not being referred to arbitration does not at all arise.

46. I would therefore remove Mr. V.V. Vaze from the arbitratorship of this dispute and proceed to appoint a new arbitrator in his place. As it is or at least has been the case of the parties that the matter should be referred to the arbitration of an Engineer and for reasons given already I also think that these disputes can be best decided by an Engineer or experience and integrity. However, I would not directly appoint an Arbitrator but would give the parties a choice of agreeing upon any one of the following gentlemen to act as arbitrator in this case. These gentlemen, who have retired as Chief Engineers in the State of Jammu and Kashmir and are very experienced and otherwise men of high repute and they are:-

1. Shri Ghulam Rasool,

2. Shri H.K. Gandotra,

3. Shri P.N. Wanchoo, and

4. Shri J.B. Nanda.

47. The parties, if they think so, can give the agreed name of any other Engineer, which will be considered by me. The case to come up on 12-4-1971.