ivil Appeal No 3251 of 1988
From the Judgment and Order dated 219l984 of the Madras High Court in CRP No3482 of 1984
AVRangam for the Appellant P Krishna Rao and KRNagaraja for the Respondents
The Judgment of the Court was delivered by SABYASACHI MUKHARJIJ
Leave granted and the appeal is disposed of by the following judgment
PG NO 675 This appeal arises out of an order of the High Court of Madras dated 21st September 1984
The appellant is the Secretary to the Government Transport Deptt
 Madras and the respondent No 1 is the managing partner of Ms National Company which was the successful tenderer of the work of construction of a bridge across the river Coovum at Koyambedu within the corporation limit of the city of Madras and accordingly the necessary contract was executed between the respondent No 2 the Superintending Engineer Highways World Bank Project Circle Madras and the said Company on 28th April 1979
According to the conditions of the contract between the parties the work should have been completed on or before 5th November 1980
The said National Company however according to the appellant did not even commence the work till 2191981
and despite extension of time until 31101981 the said firm failed and neglected even to commence the job
Consequently the contract in favour of the said firm was determined absolutely at their risk and cost according to the appellant
The respondent herein in his individual capacity as managing partner of the said Company filed a suit in the City Civil Court Madras being OS No 399682 claiming damages alleged to have been caused as a result of the said determination of the said contract and for refund of earnest money deposit etc
In view of the Arbitration Clause under the agreement between the parties the appellant filed a petition for referring the dispute to the arbitrator for further proceedings and the City Civil Court Madras accepting the appellant s prayer passed orders directing both the parties to refer the disputes to the arbitrator and stayed the suit
As per the order of the City Civil Court Madras the respondent filed claim petition before the arbitrator namely Superintending Engineer Highways  Rural Works Rural Roads Circle Tiruchirapalli being the second respondent herein
During the pendency of the claim before the said arbitrator the respondent filed another application seeking to change the arbitrator on the ground that the arbitrator being an employee of the State Government an Engineer from any sector other than the sector of Tamil Nadu or a retired Engineer of the State Government might be appointeded arbitrator
The contract between the parties inter alia contained the following Arbitration Clause PG NO 676 3 The arbitrator for fulfilling the duties set forth in the arbitration clause of the Standard Preliminary Specification shall be Superintending Engineer H Rural Roads Tiruchira Palli Circle Pursuant to this the Superintending Engineer of that Circle at the relevant time was previously appointed as arbitrator
There was succession to that office by another incumbent and the succeeding Superintending Engineer wanted to continue the arbitration proceedings but before that an application was made under Section 5 of the  l940 hereinafter called the Act  for removal of the arbitrator before the learned Judge of the City Civil Court Madras
The learned Judge by his order sought to revoke the authority of the named arbitrator
The learned Judge in his order dated 6th March1984 inter alia observed as follows The apprehension of bias on the part of the Arbitrator is made to rest on the ground that the first respondent in the counter filed before the Arbitrator to the claim made by the petitioner referred to GO Ms 409Transport Dated 7483 which in turn made a reference to a letter No114879D281
Dated 30
1082 of the Chief Engineer H  RW
 In the order of the learned Judge City Civil Court he stated that the Chief Engineer of the Circle concerned was in favour of the cancel lation of the contract in question and the contract entrusted to the petitioner came to be terminated and the construction was sought to be entrusted at the risk and cost of the petitioner on the advice or the proposal of the Chief Engineer
The Superintending Engineer is sub ordinate to the Chief Engineer therefore the learned Judge City Civil Court was of the view as he says in the judgment It is not unreasonable to say that the successive Superintending Engineer of this particular department who will be subordinate to the Chief Engineer will necessarily have a leaning to accept the attitude expressed by the Chief Engineer
 The learned Judge came to the conclusion that there could legitimately be a bias in the mind of the arbitrator who was the Superintending Engineer against the appellant
The High Court also did not examine this aspect and dismissed the appeal in limine
Hence this appeal
Apprehension of bias in the mind of the arbitrator is a good ground for removal of the arbitrator under section 5 of PG NO 677 the Act
The learned Judge City Civil Court had directed the parties to submit a list of three engineers willing to be appointed as arbitrator and if the parties express consensus one of the three from the list of the petitioner or from the list of the respondent would
be chosen and appointed as arbitrator and in case there is no consensus between the parties then from among six engineers to be mentioned by both the parties three each in a separate list one of them will be selected by draw of lots and appointed as arbitrator
The parties were directed to submit a list of three engineers of their choice who would be willing to be appointed as arbitrator in the matter within a stipulated period
This is a case of removal of a named arbitrator under Section 5 of the Act which gives jurisdiction to the Court to revoke the authority of the arbitrator
When the parties entered into the contract the parties knew the terms of the contract including arbitration clause
The parties knew the scheme and the fact that the Chief Engineer is superior and the Superintending Engineer is subordinate to the Chief Engineer of the particular Circle
ln spite of that the parties agreed and entered into arbitration and indeed submitted to the jurisdiction of the Superintending Engineer at that time to begin with who however could not complete the arbitration because he was transferred and succeeded by a successor
In those circumstances on the facts stated no bias can reasonably be apprehended and made a ground for removal of a named arbitrator
ln our opinion this cannot be at all a good or valid legal ground
Unless there IS allegation against the named arbitrator either against his honesty or capacity or mala fide or interest in the subject matter or reasonable apprehension of the bias a name and agreed arbitrator cannot and should not be removed in exercise of a discretion vested in the Court under section 5 of the Act
Reasonable apprehension of bias in the mind of a reasonable man can be a ground for removal of the arbitrator
A predisposition to decide for or against one party without proper regard to the true merits of the dispute is bias
There must be reasonable apprehension of that predisposition
The reasonable apprehension must be based on cogent materials
See the observations of Mustill and Boyd Commercial Arbitration 1982 Edition page 214
Halsbury s Laws of England Fourth Edition Volume 2 para 551 page 282 describe that the test for bias is whether a reasonable intelligent man fully appraised of all the circumstances would feel a serious apprehension of bias
This Court in International Authority of lndia vs KD Bali and Anr JT l9988 2 SC I held that there must be PG NO 678 reasonable evidence to satisfy that there was a real likelihood of bias
Vague suspicions of whimsical capricious and unreasonable people should not be made the standard to regulate normal human conduct
In this country in numerous contracts with the Government clauses requiring the Superintending Engineer or some official of the Govt
to be the arbitrator are there
It cannot be said that the Superintending Engineer as such cannot be entrusted with the work of arbitration and that an apprehension simpliciter in the mind of the contractor without any tangible ground would be a justification for removal
No other ground for the alleged apprehension was indicated in the pleadings before the learned Judge or the decision of the learned Judge
There was in our opinion no ground for removal of the arbitrator
Mere imagination of a ground cannot be an excuse for apprehending bias in the mind of the chosen arbitrator
In that view of the matter the order made by the learned Judge
City Civil Court and the decision of the High Court cannot be sustained and they are set aside
The appeal is allowed
We remand the case back to the learned Judge City Civil Court to ask the Government to appoint the Superintending Engineer
Trichy to be an arbitrator in accordance with the arbitration agreerment
The arbitrator will proceed according to the evidence of the parties and after considering all the relevant facts according to the agreement and make an award in accordance with law
There will be no order as to costs
PSS Appeal allowed


Summary:
The petitioners participated in the arbitration without demur
When the award was made in 1981 no objection was taken by them that it was bad being unreasoned one
The High Court dismissed the challenge to the award
In the special leave petition it was contended for them that relevant documents had not been taken into consideration
Dismissing the special leave petition HELD The High Court has pointed out that the award does not indicate that all relevant documents had not been taken into consideration
The parties participated in the arbitration
There is no allegation of any violation of principles of natural justice
There is no mistake of law apparent on the face of the award or gross mistake of facts resulting in miscarriage of justice or of equity
It would therefore be unjust under article 136 of the Constitution to interfere or keep the finding at bay
642C D