1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY NAGPUR BENCH, NAGPUR. WRIT PETITION NO. 4772 OF 2007 (Anuradha Sugar Mills Ltd. .v. Raj Gopal Deora and another) Office Notes, Office Memoranda of Coram appearances, Court's orders or directions Court's or Judge's Orders and Registrar's orders. Shri Anand Parchure, Advocate for the petitioner. Shri N.W. Sambre, GP for the respondent No.1. Shri Sunil Manohar, Advocate for the respondent No.2. CORAM : B.R. GAVAI, J. 6TH FEBRUARY, 2008. Heard the learned Counsel appearing on behalf of the respective parties. By way of present petition, the petitioner challenges the order dated 11th October, 2007 passed by the respondent No.1 thereby holding that 33,332 bags of sugar of the petitioner are liable to be seized. It has further been directed that unless the written permission of the said authority is obtained and a release order is issued, the said bags of sugar should not be sold. Heard Shri Anand Parchure, the learned Counsel appearing on behalf of the petitioner, Shri N.W. Sambre, the learned Government Pleader appearing on behalf of the respondent No.1 and Shri Sunil Manohar, the learned Counsel appearing on behalf of the respondent No.2. 2 The undisputed facts are that the sugarcane within the jurisdiction of the respondent No.2/Karkhana was being supplied to the petitioner/Karkhana. There was an agreement entered into between the parties dated 29th September, 2006. It is also not in dispute that initially rate was fixed at Rs.1500/- per metric tonnes, which was subsequently reduced to at the rate of Rs. 1375/- per metric tonnes. It appears that the respondent No.2 and some sugarcane growers complained to the respondent No.1. The respondent No.1, therefore, vide communication dated 6th October, 2007 directed the present petitioner, the respondent No.2, the Regional Joint Director (Sugar), Amravati and the Regional Director (Sugar), Aurangabad to attend his office on 11th October, 2007 to discuss the matter regarding the payment of the amount payable to the respondent No.2 by the petitioner towards the sugarcane supplied by the respondent No.2 to the petitioner. It appears that after hearing the petitioner and the respondent No.2 and after considering the report of the aforesaid two authorities, the impugned order came to be passed. Shri Anand Parchure, the learned Counsel appearing on behalf of the petitioner submits that the order suffers from malice inasmuch as the respondent No.1 was prejudiced against the petitioner. He further 3 submits that there was nothing to show that the arbitral proceedings were invoked by the respondent No.1 and as such the order impugned is without jurisdiction. He further submits that the respondent No.1 has been impleaded in personal capacity. The reply has not been filed by him but has been filed by the subordinate authorities. Shri N.W. Sambre, the learned Government Pleader appearing on behalf of the respondent No.1 submits that the respondent No.1, in addition to the arbitral proceedings, had also invoked the provisions of sub Clause (8) of Section 3 of Sugar (Price Determination for 2002-2003 Production) Order, 2003. He submits that on an earlier occasion, it has been found that the petitioner had engaged in disposing of the sugarcane without obtaining the requisite release order and as such, the impugned order was passed taking into consideration the interest of sugarcane growers. Shri Sunil Manohar, the learned Counsel appearing on behalf of the respondent No.2 raises basis objection to the maintainability of the petition. He submits that all issues including the allegation regarding impartiality of the Arbitrator are required to be gone into by the Arbitrator in view of the provisions of Sections 12 and 13 of the Arbitration and Conciliation Act, 1996 4 (hereinafter referred as the said Act). He further submits that in case a challenge is made to the independence or impartiality of the Arbitrator and the said challenge fails then the Arbitral Tribunal shall continue the arbitral proceedings and the only remedy which would be available to the party is to make an application for setting aside such an arbitral award under Section 34 of the said Act. Though Shri Anand Parchure, the learned Counsel for the petitioner has strenuously urged that the respondent No.1 is prejudiced against the petitioner and is not acting impartially, I am not inclined to go into those allegations at this stage because that may prejudice the rights of a party in any proceedings, if it choses to initiate. The Clause No.9 of the Agreement entered into between the petitioner and the respondent No.1 reads thus :- “If dispute arises regarding aforesaid agreement it is put up for decision before respondent Commissioner of Sugar, Maharashtra State, Pune and whichever decision they give is binding on both mills. In the aforesaid matter respondent Commissioner of Sugar, Pune work as arbitrator.” It would thus be clear that the agreement itself provides that if there is any dispute between the 5 petitioner and the respondent No.2, the same shall be referred to the Commissioner of Sugar. Though vide communication dated 6th October, 2007, the respondent No.1 has not specifically stated that the parties should remain present for arbitral proceedings, in view of the specific clause in the agreement, it cannot be said that the respondent No.1 did not have jurisdiction to initiate the arbitral proceedings. Merely by not mentioning in the letter that the proceedings are arbitration proceedings, it could not be said that the respondent No. 1 could not have gone into arbitration proceedings, when there is specific clause with regard to the said arbitration and when the parties are aware about the said clause. Section 13 of the Arbitration and Conciliation Act, 1996 reads thus :- “13. Challenge procedure. - (1) Subject to sub- section (4), the parties are free to agree on a procedure for challenging an arbitrator. (2) Failing any agreement referred to in sub- section (1), a party who intends to challenge an arbitrator shall, within fifteen days after becoming aware of the constitution of the arbitral tribunal or after becoming aware of any circumstances referred to in sub-section (3) of Section 12, send a written statement of the reasons for the challenge to the arbitral tribunal. (3) Unless the arbitrator challenged under sub- 6 section (2) withdraws from his office or the other party agrees to the challenge, the arbitral tribunal shall decide on the challenge. (4) If a challenge under any procedure agreed upon by the parties or under the procedure under sub-section (2) is not successful, the arbitral tribunal shall continue the arbitral proceedings and make an arbitral award. (5) Where an arbitral award is made under sub- section (4), the party challenging the arbitrator may make an application for setting aside such an arbitral award in accordance with section 34. (6) Where an arbitral award is set aside on an application made under sub-section (5), the Court may decide as to whether the arbitrator who is challenged is entitled to any fees.” It could thus be clear that the parties are free to agree on a procedure for challenging an arbitrator. If there is a failure of any agreement, the party who intends to challenge an arbitrator is entitled to send written statement of the reasons for the challenge to the arbitral tribunal. Thereafter an option is given to the arbitrator to withdraw from the arbitration or to decide the question of challenge. It is further provided under sub- section (4) that if a challenge under any procedure is not successful, the arbitral tribunal shall continue arbitration proceedings and make an arbitral award. Thereafter a remedy is provided to the parties aggrieved 7 to challenge the award of making an application for setting aside such an arbitral award in accordance with Section 34. It can thus be seen that complete Code is provided for challenge to the question of impartiality or independence of the Arbitrator. In that view of the matter, I find that the present petition under Article 226 and 227 is not maintainable. The same is, therefore, dismissed. It is needless to state that if the petitioner so desires, it may proceed under Section 13 of the said Act. In the event, if the petitioner so choses to invoke the provisions of Section 13 of the said Act then the period of 15 days which is provided under sub Section (2) of Section 13 would begin from today. It is further directed that the respondent No.1 shall not take any coercive steps against the petitioner for the period of three weeks from today. An ordinary copy of this order be supplied to the learned Counsel appearing on behalf of the respective parties. JUDGE *rrg.