IN THE HIGH COURT OF JUDICATURE AT MADRAS DATE: 25.11.2008. CORAM THE HON'BLE MR.JUSTICE M.JEYAPAUL O.P.No.445 of 2008 1. K.C.Palanisamy 2. Sporting Pastime India Limited, 19, Kothari Road, Chennai and having its Administrative & Corporate Office at 78, Govt. Arts College Road, Coimbatore. Petitioner vs. 1. Kasturi & Sons Limited, rep by its Joint Managing Director, 859 & 860, Anna Salai, Chennai 600 002. 2. Hindcorp Resorts Private Limited, 859 & 860, Anna Salai, Chennai 600 002. 3. Mr.Justice K.Venkataswami (Retd.,) 75, First Avenue, Indiranagar, Adyar, Chennai 600 020. 4. Mr.S.Vijayaraghavan 5. Mr.Chandrakant Kamdar Respondents For petitioners : Mr.Karthik Seshadri for M/s.Iyer & Thomas For R1 and R2 : Mr.Arvind Dattar, Senior Counsel for M/s.Feroz Ali ORDER Invoking the provision under section 14(2) of the Arbitration and Conciliation Act, 1996, the present petition is moved by the petitioners. 2. The averment found in the petition reads as follows:- A commercial agreement dated 19.7.2004 came to be executed between the first petitioner on the one hand and the first respondent, the second petitioner and the second respondent on the other. The first respondent raised a dispute that led to the constitution of an arbitral Tribunal consisting of third, fourth and fifth respondents. The third respondent is the Presiding Arbitrator. The fourth respondent was nominated by the first and second respondents and the fifth respondent was nominated by the first petitioner. During the arbitration proceedings, a consent award came to be passed on 9.4.2007. The first petitioner could not further make payment as agreed. The arbitrators proceeded to hold a hearing on 2.11.2007 to consider the effect of the breach of consent. After hearing, orders were reserved on 2.11.2007. The first and second respondents sent a letter dated 7.12.2007 seeking to file additional documents and submit additional submissions. The matter was re-opened by the Arbitrators at the instance of the first and second respondents. Whileso, on 5.6.2008, the fifth respondent, who was nominated by the first petitioner, telephonically informed the first petitioner that he was having some personal difficulties in proceeding with the arbitration and therefore, he wanted to resign. The fifth respondent informed the first petitioner that he was, therefore, resigning. The first petitioner immediately informed the Arbitral Tribunal, by his letter dated 5.6.2008, about the resignation of the fifth respondent and informed the Tribunal that he would immediately fill up the vacancy with another arbitrator. There was no denial on the part of the fifth respondent of his resignation. The Presiding Arbitrator has minuted that the fifth respondent informed him that he was always willing to participate in the arbitral proceedings provided the venue was at Mumbai as his present health would not permit travel. The petitioners were perplexed at the contrary stand indicated in the aforesaid proceedings. The fifth respondent's withdrawal was accepted by the nominating authority. The fifth respondent's volte face creates grave doubts in the minds of the petitioners as to his continued independence. The facts and circumstances would cumulatively disclose that, ipso facto and ipso jure, the fifth respondent has become incapable of acting as an Arbitrator. Therefore, the petitioners pray for a declaration that the fifth respondent has ceased to be an Arbitrator to adjudicate upon the disputes between the petitioners and the first and second respondents arisen out of the agreement dated 19.7.2004. 3. The first respondent has contended in the counter affidavit as follows:- The petition filed under section 14(2) of the Arbitration and Conciliation Act, 1996 (in short 'the Act') is not maintainable and is a blatant abuse of the process of law. Instead of writing a personal rebuttal to the first petitioner, the fifth respondent addressed a communication dated 27.6.2008 to all the parties concerned confirming his stand that he had not resigned and that he continued to be an arbitrator. There is no document before the court to demonstrate that the fifth respondent has expressed his inability to act as Arbitrator. There is no material to substantiate the allegation that a doubt lingers in the mind of the first petitioner about the impartiality or independence of the fifth respondent. If the case of the petitioners is based on impartiality and independence, the grounds for challenge as adumbrated under section 12 shall be decided by adopting the procedure mentioned in section 13 of the Arbitration and Conciliation Act, 1996. The first petitioner has created a controversy unilaterally. There is no subsisting controversy inasmuch as the fifth respondent has unconditionally stated that he had not resigned and he continued to be an arbitrator. The Presiding Arbitrator ascertained the stand of the fifth respondent Mr.C.Kamdar. He affirmed his willingness to continue and sent a communication also to the Presiding Arbitrator reaffirming his earlier stand. Therefore, the petition does not survive legal scrutiny. 4. Mr.Karthik Seshadri, learned counsel appearing for the petitioners would submit that the allegation that the first petitioner received telephonic communication from the fifth respondent that he was resigning on health grounds was not denied by the fifth respondent. It would go to show that a message was sent by the fifth respondent that he was resigning as arbitrator from the Arbitral Tribunal presided over by the third respondent. Once the fifth respondent has resigned as an Arbitrator, the petitioners have the right under section 15 of the Act to appoint a substitute of his choice. It is true that challenge can be made invoking the provision under section 13 of the Act if circumstances existed giving rise to justifiable doubt as to the independence or impartiality of an arbitrator as adumbrated under section 12(3)(a) of the Act. But, there is no bar to approach the court on the very same ground invoking the provision under section 14 of the Act as challenge as to de jure disability as contemplated under section 14(1)(a) can be made before the court under section 14(2) of the Act. Having resigned as an arbitrator and duly intimated to the first petitioner, the fifth respondent cannot now turn around and say that he has not resigned and he continues to be an arbitrator. The very fact that the fifth respondent has resiled from his telephonic communication with the first petitioner would go to show that the independence and impartiality of the fifth respondent shrouded in mystery. Therefore, he would submit that it is a fit case where the court will have to intervene invoking the provision under section 14(2) of the Act to declare that the fifth respondent ceased to be an arbitrator to adjudicate upon the disputes between the petitioners and the first and second respondents. 5. Mr.Aravind Dattar, learned Senior Counsel appearing for respondents 1 and 2 would submit that only minimum judicial interference is warranted under the scheme of Arbitration and Conciliation Act. This court has already held that for the grounds under section 12(3)(a) of the Act, the challenge procedure as contemplated under section 13 of the Act alone will have to be resorted to. In O.P.No.390 of 2008 filed by the first respondent, the Bench of this court directed the Presiding Arbitrator to ascertain whether the fifth respondent herein was willing to continue as arbitrator and on ascertaining such position to proceed with the matter in accordance with law. Further, there was no controversy for suitable remedies without exhausting the grounds of challenge under section 12 as per the procedure contemplated under section 13 of the Act. Section 14(2) of the Act cannot be invoked inasmuch as the fifth respondent has expressed his willingness to continue as arbitrator and has categorically stated that he had never resigned as an arbitrator. Therefore, there is no cause of action for the petitioners to approach this court under section 14(2) of the Act. He would contend for the foregoing reasons that the Original Petition does not merit consideration. 6. The first respondent filed O.P.No.390 of 2008 before the Honourable First Bench of this court seeking to declare the appointment of Mr.S.Parthasarathy, Senior Advocate as Arbitrator by the petitioners herein as illegal, void and ultra vires to the Arbitration and Conciliation Act, 1996. The Honourable First Bench disposed of the aforesaid O.P directing the Presiding Arbitrator to ascertain the willingness of the fifth respondent to continue as Arbitrator and proceed with the matter in accordance with law. 7. The scope of the above O.P is totally different from the scope of the present petition filed invoking the provision under section 14(2) of the Act. The points which have arisen in the present petition for determination are whether the fifth respondent has resigned as arbitrator and whether his impartiality and independence are shrouded in doubt. Therefore, the nature of disposal of O.P.No.390 of 2008 by the Honourable First Bench of this court does not militate against the present proceedings initiated by the petitioners herein. 8. It is important to refer to the communication directly sent by the first petitioner to the Arbitrators viz., respondents 3 to 5 on 5.6.2008. In the said communication, the first petitioner has informed the arbitrators that he received telephonic communication from the fifth respondent Mr.C.Kamdar that he had resigned from the Arbitral Tribunal as he was unable to continue as Arbitrator for certain personal reasons. The first petitioner further informed that the fifth respondent had become de facto unable to act further. He proposed to appoint another Arbitrator in his place in accordance with the Arbitration Act. In all fairness, the first petitioner should have passed on this information to the Arbitrators only through his counsel, but, he has chosen to communicate to the Arbitrators directly despite the fact that his counsel was representing him. The direct communication by a litigant to a Presiding Officer smacks off lack of ethics known to judicial or quasi-judicial functions. 9. The counsel for the petitioners herein informed the arbitrators that the fifth respondent had resigned from the arbitration and therefore, the Arbitral Tribunal has become coram non judice. Having received such a communication dated 24.6.2008 from the counsel for the petitioner, the fifth respondent shot back vide his e-mail communication dated 27.6.2008 that he had not resigned as Arbitrator from the Arbitral Tribunal in the subject arbitration matter and that he continued to be an Arbitrator. 10. It is true that the alleged telephonic conversation, the fifth respondent had with the first petitioner was not referred to in the e-mail communication dated 27.6.2008 sent by the fifth respondent to the other Arbitrators and the counsel on either side. The fifth respondent, being an Arbitrator, might not have ventured to generate controversy as to the allegations of telephonic conversation between the fifth respondent and the first petitioner. But, the affirmative stand of the fifth respondent that he had not resigned from the Arbitral Tribunal and that he continued to be an Arbitrator in the Tribunal puts an end to the controversy trumpeted by the first petitioner. 11. Of course, the fifth respondent wanted to have the hearing at Mumbai for health reasons. But, such a stand of the fifth respondent does not imply that he wanted to back out from the Arbitral Tribunal on health grounds. 12. No arbitrator would stoop to a level of communicating to the party instead of taking the Arbitral Tribunal into confidence that he had resigned from the Tribunal. Secondly, had he telephonically communicated so to the first petitioner, he would not have resiled from such a stand within a short span of time. 13. It is only the Arbitral Tribunal which can decide whether one of its members resigned or withdrawn from the Arbitral Tribunal. No litigant can jump to a conclusion unilaterally having exercised his option to appoint an Arbitrator of his choice that his nominee had resigned from the Arbitral Tribunal. When a decision was arrived at by the Arbitral Tribunal that there was no resignation of one of its members, a litigant cannot seek to resort to section 15 of the Act on the assumption that his nominee had resigned from the Arbitral Tribunal. There is no substantial material to show except the ipse dixit of the first petitioner that the first respondent resigned from the Arbitral Tribunal. A doubt which lingers in the mind of a litigant as to the impartiality and independence of the Arbitrator should be a reasonable one. Giving credence to imaginary doubts entertained by a litigant will lead to disastrous conclusions. There is nothing on record to show that the fifth respondent Mr.C.Kamdar lacked independence and impartiality. Therefore, such spurious allegations made by one of the parties to the arbitration proceedings without any basis will have to be condemned as otherwise a litigant who wants to stall the expeditious disposal of the arbitration proceedings would try to project some frivolous and unworthy allegations in order to walk out with impugnity. 14. Section 12 of the Act deals with the grounds for challenge. As per section 12(3) of the Act, an arbitrator may be changed if circumstances exist to give rise to justifiable doubt as to his independence and impartiality. Section 13 of the Act deals with the challenge procedure. The Arbitral Tribunal has been empowered to adjudicate the challenge made before it by a party invoking the provision under section 12 of the Act. But, in a case where an arbitrator becomes de jure or de facto unable to perform his functions or for other reasons fails to act without undue delay and he withdraws from his office, the mandate of an Arbitrator stands terminated automatically as per section 14 of the Act. If a controversy with respect to de jure or de facto inability of an arbitrator remains, a party may approach the court to decide on the termination of the mandate. Section 15 deals with substitution of an Arbitrator by a party on the termination of his mandate. 15. An arbitrator is supposed to be independent and impartial. If he lacks such a basic trait, then we can easily construe that he suffers from inability to perform his functions. It is true that challenge on the ground adumbrated under section 13(3)(a) of the Act shall be made within fifteen days on coming to know of the existence of such circumstances before the Arbitral Tribunal as per section 13(2) of the Act. The cumulative reading of sections 12, 13 and 14 of the Act would go to suggest that challenging the independence and impartiality of an Arbitrator, a party can approach the Arbitral Tribunal to redress his grievance. But, in case, he fails to do so, he is not debarred from resorting to section 14 of the Act as the challenge with respect to independence and impartiality of an arbitrator falls within the domain of de jure disability as contemplated under section 14(1)(a) of the Act. Therefore, the party, who harbours a justifiable doubt as to the independence or impartiality of an Arbitrator, can either resort to the challenge procedure before the Arbitral Tribunal as contemplated under section 13(2) of the Act or approach the court for necessary relief under section 14(2) of the Act. But, a party can choose either of the fora. He cannot challenge the legal disability both before the Arbitral Tribunal and also before the court. 16. This court, in its decision in E.LOGISTICS PRIVATE LIMITED AND V.SANJEEVI vs. FINANCIAL TECHNOLOGIES INDIA LIMITED AND OTHERS (O.A.No.468 of 2006 dated 14.11.2006) held as follows:- " 25. Insofar as the allegation of bias is concerned, the applicants have to send a written statement of the reasons for the challenge to the arbitral tribunal under Section 13 of the Act, 1996 and has to follow the further procedure contemplated under Section 13 of the Act. 26. But the applicants without following the procedure contemplated under Section 13 and 16 of the Act, have straight away filed the above application under Section 14 read with 12 of the Act, 1996 which is not maintainable. The scope of judicial intervention is very minimal under the Act, 1996 and as per Section 5 of the Act courts shall not intervene where adequate procedures are contemplated in the Act. Therefore I am not inclined to terminate the mandate of the 6th respondent as prayed for." 17. No argument has been advanced before this court while deciding the aforesaid case with regard to the scope of de jure disability confronted by an Arbitrator while discharging his functions. Therefore, there was no occasion for the court in the above case to decide whether the challenge as to the de jure or de facto disability would encompass the challenge as to the independence or impartiality of an Arbitrator. Therefore, the aforesaid observation made by this court sans discussion with respect to the de jure or de facto disability as contemplated under section 14(1)(a) of the Act does not pose an impediment to decide in the light of the discussion embarked upon by me that the de jure disability which includes lack of independence or impartiality can be challenged at the option of the party aggrieved either before the Arbitral Tribunal or before the court. 18. In STATE OF ARUNACHAL PRADESH v. SUBHASH PROJECTS AND MARKETING LTD. AND ANOTHER ((2006)3 GLR 939), the Bench of the High Court of Gauhati, in a commendable decision, has held as follows:- "We, therefore, hold that a party who had either abstained from or omitted to raise a challenge to the independence or impartiality of an arbitrator under Section 13(2) of the Act would not be debarred from invoking Section 14 contending that the arbitrator had become de jure unable to perform his functions. Independence and impartiality of an arbitrator being inseverable attributes to vest him with the legal authority to adjudicate the differences between the parties in an arbitration exercise, he would be de jure disqualified from discharging his functions once he renounces the above qualities. This according to us is the mandate of Sections 12, 13 and 14 which form a complete scheme with the underlying objective of securing the sanctity and probity of an arbitration proceeding." 19. I am in respectful agreement with the aforesaid decision of the Bench of Gauhati High Court. Therefore, there is no difficulty in holding that the petition filed by the petitioners challenging the continuance of the fifth respondent on the plea of de jure or de facto disability is well maintainable before the court under section 14(2) of the Act. But, as rightly pointed out by the learned Senior Counsel appearing for respondents 1 and 2, there is no material to show that the fifth respondent lacked independence or impartiality. 20. Further, resignation of the fifth respondent from the Arbitral Tribunal is only in the surmise and speculation of the first petitioner. There is no basis for the plea that the fifth respondent had already resigned from the Arbitral Tribunal. The third respondent has rightly ascertained from the fifth respondent and has come to the conclusion that the fifth respondent has not resigned his position and continues to be an Arbitrator. Further, the controversy raised by the first petitioner with regard to the resignation of the fifth respondent from the Arbitral Tribunal was set at rest by the fifth respondent himself and the same was ascertained by the third respondent in his capacity as a Presiding Arbitrator. Only when a controversy with respect to de jure or de facto disability remains, can a challenge be made before the court invoking the provision under section 14(2) of the Act. There was no subsisting controversy revolving around the bogey of resignation raised by the first petitioner. 21. In view of the above facts and circumstances, no ground has been made out to declare that the fifth respondent has ceased to be an Arbitrator to adjudicate upon the disputes between the petitioners and first and second respondents. Therefore, the petition stands dismissed with costs. 25.11.2008. Index : Yes. Internet: Yes. ssk. M.JEYAPAUL, J. Ssk. P.D. ORDER IN O.P.No.445 of 2008 Delivered on 25.11.2008.