:1: :1: :1: IN IN IN THE HIGH COURT OF JUDICATURE AT BOMBAY THE HIGH COURT OF JUDICATURE AT BOMBAY THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL CIVIL CIVIL APPELLATE JURISDICTION APPELLATE JURISDICTION APPELLATE JURISDICTION WRIT PETITION NO. 1841 OF 2008 Jayshree Soma Panchal and Ors. ...Petitioners Versus The Hon’ble Minister for Co-operation, Mantralaya and Ors. ....Respondents ====== Mr.S.U.Kamdar i/by. Mr.N.N.Bhadrashete, Adv. for the petitioners. Ms.V.S.Mhaispurkar, for respondent nos.1 to 3. Mr.Sameer Patil, AGP for respondent nos.1 to 3. CORAM: S.C.DHARMADHIKARI, J. DATED: 27TH MARCH, 2008. P.C. P.C. P.C. : : : 1. The petitioner is facing proceedings under Section 78(1) of the Maharashtra Co-operative Societies Act. A Show Cause Notice is issued on 4.10.2007 by the District Deputy Registrar, Co-operative Societies, Mumbai(1), City. :2: :2: :2: 2. The Show Cause Notice proceeds to allege that the present petitioners have failed to abide by the requirement of Section 73(1-AB) of the Maharashtra Co-operative Societies Act, 1960. Having not complied with this requirement, the petitioners must vacate the office and that is how the proceedings have commenced. Apart from the fact, that non-compliance is alleged, additionally, it is alleged in the Show Cause Notice that the Bonds which have been submitted and furnished to the office, do not appear to be genuine and the stamp paper and the contents thereof also, cannot be relied upon. 3. This Show Cause Notice is issued by the District Deputy Registrar, Shri Shashikanth Patangrao Ghorpade. Mr.Ghorpade has also given a statement before the concerned police station. His statement has been recorded after the Bonds/Stamp Papers have been seized and a complaint has been lodged by him alleging commission of criminal offences. The contents of the statement, copy of which has been annexed at pages 14A of the petition paper-book (Exhibit-B) are relied upon by Mr.Kamdar to urge that the District Deputy Registrar :3: :3: :3: has made up his mind that the Bonds have not been submitted within the requisite time. That apart, the Bonds submitted and furnished, do not disclose that the same have been furnished within the time stipulated by law. There are interpolations and insertions in the Stamp paper. In such circumstances, Mr.Kamdar, submits that if the proceedings pursuant to the Show Cause Notice, go on before this very Officer, then, it is likely that he will be influenced by his own statement. Mr.Kamdar, submits that, it is not the law that the proceedings should be vitiated actually by any bias but even a reasonable apprehension is enough. In such circumstances, the petitioners desire that the proceedings must go before some other Officer and they are ready and willing to appear before the same without questioning the territorial jurisdiction or Authority. 4. Ms.Mhaispurkar, learned AGP appearing for the state submits that the Show cause Notice under Section 78(1) and Criminal proceedings are distinct. One cannot have any bearing on the other. Merely because the statement of Mr.Ghorpade is recorded, that does not mean that the proceedings would not be decided fairly :4: :4: :4: and impartially by him. The presumption of Bias at this stage is without any basis. In these circumstances and when the matter is at the stage of Show Cause Notice, the Writ Petition be dismissed. 5. I have perused the petition, Show Cause Notice and the Statement with the assistance of the learned Counsel appearing for both sides. The view taken consistently by the Hon’ble Supreme Court in this regard is that, there must be purity in the administration of justice as well as, in the administration of quasi-judicial justice. Whenever the bias is alleged, then, the Adjudicator must not be guilty of any act which can possibly be construed as indicative of partiality or unfairness. In the context of arbitration proceedings by following the settled principles, this is what the Supreme Court has observed in AIR 1988 SC 1099 (International Airport Authority of AIR 1988 SC 1099 (International Airport Authority of AIR 1988 SC 1099 (International Airport Authority of India India India V/s. K.D.Bali and Anr.) V/s. K.D.Bali and Anr.) V/s. K.D.Bali and Anr.) "4. The main contention for the revocation of the authority of the Arbitrator was about the alleged apprehension in the mind of the petitioner about bias of the sole arbitrator. The learned Judge of the High Court was unable to accept any ground for alleged apprehension. :5: :5: :5: It is apparent as the learned Judge noted that respondent No.2 had complied with the directions of the arbitrator about the conduct of the proceedings but the petitioner went on seeking adjournments after adjournments. Respondent no.2 complained to the Arbitrator on 4th May 1987 about the delaying tactics adopted by the petitioner and thereupon the arbitrator directed that the haring would take place on 8th and 9th June, 1987 and no further adjournment would be granted. After this direction was given by the arbitrator, the petitioner addressed a letter dated 25th May, 1987 to the arbitrator objecting to the jurisdiction in respect of the second and third references. The objections to the jurisdiction raised by the petitioner were that the claim made in the second and third references were barred by principles analogues to Order II, Rule 2 of the Code of Civil Procedure, the Chief Engineer had no authority to refer the disputes to the arbitration, the claims made by respondent No.2 were beyond the stipulated period of 9 0 days and therefore were not arbitrable and the time for declaring the award having expired, the Arbitrator could not continue with the arbitration proceedings. On 8th June, 1987 as mentioned hereinbefore the learned advocate for the petitioner orally made submissions on the issue of jurisdiction and thereafter sought adjournment ill June 9, 1987 for filing written submissions. On 9th June, 1987 apart from filing written submissions further oral arguments were advanced and thereafter an adjournment was sought beyond June, 1987. This adjournment was sought because the time to declare the award was expiring by June, 1987. The hearing was adjourned till June,17, 1987 and again the petitioner’s advocate argued on preliminary objections about jurisdiction. The arguments were advanced on the next adjourned dates, that is, June 26 and June 27, 1987. It further appeared that as the time for making the Award had expired and the petitioner did not consent to the extension of time, :6: :6: :6: respondent No.2 filed petition to the High Court of Bombay for extension of time on June 21, 1987. Thereafter the petitioner made an application before the arbitrator under Section 13(b) of the Act calling upon the arbitrator to state special case for the opinion of the High Court on certain alleged legal objections. In the meanwhile the petition for extension of time filed in the Bombay High Court was granted and the time for declaring the Award was extended till January 15, 1988. Thereafter the arbitrator fixed the hearing on September 28, 1987 and the advocate for the petitioner again reiterated the preliminary objections to the jurisdiction of the arbitrator and insisted upon the arbitrator, passing an order on the application under Section 13(b) of the Act. The arbitrator rejected the preliminary objections by his order dated 3rd October, 1987 and also the application for stating special case to the High Court under Section 13(b) of the Act. The arbitration rejected the preliminary objections by his order dated 3rd October, 1987 and also the application for stating special case to the High Court under Section 13(b) of the Act. The petitioner’s Advocate thereupon sought adjournment of the hearing and accordingly hearing was adjourned on several dates. Ultimately, the arbitrator fixed the hearings on 30th October, 1987 and 31st October, 1987. The haring was postponed to 2nd November, 1987 and on that day the petitioner’s advocate remained absent. Thereafter the hearing proceeded on 6th November and 11th November, 1987 as well as on 13th, 18th and 19th November, 1987. Respondent no.2 concluded arguments, while the arguments on behalf of the petitioner were advanced on December 3, 1987. The arguments further proceeded on December 8 and 9, 1987. Thereafter on December 17, 1987 the present petition was filed for revocation of the appointment of respondent No.1 as the sole arbitrator. In our opinion, the above narration gives a glimpse how a party can try :7: :7: :7: to prolong a proceeding. " 5. Several points were taken in support of the application for revocation. It was sought to be urged that the petitioner had lost confidence in the sole arbitrator and was apprehensive that the arbitrator was biased against the petitioner. It is necessary to reiterate before proceeding further what are the parameters by which an appointed arbitrator on the application of a party can be removed. It is well settled that there must be purity in the administration of justice was well as in administration of quasi justice as are involved in the adjudicatory process before the arbitrators. It is well settled that once the the arbitrator enters in an arbitration, the arbitrator must not be guilty of any act which can possibly be construed as indicative of partiality or unfairness. It is not a question of the effect which misconduct on his part had in fact upon the result of the proceeding, but, of what effect it might possibly have produced. It is not enough to show that, even if there was misconduct on his part, the award was unaffected by it, and was in reality just; arbitrator must not do anything which is not in itself fair and impartial. See Russell on Arbitration, 18th Edition page 378 and observations of Justice Boyd in Re Brien and Brien, (1910) 21 R 84 at P.89. Lord O’Brien in King (De Vesci) v. Justices of Queen’s County, (1908) 2 IR 285 observed as follows : "By bias I understand a real likelihood of an operative prejudice, whether conscious or unconscious. There must in my opinion be reasonable evidence to satisfy us that there was a real likelihood of bias. I do not think that their vague suspicions of whimsical capricious and unreasonable people should be made a standard to regulate our action here. It might be a different matter if suspicion :8: :8: :8: rested on reasonable grounds was reasonably generated and but certainly mere flimsy ground elusively generated and morbid suspicions should not be permitted to form a ground of decision. " (Emphasis supplied) See Queen v.Rand, (1866) 1 QB 230; Ramnath v. Collector, Darbhanga, ILR 34 Pat 254: (AIR 1955 Pat 345); Queen v.Meyer, (1875) 1 QBD 173 and Eckersley v. Mersey Docks and Harbour Board, (1894) 2 QB 667. " 9. Thus, the law is well settled that vague suspicions cannot be made the foundation for alleging bias. The test is real likelihood of bias. once the test is satisfied and the case is resting not merely on suspicion,then, it cannot be said that the apprehension is not reasonable. In the present case, reading the statement of Shri.Ghorpade as a whole, it is clear to me that the tests laid down by the Hon’ble supreme Court have been satirised. In such circumstances and when there are several District Deputy Registrar’s available in the city of Mumbai, so also, the petitioners being ready and willing to appear before any of them, then, I see no reason as to why the request of the petitioners to change the Adjudicator cannot be acceded to by the State. I was rather :9: :9: :9: surprised by the stand of the State Government in this case. The State Government must ensure purity of the proceedings which are quasi-judicial in nature. Section 78 is indeed a drastic measure. Removal of a Member of a Committee or supersession thereof, are proceedings of last resort and are not resorted to frequently and casually. In such circumstances, assurance of impartiality in the process and giving guarantee of equity and justice, so also, fair play was expected from the State and the Adjudicator. 10. However, after arguing for some time, the learned AGP states that this court may pass appropriate orders. In such circumstances, it is directed that the District Deputy Registrar, Shri Ghorpade will not adjudicate upon these proceedings any further. The show Cause Notice having been issued by him, the proceedings must be dealt with by another District Deputy Registrar and Ms.Mhaispurkar, on instructions states that Mr.Milind Borikar, District Deputy Registrar, Co-operative Societies, Mumbai-Division will decide the matter. The petitioners to appear before him on the date and time notified by him. However, it will not be open for the :10: :10: :10: petitioners to urge that the said Mr.Borikar does not have the territorial jurisdiction or authority to deal with the matter. His jurisdiction on that ground cannot be questioned. The matter now to proceed before him. This Court has not expressed any opinion on the merits of the controversy. Further, if the charges are indeed serious, then, even the Criminal Case may proceed uninfluenced by the fact that this court has directed a change in the Adjudicator. All pleas in the criminal case are also kept open. The Writ Petition is disposed off in the above terms. No costs. sd/- ********