RESPONDENT: K.D. BALI & ANOTHER DATE OF JUDGMENT29/03/1988 MUKHARJI, SABYASACHI (J) MUKHARJI, SABYASACHI (J) RANGNATHAN, S. CITATION: 1988 AIR 1099 1988 SCR (3) 370 1988 SCC (2) 360 JT 1988 (2) 1 1988 SCALE (1)631 CITATOR INFO : R 1988 SC2232 (13) D 1991 SC 933 (11) ACT: Arbitration Act, 1940Whether a party to arbitration proceedings can seek revocation of authority of the arbitrator appointed under sections 5 and 11Ofon apprehension in the mind of such a party about bias of the arbitratorDetermination of the question. HEADNOTE: % This petition for special leave was against the judgment and order of the High Court of Bombay, rejecting the application for revocation of the authority of the respondent No. 1, the sole arbitrator under sections 5 and 11 of the Arbitration Act, 1940 ('The Act'). The petitioner invited tenders for the construction of the terminal building of a new international passenger complex (Phase II) at the Bombay Airport. The respondent No. 2, a partnership firm, submitted a tender which was accepted and a formal agreement followed, with a provision in the agreement for settlement of disputes through a sole arbitrator appointed under clause 25 of the conditions of contract by the competent authority. Certain disputes arose in which the petitioner sought claims amounting to Rs.85 lakhs. The respondent No. 2the contractorapproached the petitioner to refer the disputes to arbitration. The Chief Engineer of the petitioner appointed respondent No. 1 as the arbitrator and made a reference with regard to the claim of Rs.85 lakhs. The respondent No. 2 asked the Chief Engineer to refer further disputes to the arbitrator and, accordingly, on 16th May, 1986, a second reference was made with regard to 11 further points of dispute with claims amounting to Rs.1.17 crores. On 23rd December, 1986, the Chief Engineer made reference No. 3 to the Arbitrator with regard to claim amounting to Rs.5.81 crore. Thereafter, by applications of 8th and 9th June, 1987, the petitioner expressed objections to the references Nos. 2 and 3 made by the Chief Engineer contending that the references were null and void, being irregularly made, and took preliminary objections before the arbitrator to the arbitration proceedings, being lack of jurisdiction of the arbitrator on the ground that he was not validly appointed so far as references Nos. 2 and 3 were concerned. On 7th 371 August, 1987, the petitioner made an application before the arbitrator under section 13(b) of the Act with the request to state the matter before him for the opinion of the Court as special case. The arbitrator by his order dt. 3rd October, 1987, rejected the said application and the preliminary objections of the petitioner. Thereafter, the petitioner alleging that the arbitrator had formed his own opinion regarding the matters in issue, filed an appliction before the High Court for the revocation of the authority of the arbitrator on the ground of apprehension in the petitioner's mind about bias of the arbitrator. The High Court by its judgment and order dt. 2nd February, 1988, rejected the application of the petitioner. The petitioner then moved this Court for relief by special leave. Dismissing the petition for special leave, the Court, ^ HELD: It was necessary to reiterate first what are the parameters by which an appointed arbitrator can be removed on the appliction of a party. It is wellsettled that there must be purity in the administration of justice as well as quasijustice involved in the adjudicatory process before the arbitrator. Once the arbitrator enters on an arbitration, he 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 a 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; the arbitrator must not do anything which is not in itself fair and impartial. In the words of Lord O'Brien, L.C.J, there must be a real likelihood of bias and not a mere suspicion of bias before proceedings can be quashed on the ground that the person conducting the proceedings