Bombay High Court Sets Aside Arbitral Award Due to Arbitrator Disqualification in Multi-State Cooperative Dispute. Failure to Disclose Bias and Withdrawal from Similar Matters Constitutes Grounds for Setting Aside Under Section 34 of Arbitration and Conciliation Act, 1996.

Petition under Section 34 of the Arbitration and Conciliation Act, 1996 to set aside an arbitral award.

The petitioner bank sought to set aside the arbitral award dated 24 September 2009 passed by the arbitrator.

The petitioner alleged that the arbitrator was disqualified due to bias, as he had withdrawn from over 4050 similar matters involving the same bank, and failed to disclose this fact.

The arbitrator passed an award on 24 September 2009 in favor of the respondents. The petitioner did not raise an objection under Section 13 during the arbitration proceedings.

Whether the arbitral award can be set aside under Section 34 of the Arbitration and Conciliation Act, 1996 on the ground of arbitrator disqualification due to bias, where the arbitrator had withdrawn from numerous similar matters involving the same party but did not disclose this fact. Whether the failure of the petitioner to raise an objection under Section 13 during the arbitration proceedings bars it from raising the issue in a Section 34 petition.

The petitioner argued that the arbitrator was disqualified as he had withdrawn from over 4050 other matters involving the same bank due to allegations of bias, and this disqualification applied to the present case. The arbitrator's failure to disclose this fact goes to the root of the matter. The respondents contended that the petitioner did not raise any objection under Section 13 during the arbitration proceedings and that the arbitrator was not made a party to the petition. They argued that the allegations were not relevant to the present case.

An arbitral award can be set aside under Section 34 of the Arbitration and Conciliation Act, 1996 if the arbitrator was disqualified due to bias, even if the objection was not raised during the proceedings, where the disqualification goes to the root of the matter and the arbitrator failed to disclose relevant facts such as withdrawal from numerous similar matters involving the same party.

After hearing both the parties and considering the rival submissions so raised, I am inclined to interfere with the Award based upon the reasons already recorded in the Order dated 27 April 2012. The basic ground is raised on the foundation of Arbitration Case No. ARB/SCB/001/2009, wherein an application under Section 13 of the Arbitration Act, the contesting party raised specific objection based upon the averments, that the same Arbitrator, in other, as many as more than 4050 matters disqualified and withdrew from the Arbitration proceedings. Therefore, those grounds and objections so raised with regard to the disqualification of the Arbitrator, in my view, and as contended, goes to the root of the matter.

The petitioner bank filed a dispute under Section 91 of the Maharashtra Cooperative Societies Act. An arbitrator was appointed under Section 84 of the Multi-State Cooperative Societies Act, 2002, who passed an award on 24 September 2009. The bank filed Arbitration Petition No. 461 of 2010 under Section 34 of the Arbitration and Conciliation Act, 1996 to set aside the award. The petition was heard on 27 April 2012, 4 May 2012, 7 May 2012, 10 May 2012, and finally on 11 May 2012, when judgment was reserved. Judgment was pronounced on 11 June 2012.

• Arbitration and Conciliation Act, 1996: Section 13, Section 34
• Multi-State Cooperative Societies Act, 2002: Section 84
• Maharashtra Cooperative Societies Act: Section 91