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Synopsis

The Supreme Court has said that skipping the statutory route carefully devised by Parliament can cast yet more spells of uncertainty upon the arbitration process as it rejected the Chennai Metro's plea raising apprehension of bias and impartiality of arbitrators in its dispute with Afcons.

A bench of Justices S Ravindra Bhat and Aravind Kumar directed the arbitrators to resume the proceedings and decide the case in accordance with law. 

The top court upheld the Madras High Court's order, rejecting the Chennai Metro's plea concerning the revised fees by the three members arbitral tribunal.

"The attempt by Chennai Metro to say that the concept of de jure ineligibility because of existence of justifiable doubts about impartiality or independence of the tribunal on unenumerated grounds [or other than those outlined as statutory ineligibility conditions in terms of Sections 12 (5)], therefore cannot be sustained. We can hardly conceive of grounds other than those mentioned in the said schedule, occasioning an application in terms of Section 12 (3)," the bench said.

On behalf of Chennai Metro, Additional Solicitor General N Venkataraman and advocate Ritin Rai argued that the unilateral increase of fee by the tribunal despite the protests or objections of one of the disputing parties, was impermissible in law, which rendered the tribunal being exposed to the charge that justifiable grounds about their continuing to be impartial, arose. 

Despite resistance by Chennai Metro, the tribunal’s insistence that it would continue with the proceedings and charge the higher amount which was not agreed by both parties, led to a reasonable apprehension of bias which goes into the root of the proceedings, they said.

Senior advocate Darius J Kambhatta for Afcons contended that application under Section 14 of the Arbitration and Conciliation Act, was not maintainable. He submitted that the application was not maintainable.

There is a distinction between two terms “bias and impartiality” as bias is synonymous with partiality and therefore opposed to the concept of impartiality. If an individual is biased, automatically he cannot be deemed impartial. Both bias and partiality are interchangeable, and the underlying premise for both is the existence of a prejudiced outlook which is opposed to the fundamental tenet of impartiality, he said. 

He pointed out that the expression used by the Chennai Metro in its Section 14 petition was only “impartial”.

Rejecting the Chennai Metro's contention, the bench said that in case, the top court were in fact make an exception to uphold its plea, the consequences could well be an explosion in the court docket and other unforeseen results. 

"Skipping the statutory route carefully devised by Parliament can cast yet more spells of uncertainty upon the arbitration process. In other words, the de jure condition is not the key which unlocks the doors that bar challenges, mid-stream, and should 'not to unlock the gates which shuts the court out' from what could potentially become causes of arbitrator challenge, during the course of arbitration proceedings, other than what the Act specifically provides for," the bench said.

Chennai Metro Rail Limited, a joint venture between the central government and the Tamil Nadu government, had, pursuant to a public tender, awarded the contract to the respondent Afcons for a project the total value of Rs 1566 crores. The contract was signed on January 31, 2011. Eventually, on April 15, 2021, Afcons sought a reference of several heads of disputes to arbitration after certain interlocutory proceedings, leading to reference of the dispute to thre member arbitral tribunal.

Case Title:Chennai Metro Rail Corporation v. S Transtonnelstroy Afcons (JV) & Anr.