The Supreme Court on 20th Feb 2023 has considered to decide one of very important issue under Arbitration Proceedings "whether an arbitrator can be considered biased towards one party if the other party objects to their unilaterally increasing their fees". The Bench of Justices BR Gavai and Aravind Kumar while noting that a special bench for hearing arbitration matters was being constituted, if this issue could also be decided by the Special Bench.

The order reads, "Taking into consideration that the decision on the issue will have wider ramifications, the matter requires to be heard expeditiously...since a special Bench for taking up arbitration matters is being constituted, we direct the Registry to place the matter before the Hon’ble the Chief Justice of India for obtaining orders as to whether this matter can also be referred to the special Bench."

The appellant in the present case challenged a Madras High Court judgment on the ground that the High Court had failed to terminate the mandate of an arbitral tribunal owing to apprehensions of bias after the arbitrator had unilaterally increased their fees. The appellant had objected to the increase in fees of the arbitrator.

During the hearing, Additional Solicitor General N Venkataraman, appearing for the appellant, relying on the judgments in Union of India v Singh Builders Syndicate and Oil and Natural Gas Corporation Ltd v. Afcons Gunanusa JV, argued that if an arbitrator unilaterally increases their fees and the same is opposed by one of the parties, then there is likelihood of bias in the mind of the arbitrator against such a party.

Senior Advocate CA Sundaram, appearing for the respondent-M/S Transtonnelstroy Afcons, relied on the Supreme Court judgment in HRD Corporation v. Gail and argued that if a case of the parties is based on bias, then it will be covered under Section 13 of the Act of 1996. He added that the only stage at which such a challenge could be raised is after the award is passed by the tribunal. He also submitted that the case of bias would not automatically terminate the mandate of an arbitrator in terms of Section 14 of the Act.

"The judgment of this Court in the case of Union of India vs. Singh Builders Syndicate (supra) is rendered by a Bench of two Judges so also the HRD Corporation (Marcus Oil and Chemical Division) vs. Gail (India limited (Formerly Gas Authority of India Limited) (supra) is rendered by two learned Judges whereas the judgment in Oil and Natural Gas Corporation Ltd. vs. Afcons Gunanusa JV (supra) is by a Bench strength of three learned Judges."

Case Setails:-

M.A. No. 184/2023

Chennai Metro Rail Limited Administrative Building v. M/S Transtonnelstroy Afcons

Appearances of the Advocates:-

For Petitioner(s) 
Mr. N. Venkataraman, A.S.G.
Mr. Ritin Rai, Sr. Adv.
Mr. Sairam Arjun Suresh, Adv.
Mr. Chitranshul A. Sinha, Adv.
Mr. Raghavendra Ross Divakar, Adv.
Mr. Jaskaran Singh Bhatia, Adv.
For M/S. Dua Associates, AOR

For Respondent(s)
Mr. C A Sundaram, Sr. Adv.
Mr. K V Vishwanathan, Sr. Adv.
Mr. Manu Seshadri, Adv.
Mr. Aveak Ganguly, Adv.
Mr. Abhijit Lal, Adv.
Ms. Pallavi Anand, Adv.
Mr. Mithu Jain, AOR