Calcutta High Court
West Bengal Industrial Development … vs Tata Motors Limited on 19 June, 2025
Author: Aniruddha Roy
Bench: Aniruddha Roy
IN THE HIGH COURT AT CALCUTTA
ORDINARY ORIGINAL CIVIL JURISDICTION
[COMMERCIAL DIVISION]
ORIGINAL SIDE
Present:
The Hon'ble Justice Aniruddha Roy
AP-COM/88/2024
IA No. GA No. 1 of 2025
WEST BENGAL INDUSTRIAL DEVELOPMENT CORPORATION LTD.
VS.
TATA MOTORS LIMITED
For the award-holder: Mr. Sudipto Sarkar, Sr. Advocate
Mr. Siddhartha Mitra, Sr. Advocate
Mr. Deepan Kr. Sarkar, Advocate
Mr. Samridha Sen, Advocate
Mr. Soumitra Datta, Advocate
For the award-debtor: Mr. Kishore Datta, Advocate General
Mr. T.N. Siddique, Advocate
Mr. Manoj Kumar Tiwari, Advocate
Mr. Deepank Anand, Advocate
Ms. Arpita Dey, Advocate
Reserved on: 24.04.2025
Judgment on: 19.06.2025
ANIRUDDHA ROY, J.:
Facts:
1. This GA No. 1 of 2025 is an application taken out by the award-debtor
(WBIDC) as an interlocutory application in a proceeding filed by it under
Sub-Section 2 to Section 36 of the Arbitration and Conciliation Act,
1996. In the application filed by the award-debtor under Sub-Section 2 to
2Section 36 of the Arbitration Act, an unconditional stay of operation of the
award dated November 30, 2023 passed by the Arbitral Tribunal and the
consequential interim order have been prayed for.
2. From time to time the said application filed by the award-debtor under
Sub-Section 2 to Section 36 of the Arbitration Act has been substantially
heard. The award-debtor has concluded his submissions. Opposing the
submissions of the award-debtor, the award-holder has also concluded its
submissions. On April 3, 2025 when the day was fixed for commencing
submissions by the award-debtor in reply to the submissions of the award-
holder, the instant application GA No. 1 of 2025 has been moved, at the
fag end of hearing of the main application filed by the award-debtor under
Sub-Section 2 to Section 36 of the Arbitration Act.
3. The grounds on which the instant application has been filed and the case
made out therein would appear from the averments made in the
application. The relevant averments are quoted below:
“3. It is respectfully submitted that the Section 36
Application is currently being heard by this Hon’ble
Court, and the next hearing is scheduled on 3 April
2025 for rejoinder arguments by the Petitioner.
4. As set out in detail in the Section 36 Application,
there existed (and continue to exist) circumstances
which give rise to justifiable doubts as to the
independence and impartiality of the Learned
Presiding Arbitrator. For reasons unknown to the
Petitioner, the Learned Presiding Arbitrator chose not
to and/or did not disclose his
association/relationship/engagements with TML,
which continued during the currency of the arbitral
proceedings. The Petitioner has filed various
documents on record evidencing the relationship
3between the Learned Presiding Arbitrator and TML,
and has raised specific allegations of bias against the
Learned Presiding Arbitrator.
5. The fact that the Learned Presiding Arbitrator did
attend the events on several occasions, as appearing
from the above documents, is not in dispute. It is also
not in dispute that the Learned Presiding Arbitrator
did not make any disclosure regarding these repeated
engagements with TML. Respondent however asserts
that bias is not a ground for grant of an unconditional
stay on the operation of an arbitral award, and that
this Hon’ble Court should not go into the question of
bias at all since the Learned Presiding Arbitrator has
not been made a party to the present proceedings. Be
that as it may, it is the case of the Petition that owing
to the unexpected conduct of the Learned Presiding
Arbitrator, coupled with the denial of equal treatment
and opportunity in the arbitration, the Award is in
conflict with the public policy of India and the making
of the Award is affected by fraud and/or corruption. It
is respectfully submitted that the operation of the
Award is therefore liable to be unconditionally stayed.
6. In support of the above submissions, during
arguments, the Application/Petitioner had relied upon
various judicial precedents. Amongst others, the
Petitioner had placed reliance on the decision of the
Hon’ble Supreme Court in Vinod Bhaiyalal Jain vs.
Wadhwani Parmeshwari Cold Storage, reported as
(2020) 15 SCC 726, and the decision of the Hon’ble
Delhi High Court in Microsoft Corporation vs. Zoai
Founder, reported as 2023 SCC OnLine Del 3800.
In both these cases, there was an allegation of bias
against the arbitrator.
7. In the hearing held on 7 January 2025, it was
contended by the Respondent that:
-in both the decisions cited by the Petitioner, viz.,
Vinod Bhaiyalal Jain vs. Wadhwani
Parmeshwari Cold Storage, reported as (2020) 15
SCC 726, and Microsoft Corporation vs. Zoai
Founder, reported as 2023 SCC OnLine Del 3800,
4the arbitrator in question was made a party to the
proceeding;
-the issue of bias cannot be decided in the absence of
the Learned Presiding Arbitrator;
-since the Learned Presiding Arbitrator has not
been made a party to the present proceeding, this
Hon’ble Court should not go into the question of bias
at all;
-the Learned Presiding Arbitrator has to be heard
and failure to do so will result in gross injustice.
8. In support of the above submissions, the
Respondent placed reliance on a judgment of the
Hon’ble Madras High Court in Kothari Industrial
Corporation Limited v. Southern Petrochemicals
Industries Corporation Limited, reported as (2021)
SCC OnLine Mad 5325. The relevant portion of the
above judgment is extracted herein below:
“2. For a start, the name of the second respondent
is deleted from the array of parties. It is a pernicious
practice in this court to implead arbitrators or arbitral
tribunals when there is no need to do so. Often,
arbitrators are embarrassed upon receipt of notice. It
is only in a rare case when a personal allegation is
made against an arbitrator may such arbitrator be
impleaded. Just as in case of a revision or an appeal
the lower forum or the Judge manning the lower forum
is not impleaded as a party, in proceedings under
Section 34 of the Arbitration and Conciliation Act,
1996, the arbitrator or the members of the arbitral
tribunal are utterly unnecessary parties unless
specific personal allegations are levelled against them
that would require such persons to answer the
allegations.”
9. It is respectfully submitted that when the Petitioner
had filed the Section 36 Application, it was fully
conscious of the legal position summarized in the above
decision of the Hon’ble Madras High Court. However,
given the seriousness of the issue and the sensitivity
involved, the Petitioner exercised utmost restraint and
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caution- and did not implead the Learned Presiding
Arbitrator. In view of the submissions made by the
Respondent, the Petitioner agrees with the Respondent
and submits that the Learned Presiding Arbitrator
should be requested to clarify his association with the
Respondent as reflected from the documents annexed
at Pages 222 to 260 of the Section 36 Application, and
for such purpose, the Learned Presiding Arbitrator may
be impleaded in the array of respondents in the Section
34 Application as well as the Section 36 Application.
10. The Petitioner respectfully submits and concurs
with the Respondent that any order passed in the
present proceedings will have a direct bearing on the
Learned Presiding Arbitrator. It is therefore submitted
that the Learned Presiding Arbitrator’s presence is
necessary to enable this Hon’ble Court to effectually
and completely adjudicate upon the questions raised in
the present proceedings. It is also relevant to mention
herein that to demonstrate the relationship between
the Learned Presiding Arbitrator and the Respondent,
the Petitioner had also placed on record a news item
appearing on the website of the Respondent and in this
regard, had filed a supplementary affidavit dated 9
April, 2024. It is respectfully submitted that during the
pendency of the Section 36 Application and while
arguments on the said application are being heard, the
Respondent has now removed the said news item from
its website.
11. The Petitioner therefore prays that being a
necessary and proper party, the Learned Presiding
Arbitrator may kindly be impleaded in the present
proceedings. The Petitioner respectfully submits that
such impleadment will not alter the nature of the
proceedings or introduce a new cause of action.”
4. The reliefs from the instant application are also quoted below:
“a) An order be issued directing Hon’ble Mr. Justice (Retd.) V. S.
Sirpurkar i.e., the Learned Presiding Arbitrator of the Tribunal be
impleaded as party in the instant proceedings;
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b) Pass such other and/or further orders as this Hon’ble Court may
deem fit and proper in the facts of the present case.”
5. The award-holder/respondent has filed its affidavit-in-opposition and,
inter alia, contended as follows:-
“4. The Respondent TML has broadly made, inter alia,
the following submissions on 7th January, 2025, 5th
March, 2025 and 6th March, 2025:
a. An arbitral award can only be stayed
unconditionally if a prima facie case that the making
of the award was induced or effected by “fraud” or
“corruption” is made out. No such case has been made
out in the S.36 (2) application and no particulars to
that effect have been pleaded. Therefore, on this
ground alone, no unconditional stay can be granted.
No further reason is necessary to reject the prayer of
WBIDC for unconditional stay.
b. Grounds for setting aside the award under Section
34 cannot be considered in this application under
Section 36(2). The enquiry in the S. 36(2) application
has to be confined to the statutorily mandated
grounds following the legislative policy. Accordingly,
the question of “bias” which is not falling within the
scope of Section 36(2) read with Section 36(3) cannot
be considered at all.
c. An allegation of bias on the part of a Tribunal
cannot be equated with the allegation of fraud or
corruption flowing from alleged inducement.
d. Bias of the nature alleged is not covered by either
“fraud” or “corruption” in terms of the second proviso
to Section 36(3) of the 1996 Act.
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e. The arguments of TML answering the charge of
“bias” was made in the alternative without prejudice
to the above i.e. this Hon’ble Court should not and
need not go into the question of “bias”. The case of the
petitioner was and is misplaced and misconceived.
f. The said application does not deal with this point.
6. The argument of bias is dealt with hereunder
without prejudice to the above.
a. WBIDC’s case for unconditional stay of the Award
is only a case of alleged “bias” on the part of the
Presiding Arbitrator only because he attended certain
events concerning a third party who are dealers of
Tata cars. This does not fall within any of the specific
entries in the 5th Schedule or the 7th Schedule read
with Section 12 of the 1996 Act. These two schedules
are exhaustive. Therefore, the question of any bias
does not arise. In any case, “bias” would not be a
ground for unconditional stay under Section 36(2). The
1996 Act flows from a contract of arbitration where
the parties have agreed to have their disputes settled
by a private forum and not the Court. The 1996 Act
has laid down the contractual parameters of
impartiality and independence of the arbitrators.
“Impartial” according to, inter alia, the Law Lexicon by
P. Ramanatha Aiyar, 5th Edition, means “…a man who
is impartial is one who is not biased in favour of one
party more than another…..The primary idea
contained in the definition is freedom from personal
bias…….”. Although “bias” has not been defined in
the 1996 Act, the two schedules are the heads of bias
contractually agreed and no other head is permissible.
The petitioner has not dealt with this argument in the
said application. I crave leave of this Hon’ble Court to
8refer to further material in this regard at the time of
hearing, if necessary.
b. In any event, WBIDC was aware of the Learned
Presiding Arbitrator’s act of attending the events
during the arbitral proceedings but did not raise the
same before the Tribunal within 15 days of knowledge
as required under Section 13(2) of the 1996 Act. From
pages 224 to 227 of the S. 36(2) application (from the
“Related News” and “Latest News” sections), it is
clear that WBIDC had knowledge of the above at least
on 12th September, 2022 or thereabout but consciously
waived their right to object. Yet WBIDC has claimed in
paragraph 25 of the S.36(2) application that they
came to know of the Learned Presiding Arbitrator
attending the events “recently” and post-award. This
is contrary to the articles annexed by them. Therefore,
the ground of bias cannot at all be raised at this
stage. In this regard, a short list of relevant dates
demonstrating the fact that WBIDC had knowledge of
the Learned Presiding Arbitrator attending certain
events organised by car dealers (not by TML) during
the pendency or arbitral proceedings (along with
annexures thereto) is annexed hereto and marked
with the letter “A”. In connection with this knowledge
(of the article forming the basis of all allegations) on
the part of the Petitioner, the Respondent had
prepared and served a supplementary affidavit on the
Petitioner during the hearing of the matter which was
vehemently opposed by the Petitioner in view of the
stage of the proceedings. However, the issue of
“Knowledge” of the article has acquired further
importance in view of the pleadings in the said
application and therefore in the interests of justice it
9has become imperative to rely upon such
supplementary affidavit. If the Respondent TML is
permitted to rely on the same, no prejudice shall be
caused to the Petitioner since an advance copy as also
an affirmed copy of the same was served on the
Petitioner on 5th March, 2025 and 6th March, 2025
respectively. In any case, the supplementary contains
submissions already made by the Respondent TML on
7th January, 2025 save and except the letter issued
by Hitavada. In this regard, a copy of such
supplementary affidavit along with the covering letter
issued by the Learned Advocate-on-record of the
Respondent is annexed hereto and marked with the
letter “B”. The matters raised in that affidavit has also
not been dealt with by the Petitioner despite
knowledge.
c. Moreover, if the ground of bias is the main cause of
action of the Petitioner and the Petitioner accepts that
the matter cannot be decided in the absence of a
necessary and proper party, the proposed party
cannot be added beyond the period of limitation which
has long expired.
d. Any case of “fraud” or “corruption” would have to
be visible at the first blush and the facts ought to be
undisputed. In this case, the so-called instance of bias
and its alleged date of discovery by WBIDC are in
serious doubt in light of what has been stated above.
Therefore, quite apart from the fact that no case of
fraud or corruption has been made out, even in
respect of bias no unimpeachable case has been made
out since there is heave doubt as to the claimed date
of knowledge of the alleged acts of the Learned
10Presiding Arbitrator. Therefore, on this ground as well,
the S.36(2) application should fail.
e. As an alternative case, it was argued that if bias is
alleged, all the members of the Arbitral Tribunal (since
the arbitral award in this case is a unanimous award)
ought to be made parties. Even then, such argument
would not be relevant at the Section 36 (2) stage since
the judicial decisions cited by both the Petitioner and
Respondent on the point of the Learned Arbitrator
being made party were all pronounced in matters
arising out of Section 34 applications. This is apparent
from the cases cited by the Petitioner on 9th April,
2024 before the previous Bench as also before this
Hon’ble Court on 16th July, 2024 and 22nd November,
2024.”
6. Denying the contentions of the award-holder/respondent, the award-debtor
filed its affidavit-in-reply. The parties have filed their respective written
notes on argument.
Submissions :-
7. Mr. Kishore Datta, learned Advocate General for the State appearing for the
award-debtor submits that the award dated October 30, 2023 was passed
by a three members arbitral tribunal. The award-debtor has applied before
this court for setting aside of the award under Section 34 of the Arbitration
Act. The award-debtor has filed an independent application under sub-
Section (2) to Section 36 of the Arbitration Act praying for unconditional
stay of operation of the award. In the said proceeding, the instant
interlocutory application has been filed.
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8. The principal argument of the learned Advocate General is that the second
proviso to sub-Section (3) to Section 36 of the Arbitration Act, inter alia,
provides that if the court is satisfied that a prima facie case is made out that
the making of arbitral award was induced or effected by FRAUD or
CORRUPTION, the court shall stay the award unconditionally pending
disposal of the challenge under Section 34 to the award. He submits that
the disclosures to the application filed by the award-debtor under Section 36
(2) of the Act and also in the instant application would demonstrate that one
of the members of the arbitral tribunal on repeated occasions had attended
the various programmes where diverse new model of cars manufactured by
the award-holder were launched. The admitted position is that all such
launching programmes were held during pendency of the arbitral proceeding
but since all those facts were not within the knowledge of the award-debtor
prior to the award being made and published, the award-debtor could not
apply before the tribunal for termination of the mandate of the learned
member of the tribunal concerned. However, the moment it came to the
knowledge of the award-debtor, though after the arbitral award was made
and published, the petitioner raised those pleas as their grounds while
applying under Section 34 of the Arbitration Act. On this plea, the award-
debtor has also prayed for unconditional stay of the arbitral award under
Section 36 (2) of the Act. The main contention of the award-debtor is that
the arbitrator concerned did not disclose these facts during the arbitration.
He acted bias.
9. To support his contentions, learned Advocate General relied upon principally
on two decisions of the Hon’ble Supreme Court which are :-
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i) In the matter of: Vinod Bhaiyalal Jain vs. Wadhwani
Parmeshwari Cold Storage, reported at (2020) 15 SCC
726 and
ii) In the matter of: Microsoft Corporation vs. Zoai
Founder, reported at 2023 SCC Online Del 3800.
10. While deciding the issue before it, the Hon’ble Supreme Court held that
since an allegation of fraud has been raised against the arbitrator concern,
the arbitrator was directed to be impleaded in the Section 34 proceeding, so
that the arbitrator can get an opportunity to defend the allegation against
him.
11. Learned Advocate General while advancing his submissions has submitted
that ‘BIAS’ is an element of ‘FRAUD’. Therefore, when the expression
‘FRAUD’ has been included in the second proviso to sub-Section (3) to
Section 36 of the Arbitration Act and the incorporation was made by way
of a subsequent amendment to the Act, the legislature thought it fit that if
fraud is established which includes ‘BIAS’ then the award-debtor, as of
right, is entitled to an order for unconditional stay of the award. To
adjudicate this allegation of fraud and/or bias, the concerned member of the
arbitral tribunal is required to be impleaded in the Section 34 proceeding as
well as in the Section 36 (2) proceeding under the Arbitration Act.
12. In support of his contentions that the fraud cannot be put in a straight-
jacket and has a very wide connotation in legal parlance and fraud is infinite
in variety, he has placed reliance upon a decision of the Hon’ble Supreme
Court In the matter of : Venture Global Engineering vs. Satyam
Computers Services Limited, reported at (2010) 8 SCC 660.
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13. On the same proposition of law argued by the learned Advocate General,
he has relied upon several other decisions which are mentioned in the
written notes on argument. In the light of the above, the award-
debtor/applicant prays for impleadment of the concerned member of the
arbitral tribunal in this Section 36 (2) proceeding.
14. This court has read all decisions and ultimately is of the view that, to
adjudicate upon the instant application with its limited scope, all those
judgments are not required to be discussed for the same proposition
individually and those may be considered at the appropriate stage.
15. Mr. Sudipto Sarkar, learned Senior Advocate with Mr. Sidhartha Mitra,
learned Senior Advocate being ably assisted by Mr. Dipan Kumar Sarkar,
learned Advocate appearing for the award-holder (TML) submits that the
instant application has been filed by the award-debtor as a delaying tactics at
the fag end of hearing of the said Section 36(2) application. The instant
application is a result of an afterthought. Mr. Sarkar, learned Senior
Advocate has submitted that in the event an allegation of fraud is alleged in a
proceeding for setting aside of an award against an arbitrator, such arbitrator
is required to be impleaded in the setting aside proceeding so that he can get
an opportunity to deal with the charge against him. In support, he has relied
upon a judgment of the Madrash High Court In the matter of : Kothari
Industrial Corporation Limited vs. Southern Petrochemicals Industries
Corporation Limited, reported at 2021 SCC Online Mad 5325.
16. Mr. Sarkar further submits that bias is not a ground included within the
meaning of the second proviso to Section 36 (3) of the Arbitration Act. The
provision even has clearly codified that only on fraud and corruption, an
14
award can be unconditionally stayed. The incidents of fraud and corruption
are also well explained in the relevant schedules to the Arbitration Act, which
are part of the statute. Bias not being included in those specified statutory
provisions, cannot be a ground for unconditional stay of an award. The
award-debtor has not pleaded any particulars of fraud or corruption as
defined in the statute.
17. He further submits that a prima facie case under Section 36 (3) must
mean a finding of fraud on the face of the record or from a first blush of the
award. In this regard, he has relied upon a judgment of this court In the
matter of : SRMB Srijan Ltd. vs. Great Eastern Energy Corporation Ltd.,
reported at 2024 SCC Online Cal 2089.
18. In addition to the above, learned Senior Counsel further submits that the
incidents cited by the award-debtor had alleged to have happened
contemporaneously during 2022 prior to the award being passed. With
reference to the news articles relied upon on behalf of the award-debtor,
being part of the records, Mr. Sudipto Sarkar, learned Senior Advocate has
submitted that all these incidents were within the knowledge of the award-
debtor contemporaneously but still the award-debtor chose not to take out
appropriate application before the arbitral tribunal, when the reference was
pending before it. The award-debtor, therefore, has waived its right to take
this plea at this belated stage.
19. In the light of the above, Mr. Sarkar submits that the instant application
should be dismissed and there is no merit in the submissions made on behalf
of the award-debtor.
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20. In addition to the above, several other submissions were also made by Mr.
Sarkar, learned Senior Advocate which shall be evident from the written notes
on argument filed on behalf of the award-holder. Various judgments on
different points have also been referred to. After reading the entire notes on
argument, this court is of the view that, all those submissions and judgments
are not required to be discussed at this stage while adjudicating the instant
application which has a very limited and narrow scope and those may be
considered at the appropriate stage.
Decision :-
21. After considering the rival submissions made on behalf of the parties and
on perusal of the materials on record and after mindful consideration on the
written notes on argument submitted on behalf of the parties, this court is of
the view that the instant application has a very limited scope for adjudication.
Various points have been taken relying upon diverse judgments by the
parties mentioned in their notes on argument, only those which according to
this court found to be extremely necessary for adjudication, are only dealt
with. All those submissions may be considered, if necessary, at the
subsequent stage of the proceeding.
22. At the threshold, it appears to this court that the basis of the instant
application are the law laid down by the Hon’ble Supreme Court In the
matter of : Vinod Bhaiyalal Jain (supra) and Microsoft Corporation
(supra). Both the said judgments were delivered and the law was laid down in
a Section 34 proceeding. While adjudicating a Section 34 proceeding, the
setting aside court, though not a court of appeal but with its limited authority
and jurisdiction shall cause the enquiry and review the award in detail within
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its permitted jurisdiction and limitation. An arbitral award whether would
vitiate on the ground of fraud or corruption and/or the ground of bias alleged
against the arbitral tribunal, shall be adjudicated at the Section 34 stage.
When an application has been filed under Section 36 (2) praying for an
unconditional stay of an award, the applicant must satisfy the court that
there is a ground of fraud or corruption on the part of the tribunal within the
meaning and scope of sub-Section (3) to Section 36 of the Arbitration Act.
At that stage the setting aside court in exercise of its power under Section 36
(2) and (3) of the Arbitration Act, shall first has to arrive at a prima facie
view that there has been an element of fraud or corruption as defined under
sub-Section (3) to Section 36 of the Act. The scope of adjudication under
Section 34 and Section 36(2) and (3) of the Arbitration Act are totally
different.
23. By filing the instant application, the award-debtor prays for impleadment
of the concerned member of the arbitral tribunal even before adjudication of
the said pending Section 36 (2) application. Unless this court arrives at a
prima facie finding of fraud or corruption or even bias as alleged by the
award-debtor in the facts of this case, the question of impleadment of the
concerned member of the arbitral tribunal does not and cannot arise. The
famous phase is reiterated once again that cart cannot be placed before the
horse.
24. The decision relied upon on behalf of the award-holder In the matter of :
Kothari Industrial Corporation Limited (supra) is also a Section 34 case.
25. The application filed in Section 36 (2) is pending. While adjudicating the
said application, the court would have jurisdiction to decide whether any
17
prima facie case for fraud or corruption has been made out, so that there can
be an order for unconditional stay of the arbitral award. Therefore, unless the
said application is finally adjudicated upon on its own merit and until this
court comes to a specific prima facie finding of fraud or corruption and/or
bias, as alleged on behalf of the award-debtor, the question of impleadment,
as prayed for by the appellant/award-debtor, would not arise.
26. As argued by the learned Advocate General that the expression ‘bias’
though not specifically included under sub-Section (3) to Section 36 of the
Arbitration Act but the said expression ‘bias’ includes an element of fraud is
also not within the scope of adjudication of the instant application. The same
can be considered at the appropriate stage but not at this stage.
27. In view of the foregoing reasons and discussions, this court is of the firm
and considered view that the instant application being IA No. GA 1 of 2025
is premature and accordingly stands dismissed without any order as to
costs.
(Aniruddha Roy, J.)