Facts: The State of Goa awarded a contract for the construction of the Mandovi Bridge to the Respondent-Corporation in 1987. During construction, a span of the bridge collapsed in 1990, leading to disputes that were referred to a three-member Arbitral Tribunal under the Arbitration Act, 1940. The Respondent nominated Shri Shitala Sharan as its arbitrator. The Appellant-State initially objected to this appointment on grounds of bias, as the arbitrator was a former employee and consultant for the Respondent, but the Tribunal rejected this objection in 1996. The proceedings continued, and an unanimous award was passed in 1997. The State subsequently challenged the award, primarily arguing that the arbitrator's failure to disclose his past relationships under Section 12 of the Arbitration and Conciliation Act, 1996, vitiated the award.
Procedural Posture: The Arbitral Tribunal filed the award before the Civil Court to be made a "rule of court" under the 1940 Act. However, following the enactment of the 1996 Act, the Civil Court returned the award for lack of jurisdiction. The State then filed objections under Section 34 of the 1996 Act before the Principal District Judge, North Goa, which were rejected on 22.02.2016. The State then preferred this appeal under Section 37 of the 1996 Act.
Issue: Whether the Arbitral Award was vitiated by bias due to the non-disclosure of the arbitrator's past professional links with the Respondent, and whether the disclosure requirements under Sections 12 and 13 of the Arbitration and Conciliation Act, 1996, applied to proceedings that commenced under the 1940 Act.
Holding: No, the award is not vitiated by bias. The Court held that since the arbitration commenced before the 1996 Act came into force, the disclosure provisions of the new Act did not apply. Furthermore, the allegation of bias was not substantiated by evidence.
Reasoning: The Court reasoned that under Section 85(2)(a) of the 1996 Act, proceedings commenced under the 1940 Act continue to be governed by the old Act unless parties agree otherwise. Since the arbitration began in 1993, the disclosure mandates of Section 12 of the 1996 Act were inapplicable. On merits, the Court found that the Appellant had full knowledge of the arbitrator's background at the time of nomination and raised no timely objection. Additionally, the award was unanimous; any perceived bias of one nominee was neutralized by the presence of a neutral Chairman and the State’s own nominee. Mere past employment, without demonstrable personal or financial interest in the dispute, does not constitute bias.