Safiya Malik

The High Court at Calcutta Single Bench of Justice Aniruddha Roy held that the impleadment of an arbitrator on allegations of bias cannot precede a judicial finding of prima facie fraud or corruption under Section 36(3) of the Arbitration and Conciliation Act, 1996. The Court dismissed the award-debtor’s interlocutory application seeking impleadment of the presiding arbitrator, terming it “premature.” The application was dismissed without costs, and the Court clarified that the question of impleadment would only arise upon a judicial satisfaction regarding the alleged bias or fraud affecting the arbitral award.

The application, IA No. GA 1 of 2025, arose in proceedings initiated under Section 36(2) of the Arbitration and Conciliation Act, 1996, where the award-debtor, West Bengal Industrial Development Corporation Ltd. (WBIDC), sought an unconditional stay of an arbitral award dated November 30, 2023. This award had been passed by a three-member tribunal in a dispute between WBIDC and Tata Motors Limited.

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During the final stages of argument on the Section 36(2) application, the award-debtor moved the instant interlocutory application, praying for the impleadment of the tribunal’s presiding arbitrator. The basis for the request was the alleged undisclosed professional engagements between the arbitrator and Tata Motors Limited (TML), which the award-debtor contended gave rise to a reasonable apprehension of bias.

The award-debtor argued that the arbitrator had attended multiple product launch events related to TML’s vehicles during the pendency of the arbitration. These events, according to WBIDC, indicated an association that should have been disclosed under Section 12 of the Arbitration Act, read with the Fifth and Seventh Schedules. The application asserted that these non-disclosures rendered the award susceptible to challenge under the public policy ground and constituted sufficient basis for an unconditional stay.

In support, the award-debtor cited judgments including Vinod Bhaiyalal Jain v. Wadhwani Parmeshwari Cold Storage [(2020) 15 SCC 726] and Microsoft Corporation v. Zoai Founder [2023 SCC OnLine Del 3800], which dealt with the necessity of impleading arbitrators when allegations of bias or fraud are raised.

The application further noted that the arbitrator had not been made a party in the original Section 34 and 36 proceedings to maintain judicial propriety and avoid embarrassment. However, in light of submissions by TML contesting the maintainability of the bias allegation without the arbitrator being impleaded, WBIDC agreed to seek impleadment.

In response, TML opposed the impleadment request, arguing that no prima facie case of fraud or corruption had been established to invoke the second proviso to Section 36(3). TML asserted that allegations of bias—particularly those concerning attendance at public events by dealers or unrelated entities—did not fall within the statutory framework governing arbitrator impartiality, as defined under the Fifth and Seventh Schedules of the Act.

TML further contended that WBIDC was aware of these associations during the arbitration proceedings, based on news reports dating back to 2022, but chose not to raise any objections under Section 13(2) of the Act. According to TML, this amounted to waiver, and no objection could now be raised post-award.

TML also submitted that proceedings under Section 36(2) are limited in scope and not the appropriate stage to evaluate bias allegations. Such an enquiry, if warranted, must be undertaken during the substantive hearing under Section 34. TML relied on Kothari Industrial Corporation Ltd. v. Southern Petrochemicals Industries Corporation Ltd. [2021 SCC OnLine Mad 5325] to support its submission that arbitrators should not be impleaded unless specific personal allegations necessitate their response.

The Court heard detailed submissions from both parties and perused their respective written notes of arguments, including a supplementary affidavit filed by TML on the issue of WBIDC’s knowledge of the alleged bias.

The Court recorded, “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).”

It noted that, “Both the said judgments were delivered and the law was laid down in a Section 34 proceeding.” The Court distinguished the scope of proceedings under Section 36(2) and (3), stating, “The scope of adjudication under Section 34 and Section 36(2) and (3) of the Arbitration Act are totally different.”

Clarifying the sequencing of issues, the Court held, “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 Court stated, “The famous phase is reiterated once again that cart cannot be placed before the horse.”

Regarding the argument that bias constitutes a form of fraud, the Court observed, “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.”

After considering the rival submissions made on behalf of the parties, perusing the materials on record, and mindful evaluation of the written notes on argument submitted by both sides, the Court concluded that the instant application had a very limited scope for adjudication. It was found that various judgments were relied upon by both parties, but the Court confined its consideration only to those points necessary for adjudicating the present application. All other submissions and case laws were deferred for consideration at the appropriate stage of the proceedings.

The Court held that the basis of the instant application rested on the law laid down by the Hon’ble Supreme Court in Vinod Bhaiyalal Jain and Microsoft Corporation. However, it was observed that both those judgments pertained to Section 34 proceedings. The Court clarified that in adjudicating a Section 34 application, the setting aside court, although not a court of appeal, undertakes a detailed enquiry and review of the arbitral award within the jurisdiction and limitations prescribed.

The Court recorded that whether an arbitral award would be vitiated on the ground of fraud or corruption or on the ground of bias alleged against the arbitral tribunal is a question to be adjudicated at the Section 34 stage. It stated that under Section 36(2), which concerns the unconditional stay of an arbitral award, the applicant must first satisfy the Court that there is a ground of fraud or corruption as defined in Section 36(3) of the Act.

It was held that unless the Court arrived at a prima facie finding of fraud or corruption or even bias, as alleged by the award-debtor, the impleadment of the concerned member of the arbitral tribunal could not be entertained. The Court explicitly stated that “the cart cannot be placed before the horse.”

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The Court noted that the application for impleadment had been filed even before adjudication of the pending Section 36(2) application, and therefore, in the absence of a prima facie finding on the grounds of fraud, corruption, or bias, the relief sought in the present application was not tenable. Furthermore, it was stated that the argument made by the learned Advocate General that bias includes an element of fraud was outside the scope of the instant application and could only be considered at the appropriate stage of the main proceedings.

In conclusion, the Court held that the instant application, being IA No. GA 1 of 2025, was premature and accordingly stood dismissed without any order as to costs.

Advocates Representing the Parties

For the Petitioners: Mr. Kishore Datta, Advocate General; Mr. T.N. Siddique, Advocate; Mr. Manoj Kumar Tiwari, Advocate; Mr. Deepank Anand, Advocate; Ms. Arpita Dey, Advocate

For the Respondents: Mr. Sudipto Sarkar, Senior Advocate; Mr. Siddhartha Mitra, Senior Advocate; Mr. Deepan Kr. Sarkar, Advocate; Mr. Samridha Sen, Advocate; Mr. Soumitra Datta, Advocate

Case Title : West Bengal Industrial Development Corporation Ltd. v. Tata Motors Limited

Case Number: AP-COM/88/2024; IA No. GA 1 of 2025

Bench: Justice Aniruddha Roy

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