The concept of adjudicators' independence and impartiality, whether in judges or arbitrators, is a characteristic of every adjudicatory procedure. The core principle of natural justice is Nemo iudex in causa sua, which states that no one should judge in his matter, regardless of whether the processes are judicial or quasi-judicial.
Until recently, the Arbitration and Conciliation Act of 1996 enabled one of the arbitration agreement's parties to pick a solitary arbiter, who might be an employee or a nominee of that party. This often prompted considerable concerns about biased awards favouring the appointing party, jeopardising the above-mentioned basic concept of natural justice. However, after many cases, Indian courts have lately reversed their position and now consider such one-sided terms to be completely unlawful.
FACTS OF THE CASE
M. P. Road Development Authority, Bhopal, granted M/s Tulsi Narayan Garg a tender for the building and maintaining a rural road. The Appellant and Respondent No. 1 agreed. However, due to delayed work progress, the agreement was dissolved. The first respondent utilised the provision to determine liquidated damages.
This was challenged at the High Court of Madhya Pradesh by the Appellant. The Petition was dismissed by the High Court, with the Respondent No. 1 being directed to take the matter to the Arbitral Tribunal under the Adhiniyam of 1983.
The Appellant also filed a reference petition with the Arbitral Tribunal. Meanwhile, Respondent No. 1 has served the Appellant with a notice of intent to sue for damages.
The Collector (Respondent No.3) was given instructions by the General Manager of Respondent No. 1 to take action regarding the liquidated damages as land revenue arrears.
The Appellant disputed this at the High Court, and it was noted that the liquidated damages sought by Respondent No. 1 are now under arbitration before the Arbitral Tribunal. The High Court decided to dismiss the Petition. The decision was later appealed to the Supreme Court.
1. Whether a person be an arbiter in his case?
The Respondents were not justified in beginning recovery proceedings without waiting for the result of the Arbitral procedure after the Appellant had taken use of the remedy offered by the Adhiniyam of 1983. The Court reaffirmed the notion that a participant to an agreement cannot be an arbitrator in his matter. The Respondent would not be justified in seeking recovery under the Land Revenue Act 1967 unless the disagreement was resolved through a manner specified by law.
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