Report No. 176
2.27 Proposal for inclusion of the ground of misconduct - Rejected.
The ground of misconduct was used under the old Act of 1940 in sec.30 (a) - 'the arbitrator must have misconducted himself or the proceedings'. These words have been construed by the Courts in India in a variety of ways. As pointed in State of Kerala vs. K. Kurian P. Paul (AIR 1992 Ker 180), the words include
(i) defect in the procedure followed,
(ii) committing breach and neglect of duty and responsibility
(iii) acting contrary to equity and good conscience
(iv) acting beyond the reference,
(v) acting without jurisdiction,
(vi) proceeding on an extraneous circumstances,
(vii) ignoring material documents,
(viii) bases the award on no evidence. Of course, corruption and bribery would also be included.
It would be seen that some of these grounds are indeed covered by section 34 of the 1996 Act - e.g.
(i) party was under some incapacity
(ii) arbitration agreement was not valid under law
(iii) applicant was not given proper notice of appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case
(iv) award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration
(v) composition of the tribunal and the arbitral procedure was not in accordance with the agreement of the parties
(vi) subject matter of dispute was not capable of settlement by arbitration under the law for the time-being in force or
(vii) the award is in conflict with 'public policy' of India - which includes fraud or corruption or violation of sections 75 or 81.
These grounds appear to the Commission to be sufficient and need not be further enlarged by the addition of the ground of 'misconduct'. It is not, therefore, desirable to introduce a general ground of 'misconduct' for that would indeed open flood gates of litigation. After careful consideration of the matter, the Commission is not inclined to include 'misconduct' as a ground of challenge even in cases of purely domestic arbitration between Indian nationals.