IN THE SUPREME COURT OF BANGLADESH

   HIGH COURT DIVISION

            (CIVIL REVISIONAL JURISDICTION)

Present:

  Mr. Justice Md. Badruzzaman.

   And

  Mr. Justice Sashanka Shekhar Sarkar

CIVIL REVISION NO. 139 OF 2024. Mohammad Kamal Pasha

               ...Petitioner. -Versus-

  Three Star Properties Limited and others .

  ....Opposite parties.   Mr. Hossain Ahmed Ashik, Advocate

… For the petitioner.

  Mr. Mohammad Osman , Advocate

… For the opposite party No.1

Heard on: 20.05.2024, 21.05.2024 and 28.05.2024  Judgment on: 30.05.2024,

Md. Badruzzaman,J

This Rule was issued calling upon opposite party No. 1 to show cause as to why order dated 15.10.2023 passed by learned Senior District Judge, Chattogram in Arbitration Miscellaneous Case No. 71 of 2018 should not be set aside.

At the time of issuance of Rule this Court vide order dated 02.01.2024 stayed all further actions of the Arbitral Tribunal in the arbitral proceedings for a period of 06(six) months. Thereafter, upon an application filed by the petitioner this Court vide order dated 27.03.2024 directed opposite party No. 1 to maintain status-quo in respect of the Branch Office of National Bank Limited and Walton Show Room situated on the 1st Floor of the under construction building for a period of 06(six) months.

Facts relevant, for the purpose of disposal of this Rule, are that the petitioner and two others are land owners of .3960 acre land and opposite party No. 1 is a Real Estate Company engaged with Real Estate Development business. The land owners and the developer entered into an agreement on 28.09.2010 for construction of multi-storied building in said .3960 acre land followed by Power of Attorney and thereafter, the parties again entered into an agreement on 16.09.2019 with fresh terms and conditions for completion of the construction of the multi-storied building. The developer got plan approved by the concerned C.D.A and started construction of the multi-storied building but it could not complete the project within time specified by the deed of agreements. The land owners took possession forcibly in a part of the constructed building by ousting the developer from the project and accordingly, dispute arose between the parties and the developer company filed Arbitration Miscellaneous Case No. 71 of 2018 before the learned District Judge, Chattogram under section 12 of the Arbitration Act to resolve the dispute as per terms of the agreements by appointing Arbitrator.  The land owners as opposite parties in the arbitration proceeding filed written objection denying the material allegations stated in the arbitration miscellaneous case. The learned District Judge, after hearing, vide order dated 09.10.2019 appointed two arbitrators, one was selected by the land owners and the other by the developer and then said Arbitrators appointed an Umpire and accordingly, Arbitral Tribunal was constituted.

In course of arbitration preceding before the Arbitral Tribunal the land owners and developer placed their respective claims before the Tribunal. The land owners on 11.4.2022 filed an application before the Tribunal under Order 26 rule 9 of the Code of Civil Procedure for local investigation by appointing survey knowing Advocate Commissioner to ascertain the quantum of constructed building as well as the cost

incurred by the developer for construction of the building. The Arbitral Tribunal by order dated 30.05.2022 allowed the application appointing themselves as Commissioners for local inspection instead of local investigation. It has also stated in the revisional application that the Arbitral Tribunal was not competent to make survey or ascertain cost by accounting process but they visited the suit property only for one day. After inspection, they did not file any inspection report in the Arbitral proceeding for which the petitioner was unable to know about the result of the inspection and they could not file written objection against the report. It has also stated that the Arbitral Tribunal did not frame any issue to resolve the dispute between the parties but on 29.09.2022 directed the parties to submit Tk. 30,000/- each for the cost of Non-judicial Stamp and other ancillary purpose for pronouncement of Arbitral Award. The developer deposited the cost but the land owners did not deposit cost and filed an application under section 15 of the Arbitration Act, 2001 before the learned District Judge for termination of the Arbitral Tribunal and substitution of the members of the Tribunal under section 16 of the Arbitration Act. The developer company filed written objection against the application (Annexure-D). The learned District Judge, after hearing the parties, rejected the application filed by the land owners by order dated 15.10.2023.

Being aggrieved by said order dated 15.10.2023 one of the land owners as petitioner has preferred this application under section 115(1) of the Code of Civil Procedure and obtained the instant Rule.

The developer opposite party No. 1 filed counter-affidavit to contest the Rule controverting the statements made in the revisional application and stating that the Arbitral Tribunal proceeded with the arbitration proceeding in accordance with law and as such, the learned District Judge committed no illegality in passing the impugned order.

Mr. Hossain Ahmed Ashik, learned Advocate appearing for the petitioner submits that from the very initial stage of the proceeding, the members of the Arbitral Tribunal showed their disqualifications in conducting the arbitration proceeding because of the fact that they could not understand the main controversies between the parties, they did not frame any issue to be resolved in regards the dispute of the parties, failed to understand that local investigation was necessary to resolve the dispute, illegally appointed themselves as the local inspectors against the normal judicial practices, did not submit any report of the local inspection conducted by them and did not provide any copy of the report to the parties so that they could raise objection and finally directed to deposit cost for pronouncement of Arbitral Award keeping in dark of the land owners and as such, the members of the Arbitral Tribunal suffer from disqualification to conduct the proceeding and accordingly, their mandates are liable to be terminated under section 15(2) of the Arbitration Act but the learned District Judge without considering above aspect of the matter illegally rejected the application of the petitioner.

As against the above contention of the learned Advocate for the petitioner Mr. Mohammad Osman, learned Advocate appearing for opposite party No. 1 submits that the removal proceeding on the point of impartiality or independency on the part of the Arbitral Tribunal has been enunciated in section 13 read with section 14 of the Arbitration Act and for the alleged disqualification of the members of the tribunal, the petitioner should have filed objection before the Arbitral Tribunal and if failed, they should have filed appeal before the High Court

Division and as such, the application was not maintainable. In regards

other points on merit as have been raised by the learned Advocate for

the petitioner the learned Advocate for opposite party No. 1 could not

make any plausible submission to substantiate that the Arbitral Tribunal

conducted the arbitration proceeding in accordance with law.

We have heard the learned Advocates, perused the revisional

application, counter-affidavit and other relevant documents as have

been  annexed  thereto.  We  have  also  perused  the  impugned  order

passed by the learned District Judge and meticulously consulted the

Arbitration Act, 2001.

Section 13 of the Arbitration Act, 2001 specifies the grounds for

challenge an arbitrator and section 14 of the Act provides the challenge

procedure.

 For ready reference section 13 and 14 of the Arbitration Act,

2001 is quoted below:-

""13z Bf¢šl L¡lZ pj§q- (1) p¡¢mpL¡l£ ¢qp¡­h Ae¤­l¡d

f¡Ðç fЭaÉL hÉ¢š² fÐb­j a¡q¡l ¢el­flr a¡ J ü¡d£ea¡ pÇf­LÑ

p­¾c­ql Eáh qC­a f¡­l HCl©f pLm f¢l¢ÙÛ¢a fLСn L¢l­hez

2.   f­ÐaÉL a¡q¡l ¢e­u¡­Nl pju qC­a p¡¢mp£ L¡kdÑ¡l¡ Qm¡L¡m£e  ®k  ®L¡e  pj­u  Ef-d¡l¡  (1)  H  E­õ¢Ma  f¢l¢ÙÛ¢a Ae¢a¢hm­ð Q¤¢š²l pLm fr­L Hhw AeÉ pLm p¡¢mpL¡l£­L AhNa L¢l­he, k¢c C­a¡j­dÉ a¡q¡l¡ avpÇf­LÑ Ah¢qa e¡ qCu¡ b¡­Lz
3.   ®L¡e p¡¢mpL¡l£l ¢hl¦­Ü Bf¢š E›¡fe Ll¡ k¡C­h k¢c a¡q¡l ¢el­fra¡ J ü¡d£ea¡ pÇf­LÑ p­¾cq b¡L¡l ®L¡e f¢l¢ÙÛ¢a ¢hcÉj¡e b¡­L h¡ frNZ LaѪL pÇja ®k¡NÉa¡ a¡q¡l e¡ b¡­Lz
4.   p¡¢mpL¡l£ ¢e­u¡Nc¡eL¡l£ h¡ p¡¢mpL¡l£ ¢e­u¡­N pÇj¢ac¡eL¡l£ ®L¡e fr, Eš² ¢e­u¡­Nl flhaÑ£ pj­u a¡q¡l S¡e¡ ®L¡e f¢l¢ÙÛ¢al L¡l­Z, Eš² p¡¢mpL¡l£l ¢hl¦­Ü Bf¢š ¢c­a f¡¢l­hez

14z Bf¢š c¡­u­ll f¢Ü¢a - (1) Ef-d¡l¡ (6) Hl ¢hd¡e p¡­f­r, frNZ p¡¢mL¡l£l ¢hl¦­Ü Bf¢š c¡­u­ll fÜ¢a ¢el©f­Z pÇja qJu¡l ®r­œ ü¡d£e b¡¢L­hz

2.   Ef-d¡l¡ (1) H E­õ¢Ma pÇj¢a­a Efe£a qC­a hÉbÑa¡l ®r­œ ®L¡e fr ®L¡e p¡¢mL¡l£l ¢hl¦­Ü Bf¢š c¡­ul L¢l­a Q¡¢q­m Eš²

fr d¡l¡ 13 Hl Ef-d¡l¡ (3) H E­õ¢Ma f¢l¢ÙÛ¢a pÇf­LÑ AhNa qJu¡l ¢œn ¢c­el j­dÉ ¢m¢Ma ¢hhª¢al j¡dÉ­j Bf¢šl L¡lZpjq§

hZÑe¡ L¢lu¡ p¡¢mp£ V¡ÊCh¤Ée¡­ml ¢eLV Bf¢š c¡­ul L¢l­hz

3.   pw¢nÔø  a¡q¡l fc qC­a ¢e­S­L faÐÉ¡q¡l e¡ L¢l­m

Abh¡ Afl fr h¡ HL¡¢dL f­rl ®r­œ frNZ Eš² Bf¢š­a

pÇja e¡ qC­m, Ef-d¡l¡ (2) H E­õ¢Ma ¢m¢Ma ¢hhª¢a c¡¢Mm qJu¡l ¢œn ¢c­el j­dÉ Bf¢šl ¢ho­u p¡¢mp£ V¡ÊCh¤Ée¡m ¢pÜ¡¿¹

fcСe L¢l­hz

4. Ef-d¡l¡ (3) Hl Ad£e p¡¢mp£ V¡ÊCh¤Ée¡m La«ÑL fÐcš ¢pÜ¡¿¹ à¡l¡

pwr ¥ì fr Eš² ¢pÜ¡¿¹ fcС­el ¢œn ¢c­el j­dÉ q¡C­L¡VÑ ¢hi ¡­N

Bf£m c¡­ul L¢l­a f¡¢l­hez

5.    Bf£m c¡­ul qJu¡l eî C ¢c­el j­dÉ q¡C­L¡V Ñ¢hi ¡N Eš²

¢ho­u ¢pÜ¡¿¹ fÐc¡e L¢l­hz

6.    frNZ La«ÑL pÇja fÜ¢a, ¢Lwh¡ Ef-d¡l¡ (3) H E­õ¢Ma fÜ¢al Ad£e c¡­ulL«a Bf¢š Abh¡ ¢pÜ¡­¿¹l ¢hl¦­Ü c¡¢MmL«a Bf£m AL«aL¡k ÑqC­m p¡¢mp£ VÊ¡Ch¤Ée¡m p¡¢mp£ L¡kÑd¡l¡ AhÉ¡qa

l¡¢M­h Hhw ®l¡­uc¡c fÐc¡e L¢l­hz''

The provisions under sections 13 and 14 of the Arbitration Act, 2001 are clear and unambiguous. Section 13 of the Arbitration Act stated about the disqualifications of an arbitrator for which a party to the proceeding may challenge the authority of a member of the Arbitral Tribunal. According to section 13(3) of the Act, an arbitrator may be challenged only if circumstances exist that give rise to justifiable doubts as to his independence or impartiality, or he does not possess the qualifications agreed to by the parties. Section 14 of the Act provides the challenge procedure. According to sub-section (1) read with sub- section  (2)  of  section  14,  the  parties  shall  be  free  to  agree  on  a procedure for challenging an arbitrator and failing to such agreement, a party  who  intends  to  challenge  an  arbitrator  shall  send  a  written statement for the challenge to the Tribunal within thirty days after

becoming aware of the circumstances referred to in sub-section (3) of section 13 of the Act. Sub-section (3) of section 14 stipulated that unless  the  arbitrator  withdraws  from  his  office  or  the  other  party agrees to the challenge, the arbitral tribunal shall decide the challenge within thirty days from the date of filing the written statement.

Section 15 of the Arbitration Act, 2001 provides procedure of termination of arbitrator’s mandate which reads as follows:-

""15z p¡¢mpL¡l£l La«Ñ­aÅl Ahp- ¡e (1) p¡¢mL¡l£l La«Ñ­aÅl Ahp¡e

qC­h k¢c-

12. ¢a¢e ü£u fc qC­a ¢eS­L faÐÉ¡q¡l L¢lu¡ ®ee;
13.          ¢a¢e j¡l¡ k¡e;
14. pLm fr a¡q¡l Afp¡l­Z pÇja qu; h¡
15. ¢a¢e a¡q¡l  c¡¢uaÅ f¡m­e  Abh¡ A­k±¢š²L ¢hmð  hÉ¢a­l­L c¡¢uaÅ f¡m­e Arj qe Hhw ¢e­S­L ü£u fc qC­a fÐaÉ¡q¡l L¢lu¡

®ee h¡ pLm fr a¡q¡l LaѪ­aÅl Ahp¡­e pÇja quz

2.    k¢c ®L¡e  Ef-d¡l¡ (1) Hl cg¡ (O) H E­õ¢Ma

L¡l­Z A­k¡NÉa¡l SeÉ qCu¡ ü£u fc qC­a ¢e­S­L faÐÉ¡q¡l

L¢l­a hÉbÑ qe Hhw pLm fr a¡q¡l Afp¡l­Z pÇja qC­aJ hÉbÑ

qu,  a¡q¡  ¢h¢d  à¡l¡  ¢edÑ¡¢la  pj­u  j­dÉ,  ®L¡e  f­rl

B­hc­el ®fТr­a-

(L) B¿¹SÑ¡¢aL h¡¢Z¢SÉL p¡¢mp hÉa£a AeÉ¡eÉ p¡¢m­pl ®r­œ, ®Sm¡ SS,

(M)  B¿¹SÑ¡¢aL  h¡¢Z¢SÉL  p¡¢m­pl  ®r­œ  fÐd¡e  ¢hQ¡lf¢a  ¢Lwh¡ fdСe ¢hQ¡lf¢a  LaªÑL j­e¡e£a  p¤fУj ®L¡­VÑl  ®L¡e  ¢hQ¡lL-Eš² p¡¢mpL¡l£­L Afp¡lZ L¢l­a f¡¢l­hez

3.     ®kC­r­œ frNZ pÇja qu, ®pC­r­œ frNZ La«ÑL pÇja

hÉ¢š²l à¡l¡ Afp¡lZ L¡kÑLl qC­hz

4.   k¢c ®L¡e  ü£u fc qC­a ¢e­S­L fÐaÉ¡q¡l L¢lu¡ ®ee

Abh¡ ®kC­r­œ Ef-d¡l¡ (1) Hl cg¡ (O) H E­õ¢Ma f¢l¢ÙÛ¢al

Ad£e pLm fr a¡q¡l LaÑ­aÅl Ahp¡­e pÇja qu, ®pC­r­œ Eq¡

HC cg¡ Abh¡ d¡l¡ 13 Hl Ef-d¡l¡ (3) H E­õ¢Ma ®L¡e L¡l­Zl

A­bÑ NËqZ Ll¡ h¤T¡C­h e¡z

hÉ¡MÉ¡  -  HC  d¡l¡u  ""®Sm¡  SS""  A­bÑ  ®k  ®Sm¡  S­Sl  ÙÛ¡e£u A¢d­r­œl j­dÉ pw¢nÔø p¡¢mp Q¤¢š² pÇf¡¢ca qCu¡­R ®pC ®Sm¡ SS­L h¤T¡C­h''

According to sub-section (1) read with sub-section (2) of section 15 of the Arbitration Act, 2001, the mandate of an arbitrator shall terminate, if

1.     he withdraws himself from his office;
2.    he dies;
3.     all the parties agree on the termination of his mandate; or
4.    he is unable to perform his functions of his office or for other reasons fails to act without undue delay and withdraws from his office or the parties agree on the termination of his mandate.

If any arbitrator has incurred disqualifications referred to in clause- (d) of sub-section (1) of section 15 of the Act, the District Judge, in case of other arbitrations excepting international commercial arbitration, and the Chief Justice or a Judge of the Supreme Court designated by the Chief Justice in case of international commercial arbitration, on the application by any party may terminate the said arbitrator.

The disqualifications as stated in Clause – ‘d’ of sub-section (1) of section 15 of the Act of 2001 has not been defined in the Arbitration Act. As per said Clause disqualification means ‘if the arbitrator is unable to perform his functions of his office or for other reasons fails to act without undue delay and withdraws from his office’.  “Unable to perform his function is a big term which includes unable to work at all, unable to perform any one of the essential functions of his or her position i.e the fundamental job duties of the employment position and

a manifest lack of qualities.

Rule 14 of the ICSID Convention Arbitration Rules 2022 specifies the qualities required of the Arbitrators. They must possess high moral Character, recognized competence in the fields of law, commerce, industry or finance who may be relied upon to exercise independent judgment. The most frequently proposed ground for disqualification of a member of a Tribunal is alleged lake of reliability to exercise independent or impartial judgment. An Arbitrator may also be removed for incapacity or failure to perform the duties required of an arbitrator.

In the instant case, the land owners and developer entered into development agreement and as per terms of that agreement the developer started to construct building in the land owned by the petitioner and two others but admittedly, could not complete the construction work in stipulated time for which the land-owners sustained financial loss. The developer alleges that the land owners forcibly dispossessed them from a portion of the constructed building before completion of the project and accordingly, the developer incurred huge financial loss. The land owners also claimed that the land in question was under mortgage in financial institution and tri-partied agreement was executed among the developer, land owners and the bank for repayment outstanding dues of the land owners from the proceeds of the constructed flats but since the developer could not complete the project within specified time and violated the tri-partied agreement and did not pay the installments to the bank as per the agreement the land owners rightly took possession of some portion of the under constructed and unfinished building. To resolve the dispute,  arbitrators were appointed by the learned District Judge. Accordingly, it was the duty of the arbitrators to assess the cost incurred by the developer and the loss of the land-owners for non-completion of the

project in stipulated time. How the cost of the unfinished constructed building would be determined ? Is it possible by local inspection? Answer is obviously no. But the arbitrators instead of allowing the application for local investigation for ascertaining the actual cost, loss and damage appointed themselves as local inspectors to see the building only and not to determine the actual loss or profit or expense or expenditure of the building or the measurement of the unfinished constructed building. A local inspection cannot determine the actual loss or expense or cost of the building and accordingly, the arbitrators should have allowed the application for local investigation. It is also against the norms of judicial practices that the arbitrators themselves would collect the evidence by way of local inspection. It is one kind of misconduct on the part of the arbitrators. Moreover, the Arbitrators did not frame any issue to resolve the dispute and after inspection they did not supply any inspection report to either of the parties but directed to pay cost for preparing arbitral award. Accordingly, we are of the view that the members of the arbitral tribunal were unable to perform their functions of their office as per law and also failed to act without undue delay because of the fact that the tribunal was constituted in 2019 and

it could not give any award till 15.10.2023, the date of passing the impugned order and they did not withdrawn from their office and accordingly, such disqualifications, as stated above, fell within the preview of “he is unable to perform his functions of his office or for the reasons fails to act without undue delay” as stated in clause ‘(d)’ of sub- section (1) of section 15 of the Arbitration Act, 2001 and as such, the application filed by the land-owners before the learned District Judge was maintainable.

It appears that the learned District Judge without considering above aspect of the matter illegally rejected the application filed by the land owners. We are of the view that the dispute between the parties should be resolved by appointing fresh arbitrators who are competent to resolve the dispute in the prevailing facts and circumstances of the case.

In that view of the matter we find merit in this Rule.

In the result, the Rule is made Absolute. The impugned order dated 15.10.2023 is hereby set aside. The mandate of the arbitrators is terminated.

The learned District Judge is directed to appoint another arbitral tribunal consisting of three members to resolve the dispute between the parties afresh. The Chairman of the tribunal will be selected by the learned District Judge from the retired District Judges. Out of other two members, one will be appointed by the choice of the land owners and another by the choice of the developer company.    

The order of stay and status-quo granted earlier is hereby

vacated.

Communicate a copy of this judgment to the Court below at once.

(Justice Md. Badruzzaman)

I agree.

       (Mr. Justice Sashanka Shekhar Sarkar)