R.C Lahoti, J. (ORAL):— Challenge is laid to the constitutional validity of Section 7-B of the India Telegraph Act, 1885 which provides as under:—

“7-B. Arbitration of disputes

(1) Except as otherwise expressly provided in this Act, if any dispute concerning any telegraph line, appliance or apparatus arises between the telegraph authority and the person for whose benefit the line, appliance or apparatus is, or has been, provided, the dispute shall be determined by arbitration and shall, for the purposes of such determination, be referred to an arbitrator appointed by the Central Government either specially for the determination of that dispute or generally for the determination of disputes under this Section.

(2) The award of the arbitrator appointed under sub-section (1) shall be conclusive between the parties to the dispute and shall not be questioned in any Court.

2. The challenge is laid on the ground that the provision is discriminatory and ultra vires of the Constitution, also against the principle of natural of justice and it gives unbridled power to the arbitrator who is an employee of the respondent (MTNL). It is further submitted that the provision makes the award of the arbitrator final and binding without any judicial scrutiny and there is no judicial check against the arbitrary exercise of powers by arbitrator.

3. It is true that Section 7-B above said excludes the ordinary remedy available under the law for settlement of such dispute as are covered by Section 7-B aforesaid and the award so given is conclusive and not available to be questioned in any Court, however, that by itself would not make the provision unconstitutional.

4. Arbitration is one of the well recognised forum for settlement of disputes. When the parties are governed by any contract or law which makes it obligatory for the parties to have recourse to arbitration for resolution of disputes inter se, their right to approach the ordinary forum is taken away.

5. A number of statutes contain provision for statutory arbitration just as the Section 7-B above said does. A list of several such enactments can be found below Section 46 of the Law of Arbitration by S.D Singh, [10th Edition 1994, at pp 839-841].

6. It is also well settled by a catena of decisions that an arbitrator is not bound to assign reasons for his award unless assigning reasons be a requirement of the contract or mandate of any law or the order of reference. (See Riapur Development Authority & Ors. v. Chokhamal Contractors & Ors., 1989 (2) SCC 721, 753.

7. However, this aspect is rendered more or less academic with the pronouncement of the Supreme Court in M.L Jaggi v. MTNL, JT 1996 (1) SC 215. Their Lordships of the Supreme Court have noticed that reasons are required to be recorded when a decision effects the public interest was a settled law. Then they have proceeded to hold by reference to arbitral awards under Section 7-B, of the Indian Telegraph Act:—

“It is seen that under Section 7-B, the award is conclusive when the citizen complains that he was not correctly put to bill of the calls he had made and disputed the demand for payment. The statutory remedy opened to him is one provided under Section 7 B, he is enjoined to give reasons in support of his decision since it is final and cannot be questioned in a Court of law. The only obvious remedy available to the aggrieved person against the award is judicial review under Article 226 of the Constitution. If the reasons are not given, it would be difficult for the High Court to adjudge as to under what circumstances the arbitrator came to his conclusion that the amount demanded by the Department is correct or the amount disputed by the citizen is unjustified. The reasons would indicate as to how the mind of the arbitrator was applied to the dispute and how he arrived at the decision. The High Court, though does not act in exercising judicial review as a Court of appeal but within narrow limits of judicial review it would consider the correctness and legality of the award. No doubt, as rightly pointed out by Mr. V.R Reddy, Additional Solicitor General that the questions are technical matters. But nonetheless, the reasons in support of his conclusion should be given. In this case, arbitrator has not given reasons. The award of the arbitrator is set aside and the matter is remitted to the arbitrator to make and award and give reasons in support thereof.” (para 8)

It is thus clear that with effect from 2.1.96 (the date of decision in M.L Jaggi's case, supra), every arbitrator making an award under Section 7-B shall have to give reasons for his conclusions and the award shall be open to judicial review under Article 226 of the Constitution though within the permissible narrow limits of judicial review to consider the correctness and legality of the award. The principal challenge to the constitutionality of Section 7-B therefore fails.

8. Merely because the arbitrator appointed under Section 7-B may happen to be an employee of MTNL or one associated with MTNL or tele-communications department of the Central Government cannot also by itself be a ground for holding the provision constitutional. Section 7-B does not by itself provide for appointment of an employee of MTNL or Central Government as arbitrator. The challenge as laid aims not at the provision but at the exercise of power thereunder. Merely because an arbitrator happens to be an employee or a person associated with one of the parties would not by itself vitiate the appointment though it may give rise to a ground for apprehension of bias. In Secretary to Government, Transport Deptt. Madras v. Munuswamy Mudaliar and Anr., 1988 (Suppl) SCC 651, question arose in the context of Section 5 of the Arbitration Act where appointment of a named and agreed arbitrator was sought to be set aside by imputing bias to him. Their Lordships held:—

“Reasonable apprehension of bias in the mind of a reasonable man can be a ground for removal of the arbitrator. But a named and agreed arbitrator cannot and should not be removed in exercise of a discretion vested in the Court under Section 5 of the Act, unless there is allegation against the named arbitrator either against his honesty or capacity or mala fide or interest in the subject-matter or reasonable apprehension of the bias.

A predisposition to decide for or against one party, without proper regard to the true merits of the dispute is bias. There must be reasonable apprehension of that predisposition based on cogent material. The test for bias is whether a reasonable intelligent man, fully apprised of all the circumstances, would feel a serious apprehension of bias. Vague suspicions of whimsical, capricious and unreasonable people should not be made the standard to regulate normal human conduct.”

9. No rules, executive instructions or guidelines have been brought to the notice of the Court wherein the Central Government might have laid down its policy or principles governing appointment of arbitrators under Section 7-B of the Act. In the cases which are filed in the Courts, it appears that mostly the persons associated with accounts or technical side of MTNL or telecom department are appointed arbitrators. The person aggrieved apprehends that an employee of the Central Government or the MTNL would be biased in favour of the Department and would not freely and fairly decide in favour of the person aggrieved even if convinced of the genuineness of his claim. Such a bald and generalised apprehension is not justified. However, the fact remains that justice should not only be done but also appear to have been done. In International Airport Authority of India v. K.D Bali & Anr., AIR 1988 SC 1099, their Lordships have quoted the following observations in the context of likelihood of bias attributable to arbitrator:—

“The purity of administration requires that the party to the proceedings should not have apprehension that the authority is biased and is likely to decide against the party. But we agree with the learned Judge of the High Court that it is equally true that it is not every suspicion felt by a party which must lead to the conclusion that the authority hearing the proceedings is biased. The apprehension must be judged from a healthy, reasonable and average point of view and not on mere apprehension of any whimsical person. While on this point we reiterate that learned counsel appearing for the petitioner in his submissions made a strong plea that his client was hurt and had apprehension because the arbitrator being the appointee of his client was not acceding to the request of his client which the petitioner considered to be reasonable. We have heard this submission with certain amount of discomfiture because it cannot be and we hope it should never be in a judicial or a quasi-judicial proceeding a party who is a party to the appointment could seek the removal of an appointed authority or arbitrator on the ground that appointee being his nominee had not acceded to his prayer about the conduct of the proceeding. It will be a sad day in the administration of justice if such be the state of law. Fortunately, it is not so. Vague suspicions of whimsical, capricious and unreasonable people are not our standard to regulate our vision. It is the reasonableness and the apprehension of an average honest man that must be taken note of. In the aforesaid light, if the alleged grounds of apprehension of bias are examined, we find no substance in them. It may be mentioned that the arbitrator was appointed by the Chief Engineer of the petitioner, who is in the service of the petitioner.”

10. Though an award under Section 7-B of Act is immune from challenge in any Court, a person having grievance against an arbitrator is not without remedy. Section 46 of the Indian Arbitration Act, 1940 makes the provisions thereof applicable to statutory arbitrations also except to the extent to which the provisions of such other enactment may be inconsistent with the provisions of the Arbitration Act. If a person aggrieved may make out a case of bias on the part of the arbitrator, his authority can be revoked by the leave of the Court under Section 5 of the Arbitration Act, though Section 12 thereof being inapplicable to statutory arbitrations matter of fresh appointment shall have to be left to the Central Government, (see observations in Reg. Co-operative Societies W.B v. Krishan Kumar Singhania (1995) 6 SCC 482).

11. The provision cannot be held to be unconstitutional merely because it does not exclude the possibility of telcom or MTNL officers/employees being appointed to arbitrate. May be looking to the nature of dispute arising for decision in an individual case it is only a person well versed in accounting or on technical side of telcom/MTNL is thought fit to arbitrate.

12. Section 7-B of the Indian Telegraph Act, 1885 is held intra vires the Constitution.

13. Though we find nothing unconstitutional in so far as the provisions of Section 7-B are concerned and we find the challenge wholly devoid of any merit we would like to make a few observations of our own.

14. Immense spread in the telecommunication services has given rise to immense number of disputes also. It cannot be said that all the disputes raised are either frivolous or meritless. In any case, grievances raised by members of public and the consumers have to be attended to and redressed if found to have been genuinely raised. That would only generate the confidence of public in the State. A large number of complaint relates to excess billing. There are complaints raising grievance of ISD/STD calls having been made by unscrupulous persons, sometimes with the alleged connivance of lower staff, and the charges having been diverted to the complainants' number. Such complaints should be promptly attended to and investigated. That will curb the corruption and underhand dealings. If raised in the form of dispute under Section 7-B of the Act, matter should be promptly entrusted to the arbitration of such arbitrators who may or may not be in the employment of MTNL/Central Government but who can be expected to impartially decide the dispute and who cannot be accused of having any inclination to shield the erring sub-ordinate employees of MTNL or the Department. In any case, the Central Government must lay down guidelines and have panel of arbitrators by name or ex-officio who can be entrusted with arbitration and in whom the public and consumers can be expected to have faith.

15. This petition was filed by the petitioner challenging an award given by an arbitrator under Section 7-B of the Act. The appointment of the arbitrator suffered from a serious legal infirmity in as much as the appointment was made by MTNL itself and not by Central Government. That vitiated the appointment of the arbitrator as also the award given by him. On 17.10.95, the respondent had conceded to the impugned award being set aside. The Court having recorded the statement made on behalf of the respondent through its counsel had also allowed liberty to the respondent to secure appointment of an arbitrator from the Central Government in accordance with Section 7-B of the Act. That must have been done. If not already done, that can be done even now. In any case, relief in that regard is rendered redundant. Inspite of the proceedings dated 17.10.95 the petitioner had pressed the petition for adjudication on merits of his challenge to the vires of Section 7-B of the Act, which we hereby do.

16. The petition is dismissed.