Manish Anand & Ors. v FIITJEE Ltd. 248 (2018) DLT 499
The mandate of the Sole Arbitrator was challenged in this case under Section 11 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as “the Act”) on two grounds.
- The unilateral appointment of the Arbitrator by the respondent.
- The Arbitrator had not given proper disclosure as required under Section 12(1) of the Act.
Issue: (1) Whether the unilateral appointment of the sole Arbitrator by a party is invalid?
(2) Whether the inappropriate discovery would contribute the sole Arbitrator so allotted barred or de jure incompetent of proceeding with the arbitration proceedings?
(3) Whether the court has jurisdiction to obstruct this case?
An arbitration agreement was come in into by the parties according to which the Respondent unilaterally allotted the sole Arbitrator to arbitrate upon the disputes that took place between them. The Arbitrator made a disclosure to observe with independence and impartiality under Section 12(1) of the Act, even if not in the form stipulated in the Sixth Schedule. The petitioner contended that the arbitration agreement, so far as it vested the influence in the respondent to unilaterally hire the sole Arbitrator, was null. The petitioner further contended that the authorization of the Arbitrator should be concluded as the disclosure made by him was not in the approved format. Therefore, this petition was filed under section 11 of the Act to cease the authorization of the Arbitrator.
(1) The court relied on the judgment of Bhayana Builders Private Ltd. v Oriental Structural Engineers Private Ltd. to clutch that the appointment of the Arbitrator cannot be challenged on the ground that he was unilaterally allotted by the respondent, as the selection was made in harmony with the agreement between the parties.
(2) The court took note of the 246thLaw Commission Report to be grateful for and re-accentuate the significance of disclosure by an arbitrator under Section 12(1) of the Act. It’s contingent that the legislature did not state that the consequence of non-disclosure would outcome in automatic annihilation of the mandate of the Arbitrator. Thus, the court held that in the facts of the present case, an inappropriate revelation would not submit the arbitrator disqualified or de jure incompetent of proceeding with the arbitration.
The court aside that the petitioner’s reliance on Dream Valley Farms Private Ltd. & Another. v Religare Finevest Ltd. & Others was mislaid. In the said judgment, the Arbitrator’s disclosure was ex-facie deceptive as divergent to the present case where the disclosure was not in the approved format.
Thus, the court held that however, the disclosure given by the arbitrator was not in the approved format, it unveiled the fundamental aspect of independence and neutrality.
(3) The court evaluated the scope of Section 11 of the Act as portrayed by the Supreme Court in the case of Indian Oil Corporation Ltd. v Raja Transport Private Ltd. which held that “…except the cause of action for summoning jurisdiction Under Clauses (a), (b) or (c) of Sub-section (6) of Section 11 of 1996 Act arises, there is no inquiry of the Chief Justice or his consent to implementing power Under Sub-section (6) of Section 11.” As no such condition existed, the Court did not have jurisdiction to implement its authority under Section 11 of the Act.
The judgment elucidates that an inappropriate disclosure would not provide the arbitrator disqualified or de jure incompetent of proceeding with the arbitration. Hence, the authorization of the Arbitrator could not be ended merely on the ground that the disclosure requirements under Section 12(1) of the Act were not in the format prescribed under the Sixth Schedule.