Vinod Bhaiyalal Jain & Ors v. Wadhwani Parmeshwari Cold Storage Pvt. Ltd.
Respondent owns cold storage at Nagpur which is managed by Suresh Wadhwani. The appellants are the sons of Mr. Bhaiyalal Jain who were in the business of commission agents for agricultural products. The appellants in 2004 had used the services of cold storage for storing 50 bags of ‘Shingada’ which is an agricultural product. The appellant has contended that the respondent had failed to store the goods in a proper way which had caused damage to the same. The appellants issued a notice to claim compensation. The respondents denied the claims of the appellant and gave a counterclaim. This led to disputes between the parties. Respondent claimed the parties were governed by an arbitration clause as they have agreed to refer the dispute to an arbitrator- Sri S.T. Madnani. The father of the appellant issued a notice disputing the existence of an arbitration clause and further claimed that Sri S.T. Madnani cannot be appointed as the arbitrator here on the grounds that he has previously been the counsel of the respondent. Despite these objections, arbitration proceedings continued and the arbitrator proceeded with the matter in the absence of appellants and passed an order directing the appellants to pay the claim amount. The Arbitrator further imposed an amount of Rs.43,000/ on the appellants. Following this, the appellant filed a petition under s.34 of the Arbitration and Conciliation Act, 1996 before the District Judge of Nagpur.
- Whether the appointment of the arbitrator with non-disclosure that he was previously respondent’s counsel valid in law?
The District Judge agreed with the claims of the petitioner and stated that the arbitrator had acted as the counsel for the respondent previously, which wasn’t disclosed in terms of s.12 of the act and under s.13 of the act the court noted that the objections of the petitioner are justified. Thus on the above-stated grounds, the District Judge set aside the arbitral award passed by Sri S.T. Madnani.
An appeal was filed by the respondents before the High Court under s.37(1b) of the act. The High Court noted that the objection raised against the appointment of the arbitrator was raised by the father of the appellants and not by the appellants. The court also ruled that just because the arbitrator had previously acted as the counsel for the respondents does not make a valid ground for a reasonable person to perceive that the arbitrator would be biased here. The High Court dismissed the decision rendered by the District Court and restored the arbitral award.
Following this, the appellants filed a petition before the Supreme Court. The Supreme Court agreed with the decision rendered by the District Court. The court noted that despite the fact that a notice was received by the arbitrator that the appellant has filed a petition in the District Court for the appointment of an independent arbitrator, the arbitrator continued the proceedings and passed an award. The court further agreed with the fact that it wasn’t disclosed that the arbitrator was previously the counsel for the respondent violating s.12 of the act.
This Article Does Not Intend To Hurt The Sentiments Of Any Individual Community, Sect, Or Religion Etcetera. This Article Is Based Purely On The Authors Personal Views And Opinions In The Exercise Of The Fundamental Right Guaranteed Under Article 19(1)(A) And Other Related Laws Being Force In India, For The Time Being.