9911796707
TMI Blog2022 (12) TMIX X X X Extracts X X X X X X X X Extracts X X X X ..... onus for disclosing the number of matters in which the learned Sole Arbitrator had been appointed as such, at the instance of the respondent, rested with the learned Sole Arbitrator. The assumption that the burden to ascertain the circumstances that may give rise to justifiable doubts as to the independence and impartiality of the arbitrators is on the parties, is erroneous; this disclosure is necessarily required to be made by the person approached in connection with his appointment as an arbitrator. In the present case, the learned Commercial Court had proceeded on the basis that the appellants are precluded from raising an objection as to the ineligibility of the arbitrator as no such application was made by the appellants before the Arbitral Tribunal. The learned Commercial Court has also faulted the appellants by not providing the full particulars as to the number of arbitrations conducted by the learned Sole Arbitrator for the respondent company in the past three years. In addition, the appellants have been faulted by the learned Commercial Court in not filing an application before the learned Sole Arbitrator, seeking a declaration as required u/s 12(5) of the A C Act. This ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trator was ineligible to act as an arbitrator under Section 12(5) of the A C Act or that the impugned award could be impeached on the ground of justifiable doubts as to the independence and impartiality of the learned Sole Arbitrator. Further, the learned Commercial Court held that, as per Section 12 of the A C Act, an arbitrator is required to give a declaration only if he is of the view that there are circumstances which affect his independence and impartiality. Factual Context 4. The respondent is a limited company duly incorporated under the Companies Act, 1956 and carrying on business of hire purchase, lease and loan-cum-hypothecation in respect of light motor vehicle/medium motor vehicle/heavy goods vehicle as per the guidelines laid down by the Reserve Bank of India (RBI). The respondent (claimant before the Arbitral Tribunal) states that appellant no.1 (Mr. Ram Kumar) had approached the respondent, seeking finance of ` 2,95,500/-for the purchase of goods/passenger vehicle. It is the respondent's case that the appellant entered into a loan-cum-hypothecation agreement (hereafter 'the Agreement') on 12.03.2015, in respect of vehicle bearing RC No. DL 1ZZ-1722, with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e A C Act. 13. The appellants had assailed the impugned award, inter alia, on the ground that the learned Sole Arbitrator had been appointed without the knowledge of the appellants. The appellants also alleged that the learned Sole Arbitrator was biased in favour of the respondent as he had been appointed as an arbitrator by the respondent in several such matters against various parties. The appellants allege that the learned Sole Arbitrator is on the panel of the respondent and acts as its agent. 14. The learned Commercial Court had rejected the contention that the impugned award is liable to be set aside on account that the learned Sole Arbitrator was ineligible to be appointed as an arbitrator by virtue of Section 12(5) of the A C Act. The relevant extract of the impugned order indicating the reasons for rejecting the appellants' challenge on the aforesaid ground is set out below: 23. As regards challenge to appointment of the arbitrator, no formal application was moved challenging the appointment of the arbitrator and contention that the arbitrator was panel arbitrator and hence was biased, the petitioner was required to challenge the arbitrator by moving appropriate applic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as required to disclose the circumstances which may give rise to justifiable doubts as to his independence and impartiality. However, it was found that the impugned award could not be assailed for want of such disclosure. The learned Commercial Court was of the view that the disclosure, required in the form prescribed in the Sixth Schedule of the A C Act, was not mandatory; the learned Sole Arbitrator was required to make a disclosure only when he felt that there were justifiable doubts to his independence and impartiality. The learned Commercial Court also held that acting as an arbitrator, in other disputes involving the respondent, was not a circumstance which is covered under the Seventh Schedule of the A C Act and therefore, the learned Sole Arbitrator was not ineligible to act as such in the present arbitral proceedings. 16. We are of the view that the learned Commercial Court has fallen into error in concluding as aforesaid. By an order dated 13.09.2022, this court had directed the respondent to file an affidavit, clearly disclosing whether the learned Sole Arbitrator, who had been appointed by the respondent, was also involved in any other matter or was engaged in any profe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... approached in connection with his appointment as an arbitrator. 20. In terms of Explanation 2 to Section 12(1) of the A C Act, the arbitrator is also required to make the necessary disclosure as specified in the Sixth Schedule of the A C Act. 21. The learned Commercial Court found that the appellants were precluded from assailing the impugned award on the ground that they had not filed an application before the learned Sole Arbitrator to make the disclosure or challenge his appointment. 22. It is necessary to note that the language of Section 12(1) of the A C Act does not leave it at the discretion of any person, approached in connection with being appointed as an arbitrator, to make the necessary disclosures. The use of the words he shall disclose in Section 12(1) of the A C Act makes it mandatory for the person who is approached in connection with his possible appointment as an arbitrator, to make a disclosure of all circumstances that may give rise to justifiable doubts as to his independence and impartiality. 23. In terms of Explanation 2 to Section 12(1) of the A C Act, such disclosure is to be made in the form specified in the Sixth Schedule of the A C Act. It may be suffici ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tur Cable TV Digi Services v. Siti Cable Network Limited (2020) 267 DLT 51, the learned Single Judge of this Court, following the decision in TRF Ltd. v. Energo Engineering Projects Ltd. (supra) and Perkins Eastman Architects DPC Anr. v. HSCC (India) Ltd. (supra), held that unilateral appointment of an arbitrator by a party is impermissible. 29. In Bharat Broadband Network Limited v. United Telecoms Limited (2019) 5 SCC 755, the Supreme Court rejected the contention that the waiver of a right to object the ineligibility of an arbitrator, under Section 12(5) of the A C Act, could be inferred by conduct. The relevant observations made by the Supreme Court are set out below: 20. This then brings us to the applicability of the proviso to Section 12(5) on the facts of this case. Unlike Section 4 of the Act which deals with deemed waiver of the right to object by conduct, the proviso to Section 12(5) will only apply if subsequent to disputes having arisen between the parties, the parties waive the applicability of sub-section (5) of Section 12 by an express agreement in writing. For this reason, the argument based on the analogy of Section 7 of the Act must also be rejected. Section 7 de ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
