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Unilateral appointment of an arbitrator by a person who is ineligible to act as an arbitrator is impermissible: High Court of Delhi

The individual so appointed unilaterally would also be ineligible to act as an arbitrator by virtue of Section 12(5) of the A&C Act, as introduced by the Arbitration and Conciliation (Amendment) Act, 2015. The only exception carved out, which is provided under the proviso of Section 12(5) of the A&C Act, is where parties by a written agreement waive their right under Section 12(5) of the A&C Act after the disputes have arisen and the same was upheld by High Court of Delhi through the learned bench led by JUSTICE VIBHU BAKHRU in the case of MOHD TARIQ USMANI vs. JEETENDER PAL & ANR. [Crl. M.A. 4645/2022] on 11.03.2022.

The facts of the case are that the petitioner filed the present petition under Sections 14 and 15 of the Arbitration and Conciliation Act, 1996 praying that the mandate of the Arbitrator, one Mr Manoj Kumar Verma, be terminated as he was unilaterally appointed by the respondent. The petitioner further prays that another arbitrator be appointed in his place. There is no dispute that the said Arbitrator was appointed unilaterally by the respondent to adjudicate the disputes that have arisen between the parties in connection with a Partnership Deed.

Respondent’s counsel stated that the petitioner did not respond to the legal notice but has now, filed a forged and fabricated reply. It is respondent’s case that the petitioner did not object to the appointment of the learned Arbitrator at the material time and therefore, is precluded from raising any objections at this stage. The respondent further states that the present petition is not maintainable as the only recourse available to the petitioner is to make an application under Sections 12 or 13 of the A&C Act before the Arbitral Tribunal.

The petitioner’s counsel stated that it is clear from the legal notice that the respondent had invoked the arbitration clause and simultaneously appointed Mr Manoj Kumar Verma as the Sole Arbitrator without the consent of the petitioner. The said notice does not indicate that the parties had earlier mentioned or discussed the appointment of the Sole Arbitrator.

The Court held that in this case there is no written consent of the petitioner for the respondent to unilaterally appoint an arbitrator. It was observed that, “unilateral appointment of an arbitrator by a person who is ineligible to act as an arbitrator is impermissible. The individual so appointed unilaterally would also be ineligible to act as an arbitrator by virtue of Section 12(5) of the A&C Act, as introduced by the Arbitration and Conciliation (Amendment) Act, 2015. The only exception carved out, which is provided under the proviso of Section 12(5) of the A&C Act, is where parties by a written agreement waive their right under Section 12(5) of the A&C Act after the disputes have arisen.”

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Judgment reviewed by – Shristi Suman

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