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Where a person is ineligible to act as an arbitrator in terms of Section 12(5) of the A&C Act, a petition for termination u/s 14 may be maintainable: High Court of Delhi

As a challenge to the Arbitral Tribunal in the circumstances referred in Section 12(3) of the A&C Act, recourse to Section 14 of the A&C Act would not be available. However, in a case where a person is ineligible to act as an arbitrator in terms of Section 12(5) of the A&C Act, a petition under Section 14 may be maintainable and the same was upheld by High Court of Delhi through the learned bench led by JUSTICE VIBHU BAKHRU in the case of SACHEEROME ADVANCED TECHNOLOGIES (SAT) vs. NEC TECHNOLOGIES PVT. LTD. (NECI) [O.M.P. (T) (COMM) 34/2022] on 29.03.2022.

The facts of the case are that the disputes between the parties aroused in the context of an agreement. The petitioner had issued a notice under Section 21 of the A&C Act, invoking the Arbitration Agreement and called upon the respondent to concur on appointment of an arbitrator. The respondent rejected the said request. Consequently, the petitioner filed a petition under Section 11 of the A&C Act seeking appointment of an Arbitrator. The petitioner was aggrieved by the manner in which the Arbitral Tribunal conducted the arbitral proceedings. It is averred that the learned Arbitrator did not make the complete disclosure as required under Section 12(1) of the A&C Act at the time of accepting her appointment. The petitioner, therefore, filed the present petition under Section 14 (2) of the Arbitration and Conciliation Act, 1996, inter alia, praying that the mandate of the learned Sole Arbitrator be terminated.

The counsel appearing for the petitioner stated that the petitioner had not challenged the appointment of the learned Arbitrator and had participated in the arbitral proceedings, however, the learned Arbitrator’s inclinations were revealed subsequently. It was submitted that the learned Arbitrator had made full disclosure at the first preliminary hearing. It was further submitted that the contention that the mandate of the learned Arbitrator stands terminated under Section 14(1) of the A&C Act is unmerited and therefore, the present petition is not maintainable.

The Court was unable to accept that the Arbitral Tribunal has not acted with due dispatch or there has been any delay on its part. It was observed that “a petition under Section 14(1) of the A&C Act cannot be filed to challenge appointment of the Arbitral Tribunal on grounds as set out under Section 12(3) of the A&C Act. Any party seeking to challenge the appointment of the arbitrator is required to do so in accordance with the procedure set out in Section 13 of the A&C Act. As a challenge to the Arbitral Tribunal in the circumstances referred in Section 12(3) of the A&C Act, recourse to Section 14 of the A&C Act would not be available. However, in a case where a person is ineligible to act as an arbitrator in terms of Section 12(5) of the A&C Act, a petition under Section 14 may be maintainable”.

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Judgment reviewed by – Shristi Suman

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