The Calcutta High Court drew a clear distinction between challenges to an arbitrator under Section 12(1) and Section 13 read with the Fifth Schedule, and those arising under Section 12(5) and Section 14 read with the Seventh Schedule of the Act. The court rejected a petition under Section 14 read with Section 15 of the Arbitration and Conciliation Act, 1996, seeking termination of the mandate of a learned Sole Arbitrator.
The petition arose out of an arbitral proceeding, wherein the arbitrator furnished a disclosure under Section 12(1) of the Act, stating that he had previously appeared against the petitioner in few matters. Initially, at this disclosure, the petitioner did not object to the appointment and agreed to proceed with the arbitral proceedings. However, further inquiry revealed that the arbitrator had also appeared as counsel against the petitioner during the pendency of the present arbitral proceedings. Taking cognizance of said fact, the petitioner challenged the appointment primarily under Sections 12 and 13 of the Act, alleging the aforementioned circumstance to give rise to justifiable grounds under the Fifth Schedule. The learned Arbitrator, however, rejected the said application and declined to recuse himself.
On the said rejection, the petitioner preferred to file the present petition under Sections 14 and 15 of the Act, claiming that the arbitrator is liable to be terminated de jure under Section 14(1)(a) of the Act.
The single bench, comprising Hon’ble Justice Gaurang Kanth, held that the challenge under Section 14 is only applicable in cases where there exists either any statutory inability under Section 12(5)/The Seventh Schedule or a de facto incapacity to perform a function. The Court noted that the 2016 Amendment laid down a clear bifurcation in the Arbitration Act, drawing a bright blue line between mandatory, non-waivable statutory ineligibilities that automatically terminate an arbitrator’s mandate under Section 12(5) r.w the Seventh Schedule, and those circumstances that merely raise justifiable doubts about impartiality, which remain subject to assessment, waiver and statutory challenge under Sections 12(1), (4) r.w the Fifth Schedule.
The court outrightly discarded the petitioner’s reliance on the Supreme Court decision in HRD Corporation v. GAIL (India) Ltd. (2018) 12 SCC 471 to assert that the ongoing relationship of the arbitrator during the pendency of the arbitration proceedings would fall within the Seventh Schedule. The court observed that in the HRD Corporation case, the court held that all conflicts not enumerated in the Seventh Schedule are matters of assessable bias under the Fifth Schedule, thus, liable to be raised under Section 13 before the Arbitral Tribunal. The bench observed that the petitioner’s allegations against the arbitrator do not qualify under any of the specific categories mentioned in the Seventh Schedule.
Accordingly, the court dismissed the petition as being not maintainable. The court directed the petitioner to adopt the correct recourse as provided under Section 13 of the Act, i.e., the challenge procedure before the tribunal and, if necessary, a post-award challenge under Section 34 of the Act.
Appearances:
For Petitioner: Mr. Swatarup Banerjee, Adv., Mr. Sariful Haque, Adv., Mr. Rajib Mullick, Adv., Ms. Sonia Mukherjee, Adv.
For Respondent: Mr. Rohit Das, Adv., Ms. Kishwar Rahaman, Adv., Ms. Divya Tekriwal, Adv
