Saturday, 13 April 2019

What amounts improper disclosure by Arbitrator as per Sixth Schedule of Arbitration Act ?

 The petitioner vide its email dated 05.10.2018 sought a disclosure in
terms of the Sixth Schedule of the Act from the Arbitrator. The Arbitrator,
however, sent an email dated 06.10.2018 stating as under:
“The requirement of disclosure under the law in terms of
Schedule VI would only arise, in the event, the Arbitral
Tribunal had any kind of relationship either with the
Counsels or the parties. However, as has been mentioned in
the proceedings of 04.10.2018 that the Arbitral Tribunal has
no disability as enumerated under Schedule V and VII of the
Arbitration and Conciliation Act, 1996, hence it is explicit
and it is reiterated that the Arbitral Tribunal has/had no
relationship with either of the parties or their Counsels as
envisaged under Schedules V and VII of the Act.
Hence, the disclosure as requested by you under Schedule VI
is not required.”
6. The learned counsel for the petitioner submits that the mandate of the
Arbitrator is liable to be terminated as he has not given a disclosure in terms
of the Sixth Schedule of the Act and also because his appointment was in
violation of the section 12(5) of the Act. 
7. As far as the non disclosure of the Arbitrator in terms of the Sixth
Schedule is concerned, as the Arbitrator has disclosed the major requirement
of the said Schedule and it seems that the Arbitrator was under the
misconception that he need not disclose the other relevant aspects of the
Sixth Schedule to the Act, I grant one further opportunity to the Arbitrator to
give disclosure in terms of the Sixth Schedule of the Act. Such disclosure
should be given by the Arbitrator within one week of communication of this
order.
 IN THE HIGH COURT OF DELHI AT NEW DELHI
 O.M.P. (T) (COMM.) 120/2018 & I.A. No.15421/2018

GOEL CONSTRUCTION CO. PVT. LTD. Vs THE INSTITUTE OF CHARTERED
ACCOUNTANTS OF INDIA (ICAI) .
CORAM:
HON'BLE MR. JUSTICE NAVIN CHAWLA

Dated: 13.11.2018

1. This petition under section 14 of the Arbitration and Conciliation Act,
1996 (hereinafter referred to as the „Act‟) has been filed by the petitioner
challenging the mandate of the Arbitrator appointed by the President of the
respondent in terms of the Arbitration Agreement between the parties.
2. The Arbitration Agreement between the parties is contained in clause
16 of the Agreement dated 07.02.2013 executed between the parties and
reads as under:
“16. ARBITRATION:
That in case of any dispute or difference arising out in
relation to meaning or interpretation of the
document/agreement, authorized officials of both the parties
shall try to resolve the same through discussions and
conciliation, failing to which the matter shall be referred to
a sole arbitrator to be appointed by the President of the
ICAI. The Arbitration and Conciliation Act, 1996 will be
applicable to the arbitration proceedings and the venue of
the arbitration shall be at Delhi only. The award of the
arbitrator shall be final and binding on the parties.”
3. Disputes having arisen between the parties, the petitioner invoked the
Arbitration Agreement vide its notice dated 24.08.2018. In response thereto
the President of the respondent appointed the sole arbitrator by
communication dated 26.09.2018. On 04.10.2018, the parties appeared
before the arbitrator.
4. It is the contention of the learned counsel for the petitioner that the
Arbitrator has wrongly recorded that the petitioner had no objection to the
constitution of the tribunal. In fact, on that date, occasion for raising
objection for the petitioner had not arisen as the petitioner was expecting a
disclosure in terms of the Sixth Schedule of the Act.
5. The petitioner vide its email dated 05.10.2018 sought a disclosure in
terms of the Sixth Schedule of the Act from the Arbitrator. The Arbitrator,
however, sent an email dated 06.10.2018 stating as under:
“The requirement of disclosure under the law in terms of
Schedule VI would only arise, in the event, the Arbitral
Tribunal had any kind of relationship either with the
Counsels or the parties. However, as has been mentioned in
the proceedings of 04.10.2018 that the Arbitral Tribunal has
no disability as enumerated under Schedule V and VII of the
Arbitration and Conciliation Act, 1996, hence it is explicit
and it is reiterated that the Arbitral Tribunal has/had no
relationship with either of the parties or their Counsels as
envisaged under Schedules V and VII of the Act.
Hence, the disclosure as requested by you under Schedule VI
is not required.”
6. The learned counsel for the petitioner submits that the mandate of the
Arbitrator is liable to be terminated as he has not given a disclosure in terms
of the Sixth Schedule of the Act and also because his appointment was in
violation of the section 12(5) of the Act. The learned counsel for the
petitioner relying upon the judgment of TRF Ltd. vs. Energo Engineering
Projects Ltd. (2017) 8 SCC 377, submits that the President of the
respondent himself being ineligible in terms of the Seventh Schedule of the
Act to act as an Arbitrator, cannot appoint another person to act as an
Arbitrator. He also tried to distinguish the judgment of this Court in
Bhayana Builders Pvt.Ltd. v. Oriental Structural Engineering Pvt. Ltd.,
2018 SCC OnLine Del 7634, on this aspect.
7. As far as the non disclosure of the Arbitrator in terms of the Sixth
Schedule is concerned, as the Arbitrator has disclosed the major requirement
of the said Schedule and it seems that the Arbitrator was under the
misconception that he need not disclose the other relevant aspects of the
Sixth Schedule to the Act, I grant one further opportunity to the Arbitrator to
give disclosure in terms of the Sixth Schedule of the Act. Such disclosure
should be given by the Arbitrator within one week of communication of this
order.
8. The learned counsel for the petitioner, without prejudice to the rights
and submissions of the parties, submits that as disclosure would be made by
the Arbitrator pursuant to this order, the schedule for completion of
pleadings fixed by the Arbitrator in his Procedural Order dated 04.10.2018
would require certain modifications. Learned counsel for the respondent
submits that the respondent has no objection to the same.
9. The parties would, therefore, jointly approach the Arbitrator for fixing
the schedule of completion of pleadings and for other procedural directions
in that regard after the disclosure is received by the parties.
10. As far as challenge to the power of the President of the respondent to
appoint an Arbitrator is concerned, in my view, the same is covered by the
judgment of this Court in Bhayana Builders (supra) and therefore, I do not
find any merit in the same.
11. The petition is disposed of with the above directions, with no order as
to costs.
Dasti.
NAVIN CHAWLA, J
NOVEMBER 13, 2018

Print Page

No comments:

Post a comment