Delhi High Court
Teekays Interiors Pvt Ltd vs Fiitjee Foundation For Education ... on 29 August, 2017
$~50
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Date of decision: 29.08.2017
+ O.M.P. (T) (COMM.) 67/2017 & I.A.Nos.9769-71/2017
TEEKAYS INTERIORS PVT LTD ..... Petitioner
Through Mr.D.K.Sharma & Mr.Anuj Saini,
Advocates
versus
FIITJEE FOUNDATION FOR EDUCATION
RESEARCH & TRAINING ..... Respondent
Through None.
CORAM:
HON'BLE MR. JUSTICE JAYANT NATH
JAYANT NATH, J.(ORAL)
I.A.No.9770-9771/2017(exemptions)
Allowed subject to all just exceptions.
O.M.P. (T) (COMM.) 67/2017 & I.A.No.9769/2017(stay)
1. This petition is filed under Section 14(2) and 15 of the Arbitration &
Conciliation Act, 1996 (hereinafter referred to as 'the Act') seeking to set
aside the appointment of the sole arbitrator and to constitute an arbitral
tribunal.
2. Some of the relevant facts are that first agreement was entered into
between the parties for carrying out civil and interior works by petitioner at
Vittalwadi Centre, Hyderabad 08.05.2010. The second agreement is said to
have been entered into between the parties on 09.06.2010.
O.M.P. (T) (COMM.) 67/2017 Page 1 of 5
3. Disputes having been arisen between the parties. On 01.12.2011, the
respondents issued a notice to the petitioner intimating about the
appointment of Sh.Subhash Tagra, Advocate as an arbitrator. On 15.04.2013
the respondents have filed a statement of claim and the matter has been
pending before the learned arbitrator.
4. The petitioner had moved a petition for appointment of a new
arbitrator before the Andhra Pradesh High Court. This petition was
dismissed as withdrawn on 06.02.2015. He has thereafter again moved a
petition under Section 11 of the Act before this court which was also
dismissed as withdrawn on 18.05.2015.
5. Thereafter, on 21.09.2016, the petitioner moved an application before
the learned arbitrator for disclosing the requisite information as stated in the
application. On 12.05.2017, the learned arbitrator has dismissed the said
application of the petitioner.
6. I have heard the learned counsel for the petitioner.
7. The grievance of the petitioner is that the learned arbitrator is said to
be an arbitrator acting on behalf of the respondent in various arbitration
proceedings. It is urged that even though un-amended provisions of Section
12 of the Act would apply, the learned arbitrator was obliged to file a
declaration. He submits that in view of the fact that he is repeatedly
appointed as an arbitrator by the respondent, his conduct would be biased
and accordingly submits that the learned arbitrator is de jure and de facto not
entitled to act as an arbitrator and his appointment is liable to be terminated
under Section 14 of the Act.
8. The Division Bench of this court in the case of Progressive Career
Academy Pvt. Ltd. v. FIITJEE Ltd., (2011) ILR 4 Delhi
O.M.P. (T) (COMM.) 67/2017 Page 2 of 5
286/(MANU/DE/2194/2011), while considering the remedy provided under
Section 13 (3) & 13(5) of the Act, held that in case a party challenges the
appointment of an arbitrator on grounds as provided therein and the
arbitrator does not withdraw then the party aggrieved would have a remedy
under Section 13(3) of the Act before the arbitral tribunal. In case, the
learned arbitrator does not accept the plea of the aggrieved party, the
aggrieved party would have to await the award and then challenge the same.
9. Section 14 of the Act would have no application. The Division Bench
of the Andhra Pradesh High Court in Gurcharan Singh Sahney And Others
vs. Harpreet Singh Chabbra And Others, 2016 SCC Online Hyd 90 held as
follows:-
"57. The distinction between Sections 12 and 13 on the one
hand and Section 14 on the other, in immediately invoking the
jurisdiction of the Court, is based on the ability or the capacity
of the arbitrator to continue arbitral proceedings. The challenge
to an arbitrator under Section 12(3)(a) of the Act, even if
unsuccessful, does not disable or incapacitate the arbitrator
from continuing arbitration proceedings. Section 14(1)(a) of the
Act, however, relates to the inability/incapacity of the arbitrator
to perform his functions, or where his performance is such as to
needlessly delay early completion of arbitration proceedings.
While the dejure or defacto inability of the arbitrator to perform
his functions results in bringing arbitral proceedings to a
grinding halt, needless delay in the early completion of arbitral
proceedings is also a reflection of the arbitrators inability to
complete arbitration proceedings expeditiously. It is for this
reason that, unlike Section 13, Section 14 of the Act provides
for the termination of the mandate of the arbitrator.
58. The incapacities, referred to in Section 14 (1) (a) of the Act,
are such as to have a direct nexus with the inability of the
arbitrator to perform his functions. This incapacity or disability
should occur to the arbitrator himself so that he becomes, as a
O.M.P. (T) (COMM.) 67/2017 Page 3 of 5
matter of law or fact, unable to perform his functions. (Priknit
Retails Ltd.: 2013(2) ARBLR 35 (Delhi)). The de jure
impossibility, referred to in Section 14(1)(a), is the
impossibility which occurs due to factors personal to the
arbitrator, and de facto inability occurs due to factors beyond
the control of the Arbitrator. (Shyam Telecom Ltd. v. ARM
Ltd.:2004 (3) ARBLR 146 Delhi; Priknit Retails Ltd. : 2013(2)
ARBLR 35 (Delhi)). Examples would be the death of the
arbitrator or his health problems etc. (Priknit Retails Ltd. :
2013(2) ARBLR 35 (Delhi)). Mere legal disability is not a
condition precedent for invocation of Section 14. The dejure
inability must relate to his ability to function. (Priknit Retails
Ltd.)
60. The mandate of an arbitrator automatically terminates on the
death of the arbitrator or his physical incapacity to proceed with
the mandate. Dejure incapacity refers to an arbitrator's legal
incapacity to perform his functions under the law, for instance,
bankruptcy, conviction for a criminal offence, etc. Defacto
incapacity relates to factual inability, which includes factual
situations in which the arbitrator is physically unable to perform
his functions for instance, continuous ill-health, etc. (Shyam
Telecom Ltd.: 2008(4) ALT 266). If an arbitrator is genuinely
lacking in physical or mental ability to discharge his
obligations, or is found to have left his last known address
without intimation and is untraceable for quite some time, or
has been detained for custodial interrogation for a substantial
period of time for his having committed an offence and there is
uncertainty regarding his release from custody, and the Court is
of the opinion that the arbitrator has acquired de facto inability
and hence cannot act without undue delay, an order, terminating
the mandate of the arbitrator, may be passed. Similarly, if the
arbitrator becomes de jure unable to function as such, for any
reason other than manifestation of lack of independence or
impartiality for which he may have been approached to give his
ruling, approach under Section 14 is not barred. (Himadri
Chemicals & Industries Ltd.)"
O.M.P. (T) (COMM.) 67/2017 Page 4 of 5
10. In the present case, due to the alleged bias of the arbitrator, it cannot
be said that the learned arbitrator is de jure or de facto unable to act. There is
no merit in the present petition and the same is dismissed. All the pending
applications, if any, are also dismissed.
11. Needless to say that any observations made by this court in the order
would not prejudice to the petitioner in making a challenge to the
appointment of the learned arbitrator as per law at the appropriate stage.
JAYANT NATH, J.
AUGUST 29, 2017/v O.M.P. (T) (COMM.) 67/2017 Page 5 of 5