The Bombay High Court dismissed the IA seeking termination of the Arbitrator's mandate on the ground that he represented the counsel of the other party in different matters. A single judge bench of this Court comprising Hon’ble Justice Bharati Dangre held that there is no clash of interest of the Arbitrator because, as a counsel, he had represented the Advocate representing the opposite party.
Brief Facts:
The petitioner entered into a Master Service Agreement on 24/5/2017, under which the Respondent was to provide an application based platform to host and disseminate bulk SMS to end users of the petitioner. However, certain disputes arose with respect to multiple invoices raised by the Respondent, which resulted in the Respondent invoking arbitration clause and proposing the name of Mr.Amrut Joshi as Sole Arbitrator in the notice dated 16/1/2020. The petitioner did not agree to the appointment of the named Arbitrator, and this resulted in the Respondent approaching this Court under sub-section (6) of Section 11 of the Arbitration and Conciliation Act. By order dated 23/11/2022, Mr.Amrut Joshi was appointed as Sole Arbitrator to decide the disputes and differences, subject to the terms and conditions stipulated in the order.
While the proceedings were ongoing before the Arbitral Tribunal, it came to its notice that the Arbitrator was representing the counsel for the Respondent (Mr.Prabhakar Tandon and Ms.Sudha Dwivedi) in an interlocutory application No.443 of 2021 filed in Company Petition (IB) No.1399/NB/2017, captioned as Bank of India vs. Mandhana Industries Ltd. In this petition, the petitioner prayed for terminating the mandate of sole Arbitrator, Shri Amrut Joshi as he failed to disclose that he represented counsel for the Respondent in several other matters.
Contentions of the Petitioner:
The counsel for the petitioner argued that the sole Arbitrator, in the wake of the aforesaid, became ineligible to continue as an arbitrator, as per Section 12(5) r/w Schedule VII of the Act. His submission was that the Arbitrator is de jure and de facto unable to perform his functions, and since the issue of ineligibility goes to the root of the appointment, he would lack inherent jurisdiction to proceed further, which would enable a party to file an application u/s.14(2) to the Court to decide on the termination of their mandate.
Contentions of the Respondent:
The learned Counsel for the Respondent raised a question about the maintainability of the petition filed u/s.14(2) of the Arbitration and Conciliation Act. Further, it was contended that by no stretch of the imagination, the justifiable doubts as to the independence and impartiality of an Arbitrator would be applicable to a counsel who appear for distinct Attorneys in distinct proceedings. It is also not necessary to disclose such an appearance as a counsel, which is the precise reason the Arbitrator has never made a disclosure statement in respect to the above fact.
Observations of the Court:
This Court first analyzed whether the petitioner has followed the procedure to challenge the Arbitrator's appointment on the ground that there was an incorrect disclosure and, therefore, the Arbitrator has become de jure incompetent to continue with arbitration. After perusing the communication addressed by the Respondent to the Arbitrator, it was evident to the Court that the petitioner never raised a challenge as contemplated u/s.13 of the Arbitration and Conciliation Act, but he requested the Arbitrator to keep the proceedings in abeyance as he has already instituted the proceedings, seeking termination of his mandate u/s.14 of the Act.
In light of Sheetal Maruti Kurundwade Vs. Metal Power Analytical (I) Pvt. Ltd, 2017(6) Mh.L.J 642, this Court held that there is no clash of interest of the Arbitrator because, as a counsel, he had represented the Advocate representing the opposite party.
The decision of the Court:
The Bombay High Court dismissed the IA as being devoid of any merit.
Case Title: Quess Corp versus Netcore Cloud Pvt Ltd
Coram: Hon’ble Justice Bharati Dangre
Case no.: IA (L) NO. 25653 of 2022 IN ARBITRATION PETITION (L) NO. 24705 OF 2022
Advocate for the Petitioner: Mr.Vishal Nautiyal with Ms.Vidhi N. Sharda, Mr.Smit Shah i/b Mr.Aviral Dhirendra
Advocate for the Respondent: Mr.Prakhar Tandon
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