Bombay High Court
Gwaldas Mundra vs Anand Rathi And 4 Ors on 29 July, 2016
Bench: R.D. Dhanuka
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
ARBITRATION PETITION (L) NO.863 OF 2016
Gwaldas Mundra )
Dilrag, B Wing, 2nd floor, 4, )
Presidency Society, N.S.Road no.9, )
JVPD scheme, Vile Parle (west), )
Mumbai - 400 049. ) .. Petitioner
Versus
1. Anand Rathi )
11th floor, Times Tower, Kamla City,
ig )
Senapati Bapat Marg, Lower Parel, )
Mumbai - 400 013. )
2. Kailash Biyani )
C/o.Asian Markets Securities Pvt.Ltd. )
1/2, Athena House, Rajnigandha )
Complex, Gokuldham, Film City Road,)
Goregaon (East), Mumbai - 400 063. )
3. Pradeep Sancheti )
nd
203-203, Mulla House, 2 Floor, 51, )
M.G.Road, Fort, Mumbai - 400 001. )
4. N.M.Gupta )
rd
C/301-302,3 Floor, Beaumonde Tower)
Appa Saheb Marathe Marg, Prabhadevi)
Mumbai - 400 025. )
5. Pradeep Gupta )
C-301,Beaumonde Tower, Appa Saheb)
Marathe Marg, Prabhadevi, )
Mumbai - 400 025. ) .. Respondents
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Mr.Suryanarayanan i/by M/s.Dhiren Akbari for the petitioner.
Mr.Prateek Seksaria a/w Mr.Simil Purohit a/w Mr.Punit Damodar a/w
Ms.Nikita Vardhan i/by M/s.Kanga & Co. for the respondent nos.4 & 5.
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CORAM : R.D. DHANUKA, J.
DATE : 29th July 2016
P.C.
. By this petition filed under Section 12(5) read with Section
14 of the Arbitration and Conciliation Act,1996 (for short "the Arbitration
Act"), the petitioner has prayed for declaration that the respondent nos.1
to 3 i.e. arbitral tribunal were not eligible to assume office as arbitrators
in view of their statutory disability in terms of Section 12(5) of the
Arbitration Act and seeks appointment of a retired Judge of this Court in
substitution in terms of Sub-section (1) read with Sub-section (2) of
Section 14 of the Arbitration Act.
2. Mr.Seksaria, learned counsel appearing for the respondent
nos.4 and 5 raises a preliminary objection about maintainability of this
arbitration petition on the ground that under none of the provisions of
the Arbitration Act, this petition can be entertained by this Court.
3. Learned counsel appearing for the petitioner invited my
attention to the order dated 19th July 2016 passed by the learned arbitrator
rejecting the application filed by the petitioner under Section 12(5) of the
Arbitration Act. He submits that the respondent nos.1 and 2 being
relatives of the parties, they are not eligible to act as arbitrators in view
of the bar under Section 12(5) of the Arbitration Act. He submits that
though the respondent nos.1 and 2 were the named arbitrators in the
arbitration agreement entered into between the parties, in view of non-
obstante provision of Section 12(5) of the Arbitration Act, the respondent
nos.1 and 2 could not act as arbitrators. He submits that since the
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respondent nos.1 and 2 were not qualified to act as arbitrators, the
appointment of the learned Presiding Arbitrator by these two arbitrators is
also without jurisdiction and is illegal.
4. Learned counsel appearing for the petitioner placed reliance
on the judgment of the Supreme Court in the case of State of Bihar and
Ors. Vs.Bihar Rajya M.S.E.S.K.K. Mahasangh and Ors., reported in
AIR 2005 SC 1605 and in particular paragraphs 45 and 46 and would
submit that in view of the non-obstante provision under Section 12(5) of
the Arbitration Act, though the respondent nos.1 and 2 being the named
arbitrators in the arbitration agreement entered into between the parties,
in view of first two arbitrators being relatives of one or other party to
the arbitration agreement could not have been appointed as arbitrators.
5. Learned counsel invited my attention to Section 13 of the
Arbitration Act and would submit that there is no remedy available to
the petitioner against the order passed by the arbitral tribunal rejecting
the objection under Section 12(5) of the Arbitration Act. He placed
reliance on the judgment of the Supreme Court in the case of Lalitkumar
V.Sanghavi (D) through LRs Neeta Lalit Kumar Sanghavi & Anr. Vs.
Dharamdas V. Sanghavi & Ors. decided on 4th March 2014 in Civil
Appeal No.3148 of 2014 and would submit that the remedy of the
petitioner, according to the petitioner, would be to apply for termination
of the mandate of the arbitral tribunal under Section 14 of the Arbitration
Act.
6. The relation of the respondent nos.1 and 2 with one or other
party to the arbitration agreement is not in dispute. The petitioner had
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raised such an objection before the arbitral tribunal by filing an
application. The arbitral tribunal has ruled on the said application by
passing an order on 14th July 2016 and has rejected the said application
on various grounds.
7. The question that arises for consideration of this Court is
whether an order passed by the arbitral tribunal rejecting the objection
under Section 12(5) of the Arbitration Act can be challenged at this stage
by the petitioner by invoking the provisions of Section 14 or any other
provisions of the Arbitration Act or not.
8. It is not in dispute that the sub-section (5) of Section 12 of
the Arbitration Act is inserted by the Arbitration and Conciliation
(Amendment) Act, 2015 with effect from 23rd October 2015.
9. In so far as the reliance placed on Section 13 of the
Arbitration Act by the learned counsel for the petitioner is concerned,
the said provision does not provide for any intervention of this Court at
this stage against the order passed by the arbitral tribunal. No other
provisions of the Arbitration Act provides for intervention of this Court
at this stage against the said order passed by the arbitral tribunal under
Section 12(5) of the Arbitration Act.
10. A perusal of Section 5 of the Arbitration Act indicates that
the Court can intervene only in such proceedings where so specifically
provided in Part I of the Arbitration Act. Admittedly the application filed
by the petitioner before the arbitral tribunal was under Section 12(5) of
the Arbitration Act which falls in Part I of the Arbitration Act. In my
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view, in view of the limited intervention permissible under Section 5,
the present petition filed under Section 14 of the Arbitration Act is not
maintainable. In my view, the petition under Section 14 is not
maintainable for termination of mandate of the arbitral tribunal on the
ground of alleged apprehension of the petitioner of bias against the
petitioner.
11. In so far as the judgment of the Supreme Court in the case of
Lalitkumar V.Sanghavi (D) through LRs Neeta Lalit Kumar Sanghavi
& Anr. (supra) relied upon by the learned counsel for the petitioner is
concerned, the arbitral tribunal in that matter has terminated the
arbitration proceedings under Section 32(2) of the Arbitration Act on the
ground that the parties did not take any interest in proceeding with the
arbitration proceedings. Being aggrieved by the said order of the arbitral
tribunal, the claimant has challenged the said order.
12. Supreme Court in the said judgment has held that whether
the mandate of the arbitral tribunal was terminated or not, filing of
proceedings under Section 14(2) of the Arbitration Act would be an
appropriate remedy. In the facts of this case, there is no such order passed
by the arbitral tribunal. The arbitral tribunal has rejected the objection
filed under Section 12(5) of the Arbitration Act. In my view, the judgment
of the Supreme Court in the case of Lalitkumar V. Sanghavi (D) through
LRs Neeta Lalit Kumar Sanghavi & Anr. (supra) thus would not assist
the case of the petitioner and is clearly distinguishable in the facts of
this case.
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13. In so far as the judgment of the Supreme Court in the case
of State of Bihar and Ors. (supra) relied upon by the learned counsel
for the petitioner is concerned, the said issue raised by the petitioner can
be raised if the petitioner is aggrieved by the final award rendered by the
arbitral tribunal on interpretation of Section 12(5) of the Arbitration Act.
14. In my view, the petitioner has no remedy to challenge the
order passed by the arbitral tribunal under Section 12(5) of the Arbitration
Act at this stage and will have to wait till final award is rendered. The
petitioner can raise these grounds in the arbitration petition while
challenging the final award under Section 34 of the Arbitration Act if
the petitioner is aggrieved by the same along with the final award passed
by the arbitral tribunal. It is made clear that this Court has not expressed
any views on merits of the order passed by the arbitral tribunal and on
the issue whether the respondent nos.1 and 2 could act as arbitrators
inspite of they being relatives of one or other party to the arbitration
agreement. These issues are kept open.
15. I therefore pass the following order :-
(a) Arbitration petition is dismissed as not maintainable;
(b) There shall be no order as to costs.
R.D. DHANUKA, J.
