[Cites 23, Cited by 0]
Calcutta High Court
Srei Equipment Finance Limited vs Seirra Infraventure Private Limited on 28 November, 2025
IN THE HIGH COURT AT CALCUTTA
ORDINARY ORIGINAL CIVIL JURISDICTION 2025:CHC-OS:230
ORIGINAL SIDE
(COMMERCIAL DIVISION)
RESERVED ON: 26.11.2025
DELIVERED ON: 28.11.2025
PRESENT:
HON'BLE JUSTICE GAURANG KANTH
AP-COM 712 OF 2025
SREI EQUIPMENT FINANCE LIMITED
VERSUS
SEIRRA INFRAVENTURE PRIVATE LIMITED
Appearance:
Mr. Swatarup Banerjee, Adv.
Mr. Sariful Haque, Adv.
Mr. Rajib Mullick, Adv.
Ms. Sonia Mukherjee, Adv.
..... for the Petitioner
Mr. Rohit Das, Adv.
Ms. Kishwar Rahaman, Adv.
Ms. Divya Tekriwal, Adv.
..... For the respondent
JUDGMENT
Gaurang Kanth, J.:-
1. The Petitioner has preferred the present Arbitration Petition under Section
14 read with Section 15 of the Arbitration and Conciliation Act, 1996,
seeking termination of the mandate of the learned Sole Arbitrator.
2. The facts leading to the present case as are follows:
3. The present petition arises out of the arbitral reference concerning
disputes under the Master Lease Agreement dated 15.03.2018 bearing
Rental Schedule Nos. 156052, 156055, and 156056. Vide order dated
22.02.2022, this Court appointed the learned Sole Arbitrator to adjudicate
the disputes between the parties.
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4. At the preliminary hearing before the Arbitral Tribunal, the learned
Arbitrator furnished a disclosure under Section 12(1) of the Arbitration
and Conciliation Act, 1996, stating that he had previously appeared
against the Petitioner in a few matters. After considering this disclosure,
the Petitioner did not object to his appointment and proceeded with the
arbitral proceedings.
5. During the course of the arbitration, the Petitioner, upon further enquiry,
came to know that the learned Arbitrator had appeared as a counsel
against the Petitioner in some matters during the pendency of the arbitral
proceedings. In view thereof the Petitioner requested the learned Arbitrator
to make a subsequent declaration under 12 (1) of the Act. In his fresh
declaration dated 08.02.2025, the learned Arbitrator admitted that he had
indeed appeared against the Petitioner in four proceedings, being (i) AP
(Com) No. 823 Of 2024 titled as SREI Equipment Finance Ltd Vs KMC
Construction Ltd (ii) AP(Com) 529/2024 titled as SREI Equipment Finance
Ltd. Vs Roadwings International Pvt. Ltd (iii) AP (Com) 530 of 2024 titled
as SREI Equipment Finance Ltd Vs Roadwings International Pvt. Ltd and
(iv) AP No. 722/2022 titled as SREI Equipment Finance Ltd Vs SMS Ltd,
while the arbitration was ongoing. According to the Petitioner, this was a
new and material development that had not been disclosed earlier.
6. The Petitioner submits that this ongoing adversarial representation gave
rise to justifiable doubts as to the Arbitrator's independence and
impartiality, thereby attracting the grounds set out in the Fifth Schedule to
the Act.
7. Consequently, the Petitioner filed an application under Sections 12 and 13
of the Act challenging the mandate of the learned Arbitrator. It was
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submitted that the Arbitrator's continued appearance against the
Petitioner during the pendency of the arbitral reference amounted to a
conflict of interest incompatible with the neutrality mandated under
Section 12(1). The learned Arbitrator, however, rejected the said
application by order dated 04.08.2025 and declined to recuse himself.
8. In view thereof, the Petitioner has preferred the present petition under
Sections 14 and 15 of the Act.
9. At the outset, learned Counsel for the Respondent has raised a preliminary
objection regarding the maintainability of the present petition. Accordingly,
this Court deems it appropriate to first address the issue of
maintainability.
Submissions on behalf of the Respondent
10. The Respondent submits that the present petition is fundamentally
misconceived, as the Petitioner has erroneously invoked Sections 14 and
15 of the Arbitration and Conciliation Act, 1996, on the untenable
assumption that the case falls within the Seventh Schedule. It is
contended that the facts relied upon by the Petitioner, even if taken at face
value, at best disclose circumstances giving rise to justifiable doubts
regarding impartiality, matters squarely covered by the Fifth Schedule, and
not the Seventh Schedule.
11. The Respondent emphasises that the statutory framework draws a clear
and deliberate distinction between (i) the Fifth Schedule, which sets out
grounds that may give rise to doubts regarding an arbitrator's
independence or impartiality and must be pursued through the challenge
mechanism under Section 13 and (ii) the Seventh Schedule, which
enumerates categories of absolute and non-derogable ineligibility,
triggering an automatic bar under Section 12(5) and resulting 2025:CHC-OS:230
in
immediate termination of mandate under Section 14(1)(a).
12. It is submitted that Section 14 becomes relevant only when there exists a
de jure ineligibility arising from a Seventh Schedule entry. Had the present
case genuinely fallen within the Seventh Schedule, the Petitioner would
not have been required to invoke Section 13 at all. Jurisprudence is clear
that where a Seventh Schedule disqualification is attracted, the
arbitrator's mandate terminates ipso jure, and the aggrieved party may
directly approach the Court under Section 14 without undertaking the
statutory challenge before the arbitrator. The fact that the Petitioner
invoked Section 13, contested the matter, and suffered an adverse decision
conclusively establishes that the challenge pertains only to Fifth Schedule
concerns. In such cases, the statute mandates that the party must await
the final award and may thereafter invoke Section 34.
13. The Respondent further submits that the alleged appearance of the learned
Arbitrator as counsel against the Petitioner in certain unrelated matters
does not fall within any of the categories of absolute ineligibility specified
in the Seventh Schedule. At best, such circumstances may fall within
indicative entries of the Fifth Schedule, which relate to perception based
conflicts and do not result in automatic termination. The Petitioner is
attempting to impermissibly elevate a Fifth Schedule contingency into a
Seventh Schedule disqualification, contrary to the legislative scheme.
14. Reliance is placed on HRD Corporation v. GAIL (India) Ltd., reported as
(2018) 12 SCC 471; Bharat Broadband Network Ltd. v. United
Telecoms Ltd., reported as (2019) 5 SCC 755; and Union of India v.
Reliance, reported as 2022 SCC OnLine Del 4310, to contend that these
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authorities clearly delineate the two-tier structure introduced by the 2016
Amendment.
15. It is additionally argued that the Petitioner was fully aware of the fact that
the learned Sole Arbitrator had appeared as counsel against the Petitioner
in certain matters. The Respondent draws attention to the order sheets
placed on record, which clearly reflect the name of the learned Arbitrator
as defence counsel, alongside the appearance of the Petitioner's own
counsel. Under Section 13(2), any challenge must be raised within 15 days
of acquiring knowledge of the relevant facts; failure to do so results in
waiver under Section 4. Despite such knowledge, the Petitioner waited to
seek a formal declaration and thereafter challenged the mandate. The
Respondent therefore submits that the Petitioner has waived any such
objection by conduct and cannot now resurrect the same grounds through
a petition under Sections 14 and 15.
16. The Respondent contends that the Petitioner's reliance on "justifiable
doubts" itself demonstrates that the case falls within the Fifth Schedule.
The Seventh Schedule does not speak of doubts or perceptions; it deals
only with objective and non-waivable categories of ineligibility. Any
reference to "justifiable doubt" is thus incompatible with a claim of
Seventh Schedule disqualification.
17. For all these reasons, the Respondent prays that the present petition be
dismissed as not maintainable, submitting that the Petitioner's allegations
do not fall within the Seventh Schedule and hence cannot invoke Section
14. The Petitioner's sole statutory remedy lay under Section 13, which has
been exhausted, and the Petitioner must now await the final award and
pursue remedies under Section 34, if so advised.
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Submission on behalf of the Petitioner
18. The Petitioner submits that the mandate of the learned Sole Arbitrator
stands terminated de jure under Section 14(1)(a) of the Arbitration and
Conciliation Act, 1996, as the circumstances disclosed squarely attract
multiple entries of the Seventh Schedule, rendering the Arbitrator
statutorily and automatically ineligible to continue. Though a disclosure
under Section 12(1) was initially furnished, it was only upon a specific
query that the Arbitrator, for the first time, revealed that he is appearing
as counsel against the Petitioner in four different proceedings during the
pendency of the present arbitration. This material fact was never disclosed
earlier. Upon being apprised of this conflict, the Petitioner promptly
invoked the Section 13 mechanism on 13.02.2025.
19. The Petitioner submits that these circumstances directly attract Clauses
15, 16, 19 and 30 of the Seventh Schedule, each of which contemplates
present, direct, and incompatible engagements by an arbitrator. Once any
entry of the Seventh Schedule is triggered, the disqualification is
automatic, jurisdictional in nature, and incapable of waiver except by an
express written agreement entered after the disputes have arisen.
Accordingly, the learned Arbitrator became de jure incapable of
continuing, and no inquiry into actual prejudice or proof of bias is
required.
20. It is further submitted that Sections 12(1) and 12(3) impose a continuous
and ongoing duty of full disclosure upon an arbitrator. The learned
Arbitrator failed to disclose his contemporaneous adversarial appearance
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at the time of his appointment and disclosed it only when specifically
confronted. Such belated disclosure is contrary to the statutory mandate
of a "full and timely" disclosure at the outset. The failure to reveal an
active professional engagement against a party whose rights he was
simultaneously adjudicating strikes at the foundation of the neutrality
framework instituted by the 2016 Amendment.
21. Learned Counsel for the Petitioner submits that there is no quarrel with
the legal propositions in the judgments cited by the Respondent; rather,
those authorities reinforce the Petitioner's case. In HRD Corporation
(supra), the alleged conflicts concerned past engagements, whereas the
present case involves a live adversarial engagement by the Arbitrator
during the pendency of the arbitration, a situation the Supreme Court
expressly distinguished as falling within the Seventh Schedule. Similarly,
Bharat Broadband (supra) holds that once a Seventh Schedule disability
is attracted, the arbitrator's mandate terminates ipso jure, which directly
supports the Petitioner's position. In Union of India v. Reliance (supra),
the disqualification arose from an ongoing professional conflict during the
arbitral proceedings, squarely analogous to the facts at hand. None of the
Respondent's authorities concerns a scenario where the arbitrator is
simultaneously appearing as counsel against one of the parties during the
arbitral reference, which is the decisive distinguishing feature of the
present case.
22. Without prejudice, the Petitioner submits that Section 14(1)(a)
contemplates two independent situations, de jure and de facto incapacity.
While the authorities cited concern de jure ineligibility, the present matter
may also be viewed as one of de facto incapacity. Seventh Schedule
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disqualification corresponds to de jure incapacity, which arises by
operation of law; de facto incapacity, on the other hand, concerns an
inability as a matter of fact. Here, both standards are satisfied.
23. The Petitioner further submits that the facts also trigger Clauses 21 and 30
of the Fifth Schedule, thereby giving rise to a reasonable apprehension of
bias. The governing test is whether a fair minded and informed observer
would reasonably apprehend a lack of impartiality. Reliance is placed on
State of West Bengal Vs Shivananda Pathak & Ors. reported as 1998
(5) SCC 513 and Central Organisation For Railway Electrification Vs
ECI SPIC SMO MCML (JV) reported as 2025 (4) SCC 641, wherein the
Supreme Court held that even judicial obstinacy may constitute bias. The
Arbitrator's continued adversarial appearance against the Petitioner while
adjudicating its disputes undoubtedly satisfies this test.
24. For these reasons, the Petitioner submits that the learned Sole Arbitrator
has become both de jure ineligible under Section 12(5) and, on the facts, de
facto incapable of continuing within the meaning of Section 14(1)(a).
Consequently, the mandate of the Arbitrator stands terminated by
operation of law, and the Petitioner prays for appointment of a substitute
arbitrator under Section 15 of the Act.
Legal Analysis
25. This Court has heard the arguments advanced by the learned counsel for
both parties and examined the records and judgments cited in detail.
26. The present matter raises a foundational question concerning the
maintainability of the petition, wherein the Petitioner seeks termination of
the mandate of the learned Sole Arbitrator on the ground of alleged lack of
independence and impartiality. The Petitioner invokes the jurisdiction of
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this Hon'ble Court under Sections 14 and 15 of the Arbitration and
Conciliation Act, 1996, contending that the circumstances disclosed attract
statutory disqualification.
27. Before adverting to the facts of the present case, this Court deems it
appropriate to examine the relevant legal position.
Legislative scheme and purpose behind sections 12-14 read with the fifth
and seventh schedules.
28. Prior to the 2016 Amendment, the Arbitration and Conciliation Act, 1996
contained only a broad framework governing the neutrality of arbitrators.
Section 12 merely required disclosure of "circumstances likely to give rise to
justifiable doubts," without prescribing objective standards for assessing
impartiality or independence. The statute did not identify situations in
which an arbitrator would be rendered per se ineligible to act. Under the
pre-amendment regime, challenges under Section 13 were decided by the
arbitrator himself, and the only remedy thereafter was to await the final
award and raise the issue under Section 34.
29. This structure was widely criticised for enabling parties, particularly
government bodies, to appoint persons with direct connections or
affiliations, leading to perceptions of bias and eroding confidence in the
arbitral process.
30. To address these systemic deficiencies, the 246th Report of the Law
Commission of India recommended the introduction of objective and
transparent standards for assessing arbitrator neutrality. Accepting these
recommendations, Parliament enacted the Arbitration and Conciliation
(Amendment) Act, 2015 (effective from 23.10.2015), which significantly
strengthened the neutrality regime by revising Section 12, expanding
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mandatory disclosures, and statutorily incorporating the Fifth and Seventh
Schedules. These amendments marked a decisive shift from a subjective,
party driven model to a structured and internationally aligned framework.
31. The Fifth and Seventh Schedules are substantially modelled on the
International Bar Association (IBA) Guidelines on Conflicts of Interest in
International Arbitration. The IBA Guidelines classify potential conflict
scenarios into three categories: (i) the Red List, concerning the most serious
forms of conflict, including non-waivable conflicts that absolutely prohibit
an arbitrator from acting and waivable conflicts that may be consented to
with informed agreement; (ii) the Orange List, which sets out circumstances
that do not automatically disqualify an arbitrator but may reasonably raise
doubts regarding impartiality or independence and require disclosure; and
(iii) the Green List, which identifies circumstances that objectively do not
give rise to conflict and do not attract a duty of disclosure.
32. These Guidelines, first published in 2004 and refined through global
arbitral experience, lay down widely accepted standards on impartiality,
independence, and disclosure. The Indian Legislature, through the 2016
Amendment, codified these principles by incorporating a structured
disclosure and disqualification regime through the Fifth and Seventh
Schedules.
33. The Fifth Schedule enumerates circumstances that "give rise to justifiable
doubts" regarding an arbitrator's independence or impartiality. These
grounds fall within the domain of Sections 12(1), 12(3), and 13. The
Seventh Schedule, read with Section 12(5), identifies categories of persons
who are ineligible to serve as arbitrators, creating a bright-line rule of
automatic disqualification, subject only to express written waiver after the
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dispute arises. Thus, the Seventh Schedule embodies non-derogable and
jurisdictional bars.
34. Correspondingly, Section 14 was amended to clarify that a Seventh
Schedule disqualification renders an arbitrator de jure incapable of acting,
thereby permitting immediate judicial intervention without waiting for the
final award. The legislative intent behind the 2016 Amendment is to elevate
neutrality standards, institutionalise transparency, eliminate entrenched
conflicts of interest, and ensure impartiality through objective and
enforceable norms, aligned with internationally recognised arbitration
practices.
35. Section 12, as amended, establishes a deliberate and coherent bifurcation:
Section 12(5) read with the Seventh Schedule covers mandatory, non-
waivable statutory ineligibility going to the root of jurisdiction, resulting in
automatic termination of mandate unless expressly waived in writing post-
dispute. Sections 12(1)(4) read with the Fifth Schedule cover situations that
merely raise justifiable doubts about impartiality, which are assessable,
waivable, and subject to the statutory challenge mechanism.
36. Under this scheme, Section 13(2) expressly mandates that all challenges
founded on bias, lack of independence, or justifiable doubts under the Fifth
Schedule must be raised before the arbitral tribunal itself. The tribunal
must adjudicate the challenge under Section 13(3). If rejected, Section 13(4)
requires the arbitral proceedings to continue, with the aggrieved party
limited to a post-award challenge under Section 34.
37. Section 14 operates in a different domain. It becomes applicable only where
(a) there exists de jure inability (statutory ineligibility under Section
12(5)/Seventh Schedule); or (b) there is de facto inability (factual incapacity
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to perform functions). In the absence of either condition, Section 14 cannot
be invoked to circumvent the procedural mechanism mandated under
Section 13.
Judicial Precedents
38. In HRD Corporation (supra), the Supreme Court drew a clear and
categorical distinction between (i) ineligibility, attracting Section 12(5) read
with the Seventh Schedule, and (ii) justifiable doubts as to independence
or impartiality, falling under Section 12(1), 12(3) read with the Fifth
Schedule. The Court held that only circumstances falling under the
Seventh Schedule result in an automatic termination of mandate and
render the arbitrator de jure ineligible. All other conflicts, including past
professional engagements, prior representations, or circumstances not
amounting to an ongoing direct relationship, are matters of assessable
bias under the Fifth Schedule, which must be raised and adjudicated
through the challenge mechanism prescribed in Section 13. The relevant
portions of the judgment make it abundantly clear that unless a specific
Seventh Schedule entry is attracted, the remedy lies exclusively under
Section 13 and not under Section 14. The relevant portion reads as
follows:
"After the 2016 Amendment Act, a dichotomy is made by the Act
between persons who become "ineligible" to be appointed as
arbitrators, and persons about whom justifiable doubts exist as to
their independence or impartiality. Since ineligibility goes to the
root of the appointment, Section 12(5) read with the Seventh
Schedule makes it clear that if the arbitrator falls in any one of the
categories specified in the Seventh Schedule, he becomes
"ineligible" to act as arbitrator. Once he becomes ineligible, it is
clear that, under Section 14(1)(a), he then becomes de jure unable
to perform his functions inasmuch as, in law, he is regarded as
"ineligible". In order to determine whether an arbitrator is de jure
unable to perform his functions, it is not necessary to go to the
Arbitral Tribunal under Section 13. Since such a person would lack
inherent jurisdiction to proceed any further, an application may be
filed under Section 14(2) to the Court to decide on the termination
of his/her mandate on this ground. As opposed to this, in a 2025:CHC-OS:230
challenge where grounds stated in the Fifth Schedule are
disclosed, which give rise to justifiable doubts as to the arbitrator's
independence or impartiality, such doubts as to independence or
impartiality have to be determined as a matter of fact in the facts
of the particular challenge by the Arbitral Tribunal under Section
13. If a challenge is not successful, and the Arbitral Tribunal
decides that there are no justifiable doubts as to the independence
or impartiality of the arbitrator/arbitrators, the Tribunal must then
continue the arbitral proceedings under Section 13(4) and make an
award. It is only after such award is made, that the party
challenging the arbitrator's appointment on grounds contained in
the Fifth Schedule may make an application for setting aside the
arbitral award in accordance with Section 34 on the aforesaid
grounds."
39. In Bharat Broadband Network Ltd. (supra), the Supreme Court
unequivocally held that the grounds enumerated in the Seventh Schedule are
strict, exhaustive, and must be applied as per their precise statutory language.
The Hon'ble Apex Court emphasised that only where an arbitrator squarely falls
within one of the defined categories of ineligibility under the Seventh Schedule
does Section 12(5) stand attracted, leading to an automatic and non-derogable
termination of mandate under Section 14(1)(a). Conversely, any challenge not
fitting within the limited contours of the Seventh Schedule must be addressed
exclusively through the procedure prescribed under Section 13, as such
circumstances merely give rise to doubts regarding impartiality, which are
assessable not jurisdictional. The Supreme Court expressly clarified that Section
14 cannot be invoked as a parallel remedy to bypass the statutory mechanism
under Section 13, unless the disqualification is one of de jure ineligibility under
Section 12(5). The relevant observations read as follows:
"The scheme of Sections 12, 13, and 14, therefore, is that where
an arbitrator makes a disclosure in writing which is likely to
give justifiable doubts as to his independence or impartiality,
the appointment of such arbitrator may be challenged
under Sections 12(1) to 12(4) read with Section 13. However,
where such person becomes "ineligible" to be appointed as an
arbitrator, there is no question of challenge to such arbitrator,
before such arbitrator. In such a case, i.e., a case which falls
under Section 12(5), Section 14(1)(a) of the Act gets attracted
inasmuch as the arbitrator becomes, as a matter of law (i.e., de
jure), unable to perform his functions under Section 12(5), being 2025:CHC-OS:230
ineligible to be appointed as an arbitrator. This being so, his
mandate automatically terminates, and he shall then be
substituted by another arbitrator under Section 14(1) itself. It is
only if a controversy occurs concerning whether he has become
de jure unable to perform his functions as such, that a party has
to apply to the Court to decide on the termination of the
mandate, unless otherwise agreed by the parties. Thus, in
all Section 12(5) cases, there is no challenge procedure to be
availed of. If an arbitrator continues as such, being de jure
unable to perform his functions, as he falls within any of the
categories mentioned in Section 12(5), read with the Seventh
Schedule, a party may apply to the Court, which will then
decide on whether his mandate has terminated. Questions
which may typically arise under Section 14 may be as to
whether such person falls within any of the categories
mentioned in the Seventh Schedule, or whether there is a waiver
as provided in the proviso to Section 12(5) of the Act. As a
matter of law, it is important to note that the proviso to Section
12(5) must be contrasted with Section 4 of the Act. Section
4 deals with cases of deemed waiver by conduct; whereas the
proviso to Section 12(5) deals with waiver by express agreement
in writing between the parties only if made subsequent to
disputes having arisen between them."
40. In Union of India v. Reliance Industries Ltd. (supra), the learned Single
Judge of the Delhi High Court had occasion to consider a situation
involving allegations of bias arising from certain procedural directions
issued by the Arbitral Tribunal. One of the parties expressed an
apprehension of lack of impartiality and approached the Court under
Sections 14(2) and 15(2) of the Arbitration and Conciliation Act, 1996,
contending that the arbitrator had become de jure incapable of acting and
that the mandate therefore stood terminated. Rejecting the petition at the
threshold on the ground of maintainability, the learned Single Judge held
that such allegations founded on procedural conduct or matters relatable to
the Fifth Schedule do not fall within the narrow contours of de jure
ineligibility contemplated under Section 12(5) read with the Seventh
Schedule. The Court reiterated that unless the circumstances squarely
attract a Seventh Schedule disability, the exclusive remedy lies within the
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statutory framework of Section 13, and any challenge to the arbitrator's
continuation can be raised only post-award under Section 34.
Consequently, the prayer for termination of mandate under Section 14 was
held to be misconceived and unsustainable.
41. From the above precedents, the governing legal position is that ineligibility
under Section 12(5)/Seventh Schedule constitutes strict, non-waivable
statutory disqualifications, rendering an arbitrator de jure incapable of
acting. Where circumstances clearly fall within a Seventh Schedule entry,
the mandate terminates automatically under Section 14(1)(a), and a party
may approach the Court under Section 14(2). Section 13 is inapplicable in
such cases. Matters under Sections 12(1) and 12(3)/Fifth Schedule do not
create disqualification but merely give rise to justifiable doubts, which must
be addressed exclusively under Section 13, with post-award remedies
under Section 34. Section 14 cannot be invoked as a parallel mechanism.
Factual Analysis
42. Applying these principles to the present case, it becomes evident that the
Petitioner's allegations that the learned Sole Arbitrator appeared as counsel
against the Petitioner in certain ongoing proceedings do not fall within any
of the specific categories enumerated in the Seventh Schedule. The
Petitioner relies on Clauses 15, 16, and 19; however, a careful reading of
these provisions shows that they are wholly inapplicable. Clause 19
pertains to situations where an arbitrator has a direct or indirect interest in
the dispute itself, while Clauses 15 and 16 relate to the arbitrator's
relationship with the dispute in question. None of these circumstances are
attracted on the factual matrix presented.
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43. Such circumstances, at their highest, give rise only to potential or perceived
conflicts of interest concerns expressly governed by the Fifth Schedule.
These do not amount to statutory ineligibility but constitute grounds that
may create justifiable doubts regarding impartiality, for which the Act
prescribes a specific procedure under Section 13. Objections of this nature
must therefore be raised before the arbitral tribunal, which is vested with
the authority to adjudicate the challenge.
44. As rightly pointed out by learned counsel for the Respondent, the Petitioner
did invoke Section 13 and mounted a challenge before the learned Sole
Arbitrator. That challenge was duly considered and rejected under Section
13(3). Having failed in the mechanism prescribed by the Act, the Petitioner
now seeks to avoid awaiting the final award by re-agitating the same
grounds through the present petition under Sections 14 and 15. This
conduct itself demonstrates that the alleged grounds fall squarely within
the Fifth Schedule; for had the Petitioner genuinely believed that the
circumstances attracted Seventh Schedule ineligibility, there was no
reason to invoke Section 13 in the first place. Approaching the arbitral
tribunal initially is indicative that the challenge pertained only to
justifiable doubts and not to any de jure statutory bar.
45. Accordingly, the present petition under Sections 14 and 15, seeking direct
judicial intervention by bypassing the Section 13 process, is legally
untenable. The statutory framework draws a clear distinction between de
jure incapacity under the Seventh Schedule and assessable doubts under
the Fifth Schedule. Since the Petitioner's allegations do not attract any
Seventh Schedule disqualification, Section 14 cannot be invoked, and the
petition is not maintainable.
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46. Learned Counsel for the Petitioner contends that the case involves de facto
incapacity, and that the judgments relied upon by the Respondent do not
address de facto ineligibility or bias. This contention is misconceived. De
facto incapacity under Section 14(1)(a) arises only where an arbitrator is
demonstrably unable to perform his functions during the arbitral
proceedings. Mere prior professional engagement or perceived bias does
not constitute de facto incapacity. In the present case, the learned Sole
Arbitrator continues to perform all functions, thereby negating any claim
of factual inability.
47. The Petitioner places reliance on certain judicial precedents to allege bias,
particularly Shivananda Pathak (Supra) and Central Organisation for
Railway Electrification (supra). However, a careful examination of these
authorities reveals that they operate within the domain of the Fifth
Schedule to the Arbitration and Conciliation Act, 1996. The jurisprudence
emerging from Shivananda Pathak (Supra) underscores that allegations
of bias must be grounded in circumstances giving rise to a justifiable
doubt as to the adjudicator's impartiality, and that mere suspicion or
apprehension does not suffice to disqualify an adjudicator outright.
Similarly, in Central Organisation for Railway Electrification (Supra),
the Supreme Court reaffirmed that issues pertaining to perceived
predisposition or apprehended bias are matters intended to be addressed
through the statutory mechanism under Section 13, culminating, if
required, in a challenge to the award under Section 34.
48. In both these judgments, the Supreme Court has drawn a clear doctrinal
distinction between (i) circumstances that merely raise a doubt as to
impartiality (Fifth Schedule) and (ii) situations where the arbitrator suffers
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from a de jure or de facto inability to act (Seventh Schedule), which alone
justify recourse to Section 14. The Petitioner's reliance is therefore
misplaced, as neither Shivananda Pathak (supra) nor Central
Organisation for Railway Electrification (Supra) support an inference
of a disqualification under the Seventh Schedule. Even a case of perceived
or apprehended bias cannot, in law, trigger automatic termination of
mandate under Section 14 in the absence of demonstrable incapacity or a
prohibited relationship covered expressly by the Seventh Schedule. The
statutory scheme makes it explicit that such grievances must be processed
through the self-contained remedy under Section 13, with the supervisory
jurisdiction under Section 34 being the appropriate stage for judicial
examination.
49. Accordingly, the Petitioner's effort to characterize the learned Arbitrator's
prior representation in an unrelated proceeding as a circumstance giving
rise to de facto incapacity is wholly misconceived and legally untenable.
Such allegations, even if assumed to raise a doubt as to impartiality, fall
squarely within the Fifth Schedule and must be addressed exclusively
through the statutory challenge procedure under Section 13. The mandate
under Section 14 cannot be invoked to circumvent or dilute this
legislatively prescribed framework. The statutory architecture does not
permit parties to convert issues of perceived or apprehended bias into
assertions of automatic disqualification so as to prematurely terminate the
arbitral mandate.
Conclusion
50. In view of the foregoing, the Petitioner's challenge based on prior
professional representation does not attract de jure ineligibility under
Section 12(5)/Seventh Schedule. The allegations at most raise potential 2025:CHC-OS:230
or
perceived conflicts, governed by Section 13/Fifth Schedule, with post-
award remedies under Section 34. Judicial authorities consistently hold
that only circumstances squarely fall within the Seventh Schedule result
in automatic termination under Section 14(1)(a).
51. Accordingly, the present petition under Sections 14 and 15 is not
maintainable. The Petitioner's recourse is confined to the Section 13
procedure before the tribunal, and, if necessary, a post-award challenge
under Section 34. The prayer for termination of the Arbitrator's mandate
under Sections 14 and 15 is therefore legally untenable and
unsustainable.
52. Hence, the present petition is dismissed as not maintainable.
(GAURANG KANTH, J.)
SAKIL AMED (P.A.)
