Delhi High Court
Monica Khanna & Ors. vs Mohit Khanna & Anr. on 18 June, 2021
$~
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Date of Decision: 18th June, 2021
+ ARB.P. 202/2021
MONICA KHANNA & ORS. ..... Petitioners
Through: Mr. Abhay Mahajan, Advocate
versus
MOHIT KHANNA & ANR. ..... Respondents
Through: Mr. Amit Mishra, Advocate
CORAM:
HON'BLE MR. JUSTICE J.R. MIDHA
JUDGMENT
1. The petitioner is seeking appointment of an arbitrator under
Section 11 of the Arbitration and Conciliation Act.
2. The arbitration agreement between the parties is contained in
clause XIII of the Memorandum of Family Arrangement-cum-Deed
of Relinquishment dated 09th June, 2020 according to which the
parties agreed for reference of disputes to the sole arbitrator, Mr.
Sachin Dev Sharma, Chartered Accountant.
3. The arbitration agreement between the parties is not disputed.
The respondents have no objection to the reference of disputes to the
sole arbitrator named in the arbitration agreement.
4. Learned counsel for the petitioner submits that the sole
arbitrator named in the arbitration agreement is not competent to act
as an arbitrator in terms of Section 12(5) read with the Seventh
Signature Not Verified
Digitally Signed
By:RAJENDER SINGH
KARKI
Signing Date:19.06.2021
13:31:20
Schedule of the Arbitration and Conciliation Act as the named
arbitrator is a consultant/advisor to the respondent; and is a director
and shareholder in PEB Steel Lloyd (India) Ltd. Reference is made
to para 9 of the petition which is reproduced hereunder:
"9. That the Petitioners have become aware that the proposed
Arbitrator, named III the said Memorandum, IS a
Consultant/Advisor to the Respondents, in his capacity as a
professional Chartered Accountant; IS a Director and
Shareholder in PEB Steel Lloyd (India) Ltd. an
affiliate/subsidiary company of Lloyd Insulation India Limited
(a family concern of Late Chander Prakash Khanna); has
contacted Petitioners No. 1 and 2 indicating that they are not
entitled to any amounts, other than release of the Fixed
Deposits already standing in their names. All of the foregoing
has rendered Mr.Sachin Dev Sharma ineligible to be
appointed, and act, as an Arbitrator, in terms of Section 12(5)
read with the Seventh Schedule of the Arbitration and
Conciliation Act, 1996. Consequently, the Petitioners herein
pray unto this Hon'ble Court to appoint an independent
Arbitrator for adjudication of disputes/differences between the
parties arising out of the said Memorandum."
5. The respondents have filed the reply in which they have
admitted that the named arbitrator is a consultant/advisor to the
respondents in his capacity as a professional Chartered Accountant
and is a director and shareholder of PEB Steel Lloyd (India) Ltd.
Para 9 of the reply of the respondents is reproduced hereunder:
9. The contents of para 9 of the petition as stated are
wrong and denied. It is denied that petitioners have become
aware now that the proposed Arbitrator, named in the said
Memorandum, is a consultant/Advisor to the Respondents in
his capacity as a professional chartered Accountant is a
Director and Shareholder in PEB Steel Lloyd (India) Ltd. an
affiliate/subsidiary company of Lloyd Insulation (India) Ltd.
Signature Not Verified
Digitally Signed
By:RAJENDER SINGH
KARKI
Signing Date:19.06.2021
13:31:20
In this regard it is submitted that petitioners have themselves
agreed to the name of Mr. S.D. Sharma as an Arbitrator, in
case of any dispute/differences between the parties in the
Memorandum, for the reason that he knew both Late Mr.
Chander Prakash Khanna and Late Mrs. Nirmal Khanna and
know all the family for last 40 years. Further it was at the
insistence of the petitioners that name of Mr. S. D. Sharma
was decided as Arbitrator in the said Memorandum. In fact on
earlier occasion also in 2014 while the Late Mr. Chander
Prakash Khanna and Late Mrs. Nirmal Khanna both were
alive, at that time also the name of Mr. S.D. Sharma was
agreed by all the family members, including Petitioners, to
appoint him as a sole arbitrator to settle all the disputes with
respect to various assets and properties owned by the family.
However, the said proceeding did not initiate/proceeded
further at that time.
Petitioners were well aware of the fact that Mr. S. D sharma,
named Arbitrator in the said Memorandum, is an independent
Director of the PEB Steel Lloyd (India) Ltd. since 24.9.2018,
while signing the said Memorandum in June 2020. He is not
the Director or Shareholder in PEB steer Lloyd (India) Ltd.,
as has been alleged. It is denied for want of knowledge that
Arbitrator has contacted Petitioner No.1 & 2 indicating that
they are not entitled to any amounts, other than release of the
Fixed Deposits already standing in their names. It is
submitted that Petitioners are falsely and frivolously raising
these issues with regard to appointment of Arbitrator, while
there is already a named arbitrator in the Memorandum, just
to delay performing their obligation under the said
Memorandum and harass the Respondents particularly when
Respondents have honored their obligation.
It is denied that for the any reason much less as alleged has
rendered Mr. Sachin Dev Sharma ineligible to be appointed
and act as Arbitrator, in terms of Section 12(5) read with
Seventh Schedule of the Arbitrator and Conciliation Act,
1996. It is, thus, prayed to this Hon'ble Court to not to appoint
other Arbitrator for adjudication of dispute/differences
between the parties particularly when there is no doubt on the
Signature Not Verified
Digitally Signed
By:RAJENDER SINGH
KARKI
Signing Date:19.06.2021
13:31:20
integrity and neutrality of the Mr. S. D.Sharma as an
Arbitrator, who has been appointed with the consent and at
the instance of Petitioners. Thus, Petitioner cannot now for
false and frivolous reasons challenge him being appointed as
Arbitrator."
6. Vide order dated 26th March, 2021, this Court directed the
named arbitrator, Mr. Sachin Dev Sharma, Chartered Accountant to
file an affidavit with respect to his relationship between the parties in
terms of the Seventh Schedule under Section 12(5) of the Arbitration
and Conciliation Act.
7. The named arbitrator Mr. Sachin Dev Sharma, has filed the
affidavit in which he has admitted that he is an independent director
in PEB Steel Lloyd (India) Ltd. in which respondent No.1 is also a
director. He has further admitted that he had acted as a mediator
between the parties.
8. Learned counsel for the petitioner urged at the time of the
hearing that the named arbitrator is not competent to act as an
arbitrator under the Seventh Schedule read with Section 12 (5) of the
Arbitration and Conciliation Act.
9. Learned counsel for the respondent urged at the time of the
hearing that the named arbitrator be appointed as an arbitrator to
adjudicate the disputes between the parties. It is further submitted
that the named arbitrator is an independent arbitrator in PEB Steel
Lloyd (India) Ltd. in which respondent No.1 is also a director. It is
further submitted that the petitioner having agreed to the named
arbitrator cannot wriggle out of the arbitration agreement.
10. On careful consideration of the rival contentions of the parties,
Signature Not Verified
Digitally Signed
By:RAJENDER SINGH
KARKI
Signing Date:19.06.2021
13:31:20
this Court has serious doubt to the independence of the named
arbitrator and therefore, it would be appropriate and in the interest of
justice to appoint an independent arbitrator to adjudicate the disputes
between the parties.
11. Learned counsel for the petitioner submits that the petitioner
has claims to the tune of over Rs.5 crore against the respondent.
12. The petition is allowed and Mr. Saurabh Kirpal, Senior
Advocate, Mobile: 9811027511 is appointed as a sole arbitrator to
adjudicate the disputes between the parties.
13. The learned arbitrator shall ensure the compliance of Section
12 of Arbitration and Conciliation Act, 1996 before commencing the
arbitration.
14. The fees of the arbitrator shall be according to Fourth
Schedule of the Arbitration and Conciliation Act, 1996.
15. Copy of this order be sent to the learned Arbitrator.
J.R. MIDHA, J.
JUNE 18, 2021
dk
Signature Not Verified
Digitally Signed
By:RAJENDER SINGH
KARKI
Signing Date:19.06.2021
13:31:20
