The differential treatment between the party seeking arbitration and the party subjected to arbitration under Sections 13(4) and 16(5) of the Arbitration and Conciliation Act, 1996, is not discriminatory and does not violate Article 14 of the Indian Constitution, as there is an intelligible differentia for such differential treatment.

B. Subhashan Reddy, J. - In this writ petition, the constitutional vires of Sections 13(4) and 16(5) of Arbitration and Conciliation Act, 1996 (hereinafter referred to as "the Act") is in question.

2. The 2nd respondent is a Finance Company and laid a claim before the 3rd respondent who is an Arbitrator (Hon'ble Sri Justice Kuppuswamy, a retired Chief Justice of Andhra Pradesh High Court). The claim relates to recovery of money said to be due on account of hire purchase agreement entered into by the writ petitioner herein. Two others, namely, G. Jaganmohan Rao and Smt. Prathima Reddy are added as respondents, on the ground that they are the guarantors. Clause 15 of the agreement reads as follows :

"All disputes differences and/or claims, arising out of this hire purchase agreement, whether during its subsistence or thereafter, shall be settled by arbitration in accordance with the provisions of Indian Arbitration Act, 1940 or any statutory amendments thereof and shall be referred to the sole Arbitration of the Arbitrator nominated by the owner. The Award given by such an Arbitrator nominated by the owner, shall be final and binding on all the parties to this agreement."

This arbitration clause was invoked by the 2nd respondent appointing 3rd respondent as the Arbitrator. But, the petitioner is contesting the same on the ground that the matter is not arbitrable and that neither the 2nd respondent was entitled to appoint an Arbitrator nor was 3rd respondent was entitled to embark upon the arbitration. We need not dwell on several facts for the reason that we are only called upon to judge the constitutional validity of the provisions mentioned supra. Suffice it to say that the petitioner was not willing to participate in arbitration proceedings on the grounds mentioned above and put forth an objection regarding the continual of arbitration proceedings. But, his objections were overruled and the Arbitrator proceeded further and also complied with the formality under Section 12 of the Act regarding his independence and impartiality. The petitioner did not raise any such ground with regard to independence or impartiality of the Arbitrator, but only reiterated that the matter was not arbitrable and neither 2nd respondent was entitled to seek arbitration and appoint the 3rd respondent as the Arbitrator, nor was the 3rd respondent was entitled to embark upon the enquiry. When the objection put forth by the petitioner was not acceded to, he had filed this writ petition challenging the validity of the above provisions.

3. Section 13 as a whole along with sub-sections reads :

13. Challenge procedure :

(1) Subject to sub-section (4), the parties are free to agree on a procedure for challenging an Arbitrator.

(2) Failing any agreement referred to in sub-section (1), a party who intends to challenge an Arbitrator shall, within fifteen days after becoming aware of the constitution of the arbitral tribunal or after becoming aware of any circumstances referred to in sub-section (3) of Section 12, send a written statement of the reasons for the challenge to the arbitral tribunal.

(3) Unless the Arbitrator challenged under sub-section (2) withdraws from his office or the other party agrees to the challenge, the arbitral tribunal shall decide on the challenge.

(4) If a challenge under any procedure agreed upon by the parties or under the procedure under sub-section (2) is not successful, the arbitral tribunal shall continue the arbitral proceedings and make an arbitral award.

(5) Where an arbitral award is made under sub-section (4), the party challenging the Arbitrator may make an application for setting aside such arbitral award in accordance with Section 34.

(6) Where an arbitral award is set aside on an application made under sub-section (5), the Court may decide as to whether the Arbitrator who is challenged is entitled to any fees."

It is also apt to extract Section 16 along with its sub-sections :

"16. Competence of arbitral tribunal