JUDGMENT :

SHEKHAR B. SARAF, J.

1. The present application has been filed by Manikankana Saha, sole proprietores of ‘M/s Quality Foods’ (hereinafter referred to as the ‘petitioner’), under Section 14(2) read with Section 14(1)(a) and with Sections 12(1)(a) & 12(5) of the Arbitration & Conciliation Act,1996 (hereinafter referred to as ‘the Act’).

2. The petitioner seeks, inter-alia, termination of the mandate of the named arbitrator Mr. Rajesh Lihala, on the ground that he is de jure and/or de facto unable to perform his functions.

3. The parties had entered into two agreements, viz., Leave & License Agreement and Service Agreement dated September 01, 2018, for the premises at 6, Russell Street, Kolkata-700072 which is owned by the respondent/licensor Leela Devi Kasera, sole proprietoress of ‘M/s Govindam’.

4. In the year 2021, disputes arose between the parties due to nonpayment of monthly licence fees. Resultantly, the respondent herein invoked arbitration as per clauses 20 and 10 of the respective agreements and referred the matter to Mr. Rajesh Lihala, the named arbitrator in the aforesaid clauses.

5. Before the arbitral tribunal, the petitioner herein filed an application under Section 16 of the Act challenging its competence on the ground that there is no valid, enforceable arbitration agreement between the parties. Subsequently, a Section 17 application was filed by the petitioner herein for interim measures wherein the petitioner noted certain developments which gave rise to doubts about the arbitrator’s impartiality. Finally, on July 29, 2022, an application was filed by the petitioner under Section 13 read with Section 12(3) challenging the appointment on the grounds that there are justifiable doubts as to the impartiality of the arbitrator and as on date, the same is pending consideration by the arbitrator.

6. It is the petitioner’ case that the arbitrator and his wife are directors in a registered private limited company wherein the nephew of the respondent is also a director. In addition to this, it has been contended that the arbitrator is occupying an office in a building owned by the brother of the respondent at Premises No. 11, Crooked Lane, Kolkata 700069. As such, the arbitrator is hit by entry no. 10 of Schedule VII of the Act, and therefore, he is dejure ineligible to adjudicate the disputes between the parties.

7. I have heard the counsel appearing on behalf of the respective parties, and perused the materials on record.

8. The position of law on termination of arbitrator’s mandate and substituting him with another arbitrator is well settled. Before proceeding to discuss the relevant case laws on this proposition, it would be prudent on my part to reproduce the relevant provisions of the Act below:

Section 12: Grounds for challenge:

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(5) Notwithstanding any prior agreement to the contrary, any person whose relationship, with the parties or counsel or the subject-matter of the dispute, falls under any of the categories specified in the Seventh Schedule shall be ineligible to be appointed as an arbitrator:

Provided that parties may, subsequent to disputes having arisen between them, waive the applicability of this sub-section by an express agreement in writing.

THE SEVENTH SCHEDULE

Arbitrator’s relationship with the parties or counsel

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10. A close family member of the arbitrator has a significant financial interest in one of the parties or an affiliate of one of the parties.

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Explanation 1: The term “close family member” refers to a spouse, sibling, child, parent or life partner.

Explanation 2: The term “affiliate” encompasses all companies in one group of companies including the parent company.

9. The Supreme Court in Bharat Broadband Network Ltd. vs. United Telecoms Ltd. (2019) 5 SCC 755 had discussed the scheme of Sections 12, 13 and 14 of the Act and held that the Court can decide upon an arbitrator’s mandate only when it falls within any of the categories mentioned in Section 12(5) read with