The judgment clarified the scope of termination of an arbitrator's mandate under Section 14 of the Arbitration and Conciliation Act, 1996, emphasizing that the incapacity leading to termination should relate to the ability to function and not questions of arbitrability or related aspects.

MANMOHAN SINGH, J.

1. Petitioner M/s. Prinknit Retails Ltd., who is a manufacturer of readymade garments, filed the petition under Section 14(2) of the Arbitration and Conciliation Act, 1996 seeking quashing of order dated 24th March, 2012, declaration of termination of the mandate of the Delhi Hindustani Mercantile Association to act as arbitrators.

2. In short, the case of the petitioner is that the petitioner company received a notice 10th May, 2011 from Delhi Hindustani Mercantile Association (in short DHMA) stating that the respondent firm had some claims against the petitioner company. In the claim, the respondent sought payment of a Rs.1,92,41,398/- from the petitioner company which includes Rs.1,18,84,438/- as outstanding for goods allegedly purchased from the respondent, Rs.73,45,960/- as interest @18% upto 21.12.2010 and Rs.11,000/- as notice charges. In the claim, the respondent firm sought to rely upon the purported arbitration clause that was printed upon its bills. The specimen of the clause as appeared on bill No.2463 reads as under:

“In case of any dispute between you and us regarding payment etc. or any other business matter we both shall approach the Delhi Hindustani mercantile Association or the arbitrator or tribunal appointed by them for settlement by arbitration according to their rules and the decision given by them shall be binding on both of us and we shall have no objection to it.”

3. The respondent has alleged that it issued legal notice dated 30th December, 2010 to the petitioner company calling upon it to pay Rs.1,18,84,438/- with interest failing which the respondent would refer the dispute for arbitration to DHMA.

4. The petitioner company entered appearance before the Arbitral Tribunal of DHMA and filed an application under Section 12/14/16 of the Arbitration and Conciliation Act, 1996. The petitioner company raised objections under Section 7 of the Arbitration and Conciliation Act, 1996 and informed that it was the admitted case of the respondent firm that it had not signed any of the bills issued to the petitioner company and therefore, it was contended that neither party had any intention to enter into an arbitration agreement. It was also contended by the petitioner in the said application that even in the terms of alleged arbitration clause, the DHMA could assume jurisdiction only when approached by both the parties to the dispute. The judgment of this Court in the case of Anita Mittal v. Pal Singh Kartar Singh & Anr., reported as 164 (2009) DLT 418, being FAO No.298/2007, was referred.

5. The respondent filed the reply to the said application. Thereafter, DHMA passed the order dated 24th March, 2012 dismissing the application moved by the petitioner on the ground of Anita Mittal (supra) has nothing to do with the contents of the present case because of the reason that no notice was given to the non-claimant in that case.

6. Aggrieved by the said order dated 24th March, 2012, the petitioner by invoking the power of this Court under Section 14(2) of the Arbitration and Conciliation Act, 1996 filed the present petition on various grounds. The contention of the petitioner is that the Tribunal failed to appreciate the judgment of the Anita Mittal (supra) has the effect of de jure terminating the mandate of the Tribunal in cases like the present where DHMA has been approached by only one party to the dispute. The learned Tribunal was wrong by distinguishing Anita Mittal (supra) on the ground that no notice of the arbitration proceedings had been served upon the non-claimant therein. Therefore, the findings of Anita Mittal (supra) are not applicable to the facts of the present case.

7. At the outset, It is noteworthy to observe that learned counsel for the petitioner has already stated and it was recorded in the order dated 18th May, 2008 that she is not pressing her objection qua the jurisdiction of the arbitral tribunal to hear the matter and her objection would be confined to term