The appointment of an arbitrator cannot be displaced once made, except in certain cases where the arbitrator is ineligible to act under Section 12(5) of the Arbitration and Conciliation Act, 1996.

1. The petitioner has filed the present petition under Section 12(5) of the Arbitration and Conciliation Act, 1996 (hereafter ‘the Act’) inter-alia, praying as under:-

"(i) appoint an arbitrator on behalf of the Respondent so as to enable the two appointed arbitrators to appoint the third (presiding) arbitrator and constitute the Arbitral Tribunal to adjudicate the claims of the Petitioner in accordance with the Arbitration and Conciliation Act, 1996."

2. The respondent has already nominated its arbitrator - Mr. A.N. Chatterjee, former Deputy Comptroller and Auditor General of India.

3. It is the petitioner’s case that Mr. A.N. Chatterjee is disqualified from acting as an arbitrator in view of Section 12(5) of the Act read with the Seventh Schedule to the Act. According to the petitioner, the disputes between the parties arose from the opinion/ observations made by the Office of the Comptroller and Auditor General of India (CAG) that certain items of customs duty were to be shared between the two parties in terms of the Operation, Management and Development Agreement dated 04.04.2006 (OMDA). It is the petitioner's case that the said items were not items of revenue that were required to be shared between the parties. Mr. Sethi, learned senior counsel appearing for the petitioner contends that the entire genesis of the dispute is the opinion of CAG and therefore, an ex-officer of the CAG would be disqualified to be appointed as an arbitrator. He has also drawn the attention of this Court to entry No. 1, 15 & 16 of the Seventh Schedule to the Act, which reads as under:-

"1. The arbitrator is an employee, consultant, advisor or has any other past or present business relationship with a party.

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15. The arbitrator has given legal advice or provided an expert opinion on the dispute to a party or an affiliate of one of the parties.

16. The arbitrator has previous involvement in the case."

4. The present petition was taken up on 13.02.2017 and the petitioner was directed to approach Mr. Chatterjee with a request to make full disclosure regarding his involvement in the matter, if any. The petitioner was also permitted to frame appropriate questions to elicit a response from Mr. Chatterjee regarding his involvement in CAG's opinion, if any.

5. It appears that, thereafter, the petitioner taking advantage of the said order had sent a detailed questionnaire -which is in the nature of a detailed examination rather than seeking a clarification - to Mr. Chatterjee to ascertain whether he was involved in any manner in issuing the opinion in question.

6. A perusal of the said questionnaire and the answers furnished by Mr. Chatterjee clearly indicate that although he had held various posts in the Office of CAG but he was not involved in giving opinion, which is stated to be one of the cause of disputes between the parties. In view of the aforesaid, this Court is unable to accept that any of the entries of the Seventh Schedule are attracted.

7. In the present case, Mr. Chatterjee has neither been an employee nor a consultant or an advisor to any of the parties. There is no material to indicate that he had any business relationship with any party either. Thus, entry No. 1 of the Seventh Schedule is wholly inapplicable.

8. Further the answers given by Mr. Chatterjee to the questionnaire clearly indicate that Mr. Chatterjee was never involved in giving legal advice or expert opinion to any of the parties nor has any previous involvement in the case.

9. It is also material to mention that the CAG is a constitutional functionary appointed under Article 148 of the Constitution of India. The CAG is charged with performing functions in relation to the accounts of the States and the Union as may be prescribed. Under Article 151 of the Constitution of India, the CAG is required to submit audit reports regarding accounts of the Union and the States. Thus, officers functioning in the Office of the CAG, would in their course of functioning, have i