JUDGMENT

Navin Chawla, J. (Oral)

IA No.8438/2018 (Exemption)

Allowed, subject to all just exceptions.

O.M.P. (T) (COMM.) 51/2018

1. The petitioner has filed the present petition under Section 14 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the `Act') praying for termination of the mandate of the Arbitrator appointed by the respondent.

2. There is no dispute that the Arbitrator has been appointed in accordance with the Arbitration Agreement between the parties. Learned counsel for the petitioner submits that the Arbitrator so appointed is ineligible as he would fall under Entry 1 of the Seventh Schedule to the Act, being a former employee of the respondent.

3. Section 12(5) of the Act is reproduced herein below:

" (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."

4. A reading of the above position would show that any person who falls in a category specified in the Seventh Schedule to the Act shall be ineligible to be appointed as an Arbitrator.

5. Entry 1 of the Seventh Schedule is reproduced herein below:

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

(Emphasis Supplied)

6. A reading of the above would show that it is only the person who is an employee, consultant, advisor or has any other past or present business relationship with the party, who has been made ineligible for being appointed as an Arbitrator. The above entry in the Seventh Schedule is to be distinguished from Entry 31 contained in the Fifth Schedule, which is reproduced herein below:

"31. The arbitrator had been associated within the past three years with a party or an affiliate of one of the parties in a professional capacity, such as a former employee or partner."

(Emphasis Supplied)

7. Therefore, while a former employee has been put in the Fifth Schedule to the Act, the present employee would fall under the Seventh Schedule to the Act.

8. In Voestalpine Schienen GMBH v. Delhi Metro Rail Corporation Limited, (2017) 4 SCC 665, the Supreme Court construed the scope of Entry 1 of the Seventh Schedule in relation to the former employees of the Government and held as under:

"24. Keeping in view the aforesaid parameters, we advert to the facts of this case. Various contingencies mentioned in the Seventh Schedule render a person ineligible to act as an arbitrator. Entry 1 is highlighted by the learned counsel for the petitioner which provides that where the arbitrator is an employee, consultant, advisor or has any other past or present business relationship with the party, would not act as an arbitrator. What was argued by the learned Senior Counsel for the petitioner was that the panel of arbitrators drawn by the respondent consists of those persons who are government employees or ex-government employees. However, that by itself may not make such persons ineligible as the panel indicates that these are the persons who have worked in the Railways under the Central Government or the Central Public Works Department or public sector undertakings. They cannot be treated as employee or consultant or advisor of the respondent DMRC. If this contention of the petitioner is accepted, then no person who had earlier worked in any capacity with the Central Government or other autonomous or public sector undertakings, would be eligible to act as an arbitrator even when he is not even remotely connected with the party in question, like DMRC in this case. The amended provision puts an embargo on a person to act as an arbitrator, who is the employee of the party to the dispute. It a