The enforceability of arbitration clauses must comply with statutory provisions, specifically Section 12(5) of the Arbitration and Conciliation Act, 1996, ensuring fairness in arbitrator appointment processes.

ORDER (ORAL)

(Video-Conferencing)

1. This is a petition under Section 11 (6) of the Arbitration & Conciliation Act, 1996 (`the 1996 Act'), for appointment of an arbitrator. The substratum of the dispute between the parties, as set out in sub-paras (a) to (e) and (g) to (t) of para 4 of the petition, may be reproduced thus:

"a. The Petitioner sells, supplies and distributes its agrochemical products on pan India basis and for the said purpose, appoints Carrying and Forwarding Agents (hereinafter referred to as "C&F Agent") across the country. The Petitioner maintains its mother warehouse at Vadodara, Gujarat, where the agrochemical products are stored after manufacturing through their Job worker/Manufacturer, M/s Aristo Biotech & Life Science Pvt. Ltd. ("Aristo") and are distributed/supplied to other warehouses across the country. The warehouse at Vadodara, Gujarat also receives the imported raw material and sends them to the factory of Aristo, for manufacturing them into Finished Product. The warehouse at Vadodara, Gujarat is, therefore, strategically very important to Petitioner.

b. That the Petitioner in the year 2019, at the instance of its erstwhile Supply Chain Manager, namely Mr. Deepak Ranjan, who was looking after the work of warehouse and appointment of C&F agents, decided to appoint a new C&F agent at Vadodara, Gujarat. Mr Deepak Ranjan, suggested the name of the Respondent and vouched for Respondent's experience and credibility stating that it had handled the C&F agency at one of his previous employers' company.

c. That upon meeting, the Respondent, represented and assured the Petitioner that it has prior experience and expertise in handling material of various companies as the C&F agent. Since, Mr Deepak Ranjan was heading the supply chain department and looking after the appointment of C&F agents, the Respondent shared all the documents relevant for his appointment as C&F Agent with him.

d. It is the policy of Petitioner that an employee cannot appoint any vendor with whom he/she has any present or past collaboration or financial dealing. During the process of appointment, the Respondent vide email dated 17th March, 2019 shared its profile, ITR, statement of bank account and a cancelled cheque. Pertinently, later on, it also came to the knowledge of the Petitioner that Respondent and Mr Deepak Ranjan are close family friends and that Ms Deepali Kumari who was shown to be in the management of the Respondent's proprietorship is the wife of Mr. Deepak Ranjan. However, these facts were conveniently not brought to the notice of the Petitioner by Mr Deepak Ranjan at the time of entering into agreement with the Respondent.

e. That it was upon the representations and assurances made by the Respondent about his prior experience, Petitioner decided to appoint it as C&F agent for Gujarat. The Petitioner entered into an Agreement dated 11th March, 2019 (hereinafter referred to as the "Agreement") with the proprietary concern of the Respondent and appointed it as C&F agent for Gujarat for the warehouses located at Vadodara, Gujarat. The scope of work under the Agreement inter-alia included receiving the products sent by the Petitioner, storing them under his control and then delivering/forwarding them to the customers of the Petitioner. As per the terms of the Agreement, the Agreement was valid till 31st January, 2020 and the Petitioner had the right to extend the Agreement at its sole discretion.

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g. A bare perusal of the terms of the Agreement would show that the Respondent was under the obligation to safely store the material received from the Petitioner under the Agreement. In the event of any loss or deficiency in material caused, Respondent would be absolutely liable to indemnify the Petitioner under Clause 24a of the Agreement. The Petitioner was also entitled to adjust any loss or damage caused to it due to shortage or theft of product from the warehouse from any sum that was payable to the Respondent. Furthermore,