The court ruled that challenges based on allegations of bias in arbitration must follow the outlined procedures in the Arbitration and Conciliation Act, preventing premature judicial intervention.

ORDER

1. The Ministry of Petroleum and Natural Gas in the Union Government has instituted these proceedings purportedly under Sections 14(2) read with Section 15(2) of the Arbitration and Conciliation Act, 1996 [The Act] for a declaration that the majority of the members of the Arbitral Tribunal consisting of the Chairman Sir Michael D. Kirby AC CMG and Sir Bernard Rix, the two Arbitrators nominated by respondent Nos. 1 to 3 are de jure/de facto unable to discharge their functions and consequently their mandate stands terminated in terms of Section 14 of the Act.

2. The arbitration proceedings emanate from a Production Sharing Contract [PSC] dated 12 April 2000 executed between the petitioner and the respondent Nos. 1 to 3 and related to the development and production of gas from D1 to D3 gas discoveries falling in the D-6 block and marketing of gas in terms thereof.

3. The allegation in the present petition essentially is that the various procedural orders passed by the Arbitral Tribunal and the manner in which proceedings have been conducted clearly leads the petitioner to apprehend an evident bias and harboring justifiable doubts as to the independence and impartiality of the arbitrators. The petitioner alleges that the various procedural orders passed by the Tribunal would indicate that it has treated them unfairly, denied them reasonable opportunity and of favoring the cause of respondent Nos. 1 to 3.

4. However, and before the Court proceeds to elaborate upon the submissions which were addressed in support of the present petition by Mr. Ganguli, learned Senior Counsel, it would be pertinent to consider and rule upon a preliminary objection which was raised by Mr. Harish Salve, learned Senior Counsel appearing for respondent Nos. 1 to 3 with respect to the maintainability of the petition itself.

5. Taking the Court through the relevant statutory provisions, Mr. Salve submitted that in terms of Section 12 of the Act, an arbitrator is obliged to make a disclosure with respect to the existence of any relationship or interests that he may have with any of the parties or in relation to the subject matter of the dispute and which is likely to give rise to justifiable doubts as to their independence or impartiality.

6. Proceeding then to Explanation 1 to Section 12(1) of the Act, Mr. Salve submitted that a reading thereof would indicate that the grounds set out in the Fifth Schedule act as a guide in determining whether circumstances exist which may give rise to justifiable doubts being harbored. Proceeding further, learned Senior Counsel submitted that the procedure for challenge to the mandate of an Arbitrator in a situation that gives rise to justifiable doubts as to his independence or impartiality is set forth in Section 12(3) of the Act.

7. Mr. Salve, then submitted that sub-section (5) of Section 12 which came to be introduced by virtue of the Arbitration and Conciliation (Amendment) Act, 2016 creates an ineligibility criterion on grounds set out in the Seventh Schedule to the Act and which would operate notwithstanding any prior agreement to the contrary between parties. Mr. Salve further clarified that the aforesaid is subject to the solitary exception of a situation where parties may waive the applicability of sub-section (5) by way of an express agreement in writing.

8. According to Mr. Salve, since Section 12(5) read with the Seventh Schedule constructs a non-derogable disquali