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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
BIREN VAISHNAV, J.
Ahuja Classes - Petitioner
Versus
Bothra Classes - Respondent
R/Petn. Under Arbitration Act No. 31 of 2020
Decided On : 08-09-2020
Arbitration and Conciliation Act, 1996 – Section 11(6) , Section 11(8) - Negotiable Instruments Act - Opening coaching classes – Terminating of Agreement - Notice - Mere defense that it was agreed by all that it was a convenient venue is no explanation - Reading of the Seventh Schedule to the Act, though only item 16 is invoked by Shri Bhatt suggesting that the arbitrator had previous involvement in the case as a conciliator, however reading item 3 of Seventh Schedule indicates that even if arbitrator is a lawyer in the same firm which is representing one of the parties, more or less applies - Shri N.J. Mevada and Sole Arbitrator have a professional association as is evident from the declaration - This itself could be a justifiable reason circumstancing the Sole Arbitrator’s ineligibility to act as a Sole Arbitrator.
Fact of Case
Petitioner that he entered into a franchisee agreement with respondent for opening coaching classes of IIT-JEE/JEE Advance, JEE Mains, NEET and other tests - Petitioner that he abided by Franchisee agreement for academic - However, being dissatisfied with relationship with respondent, petitioner did not wish to proceed further and therefore addressed a letter to respondent for terminating agreement .
Finding of Court
It is thus clear that Sections 12, 13 and 14, enunciate that where an arbitrator makes a disclosure in writing which is likely to give justifiable doubts as to his independence or impartiality, appointment of such arbitrator may be challenged under Sections 12 (1) to 12(4) read with Section 13. Further, if there is a dispute between the parties as to whether he has become de jure unable to perform his functions as such, a party has to apply to the Court to decide on the termination of the mandate, unless otherwise agreed by the parties - If an arbitrator continues as such, being de jure unable to perform his functions, as he falls within any of the categories mentioned in Section 12(5), read with the Seventh Schedule, a party may apply to the Court, which will then decide on whether his mandate has terminated – Court have not gone into question of assessing arguments with regard of Act inasmuch as having found that Arbitrator was ineligible of the Act, it was not necessary for this Court to delve into issue of compliance of mandatory provision.
Result: Petition allowed
JUDGMENT :
1. This petition has been filed under Section 11(6) of the Arbitration and Conciliation Act, 1996 (hereinafter to be referred to as ‘the Act’ for short) for the following prayers:
(B) YOUR LORDSHIP, be pleased to declare the appointment of the Sole Arbitrator Rajan J. Patel as illegal, null and void-ab-initio and to appoint an Arbitrator to resolve the disputes between the Parties;”
2. The facts in brief are as under:
2.2 It is the case of the petitioner that he abided by the Franchisee agreement for the academic year 2019-20. However, being dissatisfied with the relationship with the respondent, the petitioner did not wish to proceed further and therefore on 29.03.2020 addressed a letter to the respondent for terminating the agreement.
2.3 In response to the letter of 29.03.2020, the respondent issued a notice under Clause 14(C) of the agreement for clearing of outstanding dues. It is the case of the petitioner that the petitioner also issued a notice on 08.06.2020 asking the respondent to vacate the premises as the petitioner did not want to oblige the franchisee agreement for the year 2020-21. Several exchange of notices followed under Section 138 of the Negotiable Instruments Act and the agreement to not compete inter-se between the parties.
2.4 On 16.06.2020, one Nikunj Mewada advocate addressed an e-mail to Shri Rajan J. Patel learned Sole Arbitrator submitting a statement of claim to the arbitrator and marking a copy to the petitioner. On 17.06.2020, the petitioner received a letter from the Sole Arbitrator Mr. Rajan J. Patel intimating that the first date of arbitration proceedings was on 20.06.2020. On 20.06.2020, the representative on behalf of the petitioner, Mr. Sunil Ahuja remained present and thereafter according to the petitioner he was made to wait for four hours and the hearing was adjourned to 27.06.2020. On 27.06.2020 on a medical certificate being given that the petitioner’s representative was unwell, an ex-parte mandatory injunction was passed and the proceedings were adjourned to 11.07.2020.
2.5 The petitioner issued a notice on 04.07.2020 to the respondent as well as the Sole Arbitrator stating that the appointment of the Arbitrator was illegal. In response to the notice, objections were filed by the respondent before the Arbitrator on 08.07.2020. Despite the objection of the Arbitrator’s appointment, the Arbitrator fixed the hearing on 11.07.2020. It is in this context that the prayers are made in the petition.
3. Mr. Parth Bhatt, learned advocate for the petitioner would make the following submissions:
3.2 The other submission that was made by Mr. Bhatt was that in accordance with the scheme of the Act, it is mandatory for a party to issue notice invoking the arbitration whereby the disputes raised by the party to be communicated to the other side. That mandatory requirement is in accordance with Section 21 of the Act. Breach of Section 21 of the Act would amount to breach of the prescribed procedure for appointment of an Arbitrator and therefore the Arbitr
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