The court emphasized that the threshold for interference under Section 14 should be set at a high level to prevent the derailment of arbitral proceedings by a disgruntled party.

ORDER :

PRAYER: Arbitration Original Petition filed under 14(1)(A) of the Arbitration and Conciliation Act read with Section 11 (6) of the Arbitration and Conciliation Act, 1996, pleased to Terminate the appointment of the learned Arbitrator /third Respondent herein and consequently appoint a new Arbitrator to adjudicate the disputes between Petitioner and 1st and 2nd Respondents arising out of the stockist agreement dated 22.06.2019.

The petitioner had entered into a stockist agreement dated 22.06.2019 with the first and second respondents herein. Upon disputes arising in relation thereto, the arbitral tribunal was constituted by order dated 22.03.2021 in O.P. No.78 of 2021. Shortly thereafter, by communication dated 08.04.2021, learned Arbitrator provided a disclosure in terms of Section 12 of the Arbitration and Conciliation Act 1996 (the Arbitration Act). In the said disclosure, learned Arbitrator stated, in relevant part, as under:

“Had appeared for TVS group companies prior to 2016, in my capacity as Partner T.S.Gopalan & Co Advocates Chennai.”

Upon receipt thereof, the petitioner provided its no objection in the following terms:

“I have no objection to your appointment as an Arbitrator to adjudicate the disputes arising under the Stockiest Agreement dated 22.6.2019 in terms of the order of the High Court dated 22.3.2021 in O.P.78 of 2021. However, I request you to again defer the preliminary hearing to the 2nd week of May 2021 given the rising number of Covid 19 cases all over India and my inability to come over to Chennai. I will be deeply obliged.”

2. Thereafter, hearings of the arbitral tribunal were scheduled. The respondents herein filed a statement of claim and the petitioner filed a statement of defence and made counter claims. Upon completion of pleadings, the first and second respondents herein/claimants examined witnesses who were, in turn, cross-examined by learned counsel for the petitioner. By contending that the disclosure of learned arbitrator was examined by the petitioner only when the matter was listed for the cross-examination of the witnesses of the first and second respondents herein, an application was filed by the petitioner herein under Sections 12 and 13 of the Arbitration Act. By such application, learned Arbitrator was challenged on the ground that there are justifiable doubts as to his independence or impartiality since he had acted as counsel for the first and second respondents previously. The said application was rejected by an order dated 20.04.2022. In the said order, learned arbitrator adverted to the declaration made by him and the no objection of the petitioner in response thereto. The present petition is filed in these facts and circumstances.

3. Learned counsel for the petitioner submits that learned arbitrator is ineligible as per entry 6 of the VII Schedule of the Arbitration Act. Consequently, it is asserted that a petition under Section 14 of the Arbitration Act is both maintainable and sustainable. In order to buttress this contention, learned counsel relies upon the judgment of the Hon-ble Supreme Court in Bharat Broadband Network Limited v. United Telecoms Limited (Bharat Broadband), (2019) 5 SCC 755. With reference to paragraphs 11, 12 and 15 thereof, it is contended that the ineligibility under Section 12(5) can be cured only by an express agreement as per the proviso to Section 12(5). As regards the letter issued by the petitioner, it is stated that the said letter does not make reference to the declaration of the learned arbitrator and that such no objection was given by the petitioner without examining the disclosure. In this connection, learned counsel draws reference to the application filed under Sections 12 and 13, particularly paragraphs 8 to 20 thereof.

4. The second ground of challenge is based on the order passed by learned arbitrator. With specific reference to paragraph 7 thereof, learned counsel submits that the arbitral tribunal recorded a conclusion that the applica