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2012 Supreme(P&H) 1665

IN THE HIGH COURT OF PUNJAB AND HARYANA
Before
The Hon’ble Mr. Justice L.N. Mittal
C. R. No. 7687 of 2011
Imaging Solutions Pvt. Ltd.
v.
Hughes Communications India Ltd. & Anr.
{Decided on 17/11/2012}

Advocates:
For the Petitioner:Mr. Akshay Bhan, Advocate.
For the Respondent No. 1:Mr. Ashwani Chopra, Senior Advocate with Mr. Ashish Chopra, Advocate and Mr. Dharmesh Mishra, Advocate.

Headnote:Arbitration and Conciliation Act, 1996, S.14--Impartiality of arbitrator--Petition for terminating the mandate of arbitrator--Arbitrator was director of company, but he did not disclose the said fact before entering into arbitration--Held, This is certainly a material circumstance likely to give rise to justifiable doubts as to his independence or impartiality as arbitrator in the mind of petitioner-company--Consequently, if arbitrator becomes de jure unable to perform his function as Arbitrator, therefore, his mandate is liable to termination in view of Section 14 of Act. (Paras 6, 11 to 16)

JUDGMENT

Mr. L.N. Mittal, J. (Oral): - This revision petition filed under Article 227 of the Constitution of India is directed against order dated 02.12.2011 (Annexure P-19) passed by learned Additional District Judge, Gurgaon, thereby dismissing petition under Section 14 of the Arbitration and Conciliation Act, 1996 (in short--the Act), filed by the petitioner herein for terminating the mandate of respondent no.2--Arbitrator Mr. Vijay Dhar.

2. Invoking the arbitration clause contained in lease agreement between petitioner and respondent no.1, dispute between them was referred by respondent no.1 to respondent no.2 as Arbitrator. During pendency of the arbitration proceedings, petitioner moved application under Section 12 and 13 of the Act before the Arbitrator challenging the mandate of the Arbitrator on the ground that the Arbitrator is Director of respondent no.1- Company, but the Arbitrator did not disclose the said fact before entering into the arbitration and also on the ground of possible bias i.e. lack of independence or impartiality on account thereof. When the Arbitrator failed to decide the said application, the petitioner filed C. R. No. 1614 of 2011 in this Court seeking direction to respondent no.2 for deciding the said application and also seeking removal/termination of the mandate of respondent no.2. Before the said revision petition could be decided, respondent no.2 disposed of and dismissed the petitioner’s application under Sections 12 and 13 of the Act. In view thereof, the said revision petition was disposed of as infructuous with liberty to the petitioner to raise all objections/pleas qua its grievance before the appropriate Forum for any other legal remedy available in accordance with law.

3. Thereafter, the petitioner filed petition under Section 14 of the Act before the lower court seeking termination of the mandate of respondent no.2--Arbitrator on the aforesaid grounds. Respondent no.1 contested the said petition and controverted the averments of the petitioner.

4. Learned trial court, vide impugned order (Annexure P-19), has dismissed the petitioner’s petition under Section 14 of the Act. Feeling aggrieved, petitioner has filed this revision petition to challenge the said order.

5. I have heard counsel for the parties at considerable length and perused the case file with their assistance.

6. Counsel for the petitioner contended that under Section 12 (1) and 12 (2) of the Act, respondent no.2--Arbitrator was required to disclose in writing any circumstance likely to give rise to justifiable doubt as to his independence and impartiality, but respondent no.2 did not do so as he did not disclose the factum of his being Director of respondent no.1--Company. Consequently, respondent no.2 is de jure unable to perform his function as Arbitrator, and therefore, his mandate is liable to termination in view of Section 14 of the Act. It was also argued that bias or lack of independence or impartiality on the part of respondent no.2 is apparent because respondent no.2 is Director of respondent no.1--Company. Relying on judgments of Hon’ble Supreme Court in Jiwan Kumar Lohia and another vs. Durgadutt Lohia and others reported as AIR 1992 SC 188 and Bihar State Mineral Dev. Corpn. and another vs. Encon Builders (I) Pvt. Ltd. reported as 2003 AIR (SC) 3688, it was contended that in case of bias, mandate of Arbitrator is liable to termination.

7. It was also argued by counsel for the petitioner that the lower court has dismissed the petitioner’s petition under Section 14 of the Act holding that by virtue of Section 13 (5) of the Act, the remedy available to the petitioner is to challenge the final Award of the Arbitrator under Section 34 of the Act and petition under Section 14 of the Act is not maintainable. It was contended that aforesaid approach of the trial court is erroneous and illegal. It was argued that the petitioner also has remedy under Section 14 of the Act to seek termination of mandate of the Arbitrato





































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