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2023 Supreme(Online)(BOM) 24775
HIGH COURT OF BOMBAY
BHARATI DANGRE, J
Quess Corp – Appellant
Versus
Netcore Cloud Pvt.Ltd – Respondent
Arbitration Petition (L) No. 24705 of 2022
For the Appellants/Petitioners: Mr.Vishal Nautiyal, Ms.Vidhi N. Sharda, Mr.Smit Shah, Mr.Aviral Dhirendra
For the Respondents: Mr.Mayur Khandeparkar, Prakhar Tandon, Irfan Khan, Sudha Dwivedi
Arbitrators are not automatically disqualified due to prior representation of counsel for one party unless it gives rise to justifiable doubts about their independence.
Headnote:(A) Arbitration and Conciliation Act, 1996 - Section 12(5) r/w Schedule VII and Section 14 - Challenge to Arbitrator's mandate based on alleged disqualification due to prior representation of counsel for one party - The court dismissed the petition for termination of the mandate, finding no grounds for disqualification. (Paras 1, 15, 18, 19)
(B) Independence and Impartiality of Arbitrators - The court reaffirmed the importance of impartiality within arbitration proceedings, asserting that mere prior representation does not automatically incur disqualification, provided disclosure is proper and timely. (Paras 7, 19)
Facts of the case:
The petitioner sought the termination of the sole Arbitrator based on alleged conflicts of interest as he was representing counsel for the respondent in unrelated matters.
Findings of Court:
The Arbitrator maintained his independence as the relationship was not deemed to directly affect his impartiality in the current arbitration.
Issues: Whether the Arbitrator's past representation of counsel creating justifiable doubt regarding independence constitutes valid grounds for termination of mandate.
Ratio Decidendi: The court emphasized that the mere appearance of the Arbitrator as counsel in other matters does not constitute disqualification, and procedural challenges to arbitrator's appointment must follow designated statutory channels.
Result: Petition for termination of the arbitrator's mandate dismissed.
| Table of Content |
|---|
| 1. petitioner seeks to terminate arbitrator’s mandate due to conflict. (Para 1 , 2 , 4) |
| 2. arbitrator disclosed no conflicts impacting impartiality. (Para 3 , 5 , 7) |
| 3. challenges against arbitrator must follow statutory procedures. (Para 6 , 9) |
| 4. substantive independence of arbitrators confirmed. (Para 11) |
| 5. petition dismissed; independence maintained. (Para 12 , 14 , 15) |
JUDGMENT:-
1. By the present petition, the petitioner seek relief of terminating the mandate of sole Arbitrator, Shri Amrut Joshi appointed as a Arbitrator to adjudicate the disputes that had arisen between the parties out of the ‘Masters Service Agreement’ dated 24/5/2017.
The petitioner, a limited Company incorporated under the Companies Act, claim to be a leading business service provider, whereas the respondent is involved in the business of providing mobility and e-mail services to distinct cliental in India.
Since it was desirous of availing transmission Bulk SMS services from the respondent, the petitioner entered into a Master Service Agreement on 24/5/2017, under which the respondent was to provide application based platform to host and disseminate bulk SMS to end users of the petitioner.
2. As per the petitioner, the parties started performing their respective obligations under the agreement. However, certain disputes arose with respect to multiple invoices raised by the respondent, and this resulted in the respondent invoking arbitration clause and proposed the name of Mr.Amrut Joshi as Sole Arbitrator in the notice dated 16/1/2020.
The petitioner did not agree to the appointment of the named arbitrator, and this resulted in the respondent approaching this Court under sub-section (6) of Section 11 of the Arbitration and Conciliation Act. By order dated 23/11/2022, Mr.Amrut Joshi was appointed as Sole Arbitrator to decide the disputes and differences, subject to the terms and conditions stipulated in the order.
3. The proceedings commenced before the learned Arbitrator after a date was fixed for preliminary hearing, and he made disclosure in the form mentioned in Vth Schedule of the Arbitration and Conciliation Act, 1996 , inter alia, stating that he had no direct or indirect, past or present interest in relation to the subject matter in dispute, whether financial, business, professional or other kind which would give rise to justifiable doubt as to the independence or impartiality.
Issues came to be framed by the learned Arbitrator and the matter was fixed for the claimant’s evidence on 4/7/2022.
4. The petitioner contend, that while the proceedings were ongoing before the Arbitral Tribunal, it came to its notice that the Arbitrator was representing the counsel for the respondent (Mr.Prabhakar Tandon and Ms.Sudha Dwivedi) in an interlocutory application No.443 of 2021 filed in Company Petition (IB) No.1399/NB/2017, captioned as Bank of India vs. Mandhana Industries Ltd.
5. The aforesaid information took the petitioner by surprise, and according to him, this was not disclosed by the Arbitrator, during the preliminary hearing held by him or any time thereafter. On gathering further information, it was revealed that the Arbitrator has been representing counsel for the respondent in several other matters before various forums, including the High Court of Mumbai and the NCLAT and certain orders to that effect are placed on record by the petitioner.
6. It is in this background I have heard the counsel for the petitioner, who would vehemently argue that the sole arbitrator, in the wake of the aforesaid, has become ineligible to continue as an arbitrator, as per Section 12 (5) r/w Schedule VII of the Act. The submission is, he is de jure and de facto unable to perform his functions, and since the issue of ineligibility goes to the root of the appointment, he would lack inherent jurisdiction to proceed further, which would enable a party to file an application u/s.14(2) to the Court to decide on termination of his/her mandate.
The submission is, the app
