Unilateral appointments of Arbitrators by parties with vested interests are impermissible under the Arbitration and Conciliation Act, reinforcing the need for impartiality.

JUDGMENT

Jyoti Singh, J. The present petition has been filed under Sections 14 and 15 of the Arbitration and Conciliation Act, 1996 (Act) seeking a declaration that the mandate of the Arbitrator appointed by the respondent be terminated and an Arbitrator be appointed by this Court in accordance with the provisions of the Act.

2. The present petition arises out of a Distribution Agreement entered into between the parties on 03.08.2015. Clause 13 of the Agreement provides for resolution of the disputes between the parties by way of arbitration.

3. Certain disputes arose between the petitioner and the respondent as to the amounts due to the petitioner during the subsistence of the Distribution Agreement. It is the petitioner's case that all his efforts to amicably recover the amount from the respondent failed and upon which the petitioner invoked the Arbitration Clause, vide notice dated 29.10.2018. The petitioner nominated an advocate as his Arbitrator. The respondent replied to the notice on 28.11.2018 and disagreed with the name proposed by the petitioner. Placing reliance on clause 13.2 of the Agreement and claiming power to unilaterally nominate the Arbitrator, the respondent appointed Ms. Charu Ambwani as the Arbitrator.

4. On 09.01.2019, the petitioner requested the Arbitrator vide a letter to enter upon reference and on 19.01.2019, the first procedural hearing was conducted. The petitioner avers that on 10.01.2019, the Arbitrator addressed a letter to the counsels for the parties seeking consent of the petitioner to her appointment alongwith a disclosure under Section 12 of the Act. The petitioner responded vide a letter dated 14.01.2019 declining consent to her appointment.

5. The petitioner avers that through its counsel it sent an email dated 28.01.2019 to the Arbitrator pointing out that objections regarding procedure and jurisdiction would be raised in due course by the petitioner as per provisions of the Act. On 26.11.2019, the Supreme Court delivered its judgment in Perkins Eastman Architects DPC & Anr. vs. HSCC (India) Ltd., 2019 SCC Online SC 1517 in view of which the unilateral appointment of the Arbitrator by the respondent is vitiated under Section 12 (5) of the Act.

6. The petitioner avers that in view of the said judgment, the petitioner conveyed to the nominated Arbitrator not to proceed with the arbitration as her mandate stands terminated de jure. The Arbitrator vide an email dated 07.12.2019 communicated that she would continue with the proceeding unless there was a judicial order terminating her mandate. Hence the petitioner has filed the present petition.

7. Both parties have been heard at length and have filed written submissions elaborating the arguments made.

8. The contention of the counsel for the petitioner is that the case of the petitioner is squarely covered by the judgment in the case of Perkins (supra) and Bharat Broadband Network Limited vs. United Telecoms Limited, (2019) 5 SCC 755. He contends that it is undisputed that the respondent had unilaterally appointed the Arbitrator and thus the appointment is vitiated in terms of the above judgment. Learned counsel has relied on the following paragraph of the judgment in the case of Perkins (supra):

"20. We thus have two categories of cases. The first, similar to the one dealt with in TRF Limited where the Managing Director himself is named as an arbitrator with an additional power to appoint any other person as an arbitrator. In t