Arbitration jurisdiction and impartiality disclosure: Exchange disputes survived membership cessation, but non-disclosure vitiated the awards.

Exchange bye-laws treated securities bargains as subject to the Bombay Stock Exchange's arbitration framework, so a dispute between a member and a non-member remained referable even after the member's cessation from membership during the reference. The decisive factor was the parties' status and the transaction's contractual-regulatory setting at the time of the bargain, not the continued membership of the party during the arbitration. The Arbitration and Conciliation Act also required an arbitrator to disclose, without delay, any circumstance giving rise to justifiable doubts as to independence or impartiality. Non-disclosure of the arbitrator's advocate's professional connection with the respondent's advocate breached that mandatory duty and vitiated the awards, requiring the disputes to be reheard by a fresh panel.

---

---

Issues: (i) Whether the arbitration tribunal of the Bombay Stock Exchange retained jurisdiction to decide a dispute between a member and a non-member after the member's cessation from membership during the pendency of the reference. (ii) Whether non-disclosure by the arbitrator of his advocate's simultaneous professional connection with the respondent's advocate created justifiable doubts as to impartiality and vitiated the awards.

Issue (i): Whether the arbitration tribunal of the Bombay Stock Exchange retained jurisdiction to decide a dispute between a member and a non-member after the member's cessation from membership during the pendency of the reference.

Analysis: The relevant bye-laws and regulations showed that bargains in securities are deemed to be subject to the Exchange's rules, bye-laws and regulations, and that disputes arising out of member and non-member transactions governed by those instruments are referable to arbitration. The scheme of the Exchange also contemplated claims arising after a member is declared a defaulter, and the binding effect of awards notwithstanding death or legal disability supported the continuance of arbitral proceedings. The court treated the settled Exchange practice and the welfare scheme for creditors as reinforcing this interpretation. On that construction, the decisive factor was the status of the parties at the time of the transaction, not the continued membership of the party during the arbitration.

Conclusion: The tribunal did not lose jurisdiction merely because the member's membership was cancelled during the pendency of the dispute.

Issue (ii): Whether non-disclosure by the arbitrator of his advocate's simultaneous professional connection with the respondent's advocate created justifiable doubts as to impartiality and vitiated the awards.

Analysis: Section 12 of the Arbitration and Conciliation Act required an arbitrator to disclose, in writing and without delay, any circumstance likely to give rise to justifiable doubts as to independence or impartiality. The standard applied was objective and turned on reasonable apprehension in the mind of a party, not the arbitrator's own subjective assurance of neutrality. Since the arbitrator's personal professional connection was not disclosed, and the fact was within the relevant knowledge base, the omission was treated as a breach of the disclosure duty and a violation of the procedural safeguard embodied in the Act.

Conclusion: The awards were vitiated and liable to be set aside for non-disclosure affecting impartiality.

Final Conclusion: The jurisdictional objection failed, but the awards could not stand because the arbitrator's nondisclosure breached the mandatory disclosure norm; the disputes were therefore required to be heard afresh by a newly constituted arbitral panel.

Ratio Decidendi: Under the arbitration regime, a dispute governed by Exchange bye-laws remains arbitrable despite subsequent cessation of membership if the transaction was originally within the contractual and regulatory framework, and an award is liable to be set aside where an arbitrator fails to disclose a circumstance giving rise to justifiable doubts as to impartiality.

---