Arbitrator ineligibility under Section 12(5) requires a direct Seventh Schedule conflict; unrelated prior appearances are insufficient.
Section 12(5) of the Arbitration and Conciliation Act, 1996 creates ineligibility only where the arbitrator falls within a Seventh Schedule disqualification that has a direct nexus with a party or the dispute. Prior representation of an advocate or law firm in unrelated matters, without a proximate connection to the litigant or subject matter, does not by itself render a sole arbitrator de jure ineligible or justify termination of mandate. Where the complaint is instead one of non-disclosure or circumstances giving rise to justifiable doubts, the proper route is the Section 13 challenge procedure, not a Section 14(2) petition. On the stated grounds, the mandate was not liable to be terminated and the proceedings were not required to be stayed.
Issues: (i) Whether the sole arbitrator became ineligible under Section 12(5) of the Arbitration and Conciliation Act, 1996 by reason of having represented counsel for a party in other matters, so as to warrant termination of his mandate. (ii) Whether the petition under Section 14(2) of the Arbitration and Conciliation Act, 1996 was maintainable in the facts, or whether the challenge had to be pursued under the challenge procedure in Section 13.
Issue (i): Whether the sole arbitrator became ineligible under Section 12(5) of the Arbitration and Conciliation Act, 1996 by reason of having represented counsel for a party in other matters, so as to warrant termination of his mandate.
Analysis: Section 12(5) read with the Seventh Schedule creates ineligibility only where the arbitrator falls within a disqualifying category that goes to the root of the appointment. The relevant entries require a real association with the party or the subject matter of the dispute. Representation of an advocate or law firm in unrelated matters, without a proximate nexus with the litigant or the subject matter, does not by itself attract automatic ineligibility. On the facts, the arbitrator had not acted for the claimant in the arbitration, nor was any direct association with the party or the dispute shown.
Conclusion: The arbitrator did not incur de jure ineligibility under Section 12(5) on the grounds urged, and termination of mandate was not justified on that basis.
Issue (ii): Whether the petition under Section 14(2) of the Arbitration and Conciliation Act, 1996 was maintainable in the facts, or whether the challenge had to be pursued under the challenge procedure in Section 13.
Analysis: The statutory scheme differentiates between a challenge based on circumstances giving rise to justifiable doubts, which is addressed by Section 13, and ineligibility under Section 12(5), which may attract Section 14. The objection raised by the petitioner was not established as a Seventh Schedule ineligibility; rather, it was founded on alleged lack of disclosure and circumstances said to create doubt. In such a situation, the challenge procedure under Section 13 was the appropriate course, and the arbitrator was right in declining to keep the proceedings in abeyance on the basis of an unestablished Section 14 claim.
Conclusion: The Section 14(2) petition was not sustainable on the grounds urged, and the challenge could not succeed in the manner presented.
Final Conclusion: The arbitrator's mandate was not liable to be terminated, and the arbitral proceedings were not required to be stayed on the pleaded grounds.
Ratio Decidendi: Ineligibility under Section 12(5) arises only from a direct disqualifying relationship falling within the Seventh Schedule, and unrelated appearance for counsel or law firms does not, by itself, amount to such ineligibility; where only justifiable doubts are asserted, the prescribed challenge procedure under Section 13 applies.
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