Court Upholds Arbitrator's Independence, Dismisses Petition for Termination of Mandate

The court dismissed the petition seeking termination of the sole arbitrator's mandate, finding no legal infirmity in the arbitrator's order rejecting the petitioner's request to keep proceedings in abeyance. The court emphasized the importance of an arbitrator's independence and impartiality, distinguishing between ineligibility under Section 12(5) and justifiable doubts under Schedule V. It was concluded that the arbitrator's representation of the respondent's counsel in unrelated matters did not amount to a conflict of interest or disqualification, leading to the dismissal of the petition and disposal of the interim application.

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Issues Involved:
1. Termination of the mandate of the sole arbitrator.
2. Alleged ineligibility of the arbitrator under Section 12(5) read with Schedule VII of the Arbitration and Conciliation Act.
3. Applicability of Section 14(2) of the Arbitration and Conciliation Act.
4. Challenge procedure under Section 13 of the Arbitration and Conciliation Act.
5. Independence and impartiality of the arbitrator.

Issue-wise Detailed Analysis:

1. Termination of the mandate of the sole arbitrator:
The petitioner sought to terminate the mandate of the sole arbitrator, Mr. Amrut Joshi, appointed to adjudicate disputes arising from a Master Service Agreement dated 24/5/2017. The petitioner claimed that the arbitrator was representing the counsel for the respondent in other matters, which was not disclosed, leading to a perceived conflict of interest.

2. Alleged ineligibility of the arbitrator under Section 12(5) read with Schedule VII of the Arbitration and Conciliation Act:
The petitioner argued that the arbitrator was ineligible to continue under Section 12(5) read with Schedule VII of the Act, which addresses the independence and impartiality of arbitrators. The petitioner contended that the arbitrator's representation of the respondent's counsel in other matters created justifiable doubts about his impartiality.

3. Applicability of Section 14(2) of the Arbitration and Conciliation Act:
The petitioner filed the petition under Section 14(2) of the Arbitration and Conciliation Act, seeking to terminate the arbitrator's mandate on the grounds of de jure and de facto inability to perform his functions. The respondent's counsel argued that Section 14 applies to disqualification or ineligibility circumstances enumerated in Schedule VII, while Section 13 deals with challenges under Schedule V.

4. Challenge procedure under Section 13 of the Arbitration and Conciliation Act:
The court examined whether the petitioner followed the challenge procedure under Section 13. It was noted that the petitioner did not raise a formal challenge under Section 13 but requested the arbitrator to keep proceedings in abeyance while filing a petition under Section 14(2). The court emphasized that the challenge procedure under Section 13 must be followed, allowing the arbitrator to decide on the challenge.

5. Independence and impartiality of the arbitrator:
The court highlighted the importance of an arbitrator's independence and impartiality, as reinforced by the 2016 amendment to the Arbitration and Conciliation Act. The court referred to the case of HRD Corporation (Marcus Oil and Chemical Division) Vs. GAIL (India) Limited, which distinguished between ineligibility under Section 12(5) and justifiable doubts under Schedule V. The court concluded that the arbitrator's representation of the respondent's counsel in unrelated matters did not amount to a conflict of interest or disqualification.

Conclusion:
The court found no legal infirmity in the arbitrator's order rejecting the petitioner's request to keep proceedings in abeyance. The court agreed with the observations in the case of Sheetal Maruti Kurundwade Vs. Metal Power Analytical (I) Pvt. Ltd, which clarified that an arbitrator representing a counsel in unrelated matters does not constitute a disqualification. Consequently, the petition seeking termination of the arbitrator's mandate was dismissed, and the interim application was disposed of.

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