Arbitrator independence test: prior related arbitral service did not bar appointment under the Fifth Schedule.

Prior service as arbitrator in another dispute involving a party or its affiliate does not, by itself, disqualify a proposed arbitrator under Entry 24 of the Fifth Schedule. The court applied Section 12 of the Arbitration and Conciliation Act, 1996 together with Entries 22, 24 and 16 of the Fifth Schedule, holding that the real test is whether an objective observer would perceive a likelihood of bias and whether any Seventh Schedule ineligibility applies. Entry 24 must be read harmoniously within the statutory scheme, so earlier arbitral involvement on a related issue is not an absolute bar. The petition for appointment of the sole arbitrator was allowed.

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Issues: Whether an arbitrator who is already serving in another arbitration involving one of the parties or its affiliate on a related issue is barred from being appointed under Entry 24 of the Fifth Schedule of the Arbitration and Conciliation Act, 1996.

Analysis: The issue turned on the interaction between Section 12 of the Arbitration and Conciliation Act, 1996 and Entries 22, 24 and 16 of the Fifth Schedule. The governing principle is that disqualification under Entries 22 and 24 is not automatic or absolute merely because the proposed arbitrator has earlier acted as arbitrator in another matter involving a party or affiliate. The decisive inquiry is whether, viewed objectively, a neutral third person would perceive a real likelihood of bias, and whether the arbitrator is otherwise hit by the ineligibility grounds in the Seventh Schedule. Entry 24 must be read harmoniously with the rest of the Schedule, and prior arbitral involvement on a related issue does not by itself forbid appointment.

Conclusion: Entry 24 did not bar the appointment of the proposed arbitrator, and the petition for appointment of the sole arbitrator was allowed.

Ratio Decidendi: Prior service as arbitrator in another related dispute involving a party or its affiliate does not, by itself, disqualify the proposed arbitrator; the court must apply an objective test of apparent bias and the statutory ineligibility scheme in the Fifth and Seventh Schedules.

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