Legal Document View

Unlock Advanced Research with PRISMAI

Integrated with over 4 crore judgments and laws — designed for legal practitioners, researchers, students and institutions

- Know your Kanoon - Doc Gen Hub - Counter Argument - Case Predict AI - Talk with IK Doc - ...
Upgrade to Premium
[Cites 24, Cited by 0]

Delhi District Court

Sattar Ali Khan vs Yes Bank Ltd on 9 May, 2023

      IN THE COURT OF SHRI PANKAJ GUPTA:
 DISTRICT JUDGE, (S/W) (COMMERCIAL COURT)-01,
                  DWARKA COURTS : DELHI.


OMP (COMM) NO. 25/19
CNR No. DLSW01-007559-2019

In the matter of :

Sattar Ali Khan
FCA-55A, Gali No. 3, Near
Patel Chowk, Block C, SGM Nagar,
Faridabad, Haryana-121004.


                                        ......PETITIONER


Versus

Yes Bank Ltd.
Yes Bank Tower
IFC-2, 15th Floor
Senapati Bapat Marg
Elphinstone (W)
Mumbai-400013.

Also At:
Yes Bank Ltd.
48, Nyaya Marg
Chanakyapuri
New Delhi-110021.

Also at:
Yes Bank Ltd.
Upper Ground Floor,
Plot No. 1/9
West Patel Nagar
New Delhi-110008.

                                    ............RESPONDENT




Sattar Ali Khan Vs. Yes Bank Ltd.              Page No. 1 of 39
OMP (COMM) NO. 25/19
 Date of Institution   : 01.07.2019
Date when the case
reserved for Judgment : 09.05.2023
Date of Judgment      : 09.05.2023


JUDGMENT

1. This is the petition under Section 34 of the Arbitration and Conciliation Act, 1996 (the Act) filed by the petitioners being aggrieved by the arbitration award dated 30.03.2019 (the impugned award) passed by Sh. S.S.Yadav, Advocate (the Arbitrator).

2. Brief facts leading to filing of the present petition are that the petitioner approached the respondent for grant of personal loan and the respondent agreed to the same. Consequently, the loan agreement dated 25.04.2017 was executed between the parties and the respondent disbursed the loan amount of Rs. 13,25,000/- to the petitioner repayable in 60 equal monthly installments (EMIs) of Rs. 29,134/- each along with interest. However, the petitioner defaulted in payment of the EMIs. Vide legal notice dated 15.09.2018, the respondent recalled the loan facility and called upon the petitioner to pay the entire outstanding amount which he failed to do so. Consequently, the dispute arose between the parties and the respondent invoked the arbitration clause no. 11.7 of the said agreement and appointed the arbitrator. The arbitrator entered the reference and conducted the arbitration proceedings. As per the impugned award, the petitioner failed to participate in the arbitration proceedings despite given opportunity, hence, he was proceeded ex-parte. Consequently, the arbitrator Sattar Ali Khan Vs. Yes Bank Ltd. Page No. 2 of 39 OMP (COMM) NO. 25/19 made the impugned award.

3. Notice of the petition was issued to the respondent and in response thereto, the respondent filed the written statement (WS) and prayed for dismissal of the petition.

4. The arbitrator has filed the original arbitration record.

5. I have heard counsel for the petitioner and counsel for the respondent and have perused the material available on record including the written submissions filed by the petitioner.

6. Admittedly, the petition is within period of limitation.

7. It is evident from the record that vide loan agreement dated 25.04.2017, the respondent granted loan to the petitioner and the petitioner executed the requisite documents in favour of the respondent. The petitioner had defaulted in repayment of the loan amount. Consequently, the dispute arose between the parties and the respondent invoked the arbitration clause no. 11.7 contained in the loan agreement dated 25.04.2017 and appointed the arbitrator. The arbitrator entered the reference and made the impugned award.

8. Counsel for the petitioner pleaded that the arbitrator had not sent the signed copy of the impugned award to the petitioner.

Sattar Ali Khan Vs. Yes Bank Ltd. Page No. 3 of 39 OMP (COMM) NO. 25/19

9. The petitioner in para no. 1 of the petition has pleaded that he received an envelope containing the impugned award passed by the arbitrator. In the index of the petition, the petitioner mentioned that he has filed the copy of the impugned award running from page no. 13 to 20. However, as per record, the petitioner has not filed copy of the award along with the petition.

10. As discussed above, it is own case of the petitioner that he received the copy of the award and it is nowhere the case of the petitioner that the said copy was not signed by the arbitrator. On the contrary, the petitioner in the written submission mentioned that he got the photocopy of the impugned award from the arbitrator and filed the same along with the petition. Firstly, the said submission is contradictory to the plea raised by the arbitrator in the petition. Secondly, as held above, the petitioner has not filed the copy of the impugned award along with the petition and has deliberately upheld the same. As such, an adverse inference can be drawn against the petitioner.

11. Further, the petitioner though in his petition stated that after receipt of impugned award, his counsel applied for certified copies of the arbitral proceedings and the order sheets but it is nowhere stated that he applied for the signed copy of the impugned award from the arbitrator. In the petition, the petitioner has nowhere stated that the arbitrator had not sent the signed copy of the award to him. It implies that the petitioner received the impugned award sent by the arbitrator and on that basis only, he had filed the Sattar Ali Khan Vs. Yes Bank Ltd. Page No. 4 of 39 OMP (COMM) NO. 25/19 present petition. As such, the submissions made by counsel for the petitioner are contradictory in nature. As such, there is no substance in the plea raised by counsel for the petitioner.

12. Counsel for the petitioner pleaded that the petitioner was not given proper notice of appointment of the arbitrator and the arbitral proceedings due to which he was unable to pursue the case before the arbitrator.

13. The petitioner in para 3 of the petition stated that after receiving the award, he contacted his counsel and instructed him to take necessary steps as he was unable to put his submission before the arbitrator due to his illness. As such, plea raised by counsel for the petitioner and the petitioner in the petition are contradictory in nature.

14. Now before proceedings further, it is to be ascertained whether during the arbitral proceedings, the petitioner was suffering from some medical incapacity due to which he could not appear and defend himself before the arbitrator.

15. As per record, the arbitrator consented for his appointment as an arbitrator and made the disclosure u/s 12 of the Act on 23.10.2018 and made the impugned award on 30.03.2019.

16. Along with the petition, the petitioner has filed medical record perusal of which reveals that the petitioner had taken treatment at Fortis Escorts Hospital, Faridabad, Sattar Ali Khan Vs. Yes Bank Ltd. Page No. 5 of 39 OMP (COMM) NO. 25/19 Haryana from 21.04.2018 till September 2018. Vide medical certificate dated 25.09.2018, the petitioner was declared medically fit to join duty of light nature on 01.10.2018. The plaintiff has not filed any medical document after the said period. As such, the plaintiff has failed to file any document to show that during the arbitral proceedings, he was medically unfit to join the same. As discussed in later part of the judgment, the petitioner was well aware about the dates of hearing in the arbitrator proceedings i.e. 30.11.2018 and 04.01.2019 and if the petitioner, due to some medical issue, was unable to appear and contest the proceedings, he could inform so to the arbitrator which he failed to do. The petitioner along with the petition has filed the legal notice dated 12.07.2018 and reply dated 24.08.2018 to the respondent's legal notice dated 08.08.2018, sent by him through his counsel to the respondent. Hence, it can held that even during the period when the petitioner was not medically fit as alleged, he was in constant touch of his counsel and the respondent and was active in defending himself. The petitioner has failed to explain once he could do so in case of his medical illness as alleged, then why he had not joined the arbitration proceedings when he was not suffering from any medical issue. In view of the foregoing discussions, it can be held that during the arbitral proceedings, the petitioner was not suffering from any medical incapacity which prevented him from appearing and defending him before the arbitrator.

17. In the arbitration proceedings, the address of the petitioner is mentioned as "FCA-55A, Gali No-3, Near Patel Chowk, Block-C, SGM Nagar, Faridabad, Haryana-

Sattar Ali Khan Vs. Yes Bank Ltd. Page No. 6 of 39 OMP (COMM) NO. 25/19

121004, and Also at: JCB India Ltd, 23/7, Mathura Road, Ballabgarh, Faridabad, Haryana-121002". It is noted that in the legal notice dated 12.07.2018 and reply dated 24.08.2018 sent by the petitioner through his counsel to the respondent and also in the present petition, the address "FCA-55A, Gali No-3, Near Patel Chowk, Block-C, SGM Nagar, Faridabad, Haryana-121004, has been mentioned by the petitioner. Even in the arbitration proceedings, the same address has been mentioned. The petitioner has filed the copy of his Aadhar Card wherein his same address is mentioned. It is not the case of the petitioner that the said address is incorrect or the addresses mentioned in the arbitration proceedings were the incorrect addresses. Hence, it can be held that the addresses mentioned in the statement of claim and the arbitration proceedings were the last and the petitioner's only known addresses to the respondent.

18. Perusal of the arbitral record reveals that on 23.10.2018, the arbitrator consented to his appointment as the arbitrator and made the disclosure under section 12 of the Act and fixed the matter for hearing on 30.11.2018 at 4:00pm in his chamber as mentioned therein and specifically directed that notice be issued to that effect to both the sides. The arbitrator, vide notice dated 23.10.2018, addressed to the petitioner at his given addresses had not only intimated about the date of hearing, time and its place but also made the disclosure in terms of section 12 of the Act. Perusal of the postal receipt and the tracking report reveal that the said notice was dispatched to the petitioner on 30.10.2018 and was duly served upon the petitioner on 06.11.2018. Since the petitioner failed to appear before the Sattar Ali Khan Vs. Yes Bank Ltd. Page No. 7 of 39 OMP (COMM) NO. 25/19 arbitrator on 30.11.2018, the arbitrator again issued the notice to the petitioner at the same addresses clearly mentioning the date, time and place on 03.12.2018 which was dispatched on 06.12.2018 as revealed for the postal receipts filed to substantiate the same. As discussed below, in terms of section 3 of the Act, the same is deemed to have been served upon the petitioner.

19. Perusal of record also reveals that the respondent sent the recall notice dated 15.09.2018 calling upon the petitioner to clear the outstanding amount, otherwise, it would initiate the legal proceedings against him, at the given addresses which was dispatched on 21.09.2018.

20. Perusal of record reveals that vide letter dated 10.10.2018, the respondent sent the foreclosure report to the petitioner. The petitioner has not denied the receipt of the said report.

21. Vide letter dated 20.10.2018, the respondent appointed the arbitrator. Vide letter dated 22.10.2018, the respondent informed the petitioner that since the dispute had arisen between them, hence, it had decided to initiate the arbitration proceedings and had invoked the arbitration clause. The respondent dispatched the said letter to the petitioner on 24.10.2018 and it was delivered on 31.10.2018.

22. Counsel for the petitioner pleaded that in the postal receipt, complete address of the petitioner is not Sattar Ali Khan Vs. Yes Bank Ltd. Page No. 8 of 39 OMP (COMM) NO. 25/19 mentioned and therefore, none of the said notices were served upon the petitioner. It is nowhere the case of the petitioner that the notices sent against those postal receipts do not bear his correct addresses. The petitioner has not challenged the said tracking reports in the present case. Therefore, mentioning of incomplete address in the postal receipt only is not a ground to presume that the said notices were not served at the correct and complete addresses of the petitioner.

23. In view of the foregoing discussions, it can be held that the arbitrator and the respondent sent the notices to the petitioner at his last known addresses and the same were duly received by him. Even in terms of section 3 of the Act, the said notices are deemed to have been served upon the petitioner. Not the least, in para 3 of the petition, the petitioner stated that he could not appear before the arbitrator due his illness. Hence, it can be held that the respondent had intimated the petitioner about the invocation of the arbitration clause in terms of the loan agreement and appointment of the arbitrator to conduct the arbitration proceedings to resolve the disputes between them. The arbitrator had also informed the petitioner about his appointment as an arbitrator and also made the disclosure under Section 12 of the Act. The arbitrator had also informed the petitioner about the date, time and place of the hearing. However, despite having knowledge of appointment of the arbitrator and the date, time & place of arbitration hearings, the petitioner had deliberately avoided to participate in those proceedings.

Sattar Ali Khan Vs. Yes Bank Ltd. Page No. 9 of 39 OMP (COMM) NO. 25/19

24. Counsel for the petitioners pleaded that the respondent had unilaterally appointed the arbitrator in the present case. Hence, the said appointment was hit by section 12 (5) of the Act. Therefore, the impugned award is bad in law. In support of his submissions, counsel for the petitioners relied upon the judgments "Perkins Eastman Architects DPC &Anr. Vs. HSCC (India) Ltd.", passed by the Hon'ble Supreme Court in Arbitration Application no. 32/2019; "Proddatur Cable TV Digi Services vs. Siti Cable Network Limited, reported in 2020 LawSuit (Del) 49; and "Govind Singh vs. M/s. Satya Group Pvt. Ltd." reported in 2023 SCC Online Del 37.

25. Before proceedings further, it is to be ascertained as to whether the arbitrator was appointed by the respondent as per the agreement between the parties or not.

26. Admittedly, the petitioner and the respondent entered into the loan agreement dated 25.04.2017 and the clause 11.7 of the said agreement contained the arbitration clause and the same is reproduced herein below for the sake of convenience:

"11.7 Unless the same falls within the jurisdiction of the Debts Recovery Tribunal established under the Recovery of Debts due to Banks end Financial Institution Act, 1993, any and all claims and disputes arising out of or in connection with this Agreement or its performance shall be settled by arbitration by a single Arbitrator to be appointed by the Bank. The arbitration shall be held, in the city where lending office of the Bank is situated, in accordance with the provisions of the Sattar Ali Khan Vs. Yes Bank Ltd. Page No. 10 of 39 OMP (COMM) NO. 25/19 Arbitration and conciliation Act, 1996".

27. It is nowhere the case of the petitioner that he had not signed the said agreement containing the arbitration clause or that he was not aware of the said arbitration clause. It is also not the case of the petitioner that he signed the said agreement without reading and understanding the contents of the same and their implication. Accordingly, it can be held that the petitioner had voluntarily signed the said agreement containing the arbitration clause after reading and understanding the contents of the same and their implication.

28. Vide clause 11.7 of the agreement, the petitioner agreed that in case of dispute, the same shall be resolved through the arbitration and the respondent had the duty to appoint the sole arbitrator.

29. It is nowhere the case of the petitioner that while appointing the sole arbitrator, the respondent had not followed the procedure prescribed therein. Further, it is neither reflected from the clause no. 11.7 nor it is the case of the petitioner that after the disputes had arisen and before the respondent could appoint the arbitrator, the respondent had to again seek the consent of the petitioner to appoint arbitrator.

30. In the agreement, no person was named as the arbitrator. It is nowhere the case of the petitioner that the respondent was not competent or suffered from any ineligibility to appoint the arbitrator.

Sattar Ali Khan Vs. Yes Bank Ltd. Page No. 11 of 39 OMP (COMM) NO. 25/19

31. In view of the foregoing discussions, it can be held that in terms of section 11 (2) of the Act, the parties had agreed to the procedure for appointing the arbitrator i.e. in case of any dispute between them, the same shall be referred to the sole arbitration of an arbitrator to be appointed by the respondent. Accordingly, the respondent appointed the arbitrator in terms of clause 11.7 of the said agreement and there was no requirement of consent of the petitioner before nominating/appointing the arbitrator by the respondent after the disputes had arisen between the parties.

32. Now the question arises whether the arbitrator was de jure incapable to act as an arbitrator within the meaning of section 14 of the Act as his appointment was hit by section 12 (5) of the Act.

33. In the judgment titled as"Bharat Broadband Network Ltd. v. United Telecoms Ltd.", reported in (2019) 5 SCC 755, the Hon'ble Supreme Court held:

"15. Section 12(5), on the other hand, is a new provision which relates to the de jure inability of an arbitrator to act as such. Under this provision, any prior agreement to the contrary is wiped out by the non obstante clause in Section 12(5) the moment any person whose relationship with the parties or the counsel or the subject-matter of the dispute falls under the Seventh Schedule. The sub-section then declares that such person shall be "ineligible" to be appointed as arbitrator. The only way in which this ineligibility can be removed is by the proviso, which again is a special provision which states that parties may, subsequent to disputes having Sattar Ali Khan Vs. Yes Bank Ltd. Page No. 12 of 39 OMP (COMM) NO. 25/19 arisen between them, waive the applicability of Section 12(5) by an express agreement in writing. What is clear, therefore, is that where, under any agreement between the parties, a person falls within any of the categories set out in the Seventh Schedule, he is, as a matter of law, ineligible to be appointed as an arbitrator. The only way in which this ineligibility can be removed, again, in law, is that parties may after disputes have arisen between them, waive the applicability of this sub-section by an "express agreement in writing".

Obviously, the "express agreement in writing" has reference to a person who is interdicted by the Seventh Schedule, but who is stated by parties (after the disputes have arisen between them) to be a person in whom they have faith notwithstanding the fact that such person is interdicted by the Seventh Schedule.

17. The scheme of Sections 12, 13 and 14, therefore, is that where an arbitrator makes a disclosure in writing which is likely to give justifiable doubts as to his independence or impartiality, the appointment such arbitrator may be challenged under Sections 12(1) to 12(4) read with Section 13. However, where such person becomes "ineligible" to be appointed as an arbitrator, there is no question of challenge to such arbitrator, before such arbitrator. In such a case i.e. a case which falls under Section 12(5), Section 14(1)(a) of the Act gets attracted inasmuch as the arbitrator becomes, as a matter of law (i.e.de jure), unable to perform his functions under Section 12(5), Sattar Ali Khan Vs. Yes Bank Ltd. Page No. 13 of 39 OMP (COMM) NO. 25/19 being ineligible to be appointed as an arbitrator. This being so, his mandate automatically terminates, and he shall then be substituted by another arbitrator under Section 14(1) itself. It is only if a controversy occurs concerning whether he has become de jureunable to perform his functions as such, that a party has to apply to the Court to decide on the termination of the mandate, unless otherwise agreed by the parties. Thus, in all Section 12(5) cases, there is no challenge procedure to be availed of. If an arbitrator continues as such, being de jure unable to perform his functions, as he falls within any of the categories mentioned in Section 12(5), read with the Seventh Schedule, a party may apply to the Court, which will then decide on whether his mandate has terminated.

Questions which may typically arise under Section 14 may be as to whether such person falls within any of the categories mentioned in the Seventh Schedule, or whether there is a waiver as provided in the proviso to Section 12(5) of the Act. As a matter of law, it is important to note that the proviso to Section 12(5) must be contrasted with Section 4 of the Act.

Section 4 deals with cases of deemed waiver by conduct; whereas the proviso to Section 12(5) deals with waiver by express agreement in writing between the parties only if made subsequent to disputes having arisen between them.

34. In the judgment titled as"Bhayana Builders Pvt Ltd vs Oriental Structural Engineers", reported in 2018 SCC OnLine Del 7634,it was held:

Sattar Ali Khan Vs. Yes Bank Ltd. Page No. 14 of 39 OMP (COMM) NO. 25/19
3. ........................... recently a Coordi-

nate Bench of this Court in D.K. Gupta &Anr. v. Renu Munjal, 2017 SCC Online Del 12385, considering the effect of Sec- tion 12(5) of the Act and the judgment of the Supreme Court in TRF (supra) has held as under:

"8. However the arbitration clause pertaining to this case is on a different note. Here an arbitrator so appointed is not an employee of a party to the agreement. The arbitration clause herein rather gives a choice to one of the parties viz a lender to appoint an arbitrator. Thus perhaps is a striking difference between the two arbitration clauses viz., clause 33 of TRF Ltd. (supra) and clause 8.9.4 of the agreement dated 02.09.2013 herein. In TRF Ltd. (supra) the Managing Director of the buyer, being an employee of the buyer in a way represents the buyer itself, which is not the case here. Admittedly there exist no bar under the Act which restrains a party to appoint an Arbitrator. Rather section 11(2) of the Arbitration and Conciliation, 1996 empowers the parties to agree on a procedure for appointment of an arbitrator, which exactly is the situation here. ............"

9. When there exists no prohibition in the Act for a party to appoint an arbitrator, then a lender or a buyer, per any agree- ment, may have a right to choose an arbi- trator, as even noted in para 17 of TRF (supra) as under : -

"17. First we shall address the issue whether the Court can enter into the arena of controversy at this stage. It is not in dispute that the Managing Director, by virtue of the amended provision that has Sattar Ali Khan Vs. Yes Bank Ltd. Page No. 15 of 39 OMP (COMM) NO. 25/19 introduced sub-section (5) to Section 12, had enumerated the disqualification in the Seventh Schedule. It has to be clarified here that the agreement had been entered into before the amendment came into force. The procedure for appointment was, thus, agreed upon. It has been observed by the designated Judge that the amending provision does not take away the right of a party to nominate a sole arbitrator, otherwise the legislature could have amended other provisions. He has also observed that the grounds including the objections under the Fifth and the Seventh Schedules of the amended Act can be raised before the Arbitral Tribunal and further when the nominated arbitrator has made the disclosure as required under the Sixth Schedule to the Act, there was no justification for interference. That apart, he has also held in his conclusion that besides the stipulation of the agreement governing the parties, the Court has decided to appoint the arbitrator as the sole arbitrator to decide the dispute between the parties."

54. In the Act, the test for neutrality is set out in Section 12(3) which provides-- '12. (3) An arbitrator may be challenged only if--

(a) circumstances exist that give rise to jus- tifiable doubts as to his independence or impartiality....'

55. The Act does not lay down any other conditions to identify the "circumstances" which give rise to "justifiable doubts", and it is clear that there can be many such cir- cumstances and situations. The test is not whether, given the circumstances, there is any-actual-bias for that is setting the bar too high; but, whether the circumstances in Sattar Ali Khan Vs. Yes Bank Ltd. Page No. 16 of 39 OMP (COMM) NO. 25/19 question give rise to any- justifiable appre- hensions-of bias.

24. As noted above, the Agreements that provide for one of the party to choose the Arbitral Tribunal for the parties have been in existence even prior to the insertion of the Section 12(5) of the Act. If this was the mischief that the Law Commission as also the amendment by way of insertion of Sec- tion 12(5) of the Act sought to remedy, it would have said so in clear and unambigu- ous terms. The legislature, however, did not make such contracts unenforceable but only proceeded to safeguard the parties against appointment of Arbitrators against whom circumstances exist that can give rise to a justifiable doubt as to their independence or impartiality.

28. This principle of party autonomy is also found in various provisions of the Act in- cluding Section 10: which leaves the parties free to determine the number of Arbitra- tors; Section 11: which leaves the parties free to agree on a procedure for appointing a Arbitrator; Section 13 (1): where the par- ties are left free to agree on procedure to challenge the Arbitrator; Section 19(2):

which leaves the parties free to agree on a the procedure to be followed by the Arbitral Tribunal in conducting its proceedings; Sec- tion 20: which leaves the party free to agree on the place of Arbitration; Section 22 :which leaves the parties free to agree upon the language or languages to be used in the Arbitration Proceedings and so on.

29. On the other hand, the Act, by way of the amendment, has also specifically restricted such party autonomy where it found it just to do so. Reference in this regard can be drawn to Section 31A (5) of the Act.

Sattar Ali Khan Vs. Yes Bank Ltd. Page No. 17 of 39 OMP (COMM) NO. 25/19

30. Even Section 12(5) of the Act restricts the party autonomy as it provides that any person, whose relationship with the party or counsel or the subject matter of the disputes falls under any of the categories specified in the Seventh Schedule, notwithstanding any prior agreement, shall be ineligible to be appointed as an Arbitrator.

31. Party autonomy, therefore, has been taken away only to a limited extent and cir- cumstances and it is not for this Court to expand such exclusion in the garb of inter- pretation of the Act.

34. One must also take note of the principle that the Arbitrator appointed is not the dele- gatee of any party. In fact, he has to act in- dependent of the parties. The Arbitrator so appointed is not the agent of the party ap- pointing him. In that view, the judgment of TRF Ltd. (supra) would not be applicable to the facts of the present case."

35. In the judgment titled as"Mcleod Russel India Limited & Anr vs Aditya Birla Finance Limited &Ors", reported in 2023 SCC OnLine Cal 330, the Hon'ble Calcutta High Court held:

17. ......................... The challenge to the appointment of an arbitrator on the grounds provided under section 12 or 14 is not an unconditional legislative grant; the chal-

lenge must be accompanied by supporting circumstances which give rise to justifiable doubts as to the arbitrator's independence or impartiality or the arbitrator's lack of qualifications [12(3)(a) and (b)].

........................."

36. In view of the judgment Bharat Broadband Sattar Ali Khan Vs. Yes Bank Ltd. Page No. 18 of 39 OMP (COMM) NO. 25/19 Network Ltd. (supra), it can be held that section 12(5) of the Act provides that notwithstanding any prior agreement to the contrary, the moment any person whose relationship with the parties or the counsel or the subject-matter of the dispute falls under the 7th Schedule, such person shall be "ineligible" to be appointed as arbitrator. The only way in which this ineligibility can be removed is by the proviso to section 12(5) of the Act. The requirement presumes that the agreement in writing must be made by the party who takes the objection to the appointment of the arbitrator and seeks recourse under section 12 (5). The requirement does not entail both the parties executing a formal agreement since the other party (who has made the appointment) may not raise the issue at all.Therefore, where an arbitrator becomes "ineligible" to be appointed as an arbitrator, a case which falls under section 12(5), section 14(1)(a) of the Act gets attracted as the arbitrator becomes, as a matter of law (i.e. de jure), unable to perform his functions under section 12(5). If an arbitrator continues as such, being de jure unable to perform his functions, as he falls within any of the categories mentioned in Section 12(5), read with the 7 th Schedule, a party may apply to the Court, which will then decide on whether his mandate has terminated. However, as held in the judgment Mcleod Russel India Limited (supra), the challenge to the appointment of an arbitrator on the grounds provided under Section 12 or 14 of the Act must be accompanied by supporting circumstances which give rise to justifiable doubts as to the arbitrator's independence or impartiality or the arbitrator's lack of qualifications.

37. Section 12 (5) read with the 7th schedule of the Sattar Ali Khan Vs. Yes Bank Ltd. Page No. 19 of 39 OMP (COMM) NO. 25/19 Act makes it clear that if the arbitrator falls in any of the categories specified in the 7th schedule, he becomes ineligible to act as an arbitrator. Once he becomes ineligible, then under section 14 (1) (a) of the Act, he becomes de jure incapable to perform his functions in law because he is regarded as ineligible.

38. Now the question arises as to whether the arbitrator had suffered from any ineligibility as mentioned in the 7th schedule of the Act.

39. In the present case, to hold the arbitrator ineligible to act as an arbitrator, it is to be seen whether there existed the circumstances mentioned in the 7 th schedule of the Act which would attract the provisions of section 12 (5) of the Act and nullify any prior agreement to the contrary.

40. The 7th schedule of the Act contains 19 entries. In the entire petition and even during the course of arguments, counsel for the petitioner has not pleaded that there existed any ground as contained in the 7th schedule of the Act which gave justifiable doubts as to independence and impartiality of the arbitrator. Hence, it can be held that the petitioner remained completely silent about any of the entries mentioned in the 7thschedule, the establishment of which could render the arbitrator ineligible within the meaning of section 12 (5) of the Act. Hence, it can be held that the petitioner had neither mentioned nor pleaded any ground/entry as specified under the 7th schedule to hold the arbitrator ineligible to act as an arbitrator. Sattar Ali Khan Vs. Yes Bank Ltd. Page No. 20 of 39 OMP (COMM) NO. 25/19

41. As mentioned above, the petitioner had the knowledge of the appointment of the arbitrator and the proceedings being conducted by him. The petitioner was in constant touch of his counsel also to defend himself. Hence, it can be held that the petitioner had been properly assisted by the legal professional who was well versed with the legal knowledge to this effect. Despite that, the petitioner had neither mentioned nor pleaded any ground/entry as specified under the 7th schedule to hold the arbitrator ineligible to act as an arbitrator.

42. The date when the arbitration clause was entered into the judgment "TRF Ltd. Vs. EnergoEngg. Projects Ltd." reported in (2017) 8 SCC 377 had not come into existence. However, during the arbitral proceedings, the TRF judgement had come into existence on 03.07.2017. As discussed above, the petitioner was properly assisted by his counsel i.e. a legal professional. Therefore, if the petitioner was really aggrieved by the appointment of the arbitrator being ineligible in view of section 12 (5) of the Act, he must have raised the objection to that effect with the help of the said judgement. However, that is not done by the petitioner.

43. In view of the foregoing discussions, it can be held that the arbitrator had not suffered from any ineligibility as mentioned in the 7th schedule of the Act to act as an arbitrator.

44. In the judgment Bhayana Builders Pvt Ltd (supra),it was held:

"34. One must also take note of the principle that the Arbitrator appointed is Sattar Ali Khan Vs. Yes Bank Ltd. Page No. 21 of 39 OMP (COMM) NO. 25/19 not the delegatee of any party. In fact, he has to act independent of the parties. The Arbitrator so appointed is not the agent of the party appointing him. In that view, the judgment of TRF Ltd. (supra) would not be applicable to the facts of the present case.
35. An arguments has been raised by the learned counsel for the petitioner that as the Arbitration Agreement in the present case also uses the words "sole Arbitrator to be nominated (including nomination of replacement of Arbitrator, if necessitated by vacancy by vacancy of the post caused by any reason whatsoever) by the Managing Director of the First Party", the person so appointed would become the delegatee of the Managing Director of the respondent and therefore, in terms of the judgment in TRF Ltd. (supra), would become ineligible for being appointed as a Sole Arbitrator. This argument is also fallacious. The word "nominated" in the Arbitration Agreement, in my opinion, is not in the nature of a delegation of power as was in the case of TRF Ltd. (supra).
36. In Black's Law Dictionary, Eighth Edition, the word 'nominate' has been described as under:-- "nominate, vb. 1. To propose (a person) for election or appointment. < Steven nominated Jane for president > [Cases : Elections ⇔ 122-147; Officers and Public Employees ⇔ 8. C.J.S. Elections §§ 93, 95, 97-110, 111(1), 112- 114, 115(1), 116, 118(1), 119(1), 135-137, 162; Officers and Public Employees§ 47.]
2. To name or designate (a person) for a position < the testator nominated an executor, who later withdrew because he couldn't perform his duties >. [Cases :
Executors and Administrators ⇔ 14, 17(7) C.J.S. Executors and Administrators §§ 17- 21, 43.]
37. In Stroud's Judicial Dictionary of Words and Phrases, Forth Edition, Vol.3, the word Sattar Ali Khan Vs. Yes Bank Ltd. Page No. 22 of 39 OMP (COMM) NO. 25/19 'nominate' has been defined as under:--
"NOMINATE xxxxxx (5) A power given in partnership articles to one of the parties to "nominate and INTRODUCE into the firm"

another person, involves as valid contract by the other parties to the articles that the new partner, when nominated and introduced, shall come in with their consent as entirely as if they had adopted him by name (Lovegrove v. Nelson, 3 My. & K. 20, applied by Stirling L.J., Byrne v. Reid (1902) 2 Ch. 742, 743)."

38. In Major Law Lexicon by P. Ramanatha Aiya, 4 Edition, 2010, the word 'nominate' had been defined to mean as under:--

"Nominate : To select a candidate to be voted for a public officer; or as a member of a legislative or representative assembly; to name or to recommend for confirmation. To name or designate a person for some position or office. In a will the words "I nominate" may be used as the equivalent of the more formal and usual words, "I bequeath."

The word "nominate" means to recommend for confirmation. To propose formally for an election; to appoint by name.

TO NOMINATE, NAME. To nominate and to name are both to mention by name; but the former is to mention for a specific purpose : the latter is to mention for general purpose : persons only are nominated, things as well as persons are named; one nominates a person in order to propose him, or appoint him, to an office, but one names a person casually, in the course of conversation, or one names him in order to make some inquiry respecting him. To be nominated is a public act; to be named is generally private; to be nominated is always an honour; to be named is either honourable, or the contrary, according to the circumstances Sattar Ali Khan Vs. Yes Bank Ltd. Page No. 23 of 39 OMP (COMM) NO. 25/19 under which it is mentioned: a person is nominated as member of parliament; he is named whenever he is spoken of."

39. In Datar Switchgears Ltd. (supra), the Supreme Court had explained the meaning of word "nomination" as under:--

"25. Lastly, the appellant alleged that "nomination" mentioned in the arbitration clause gives the 1 respondent a right to suggest the name of the arbitrator to the appellant and the appointment could be done only with the concurrence of the appellant. We do not find any force in the contention.
26. In P. Ramanatha Aiyar's Law Lexicon (2 Edn.) at pp. 1310-11, the meaning of the word ""nomination" is given as follows:
"1. The action, process or instance of nominating; 2. the act, process or an instrument of nominating; an act or right of designating for an office or duty. 'Nominations' is equivalent to the word 'appointments', when used by a mayor in an instrument executed for the purpose of appointing certain persons to office."

27. Nomination virtually amounts to appointment for a specific purpose and the 1 respondent has acted in accordance with clause 20.9 of the agreement. So long as the concurrence or ratification by the appellant is not stated in the arbitration clause, the nomination amounts to selection of the arbitrator."

40. In my view, therefore, the word "nominated" as used in Clause 9.03 of the Work Order in the present case only means to select a Sole Arbitrator for the parties. Person appointed/selected as an Arbitrator would not become the delegates or agent or representative of the Managing Director of the respondent or the respondent itself.

41. While I am upholding the power of a Sattar Ali Khan Vs. Yes Bank Ltd. Page No. 24 of 39 OMP (COMM) NO. 25/19 party to appoint a Sole Arbitrator if so agreed and provided for in the Arbitration Agreement, I must emphasise that the burden of ensuring that the person so appointed shall not fall foul of any of the provisions of the Fifth or the Seventh Schedule of the Act will be even higher and open to a greater scrutiny. The spirit behind the amendment to the Act shall always have to be kept in mind while appointing the Arbitrator or considering any challenge thereto................"

45. In the judgment Mcleod Russel India Limited (supra), the Hon'ble Calcutta High Court held:

33.Section 12(5) is a relationships-conflict provision. The disqualification of an arbi-

trator is premised on the intersections of the arbitrator's relationship with the par- ties/counsel/subject matter of the dispute which falls under any of the categories specified in the Seventh Schedule. The in- eligibility is hence to be fixed on the Sev- enth Schedule, in specific, as provided for in section 12(5). The proviso to section 12(5) green-lights the parties to waive all objections to ineligibility which fall under the Seventh Schedule. The proviso does not carve out any exception akin to the non- waivable Red List of the IBA Guidelines where certain conflicts remain outside the purview of waiver by agreement. Since the Act gives the right to the parties to circum- vent any and all relationship-based con- flicts which would disqualify an arbitrator under the Seventh Schedule, no appoint- ments can be treated as void ab initio or incapable of being cured by an express written agreement.

Sattar Ali Khan Vs. Yes Bank Ltd. Page No. 25 of 39 OMP (COMM) NO. 25/19

34. Section 12(5) specifies the disqualifi- cation of an arbitrator and not of the party appointing the arbitrator.

35. The proviso to section 12(5) which al- lows the parties to a dispute to waive the applicability of section 12(5) by an express agreement in writing would hence take from and be confined to section 12(5). In other words, the express agreement of the parties to get around the disqualification under the categories mentioned in section 12(5) can only be in relation to the Seventh Schedule. This is clear from the words "... waive the applicability of this sub-

section ..." in the proviso (underlined for emphasis).

36. The de jure or de facto termination of mandate of an arbitrator under section 14 must not only be assessed in light of the proviso to section 12(5) but also with ref- erence to the express agreement entered into between the parties subsequent to the dispute having arisen between the parties.

37. The proviso to section 12(5) must be read in sync with the momentum of the 1996 Act. The proviso to section 12(5) is not a speed-breaker in the momentum to be achieved through arbitration but an ac- celerator to the process so that parties may resolve any lingering ineligibility is- sues and put such matters at rest once and for all. The proviso is not to be treated as an escape-route to a disgruntled party who is dissatisfied with a decision of an arbitrator and decides to do a volte-face after participating in the proceedings for a considerable length of time.

39. All unilateral appointments of arbitra- tors cannot automatically be nullified on the application of section 12(5). The per- Sattar Ali Khan Vs. Yes Bank Ltd. Page No. 26 of 39 OMP (COMM) NO. 25/19 ceived disqualification must be assessed only on the mandate of section 12(5) which is within the guard-rails of the Seventh Schedule. Entry 12 of the Sev- enth Schedule specifically deals with a sit- uation where the arbitrator is a manager, director or part of the management or has a controlling influence in one of the par- ties. This is not the same and cannot be put on an equal footing as an arbitrator being appointed by one of the parties to the dispute. A distinction must be made on the obvious dissimilarity between an arbi- trator being hit by any one or all of the conflicted relationships in the Seventh Schedule and an arbitrator being rendered ineligible simply by reason of being ap- pointed by one of the parties to the dis- pute.

42. The decisions in TRF, Bharat Broad- band, Perkins and Jaipur Zila Parishad proceed on the basis of the named arbitra- tor also serving as the MD/CMD or a Di-

rector of one of the parties. In other words, these three cases are of a persona designata arbitrator where the persona designata was to be the arbitrator or had the right to nominate an arbitrator in his place. (for emphasis). The Supreme Court therefore, held that the person designated was per se ineligible under the Seventh Schedule read with section 12(5) of the Act to act as an arbitrator. These cases hence involve a person who chose himself to act as the arbitrator and hence was au- tomatically disqualified by the amend- ments brought to the Act in 2015 and specifically under the Seventh Schedule. This person naturally could not appoint a substitute in his or her place since that Sattar Ali Khan Vs. Yes Bank Ltd. Page No. 27 of 39 OMP (COMM) NO. 25/19 would be a mere extension of the ineligi- bility extended by one degree.

43. The ratio of TRF, Bharat Broadband and Perkins is therefore essentially that of an arbitrator who becomes ineligible by a statutory bar and consequently renders himself ineligible to nominate someone else to act as the arbitrator. The logic is that a disqualified person cannot delegate his position to another as that would amount to arbitration by the disqualified arbitrator himself. Hence, once the MD loses his position/identity as a sole arbi- trator, the MD's right to nominate is auto- matically wiped out - TRF and Perkins.

44. In the present case, Clause 3 of the Ar- bitration Agreement provides for a "Sole Arbitrator to be appointed by the In-

vestor". There is (a) no named / desig- nated Arbitrator and (b) the Investor / any of its Directors has not claimed a right to act as the Arbitrator itself. The Investor has appointed a retired Judge of a High Court. Hence, the analogy sought to be drawn between the facts of the present case and those in TRF, Bharat Broadband and Perkins is factually distinguishable since in TRF the MD himself was a sole arbitrator and was disqualified to act as such by reason of the amending Act of 2016. Bharat Broadband and Perkins con- sidered the facts of TRF and the conse- quent disqualification.

45. Unilateral appointments being imper- missible in law must be read to mean an unilateral appointment made by a person who himself is disqualified to act as an ar- bitrator under the Seventh Schedule and not each and every unilateral appointment made by one of the parties to the arbitra- Sattar Ali Khan Vs. Yes Bank Ltd. Page No. 28 of 39 OMP (COMM) NO. 25/19 tion. Treating these situations as one and the same would amount to conflation of two different and distinct scenarios which is not what the Act mandates.

48. The petitioner banks on the decision in Perkins to contend that any advantage which a party may derive by nominating an arbitrator of its choice will carry an element of exclusivity in determining the course of the dispute resolution. The peti- tioner also places emphasis on Perkins to say that a person who has an interest in the outcome of the dispute cannot have the power to appoint a sole arbitrator.

49. On the factual score, Perkins was pro- nounced on an application under section 11 of the Act for appointment of an arbi- trator. The Arbitration Agreement was of 22nd May, 2017 and the arbitrator was appointed on 30th July, 2019. The peti- tion was filed immediately thereafter and the decision in Perkins was pronounced on 26th November, 2019. Second, the facts in Perkins did not involve any ex- press written agreement under the proviso to section 12(5). Further, the contract be- tween the parties was entered into after the amendment to the Act but before the decision in TRF (pronounced on 3rd July, 2017) where the law was declared on sec- tion 12(5) of the Act. Hence, the parties were not aware of the implications of TRF with regard to automatic disqualification of the MD/CMD of one of the parties to be designated as the arbitrator.

50. The more material distinguishing fac- tor is that paragraph 21 of Perkins clubs all unilateral appointments by one of the parties to an arbitration as falling within the statutory bar of section 12(5) but Sattar Ali Khan Vs. Yes Bank Ltd. Page No. 29 of 39 OMP (COMM) NO. 25/19 without reference to the Seventh Sched- ule. This would be clear from the reliance placed by the Court on TRF which was specifically a case under section 12(5) read with the Seventh Schedule. Therefore, Perkins amplifies and extends the disqualification under section 12(5) to all unilateral appointments divorced from any of the categories specified in the Sev- enth Schedule. Perkins also proceeded on the ratio of TRF namely whether the Managing Director, after becoming ineli- gible by operation, is still eligible to nom- inate an arbitrator.

51. The absence of any issue with regard to an express written agreement under the proviso to section 12(5) in Perkins amounts to a crucial difference in facts. As discussed above, the proviso allows the parties to the dispute to waive the ineligi- bility of an arbitrator under the Seventh Schedule by an express agreement in writ- ing. The proviso hence enables the parties to obliterate any disqualification which an arbitrator may be visited with under the Seventh Schedule. In the present case, the express and unequivocal written state- ments made by the petitioner amounts to a waiver. Without doubt, the pleadings and statements made in the petitioner's appli- cations wipe out any objections to the ap- pointment of the Sole Arbitrator. There was no such unequivocal acceptance of the arbitration by conduct or otherwise in Perkins. This has a transformational legal bearing on the disputes in the present case. Therefore, Perkins is not at all a problem for the respondent no. 1.

55. The Arbitrator in the present case does not fall under any of the prohibited rela- Sattar Ali Khan Vs. Yes Bank Ltd. Page No. 30 of 39 OMP (COMM) NO. 25/19 tionships/categories in the Seventh Sched- ule including Entry 12 therein.

56. Entry 12 is being specifically men- tioned following the contention of learned counsel appearing for the petitioners. En- try 12 applies where the arbitrator himself is a manager, director or part of the man- agement or has a similar controlling influ- ence in one of the parties. The Arbitrator in the present case is neither a manager or a director nor a part of the manage-

ment of the respondent no. 1. The Arbitra- tor also does not have any controlling in- fluence in the respondent no. 1 or any of the parties to the arbitration. The Arbitra- tor is a retired Judge of the Madhya Pradesh High Court.

57. The alleged ineligibility of the ap- pointment of the Ld. Arbitrator was regu- larised under the proviso to section 12(5) by the express written documents executed by the petitioners and their con- tinuous participation in the arbitration. The petitioners continued to participate in the arbitration despite having knowledge of the curable invalidity of the arbitration agreement and being aware of the impli- cation of the judgments pronounced by the Supreme Court in TRF, Bharat Broadband and Perkins Eastman.

58. The present case is of a unilateral ap- pointment which is factually distinguish- able (as in the decisions cited) from an ar- bitrator whose eligibility is compromised by any one or more of the Entries in the Seventh Schedule. There is an obvious dif- ference - and so the decisions say - be- tween an arbitrator who is disqualified under the Seventh Schedule and an arbi- trator who himself is a party to the dis- Sattar Ali Khan Vs. Yes Bank Ltd. Page No. 31 of 39 OMP (COMM) NO. 25/19 pute. The two situations are different in fact, in logic as also in the decisions shown to the Court. The arbitration clause in the present case belongs to the first cat- egory since the Arbitrator was appointed by the respondent no. 1.

65. After discussing the import of section 12(5) read with the proviso, this Court finds and accordingly holds that section 12(5) is not applicable to this case since the alleged disqualification does not breach any one or more of the conflict- protections in the Entries of the Seventh Schedule. Even if it is assumed that the Arbitrator became ineligible by reason of the Seventh Schedule, the petitioners waived such disqualification by their ex- press writings, conduct and agreement as envisaged under the proviso to section 12(5) of the Act.

46. Section 12 (5) of the Act specifies the disquali- fication of an arbitrator and not of the party i.e. the respon- dent in the present case, appointing the arbitrator. As dis- cussed above, in the present case, the valid arbitration clause existed between the parties and no person was named as the arbitrator. As such, the respondent appointed the arbi- trator in terms thereof.

47. As held in the judgment Bhayana Builders Pvt Ltd (supra),in the present case, the arbitrator appointed was not the delegate or the agent of the respondent. The word "appoint" as used in clause 11.7 of the agreement only means to select a Sole Arbitrator for the parties. Person appointed/selected as an Arbitrator i.e. the arbitrator had not Sattar Ali Khan Vs. Yes Bank Ltd. Page No. 32 of 39 OMP (COMM) NO. 25/19 become the delegate or agent or representative of the respondent or the respondent itself. Further, neither it is not the case of the petitioners nor it is reflected from the record that the arbitrator was not independent or impartial in conducting the arbitration proceedings or making the award.

48. As held in Mcleod Russel India Limited (supra), all unilateral appointments of the arbitrators cannot automatically be nullified and can be treated as void ab initio on the application of section 12 (5) and the perceived disqualification is to be assessed only on the mandate of section 12 (5) and entries made in the 7th Schedule. Section 12 (5) specifies the disqualification of an arbitrator and not of the party appointing the arbitrator. Unilateral appointments being impermissible in law must be read to mean an unilateral appointment made by a person who himself is disqualified to act as an arbitrator under the 7 th Schedule and not each and every unilateral appointment made by one of the parties to the arbitration. A distinction must be made on the obvious dissimilarity between an arbitrator being hit by any one or all of the conflicted relationships in the 7th schedule and an arbitrator being rendered ineligible simply by reason of being appointed by one of the parties to the dispute. This is entirely different from a party nominating an arbitrator where the test of independence starts with the arbitrator on the multiprong of the 5thand the 7th schedules.

49. Under section 12 (5) of the Act, an arbitrator can be disqualified once his relationship with the Sattar Ali Khan Vs. Yes Bank Ltd. Page No. 33 of 39 OMP (COMM) NO. 25/19 parties/counsel/subject matter of the dispute falls under any of the categories specified in the 7th Schedule only. The proviso to section 12 (5) allows the parties to waive all objections to ineligibility which fall under the 7 th Schedule by an express agreement in writing would hence take from and be confined to section 12 (5). Since the Act gives the right to the parties to circumvent any and all relationship- based conflicts which would disqualify an arbitrator under the 7th Schedule, no appointments can be treated as void ab initio or incapable of being cured by an express written agreement.

50. It is evident from the recorded that it is nowhere the case of the petitioner that the arbitrator had any association with the respondent as mentioned in the 7 th schedule. During the entire arbitral proceeding or before this court, it is not the case of the petitioner that the arbitrator had acted in the bias manner while conducting the arbitral proceedings or had not acted independently and impartially. It is not the case of the petitioner that the arbitrator was under the control or influence, direct or indirect, of the respondent. Even this court does not find that the arbitrator conducted the arbitration proceedings or made award in the bias manner. Hence, it can be held that the arbitrator was not suffering from any ineligibility which falls under the 7 th schedule and therefore was not disqualified to act as an arbitrator.

51. As held in Mcleod Russel India Limited (supra), the decisions in TRF, Bharat Broadband, and Sattar Ali Khan Vs. Yes Bank Ltd. Page No. 34 of 39 OMP (COMM) NO. 25/19 Perkins proceed on the basis of the named arbitrator also serving as the MD/CMD or a Director of one of the parties. These cases involve a person who chose himself to act as the arbitrator and hence was automatically disqualified by the amendments brought to the Act in 2015 and specifically under the 7thSchedule. This person naturally could not ap- point a substitute in his or her place since that would be a mere extension of the ineligibility extended by one degree. The Supreme Court therefore, held that the person desig- nated was per se ineligible under the 7th schedule read with section 12 (5) of the Act to act as an arbitrator. The ra- tio of TRF, Bharat Broadband and Perkins is therefore es- sentially that of an arbitrator who becomes ineligible by a statutory bar and consequently renders himself ineligible to nominate someone else to act as the arbitrator.

52. Unilateral appointments being impermissible in law must be read to mean an unilateral appointment made by a person who himself is disqualified to act as an arbitra- tor under the 7thSchedule and not each and every unilateral appointment made by one of the parties to the arbitration.

53. In the present case, Clause 11.7 of the agree- ment provides for a "Sole Arbitrator to be appointed by the respondent". There is no named / designated Arbitrator and the respondent has not claimed a right to act as the arbitrator itself. The respondent has appointed an advocate. Hence, the analogy sought to be drawn between the facts of the present case and those in TRF, Bharat Broadband and Perkins is fac- tually distinguishable since in TRF the MD himself was a Sattar Ali Khan Vs. Yes Bank Ltd. Page No. 35 of 39 OMP (COMM) NO. 25/19 sole arbitrator and was disqualified to act as such by reason of the amending Act of 2016. Bharat Broadband and Perkins considered the facts of TRF and the consequent disqualifica- tion.

54. As held in the judgment Mcleod Russel India Limited (supra), Perkins judgment was pronounced on an application under Section 11 of the Act for appointment of an arbitrator. Facts in Perkins did not involve any express written agreement under the proviso to section 12 (5). Fur- ther, the contract between the parties was entered into after the amendment to the Act but before the decision in TRF (pronounced on 03.07. 2017) where the law was declared on section 12 (5)of the Act. Hence, the parties were not aware of the implications of TRF with regard to automatic disqualification of the MD/CMD of one of the parties to be designated as the arbitrator.

55. Further, as also held in the judgment passed by the Hon'ble Delhi High Court in Kanodia Infratech limited vs. Dalmia Cement (Bharat) Limited reported in 2021 SCC Online Del 4883, in the Perkins judgment, the proceedings related to the appointment of the arbitrator under Section 11(6) of the Act and involved the question once the mandate of the Managing Director to be appointed as an arbitrator become ineligible by virtue of the amendment of 2015, he cannot nominate another person as arbitrator also. On the contrary, the present petition is under Section 34 of the Act which provides the grounds on which an arbitral award can be challenged and set aside and not the mandate of arbitral Sattar Ali Khan Vs. Yes Bank Ltd. Page No. 36 of 39 OMP (COMM) NO. 25/19 tribunal. Further, as discussed above, it is not the case of the petitioner that the arbitrator was the employee or associ- ated with or was interested party in favour of the respondent or was bias in nature.

56. Further, as held in the judgment Mcleod Russel India Limited (supra), paragraph 21 of Perkins clubs all unilateral appointments by one of the parties to an arbitra- tion as falling within the statutory bar of section 12 (5) but without reference to the 7th schedule. This would be clear from the reliance placed by the Court on TRF which was specifically a case under Section 12 (5) read with the 7thSchedule. Therefore, Perkins amplifies and extends the disqualification under Section 12 (5) to all unilateral ap- pointments divorced from any of the categories specified in the 7thSchedule. Perkins also proceeded on the ratio of TRF namely whether the Managing Director, after becoming in- eligible by operation, is still eligible to nominate an arbitra- tor. The absence of any issue with regard to an express writ- ten agreement under the proviso to Section 12 (5) in Perkins amounts to a crucial difference in facts.

57. Further, as held above, in the present case, the arbitrator does not fall under any of the prohibited relation- ships/categories in the 7th Schedule. The arbitrator in the present case is neither a manager or a director nor a part of the management of the respondent. The Arbitrator also does not have any controlling influence in the respondent or any of the parties to the arbitration. The Arbitrator is an advocate by profession.

Sattar Ali Khan Vs. Yes Bank Ltd. Page No. 37 of 39 OMP (COMM) NO. 25/19

58. The judgment Govind Singh (supra) relied upon by counsel for the petitioner is distinguishable on the facts as in the said case also, the arbitrator was appointed by the Managing Director of the respondent therein.

59. The judgment Proddatur Cable TV Digi Ser- vices (supra) relied upon by counsel for the petitioner is also distinguishable on the facts because in the present case, the petitioner has not claimed the disqualification of the arbitra- tor on any of the grounds enumerated under Section 12 (5) read with 7th Schedule of the Act.

60. The judgment Bharat Broadband (supra) relied upon by counsel for the petitioner is also distinguishable on the facts because in that case, after dismissal of unilateral appointment of the arbitrator by the arbitrator Tribunal it- self, the petition under Section 14 and 15 of the Act was filed before the Court and applicability of the Section 12 (5) of the Act was considered whereas in the present case, the impugned award is challenged under Section 34 of the Act.

61. The present case is of a unilateral appointment which is factually distinguishable from an arbitrator whose eligibility is compromised by any one or more of the entries in the 7thSchedule.

62. In view of the foregoing discussions, it can be held that the arbitrator was not ineligible to act as an arbitra- tor within the meaning of Section 12(5) read with the 7 th Sattar Ali Khan Vs. Yes Bank Ltd. Page No. 38 of 39 OMP (COMM) NO. 25/19 Schedule of the Act. Therefore, the arbitrator was not de jure in capable to act as an arbitrator within the meaning of Section 14 of Act.

63. In view of the foregoing discussions, it is held that the petition is devoid of merits. Accordingly, the petition is dismissed. No order as to cost.

64. File be consigned to the record room.

ANNOUNCED IN THE OPEN COURT, On this 9th day of May, 2023.

(PANKAJ GUPTA) District Judge, S/W (Commercial Court)-01:

DELHI Sattar Ali Khan Vs. Yes Bank Ltd. Page No. 39 of 39 OMP (COMM) NO. 25/19