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Through Mr.Pawan Upadhyay, Mr.Rajesh Chhetri, Mr.Rajeev Chhetri and Ms.Meenakshi Rawat, Advs.

CORAM:

HON'BLE MR. JUSTICE NAVIN CHAWLA

1. These petitions raise an important and interesting issue of law arising out of Section 12(5) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the 'Act') and proviso thereto. The question of law being as to whether a party, who appoints an arbitrator knowing fully well that such arbitrator is suffering from a disability that falls under any of the categories specified in the Seventh Schedule of the Act and shall be ineligible to be appointed as an arbitrator, can later challenge his appointment on the ground that he was ineligible to be appointed as an arbitrator under Section 12(5) of the Act.

18. Keeping in mind the aforequoted recommendation of the Law Commission, with which spirit, Section 12 has been amended by the Amendment Act, 2015, it is manifest that the main purpose for amending the provision was to provide for neutrality of arbitrators. In order to achieve this, sub-section (5) of Section 12 lays down that notwithstanding any prior agreement to the contrary, any person whose relationship with the parties or counsel or the OMP(T)(COMM) Nos.84/2017 & 85/2017 Page 14 subject-matter of the dispute falls under any of the categories specified in the Seventh Schedule, he shall be ineligible to be appointed as an arbitrator. In such an eventuality i.e. when the arbitration clause finds foul with the amended provisions extracted above, the appointment of an arbitrator would be beyond pale of the arbitration agreement, empowering the court to appoint such arbitrator(s) as may be permissible. That would be the effect of non obstante clause contained in sub-section (5) of Section 12 and the other party cannot insist on appointment of the arbitrator in terms of the arbitration agreement.