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TMI Blog2022 (12) TMI 1515X X X X Extracts X X X X X X X X Extracts X X X X ..... s Four Lakh One Thousand and Eighty-Seven only) with interest on the aforesaid amount at 12% p.a, with effect from 16.08.2019 till the date of its realization, in favour of the Shriram Transport Finance Co. Ltd. (hereafter 'the respondent'). 3. The learned Commercial Court found no ground to set aside the impugned award. The court rejected the contention that the learned Sole Arbitrator was ineligible to act as an arbitrator under Section 12(5) of the A&C Act or that the impugned award could be impeached on the ground of justifiable doubts as to the independence and impartiality of the learned Sole Arbitrator. Further, the learned Commercial Court held that, as per Section 12 of the A&C Act, an arbitrator is required to give a declaration only if he is of the view that there are circumstances which affect his independence and impartiality. Factual Context 4. The respondent is a limited company duly incorporated under the Companies Act, 1956 and carrying on business of hire purchase, lease and loan-cum-hypothecation in respect of light motor vehicle/medium motor vehicle/heavy goods vehicle as per the guidelines laid down by the Reserve Bank of India (RBI). The respondent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was invoked by the appellants and that the appellants had called upon the respondent to appoint an arbitrator. However, he does not dispute that the learned Sole Arbitrator had been appointed unilaterally by the respondent and without seeking any concurrence from the appellants. It is also not disputed that the learned Sole Arbitrator had not made any disclosure as required under Section 12(1) of the A&C Act. 13. The appellants had assailed the impugned award, inter alia, on the ground that the learned Sole Arbitrator had been appointed without the knowledge of the appellants. The appellants also alleged that the learned Sole Arbitrator was biased in favour of the respondent as he had been appointed as an arbitrator by the respondent in several such matters against various parties. The appellants allege that the learned Sole Arbitrator is on the panel of the respondent and acts as its agent. 14. The learned Commercial Court had rejected the contention that the impugned award is liable to be set aside on account that the learned Sole Arbitrator was ineligible to be appointed as an arbitrator by virtue of Section 12(5) of the A&C Act. The relevant extract of the impugned order ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on panel of respondent/claimant company cannot be accepted to make appointment of learned arbitrator illegal. The contention is accordingly rejected." 15. It is apparent from the above that the learned Commercial Court proceeded on the basis that it was necessary for the appellants to file an application to challenge the appointment of an arbitrator. The learned Commercial Court accepted that the arbitrator was required to disclose the circumstances which may give rise to justifiable doubts as to his independence and impartiality. However, it was found that the impugned award could not be assailed for want of such disclosure. The learned Commercial Court was of the view that the disclosure, required in the form prescribed in the Sixth Schedule of the A&C Act, was not mandatory; the learned Sole Arbitrator was required to make a disclosure only when he felt that there were justifiable doubts to his independence and impartiality. The learned Commercial Court also held that acting as an arbitrator, in other disputes involving the respondent, was not a circumstance which is covered under the Seventh Schedule of the A&C Act and therefore, the learned Sole Arbitrator was not ineligible ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... number of matters in which the learned Sole Arbitrator had been appointed as such, at the instance of the respondent, rested with the learned Sole Arbitrator. The assumption that the burden to ascertain the circumstances that may give rise to justifiable doubts as to the independence and impartiality of the arbitrators is on the parties, is erroneous; this disclosure is necessarily required to be made by the person approached in connection with his appointment as an arbitrator. 20. In terms of Explanation 2 to Section 12(1) of the A&C Act, the arbitrator is also required to make the necessary disclosure as specified in the Sixth Schedule of the A&C Act. 21. The learned Commercial Court found that the appellants were precluded from assailing the impugned award on the ground that they had not filed an application before the learned Sole Arbitrator to make the disclosure or challenge his appointment. 22. It is necessary to note that the language of Section 12(1) of the A&C Act does not leave it at the discretion of any person, approached in connection with being appointed as an arbitrator, to make the necessary disclosures. The use of the words "he shall disclose" in Section 12(1) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is sub-section by an express agreement in writing." 28. Clearly, an award rendered by a person who is ineligible to act as an arbitrator would be of little value; it cannot be considered as an arbitral award under the A&C Act. While it is permissible for the parties to agree to waive the ineligibility of an arbitrator, the proviso to Section 12(5) of the A&C Act makes it clear that such an agreement requires to be in writing. In Proddatur Cable TV Digi Services v. Siti Cable Network Limited (2020) 267 DLT 51, the learned Single Judge of this Court, following the decision in TRF Ltd. v. Energo Engineering Projects Ltd. (supra) and Perkins Eastman Architects DPC & Anr. v. HSCC (India) Ltd. (supra), held that unilateral appointment of an arbitrator by a party is impermissible. 29. In Bharat Broadband Network Limited v. United Telecoms Limited (2019) 5 SCC 755, the Supreme Court rejected the contention that the waiver of a right to object the ineligibility of an arbitrator, under Section 12(5) of the A&C Act, could be inferred by conduct. The relevant observations made by the Supreme Court are set out below: "20. This then brings us to the applicability of the proviso to Section 12 ..... 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