The Delhi High Court while observing that the Explanation 1 to the Seventh Schedule refers “close family member” to a spouse, sibling, child, parent or life partner, in view of the same the Court dismissed the petition filed under Sections 14 (2) and 15 of the Arbitration and Conciliation Act, 1996 praying that the mandate of the sole Arbitrator shall be terminated and an independent be appointed in his place, as the arbitrator was claimed to be in close relationship to one of the parties by the petitioner.
A Single Bench of Justice Vibhu Bhakarau dismissed the present writ petition seeking the termination of the mandate of the sole Arbitrator and prayed for the appointment of an independent arbitrator, by observing that expression “ close family relationship” mentioned under Schedule seven of the Arbitration and Conciliation Act, 1996 indicates that the Arbitrator should have a close family relationship with one of the parties, merely being related to the parties is not sufficient.
The petitioner preferred the present writ petition under Sections 14 (2) and 15 of the Arbitration and Conciliation Act, 1996 praying that the mandate of the sole Arbitrator shall be terminated and an independent be appointed in his place.
It was the case of the petitioner that the sole Arbitrator was ineligible to act as an Arbitrator as per Section 12(5) of the A&C Act. He further claimed that the Arbitrator was related to the parties and they have not entered into agreement wherein they waived their right to waive the ineligibility. It was also claimed that the Arbitrator conducted the proceedings in a biassed manner. It was further claimed that the Arbitrator passed orders against the persons, who are not signatories to the Arbitration agreement or the arbitral proceedings.
After hearing the submissions at a length, the Court delved into the factsheet for adjudication of the present petition. While going through the factsheet, the Court was apprised of the agreement dated October 4, 2021 wherein it was stated that in case of any dispute, the matter should be referred to Arbitration. Thereafter, the Court noted that on October 25, 2021, the petitioner filed an application under Section 16 read with Sections 12 (5) and 14 of the A&C Act wherein he prayed that he would not participate in the arbitral proceedings on the ground that he was not aware of Section 12 (5) of the Act, 1996 at the time when he agreed for referring the disputes to the Arbitrator. The Arbitrator rejected the application by an order dated November 19, 2021.
Thus, the short question that was posed for consideration before the Court was whether the Arbitrator was eligible to be appointed by virtue of Section 12 (5) of the Act , 1996 and if the answer to the aforesaid question was in affirmative , then whether the petitioner waived his right to question such ineligibility.
To answer the same, the Court took into consideration the seventh schedule and Section 12 (5) of the Act, 1996 . In view of the same, it was observed that the expression “ close family relationship” indicates that the Arbitrator should have a close family relationship with one of the parties, merely being related to the parties is not sufficient, the Court noted.
Reverting back to the facts of the present case, the Court stated that the family relationship between the Arbitrator and the parties cannot be described as a close family relationship. The Arbitrator’s son is married to the daughter of the eldest brother of the parties. The Arbitrator is not from the same family as that of the parties, the Court observed. To further clarify the same, the Court opined close family relationship of A with B and B with C does not necessarily mean that A and C have a close family relationship,
In view of the aforesaid observations, the Court concluded that the present petition was meritless and accordingly the petition was dismissed.
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