Swami Vivekanand Educational and Charitable Trust, Chandigarh vs M/s. A. K. Construction Company and another

L.N. Mittal, J.—This is revision petition under Article 227 of the Constitution of India impugning order dated 13.09.2011 (Annexure P-1) passed by learned Additional District Judge, Chandigarh thereby dismissing application moved by the petitioner under Sections 12, 13 and 15 of the Arbitration and Conciliation Act, 1996 (in short, the Act) for termination of mandate of Pankaj Malik respondent No. 2-sole Arbitrator and for appointing substitute Arbitrator.

As per arbitration clause in the agreement between petitioner and respondent No. 1 herein, respondent No. 2 who was named as sole Arbitrator in the arbitration clause was appointed as sole Arbitrator.

In the application, the petitioner alleged that respondent No. 2 is partner of M/s. Planners Group along with Vijay Malik and Vikram Malik. It is also alleged that respondent No. 1 company consists of seven partners out of whom five are Maliks. The petitioner on enquiry learnt that Maliks partners of respondent No. 1 company and Maliks partners of Planners Group (including respondent No. 2 Arbitrator) are distantly related through women folk. The petitioner thus alleged that it had lost faith in impartiality of respondent No. 2-Arbitrator who did not deliberately disclose the aforesaid facts.

Respondent No. 1 resisted the aforesaid application by filing reply. It was also alleged that application to terminate the appointment of Arbitrator has to be moved before the Arbitrator himself vide Section 13(2) of the Act and the Arbitrator has to decide the said application and if such application is rejected, the Arbitrator has to continue with the arbitration proceedings and the aggrieved party can challenge the consequent award u/s 34 of the Act.

Learned Additional District Judge, Chandigarh vide impugned order dated 13.09.2011 Annexure P-1 dismissed the aforesaid application of the petitioner. The said order is under challenge in this revision petition.

I have heard learned counsel for the petitioner and perused the case file.

Learned counsel for the petitioner vehemently contended that respondent No. 2-Arbitrator is related to partners of respondent No. 1 and therefore, respondent No. 2 cannot act as Arbitrator. It was also contended that in such situation, removal of Arbitrator can be sought from the Court under Sections 12 to 14 of the Act. In support of this contention, reliance has been placed on judgment of Delhi High Court in case of Alcove Industries Ltd versus Oriental Structural Engineers Ltd., 2008(1) Arbitration Law Reporter, 393 (Delhi).

I have carefully considered the aforesaid contentions but the same cannot be accepted.

Perusal of the impugned order reveals that as per requirement of Section 13(2) of the Act, the petitioner had made request to the Arbitrator in this regard. However, the Arbitrator declined the said request of the petitioner and decided to proceed further with the arbitration proceedings. Consequently in view of Section 13(4) of the Act, the Arbitrator has to continue with the proceedings and take the same to logical conclusion by making arbitral award. Thereupon, by virtue of Section 13(5) of the Act, the petitioner would have liberty to challenge the said award by moving application u/s 34 of the Act.

In view of the aforesaid provisions of Sections 12 and 13 of the Act, the only remedy open to the petitioner is to challenge the ultimate award by filing application u/s 34 of the Act. This view taken by the lower Court is fully in consonance with the provisions of the Act. Judgment in the case of Alcove Industries Ltd. (supra) cited by counsel for the petitioner is completely distinguishable on facts and is not applicable to the facts of the instant case.

For the reasons aforesaid, I find no merit in the instant revision petition which is accordingly dismissed in limine. However, it is made clear that the petitioner shall be at liberty to challenge the award of the Arbitrator by filing application u/s 34 of the Act read with Section 13(5) of the Act and nothing in this judgment or in the impugned judgment shall have any bearing on merits of any such application.