NDLI: Bharat Broadband Network Limited Vs. United Telecoms Limited

Content Provider	Supreme Court of India
e-ISSN	30484839
Language	English
Access Restriction	NDLI
Subject Keyword	Arbitration and Conciliation s.12(5) and its proviso Applicability of the proviso Eligibility to be appointed as arbitrator 1996 express agreement in writing
Content Type	Text
Resource Type	Law Judgement
Jurisdiction	India
Act(s) Referred	Arbitration and Conciliation Act, 1996 (26 of 1996)
Case(s) Referred	Referred Case 0 Referred Case 1 Referred Case 2 Referred Case 3 Referred Case 4
Case Type	Appeal
Court	Supreme Court of India
Disposal Nature	Appeal Allowed
Headnote	Arbitration and Conciliation, 1996: s.12(5) and its proviso – Applicability of the proviso – Held: The proviso to s.12(5) applies only if subsequent to arising of disputes between the parties, the parties waive the applicability of sub-section (5) of s.12 by an express agreement in writing – The expression “express agreement in writing” refers to an agreement made in words as opposed to an agreement which is to be inferred by conduct – The instant case disclosed no such express agreement – The fact that a statement of claim was filed before the arbitrator, would not mean that there was an express agreement in words that both parties wished continuation of arbitrator so appointed despite his being ineligible to act as such. Arbitration and Conciliation, 1996: s.12(5) – Interpretation of – Eligibility to be appointed as arbitrator – In the instant case, agreement provided for appointment of arbitrator by the Managing Director of appellant-company – Accordingly, in terms of the arbitration clause, appointment of arbitrator was made – On 3.7.2017, TRF judgment of Supreme Court held that since Managing Director of a company which was one of the parties to the arbitration was himself ineligible to act as arbitrator, such ineligible person could not appoint an arbitrator, and any such appointment would be null and void – In view of TRF judgment, in the instant case, validity of appointment of arbitrator challenged by the Managing Director himself – Held: In the instant case, appointment of the arbitrator was after the introduction of s.12(5) in the statute book – The Managing Director of the appellant himself could not have acted as an arbitrator, being rendered ineligible to act as arbitrator under Item 5 of the Seventh Schedule – The scheme of ss.12, 13 and 14 was that where an arbitrator makes a disclosure in writing which is likely to give justifiable doubts as to his independence or impartiality, the appointment of such arbitrator may be challenged under ss.12(1) to 12(4) r/w s.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 s.12(5), s.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 s.12(5), 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 s.14(1) itself – If an arbitrator continues as such, being de jure unable to perform his functions, as he falls within any of the categories mentioned in s.12(5), r/w the Seventh Schedule, a party may apply to the Court, which will then decide on whether his mandate has terminated.
Judge	Hon'ble Mr. Justice R.F. Nariman
Neutral Citation	2019 INSC 537
Petitioner	Bharat Broadband Network Limited
Respondent	United Telecoms Limited
SCR	[2019] 6 S.C.R. 97
Judgement Date	2019-04-16
Case Number	3972

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