Goel Construction Co. Pvt. Ltd. v The Institute of Chartered Accountants of India

This case is a part of our Annual Arbitration Review 2018.

Order Name: Goel Construction Co. Pvt. Ltd. v The Institute of Chartered Accountants of India

Citation: O.M.P. (T) (COMM.) 120/2018 & I.A. No. 15421/2018

Court: The High Court of Delhi

 Coram: Navin Chawla, J.

Date: 13th November 2018

Overview: 

A petition had been filed under Section 14 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as “the Act”) challenging the mandate of the Arbitrator as he had not made the requisite disclosure under Schedule VI of the Act. The court disposed the petition with a direction to the Arbitrator give the disclosure within one week of communication of the order.

Factual Background: 

An arbitration agreement was entered into between the parties. Accordingly, the President of the Respondent appointed the sole Arbitrator.  It was the contention of the learned Counsel for the Petitioner that the Arbitrator had wrongly recorded that the Petitioner had no objection to the constitution of the arbitral Tribunal. When the Petitioner sought a disclosure, the Arbitrator replied saying that the requirement of disclosure under Schedule VI of the Act is not necessary as the requirement only arises when the Tribunal had any kind of relationship with either of the parties. However, such a situation did not arise as the Arbitrator was under no disability mentioned in Schedules V and VII of the Act. Hence, the Petitioner challenged the mandate of the Arbitrator before the court.

 Issue: 

Whether thedisclosure by an arbitral Tribunal under Schedule VI is necessary if the arbitral Tribunal has no disability under Schedules V and VII of the Act?

Analysis: 

With regard to the non-disclosure, the court observed that the Arbitrator had disclosed the major requirement under the Schedule and hence, the Arbitrator must be under the misconception that he was not required to make any disclosure under Schedule VI. The court disposed the Petition with a direction to the Arbitrator to make the Schedule VI disclosure within one week of communication of the Order.

As far as the challenge to the power of the President of the Respondent to appoint the Arbitrator was concerned, the court did not find any merit in the same. The court relied on the decision of Bhayana Builders Pvt. Ltd. v. Oriental Structural Engineering Pvt. Ltd.[1]to reach this conclusion.

Conclusion:

The Order clarifies that the requirement of disclosure is mandatory even if the Arbitrator is not disqualified under Schedules V and VII of the Act. Through this Order, the court has reiterated the importance of procedural compliance.

[1]249 (2018) DLT 619

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