HRD CORPORATION (MARCUS OIL AND CHEMICAL DIVISION) versus GAIL (INDIA) LIMITED (FORMERLY GAS AUTHORITY OF INDIA LTD.)

Citation: [2017] 11 S.C.R. 857 · Decided: 31-08-2017 · Supreme Court of India · Bench: R.F. NARIMAN · Disposal: Dismissed

Cited by 6 judgment(s) · cites 3 · see the full citation network in Lexace

Judgment (excerpt)

(2017] 11 S.C.R. 857 
HRD CORPORATION 
A 
(MARCUS OIL AND CHEMICAL DIVISION) 
v. 
GAIL (INDIA) LIMITED 
(FORMERLY GAS AUTHORITY OF INDIA LTD.) 
B 
(Civil Appeal No. 111'.f6 of2017) 
AUGUST 31, 2017 
[R. F. NARIMAN AND SANJAY KISHAN KAUL, JJ.] 
C , 
Arbitration and Conciliation Act, 1996 - ss. 12, 14 - Grounds 
of challenge uls.12 - Challenge to persons' possible appointment 
as an arbitrator - Held: When person is approached in connection 
with his possible appointment as an arbitrator, he has to make a D 
disclosure in writing, as to existence of any direct or ind{rect present 
or past relationship or interest in the parties/dispute, which is likely 
to give justifiable doubts as to his independence or impartiality -
Such disclosure is to be made iii a form specified in Vlth Schedule, 
guided by grounds. stated in Vth Schedule - By 2016 Amendment 
Act, a dichotomy is made between persons who become "ineligible" 
to be appointed as arbitrators, and persons about whom justifiable 
doubts exist as to their independence or impartiality - s. 12(5) r/w 
Vllth Schedule makes' it clear that if the arbitrator falls in any one 
of the categories specified in VI/th· Schedule, he becomes 
"ineligible". to act as arbitrator - On facts, challenge to appointment 
· of two arbitrators-Justice 'D' and Justice 'L' as hit by Vth and VI/th 
Schedule - As regards Justice 'D', he having already rendered an 
award in a previous arbitration between the parties would not, by 
itself, on the ground of reasonable likelihood of bias, render him 
ineligible to be an arbitrator in a subsequent arbitration - Justice 
'D' had no previous involvement in the very dispute - As regards, 
Justice 'L', he has only given a professional opinion to a company, 
which has no concern with the instant dispute, he is clearly not 
disqualified - Thus, challenge to the appointment as arbitrator not . 
sustainable - Arbitration and Conciliation (Amendment) Act; 2015 
- s. 12(5). 
857 
F 
G 
H 
• 
858 
SUPREME COURT REPORTS 
[2017] l 1 S.C.R. 
A 
Dfomissing the appeals, the Court 
B 
c 
HELD: 1.1 Under Section 12 of the Arbitration and 
Conciliation Act, 1996, it is clear that when a person is approached 
in connection with his possible appointment as an arbitrator, he 
has to make a disclosure in writing, in which he must state the 
existence of any direct or indirect present or past relationship or 
interest in any of the parties or in relation to the subject matter 
in dispute, which is likely to give justifiable doubts as to his 
independence or impartiality. He is also to disclose whether he 
can devote sufficient time to the arbitration, in particular to be 
able to complete the entire arbitration within a period of 12 
months. Such disclosure is to be made in a form specified in the 
Sixth Schedule, grounds stated in the Fifth Schedule being a guide 
in determining whether such circumstances exist. Unlike the 
scheme contained in the IBA Guidelines, where there is a non-
waivable Red List, parties may, subsequent to disputes having 
D arisen between them, waive the applicability of the items 
contained in the Seventh Schedule by an express agreement in 
writing. [Para 12] [868-G-H; 869-A-C] 
1.2 After the 2016 Amendment Act, a dichotomy is made 
by the Act between persons who become "ineligible" to be 
E 
appointed as arbitrators, and persons about whom justifiable 
doubts exist as to their independence or impartiality. Since 
ineligibility goes to the root of the appointment, Section 12(5) · 
read with the Seventh Schedule makes it clear that ifthe arbitrator 
falls in any oue of the categories specified in the Seventh Schedule, 
F 
he becomes "ineligible" to act as arbitrator. Once be becomes 
ineligible, it is clear that, under Section 14(1)(a), he then becomes 
de jure unable to perform bis functions inasmuch as, in law, be is 
regarded as "ineligible". In order to determine whether an 
arbitrator is de jure unable to perform his functions, it is not 
necessary to go to the Arbitral Tribunal under Section 13. Since 
G such a person would lack inherent jurisdiction to proceed any 
further, an application may be filed under Section 14(2) to the 
Court to decide on the termination of his/her mandate on this 
ground. As opposed to this, in a challenge where grounds stated 
in the Fifth Schedule arc disclosed, which give rise to justifiable 
H 
doubts as to the arbitrator's independence or impartiality, such 
HRD CORPORATION 
v. GAIL (INDIA) LIMITED 
859 
dou

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