Section 12(5) of the Arbitration and Conciliation Act is Mandatory: SC

The Supreme Court in the case of ‘Haryana Space Application Centre Vs Pan India Consultancy Pvt Ltd’ held that section 12(5) of the Arbitration and Conciliation Act is mandatory. Section 12(5) of the Act deals with the ineligibility of a person for the appointment as an Arbitrator.

The Supreme Court was entertaining the plea filed by the ‘Haryana Space Application Centre’ against the order of the Haryana High Court. The Haryana High Court due to the Covid-19 granted the extension of 4 months to the parties to conclude the arguments within 3 months. And, the High Court also granted the time to the Arbitral Tribunal to pass the award.

The Judges of the Supreme Court while entertaining the plea notes that the appointment of the Principal Secretary of the Haryana as nominee Arbitrator for the “Haryana Space Application Centre’ is invalid. The point for holding the appointment invalid is that the said officer is the nodal officer of the Haryana Government hence invalid under section 12(5) of the Arbitration and Conciliation Act.

Section 12(5):

The section states that, in spite of any agreement between the parties, any person whose relationship with the parties or counsels falls under the seventh schedule, the appointment will be invalid.

Seventh Schedule:

Item 5 of the schedule talks about the arbitrator’s relation with the parties or counsels. It states that the appointment of the Arbitrator will be invalid if:

  • The arbitrator is manager or director or part of the management or
  • The arbitrator has an influencing relation with either party to the dispute.

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