Arbitrator needs to be a neutral party
Jaipur Zila Dughdh Utpadak Sahkari Sangh Limited versus M/s Ajay Sales and Suppliers Civil Appeal No. 13520 of 2021
The Hon’ble Supreme Court held that the Chairman of the Company participating in the Arbitration cannot be an arbitrator in the case of Jaipur Zila Dughdh Utpadak Sahkari Sangh Limited versus M/s Ajay Sales and Suppliers Civil Appeal No. 13520 of 2021 has held:-
” Applying the law laid down by this Court in the aforesaid decisions and considering the object and purpose of insertion of Subsection (5) of Section 12 read with Seventh Schedule to the Act, the Chairman of the petitioner Sangh can certainly be held to be ‘ineligible’ to continue as an arbitrator. Though in the Seventh Schedule the word ‘Chairman’ is specifically not mentioned at the same time it would fall in the category of Clause 1; Clause 2; Clause 5; Clause 12 which read as under: “1. The arbitrator is an employee, consultant, advisor, or has any other past or present business relationship with a party. 2. The arbitrator currently represents or advises one of the parties or an affiliate of one of the parties. 5. The arbitrator is a manager, director, or part of the management, or has a similar controlling influence, in an affiliate of one of the parties if the affiliate is directly involved in the matters in dispute in the arbitration. 12. The arbitrator is a manager, director or part of the management, or has a similar controlling influence in one of the parties.”
9.1 In that view of the matter, the Chairman who is elected member/Director of the Sangh, can certainly be said to be ‘ineligible’ to become an arbitrator as per Subsection (5) of Section 12 read with Seventh Schedule to the Act.”