AIR 2017 SC 939 ::2017 (2) ADR 471 ::(2017) 2 ArbiLR 1 ::2017 (4) SCC 665 ::(2017) 2 Scale 335 ::2018 (127) ALR SOC 8 (SC) ::(2017) 6 Mah LJ 1 ::(2017) 3 Mad LJ 153 ::(2017) 2 KCCR 166 ::(2017) 173 AllIndCas 129 (SC)

Supreme Court Of India

Hon'ble Judge(s): A. K. Sikri, R. K. Agrawal , JJ

(A) Arbitration and Conciliation Act (26 of 1996) , S.12(5)— Object - Section brings in condition of neutrality in appointment of arbitrator - Independence and impartiality is rule against bias - Non-obstante clause gives power to court to appoint arbitrator if arbitrator agreed to by parties falls in any category mentioned in Sch. 7. Independence and impartiality are hallmark of any arbitration proceedings. Rule against bias is one of fundamental principles of natural justice which applies to all judicial and quasi judicial proceedings. Main purpose for amending provision was to provide for neutrality of arbitrators. In order to achieve this S. 12(5) lays down that notwithstanding any prior agreement to the contrary any person whose relationship with parties or counsel or subject-matter of dispute falls under any of categories specified in Sch. 7, he shall be ineligible to be appointed as arbitrator. In such eventuality appointment would be beyond pale of arbitration agreement, empowering court to appoint such arbitrator as may be permissible. That would be effect of non-obstante clause in S. 12(5). The genesis behind this rational is that even when an arbitrator is appointed by parties to contract, he is independent of parties. Functions and duties require him to rise above partisan interest of parties and not to act in or so as to further particular inter....