Fifth vs. Seventh Schedule: Key Threshold for Arbitrator Challenge

Overview

The present petition is an application under Sections 14 and 15 of the Arbitration and Conciliation Act, 1996, for termination of the mandate of the Sole Arbitrator appointed earlier by the Court. The petitioner contends that because the arbitrator continued to appear as counsel against the petitioner in a number of other unrelated matters during the pendency of the arbitration itself, a conflict of interest situation arose and he thus became ineligible to act as an arbitrator. The respondent opposes the maintainability of the petition on the ground that the facts, as alleged, would come only within the ambit of the Fifth Schedule and not under the Seventh Schedule.

Facts

The arbitrator has disclosed that, during the pendency of the arbitral proceeding before him, he had appeared in four matters against the petitioner under Section 12(1). The petitioner contends this would squarely fall within Entries 15, 16, 19, and 30 of the Seventh Schedule, making his mandate fall foul of Section 12(5) and thereby getting automatically terminated under Section 14(1)(a). Furthermore, it is submitted that such a concurrency of adversarial engagement ipso facto creates non-neutrality and is thus a violation of the regime of mandatory disclosure so brought in by the 2016 Amendment. It Is further submitted that failure to disclose at the outset amounts to concealment of a material fact affecting impartiality, thus rendering the arbitrator de jure incapable of continuing.

The respondent argues that the petition is an impermissible attempt at bypassing the statutory challenge mechanism under Section 13. According to the respondent, the petitioner had invoked Section 13 already, and once that challenge had been rejected, it must now await the arbitral award and approach the Courts under Section 34, as contemplated by the statutory scheme.

Analysis and decision of the court

The Court, having pursued the amended legislative scheme in 2016 and the judicial precedents accordingly, held that there is a clear statutory distinction between matters of objective ineligibility (Seventh Schedule) and perceptive doubts (Fifth Schedule). Since the facts alleged do not squarely fall within any Seventh Schedule entry, the dispute pertains only to justifiable doubts, already adjudicated under Section 13.

Therefore, the petition under Sections 14 and 15 is held not maintainable.

Case Reference :- Srei Equipment Finance Ltd. V. Seirra Infraventure Pvt. Ltd. AP-COM 712 of 2025