Synopsis

The petitioner filed an application under Section 14 read with Section 12(5) of the Arbitration and Conciliation Act, 1996, seeking termination of the sole arbitrator’s mandate and his substitution. The dispute arose between two brothers (the petitioner and the respondent) in a family jewellery business. A third brother (Sh. Sudhir Singhal) held an equal 33.3% share in the company but was not a signatory to the arbitration agreement. The respondent filed an application to implead Sudhir Singhal and the company. The petitioner then discovered that the arbitrator had issued a cheque of Rs. 1 crore in favour of Sudhir Singhal (though the cheque was returned). The arbitrator refused to file a fresh disclosure under Section 12 of the Act and instead proceeded to decide the impleadment application under Section 16 (jurisdiction). The High Court allowed the petition, holding that the arbitrator had a financial interest/business relationship with the proposed party (Sudhir Singhal), making him de jure ineligible under Section 12(5) read with the Seventh Schedule. The court terminated the arbitrator’s mandate and appointed a substitute arbitrator.

Court: High Court of Delhi
Coram: Avneesh Jhingan, J.
Date: April 6, 2026
Citation: 2026:DHC:2840
Core Law: Arbitration and Conciliation Act, 1996 – Sections 12(5), 14, 16, Seventh Schedule; De jure ineligibility.

2. Legal Framework

• Arbitration and Conciliation Act, 1996: Sections 12(5) (ineligibility based on Seventh Schedule), 14 (termination of mandate of an arbitrator who is de jure unable to perform), 16 (competence of arbitral tribunal to rule on its own jurisdiction), 2(h) (definition of “party”).

• Seventh Schedule to the Act: Contains categories that render a person ineligible to act as an arbitrator (e.g., financial interest in the subject matter or in a party).

• Relevant Precedents:
  HRD Corporation v. GAIL (India) Limited (2018) 12 SCC 471 – an arbitrator falling in any category of the Seventh Schedule is de jure ineligible; an application under Section 14(2) can be filed to terminate the mandate.
  CORE (India) Projects Pvt. Ltd. v. UOI (2024) – disclosure under Section 12 is a continuing requirement; new circu

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