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ORDINARY ORIGINAL CIVIL JURISDICTION
COMMERCIAL ARBITRATION APPLICATION (L) NO.8657 OF 2024
Kalyani Aditya Mineral Limited ...Applicant
Mr. Ashutosh Kulkarni i/b. Gaurav Sharma, Advocate for Applicant.
Ms. Ankita Singhania a/w. Abhileen Chaturvedi, Tushar Karkaria &
Mr. Sparsh Khosla i/b. Cyril Amarchand Mangaldas, Advocate for
ORAL JUDGMENT
1. Both these Applications have been filed invoking Section 14 of the Arbitration and Conciliation Act, 1996 (“the Act”). Each Application challenges the mandate of the respective arbitrator appointed in the underlying proceedings.
2. The parties to the two arbitral proceedings (and to these Applications) are identical – the Applicant, Kalyani Aditya Mineral Ltd. (“Kalyani Aditya”) and Aditya Birla Group Trading (India) Pvt. Ltd. (“Aditya Birla Trading”) FEBRUARY 10, 2025 Aarti Palkar
3. The proceedings are being conducted at the Mumbai Centre for International Arbitration (“MCIA”), in terms of the agreed arbitration clause in their agreements, by which the parties had agreed to subject their disputes to resolution at the MCIA.
4. The two Applications are (i) Commercial Arbitration Application
(L) No.8657 of 2024; and (ii) Commercial Arbitration Application (L)
5. Learned Counsel for Kalyani Aditya primarily presses into service an internet search result that is appended to Commercial Arbitration Application (L) No.8657 of 2024 at Exhibit AA (Page 514) as the basis for the challenge. The challenge to the arbitrator is based on the premise that when Kalyani Aditya did a Google search of the Learned Arbitrator’s name along with the name of law firms and their partners who are on the Governing Council of the MCIA, the search results when “Rohit Gandhi” and “Shardul” were searched for, returned two summarised entries on the Google page.
6. The Google search led to two results, based on which it is alleged that the Learned Sole Arbitrator (Mr. Rohit Gandhi) is associated with a law firm titled Shardul Amarchand Mangaldas, whose Managing Partner Ms. Pallavi Shroff represents other companies in the Aditya Birla Group in various Courts, and is on the Governing Council of the MCIA.
7. Therefore, the allegation is that the MCIA has selected an Arbitrator, who is an associate of a law firm whose Managing Partner is involved in the governance of MCIA and whose law firm represents various affiliates of Aditya Birla Trading.
8. The crux of the contention is contained in Paragraph 4.25 and
4.26 which are set out in Pages 47 and 48 of the Application, and are reproduced below:-
4.25 It has also come to the knowledge of the Petitioner from Page no. 6 of the journal published by MCIA regarding ADR week 2023 as conducted on 10.10.2023 that one of the event sponsors was Shardul Amarchand Mangaldas (a law firm in which one of the members of the council of MCIA i.e. Ms. Pallavi Shroff is a managing partner). Admittedly, the seminar of MCIA received sponsorship from Shardul Amarchand Mangaldas (a law firm in which one of the members of the council of MCIA i.e. Ms. Pallavi Shroff is a managing partner) and the said law firm providing legal services to the affiliates of Respondent no.1 company in various courts. Interrelated associations among the MCIA Council member, Respondent no.1 and its affiliates raise justifiable doubts as to the independence or impartiality of the Learned Arbitrator which has been appointed by Respondent no.3. Copy of Page no. 6 of the journal published by MCIA regarding ADR week 2023 as conducted on 10.10.2023 is enclosed as Exhibit - “Z”. Needless to say, Shardul Amarchand Mangaldas (a law firm in which one of the members of the council of MCIA i.e. Ms. Pallavi Shroff is a managing partner) served not only as consultants/advisors to affiliates of Respondent no. l & its affiliates but also sponsored the seminars of MCIA for their professional benefits. It is thus evident that the law firm of one of the members of the MCIA Council is actively representing the parent company and affiliates of Respondent no.1 namely, Aditya Birla, it is simultaneously engaged in the direct appointment of the Sole Arbitrator for the same Respondent no.1, overseeing the adjudication through its own appointed arbitrator.
4.26 From the internet, it was found that Learned Arbitrator, Mr. Rohit Gandhi was associated with Shardul Amarchand Mangaldas (a law firm in which Ms. Pallavi Shroff was Managing Partner) who is representing affiliates of Respondent no.1 i.e. Aditya Birla in various courts. A copy screenshot is enclosed as Exhibit- “AA”. It is stated that neither the learned Arbitrator has given the mandatory declaration under Section 12(1) of the Arbitration & Conciliation Act, 1996 nor the Council of MCIA demanded such disclosure before confirming the appointment of the learned Arbitrator. Statement of consent, availability, and disclosure as provided by the learned Arbitrator does not align with the mandatory requirements of Section 12(1) of the Arbitration & Conciliation Act, 1996 which require disclosure of direct or indirect, of any past or present relationship with or interest in any of the parties or about the subject-matter in dispute, whether financial, business, professional or other kind.
9. Kalyani Aditya mounted a challenge to the appointment of the arbitrator under the challenge procedure stipulated in the MCIA Rules. The MCIA called upon the Learned Arbitrator to provide his comments, which he provided. This exchange forms part of the record. Based on the reply from the Learned Arbitrator, the MCIA too has confirmed that the Learned Arbitrator has never been an associate with the law firm Shardul Amarchand Mangaldas, and that Ms. Pallavi Shroff had no part in the sub-committee of the MCIA that is involved in selection and appointment of the arbitrator in the instant matter.
10. The most vital element is the fact that the Learned Arbitrator has no connection with Shardul Amarchand Mangaldas, of which Ms. Shroff is the Managing Partner. A bare scrutiny of Exhibit “AA” would show that the phrases that had been searched for, were “Rohit Gandhi” and “Shardul”. Such a search yielded two results, both being links to profiles on LinkedIn (a social media platform meant for professional networking). On the face of it, the first result is the LinkedIn profile of one Rohit Gandhi, who is a Partner of the firm called Gandhi & Partners. The second is linked to one Rohit Gandhi, who is shown as part of Tata AIA Life Insurance. The landing page with the Google search results (reads like head-notes of judgments) picks from the contents of what would show up in the links, in a summary form. From the summary of a link it would appear that Mr. Rohit Gandhi could be suspected of having been an associate at Shardul Amarchand Mangaldas.
11. Aditya Birla Trading has filed the actual LinkedIn profile of the Learned Sole Arbitrator in its affidavit in reply (found at Page 727 to 729). From a bare reading of the same, it would be clear that throughout the career history of the Learned Sole Arbitrator, he has not been an associate with the law firm Shardul Amarchand Mangaldas. The professional history depicted on the profile, does not have any gap since the graduation from law school in 2007. On the face of it, the Learned Sole Arbitrator has set out each of the positions occupied by him after graduation, and such listing does not disclose any association with Shardul Amarchand Mangaldas. Learned Counsel for Aditya Birla Trading submits that the LinkedIn profile is an open one and Kalyani Aditya would have had access to this content, and yet has levelled allegations in Kalyani Aditya.
12. In any case, the only relevance that Shardul Amarchand Mangaldas would bear to this matter would be the attempt to link the Learned Sole Arbitrator with any of the law firms, whose partners are on the MCIA’s Governing Council. Evidently, it is reasonable to conclude (and this was confirmed by Learned Counsel for Kalyani Aditya when asked how Kalyani Aditya went about conducting this exercise) that such a search was carried out in respect of each of the law firms whose Partners are members of the MCIA Governing Council. Only the search with “Shardul” and “Rohit Gandhi” returned the two results, which are seen in the screenshot annexed at Exhibit ‘AA’.
13. On a perusal of the material on record, it is clear to me that Mr. Rohit Gandhi is a solo practitioner in the litigation space and is not part of the law firm Shardul Amarchand Mangaldas. The MCIA, which is a reputed institutional platform for arbitration has returned the same findings upon a challenge being mounted under its own challenge procedure.
14. One of the grievances of Learned Counsel for the Petitioner is that while MCIA is happy to confirm that Ms. Shroff is not part of the sub-committee that selected the Arbitrator, the MCIA for reasons best known to it, is refraining from confirming who the members of the subcommittee were, that selected the Learned Sole Arbitrator. However, in my opinion, that line of argument does not take the case of Kalyani Aditya any farther. A challenge to the independence of an arbitrator ought to be focused and specific. The grievance about the perceived lack of transparency by MCIA may be a matter for MCIA to reflect on for commanding greater confidence to enable more commercial parties to adopt the MCIA’s rules. For purposes of the challenge under Section 14 of the Act, the alleged lacuna in the MCIA not naming who precisely took the decision to appoint the Learned Sole Arbitrator is of no consequence. It is an attempt to simply change the focus from what is necessary for the Section 14 Court to examine before deciding an arbitrator’s de jure inability to perform duties.
15. It must be remembered that the jurisdiction of this Court under Section 14 of the Act is very specific. Under Section 14(2) of the Act, only where a controversy remains in respect of any element of Section 14(1)(a), would this Court have jurisdiction to intervene. The elements involved in Section 14(1)(a) are: (i) de jure inability to perform duties;
(ii) de facto inability to perform duties; and (iii) inability of the Arbitral
16. The element of inability to function without undue delay, and the de facto inability to perform the duties are not relevant for purpose of these Applications. Essentially, the challenge is that the arbitrator is de jure unable to perform his duties because of his perceived association as discerned from the Google search summary, with a law firm whose managing partner is on the Governing Council of MCIA, thereby creating an alleged conflict of interest for the Learned Sole Arbitrator that would make him ineligible to act as an arbitrator.
17. To bring home a conclusion that an arbitrator is de jure ineligible, there has to be legal incapacity for him to perform his duties. For example, an advocate who gets elevated as a judge would be legally unable to act as an arbitrator although he may be physically able to act as such – making him de jure unable to act as an arbitrator. For other circumstances, it would be vital to attract the relationships listed in the Seventh Schedule of the Act. Seventh Schedule Analysed:
18. When specifically asked for the specific Items in the Seventh Schedule that Kalyani Aditya would invoke to be able to contend that the arbitrator is de jure unable to act, I was pointed to Items 1, 2 and 4 of the Seventh Schedule. These Items are extracted below:-
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.
4. The arbitrator is a lawyer in the same law firm which is representing one of the parties. [Emphasis Supplied]
19. A bare reading of Item 1 in the Seventh Schedule would show that for the ineligibility contained in these provisions to be attracted, the arbitrator ought to be an employee, a consultant or an advisor, or for that matter ought to have had any past or present business relationship with a party to the dispute. Admittedly no link is drawn between the arbitrator in question and any of the parties to the dispute. The purported link that has been drawn, is to a law firm whose Managing Partner happens to be on the Governing Council of the MCIA. There is nothing to show that Mr. Rohit Gandhi is an employee, consultant, advisor or has any other past or present business relationship with Aditya Birla Trading. Consequently, Item 1 of the Seventh Schedule has no application in the facts of the case.
20. Likewise, there is nothing on record to suggest that Mr. Rohit Gandhi is currently representing or advising Aditya Birla Trading or an affiliate of Aditya Birla Trading. The disclosure statement of the Learned Arbitrator is also on record and does not lead to any such inference. Consequently, Item 2 of the Seventh Schedule too has no relevance to the matter at hand.
21. Item 4 too is no assistance to Kalyani Aditya. The arbitrator is not part of the law firm that is representing Aditya Birla Trading. The suspicion is that he is an associate of a law firm that represents affiliates of Aditya Birla Trading, but is it evident that he is not an associate of such firm.
22. Learned Counsel for Kalyani Aditya has fairly stated that the linkage relied upon by Kalyani Aditya would be relevant only if one considers the representation by a law firm in which the Arbitrator works as an associate, and because that law firm has represented affiliates of Aditya Birla Trading. The linkages sought to be drawn by Kalyani Aditya are far too tenuous and remote, and worse, imagined. One could understand that there may be some scope to at least examine the relationship between Mr. Rohit Gandhi and Shardul Amarchand Mangaldas, if Mr. Gandhi had at all been an associate of Shardul Amarchand Mangaldas. Even that exercise has not yielded an outcome that would render the Learned Arbitrator de jure ineligible. For Kalyani Aditya to then switch to attacking the MCIA for not being transparent about the precise individuals who selected this arbitrator is not of any relevance to my jurisdiction under Section 14 of the Act.
23. I do not think it is even necessary to rule upon whether the ingredients of the Seventh Schedule should be read strictly (since it contains a prohibition) or purposively (because it is based on the principle of eliminating conflict of interest), in the tenuous facts relied upon in this case – based on a Google search results page that showed summaries of links to two Rohit Gandhi profiles in LinkedIn. Mr. Gandhi’s own actual LinkedIn profile is on record and therefore, I am not impressed by the extraordinary and extreme effort to cause some linkage that raises some doubts about conflict of interest.
24. Having seen the material on record including the Learned Sole Arbitrator's statement of consent, availability and disclosure under the Sixth Schedule (Page 487 of the Application) and the correspondence in which MCIA engaged in order to examine the challenge to the arbitrator mounted within the rules of the MCIA, no case is made out to attract the ineligibility contained in the Seventh Schedule of the Act.
25. Consequently, I have no hesitation in dismissing this Application as not being tenable, simply because the jurisdictional facts necessary to render the Learned Sole Arbitrator de jure unable to perform his functions, which is necessary to bring my role into play, is not found on the record. Consequently, this Application is misconceived and is hereby dismissed. Commercial Arbitration Application (L) No.7917 of 2024:
26. As regards Commercial Arbitration Application (L) No.7917 of 2024, Learned Counsel fairly states that he is not pressing any element of the Seventh Schedule, but he submits that the allegations about the arbitrator are serious – alleged misconduct including serious charges of tampering of the record.
27. Learned Counsel for Aditya Birla Trading submits that the pleadings do contain allegations about the Seventh Schedule being attracted. However, Learned Counsel for Kalyani Aditya submits that he is only pressing the allegation about tampering of the record, which is so serious that this Court cannot ignore the nature of the allegation.
28. None of these allegations, howsoever serious they may sound, are permitted by Section 14 to be brought up at this stage. The challenge before the arbitrator on the ground of partiality and lack of independence (drawn from Section 12) is required to be brought up under Section 13 before the Arbitral Tribunal. Section 13(4) of the Act is very clear in its terms i.e. that if the challenge mounted before the Arbitral Tribunal fails, the arbitral proceedings would continue and it is in the eventual possibility of a challenge under Section 34 that the issues raised in the course of a challenge under Section 14 would be available as a ground in the course of Section 34.
29. Consequently, for want of jurisdiction, there is nothing that this Court can do in respect of the allegations made in Commercial Arbitration Application (L) No.7917 of 2024. Therefore, even this Application deserves to be dismissed. An Endnote:
30. Before parting with the matter, I must state that in view of the observations made above, and being mindful of the specific jurisdiction in which this Court has considered these two Applications, no comment whatsoever is made about the veracity or the absence of it, in relation to allegations contained in these Applications or in the notes tendered today, about absence of independence or impartiality. I have restricted myself to the jurisdiction under Section 14 of the Act and to determine whether the controversy about the arbitrator being de jure unable to perform his functions, is tenable.
31. I have refrained from commenting on the issues outside Section 14 because it would be inappropriate to rule on them at this stage when it is a ground for a future challenge. More importantly, once a court holds that it does not have jurisdiction on an issue, it ought to refrain from delving into that issue.
32. With the aforesaid observations, both the applications under Section 15 are dismissed and hereby finally disposed of.
33. I am not expressing any view on costs at this stage, but leave it open to the Arbitral Tribunal to factor in the delays caused by these Applications when assessing costs in the course of making the final award.
34. All actions required to be taken pursuant to this order shall be taken upon receipt of a downloaded copy as available on this Court’s website. [SOMASEKHAR SUNDARESAN, J.]