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HIGH COURT OF DELHI
Date of Decision: 15.09.2025
NATIONAL FEDERATION OF TOURISM AND TRANSPORT COOPERATIVES OF INDIA LIMITED & ANR. .....Petitioners
Through: Mr. Ankur Arora, Advocate, Mr. Shrey Chathly and Ms. Srishti Sharma, Advs.
Through: Mr Rohit K. Yadav, Adv. for R1-2 Mr. Udit Arora, Adv for R11
Allowed subject to all just exceptions.
The application stands disposed of.
JUDGMENT
1. This is a petition filed under section 34 of the Arbitration and Conciliation Act, 1996 (“1996 Act”) seeking to challenge the Award dated 09.08.2022 passed by the Sole Arbitrator.
2. The brief facts are that the petitioner No.1 is a cooperative organisation actively engaged in developing tourism and transport industry in India. The petitioner No. 2 was the Chairman of the petitioner No.1. The respondent No. 1 is the member of the petitioner No. 1 and the respondent No. 2 is the alleged Chairman of the respondent No. 1. The respondent No. 3 is the Returning Officer, who conducted elections of the Board of Directors of the petitioner No. 1 on 17.01.2022 and inducted respondent Nos. 4 to 17 to the Board of Directors of the petitioner No. 1.
3. Aggrieved by the said elections, the respondent Nos. 1 and 2 filed a petition under section 84 of the Multi State Cooperative Societies Act, 2002 which was referred to the Sole Arbitrator by the Registrar of the Cooperative Societies.
4. The petitioner No. 1 moved an application under section 12(3) and 13 of the 1996 Act before the Sole Arbitrator which was orally rejected on 09.08.2022. On the same date, the Sole Arbitrator passed the impugned Award declaring the election conducted on 17.01.2022 of the Board of Directors of the petitioner No. 1 as null and void, which is under challenge in the present petition.
5. Since the petitioner No. 1 was aggrieved in the manner of conducting the arbitration proceedings, the petitioner filed a petition under section 14 and 15 of the Arbitration and Conciliation Act, 1996 being O.M.P. (T) 7 of 2022 before this Court which was subsequently withdrawn.
6. Mr. Arora, learned counsel for the petitioner only raises one issue which is that no declaration under section 12 of the 1996 Act was given by the Sole Arbitrator prior to or during the arbitration proceedings.
7. Mr. Yadav, learned counsel for the respondent Nos. 1 and 2 accepts the factual position that no prior declaration or any declaration under section 12 of 1996 Act was given by the Sole Arbitrator.
8. In Bharat Broadband Network Ltd. v. United Telecoms Ltd., (2019) 5 SCC 755, the Hon’ble Supreme Court has observed that if the Arbitrator fails to file disclosure in terms of section 12(1) read with Fifth Schedule of 1996 Act, the remedy of the party, post Award, would be to apply under section 34 of 1996 Act to the Court to set aside the Award. Relevant paragraph is extracted below:
13(2). What is important to note is that the arbitral tribunal must first decide on the said challenge, and if it is not successful, the tribunal shall continue the proceedings and make an award. It is only post award that the party challenging the appointment of an arbitrator may make an application for setting aside such an award in accordance with Section 34 of the Act.”
9. The Division Bench of this Court in Ram Kumar v. Shriram Transport Finance Co. Ltd., 2022 SCC OnLine Del 4268 and more particularly in paragraphs 22, 23 and 24 observed as under:-
disclosure is not mandatory.
24. This Court is of the view that the requirement of making a disclosure is a necessary safeguard for ensuring the integrity and efficacy of an arbitration as an alternate dispute resolution mechanism and is not optional.”
10. From the aforesaid judgments, it is evident that a declaration mandated under section 12 of 1996 Act is a necessary safeguard for ensuring integrity and efficacy of the arbitral mechanism. Non-furnishing of a declaration vitiates the Arbitral Award and the Award so pronounced is void ab initio.
11. Since, the Award is liable it be set aside on this ground alone, I need not dwell into the merits of the Award. Consequently, the petition needs to be allowed.
12. The petitioner No. 2 and the respondent Nos. 1 and 2 agree that since there are disputes subsisting between the parties, the Sole Arbitrator may be appointed by this Court.
13. For the said reasons, the petition is allowed and with consent of the parties, the following directions are issued:i) Mr. Asheesh Jain, Senior Advocate (Mob. No. 9999822288) is appointed as a Sole Arbitrator to adjudicate the disputes between the parties. ii) The arbitration will be held under the aegis and rules of the Delhi International Arbitration Centre, Delhi High Court, Sher Shah Road, New Delhi (hereinafter, referred to as the ‘DIAC’). iii) The Sole Arbitrator is requested to furnish a declaration in terms of section 12 of the 1996 Act prior to entering into the reference. iv) It is made clear that all the rights and contentions of the parties including as to the arbitrability of any of the claim, any other preliminary objection, as well as claims/counterclaims and merits of the dispute of either of the parties, are left open for adjudication by the learned arbitrator. v) The parties shall approach the Arbitrator within two weeks from today.
14. Since it is an election matter and the subject matter is incapable of monetary quantification, the Sole Arbitrator shall fix his own fees.
15. With these directions, the petition is hereby disposed of.