Judgment :- 1. This O.P. has been filed, under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter called 'the Act') to set aside the award passed by the sole arbitrator, the 2nd respondent, dated 8.10 2003. 2. The 1st petitioner was engaged in the production and export of compressed precision moulded rubber products. The 2nd respondent (arbitrator) was inducted as a director in the board of the 1st petitioner. The entire unit was looked after by the 2nd respondent arbitrator who had also appointed his brother Mr. P.V. Balakrishnan as Chief Executive Officer of the company. The 2nd respondent and the said P.V. Balakrishnan were in charge of the day‑to‑day activities of the 1st petitioner's company. 3. An agreement was entered into on 23.12.1998 between the petitioners and the 1st respondent towards consultancy services for the management of the production unit of the company. The petitioners incurred heavy loss in the business and the unit was closed. By notice dated 28.12.2002 the 1st Respondent sought consent of the petitioners to appoint 2nd respondent as sole arbitrator. No consent, was given by the petitioners. But the 2nd respondent proceeded with the arbitration proceedings and therefore the petitioners filed their written statements for the challenge to the appointment of 2nd respondent as arbitrator. It is the 2nd respondent who had executed the agreement dated 23.12.1998 and the 2nd respondent was forced to resign from the petitioners' company due to various reasons and the 2nd respondent was not having good relationship with the petitioners. But the 2nd respondent, without passing any written order on the objections filed by the petitioners continued to act as arbitrator and passed the impugned award ex parte. Challenging the award dated 8.10.2003 this O.P. has been filed under Section 34 of the Act. 4. But the 2nd respondent, without passing any written order on the objections filed by the petitioners continued to act as arbitrator and passed the impugned award ex parte. Challenging the award dated 8.10.2003 this O.P. has been filed under Section 34 of the Act. 4. The petitioners have raised the following grounds challenging the award: (i) the second respondent has not considered the challenge to the arbitral tribunal made by the petitioners on the ground of questioning his independence or impartially; (ii) the second respondent has not followed the procedure of the Arbitration and Conciliation Act, 1996 and was under incapacity to act as arbitrator since the petitioners have not given their consent; (iii) the petitioners were unable to present their case; (iv) the second respondent ought not to have initiated the arbitration proceedings since the petitioners had not given their consent for his appointment as arbitrator; (v) the second respondent has not followed the provisions of the Arbitration and Conciliation Act, 1996 before passing the impugned award. The petitioner No.2 viz., Mr. S.M. Shroff was never a party to the arbitration agreement and even then the learned arbitrator proceeded to pass an award against him and thus there is ample proof that the arbitrator has not only acted in a biased manner but also contrary to the principles of natural justice; (vi) the second respondent has erroneously held that the plea of the petitioners in the written statement are frivolous and flimsy. Before proceeding with passing the final award it was incumbent upon the arbitrator to have first considered the written statement filed by the petitioners inter alia challenging the jurisdiction and without determination thereof the arbitrator could not have proceeded in passing the final ward; (vii) It is submitted that under Section 12 of the Arbitration and Conciliation Act, 1996, the second respondent should have disclosed in writing any circumstances likely to give rise to justifiable doubts as to his independence or impartially. It was never made clear and/or disclosed that in view of the provisions of Section 12 the petitioner had submitted to the arbitrator that he had no jurisdiction to proceed in the matter. 5. The 1st respondent entered their appearance through their counsel and contested the matter. 6. The 2nd respondent arbitrator has entered appearance and filed a counter. It was never made clear and/or disclosed that in view of the provisions of Section 12 the petitioner had submitted to the arbitrator that he had no jurisdiction to proceed in the matter. 5. The 1st respondent entered their appearance through their counsel and contested the matter. 6. The 2nd respondent arbitrator has entered appearance and filed a counter. In the counter, the 2nd respondent arbitrator has stated that the signing of the agreement on behalf of the 1st petitioner‑company by the 2nd respondent cannot be a ground for alleging bias. The 1st respondent by notice dated 28.12.2002 intimated the petitioners about the appointment of second respondent as sole arbitrator and his notice was received by the petitioners. As they did not object to the appointment of 2nd respondent as arbitrator, it was presumed that they have no objection at all. The 2nd respondent by notice dated 14.4.2003 intimated the petitioners regarding the entering upon the reference, the dates for filing the claim petition and the reply thereto and the first hearing of the proceedings. But the petitioners did not object to the appointment of 2nd respondent till 25.7.2003, on that day only, the petitioners challenged the arbitration by filing written statement which is belated and cannot be looked into. It is further stated by the arbitrator in his counter that under Section 13 of the Act, the parties who intend to challenge the arbitrator shall send a written statement of challenge within 15 days after becoming aware of the constitution of the arbitral tribunal. Therefore the petitioners have waived their right under Section 4 of the Act 1996. The arbitrator further stated that Section 11 of the Act is not violated and it is not necessary for the arbitrator to disclose anything in writing regarding the independence and impartiality of the arbitrator. With these averments, the 2nd respondent prayed for dismissal of the above petition. 7. Heard the learned counsel appearing for the parties and perused the documents filed in support of their submissions. 8. It is admitted by both parties that 2nd respondent arbitrator was once the director of the 1st petitioner company and in fact admitted by 2nd respondent himself in his counter that he only signed the agreement dated 23.12.1998, containing the arbitration clause entered into between the petitioners and the 1st respondent. It is also admitted that his brother Mr. 8. It is admitted by both parties that 2nd respondent arbitrator was once the director of the 1st petitioner company and in fact admitted by 2nd respondent himself in his counter that he only signed the agreement dated 23.12.1998, containing the arbitration clause entered into between the petitioners and the 1st respondent. It is also admitted that his brother Mr. P.V. Balakrishnan was the CEO of the company when the 2nd respondent was the Director of the company. In such circumstances, I am of the view that it is not fair and proper for the 2nd respondent to give consent for his appointment as sole arbitrator to resolve the dispute arose between the company in which he was a Director and 1st respondent with whom the 2nd respondent entered into agreement in the capacity of the Director on behalf of 1st petitioner‑company. But very curiously the 2nd respondent has chosen to accept the appointment. The 2nd respondent has also strangely filed a counter before this Court vehemently opposing the setting aside petition filed under Section 34 of the Act when the 1st respondent‑company itself did not come forward to file a counter. Therefore, I find force in the submission of the learned counsel for the petitioners that 2nd respondent should have terminated the arbitration proceedings once the objection was filed against him challenging his appointment instead of taking technical plea that the objection was not filed within 15 days. 9. In this context it is necessary to extract Section 13 of the Act: "13. Challenge procedure. (1) Subject to sub‑section (4), the parties are free to agree on a procedure for challenging an arbitrator. (2) Failing any agreement referred to in sub‑section (1), a party who intends to challenge an arbitrator shall within fifteen days after becoming aware of the constitution of the arbitral tribunal or after becoming aware of any circumstances referred to in sub‑section (3) of Section 12, send a written statement of the reasons for the challenge to the arbitral tribunal. (3) Unless the arbitrator challenged under sub‑section (2) withdraws from his office or the other party agrees to the challenge, the arbitral tribunal shall decide on the challenge. (4) If a challenge under any procedure agreed upon by the parties or under the procedure under sub‑section (2) is not successful, the arbitral tribunal shall continue the arbitral proceedings and make an arbitral award. (4) If a challenge under any procedure agreed upon by the parties or under the procedure under sub‑section (2) is not successful, the arbitral tribunal shall continue the arbitral proceedings and make an arbitral award. (5) Where an arbitral award is made under sub‑section (4), the party challenging the arbitrator may make an application for setting aside such an arbitral award in accordance with Section 34. (6) Where an arbitral award is set aside on an application made under sub‑section (5) the Court may decide as to whether the arbitrator who is challenged is entitled to any fees. 10. It is true that as per Section 13(2) challenging an arbitrator is to be done within 15 days after becoming aware of the constitution of the tribunal. But sub‑clause (2) does not stop there. It further says that challenge can be made after becoming aware of any circumstances referred to in sub‑section (3) of Section 12. Therefore I am of the opinion that the petitioners' objection should not have been rejected by the 2nd respondent on the ground of limitation, since the petitioners can also challenge the arbitrator on the basis of the circumstances referred to in sub‑section (3) of Section 12, the petitioners' objection should have been taken on file and decided on merits by passing a considerate order as per sub‑section (3) of Section 13 The circumstances referred to under sub‑section (3) of Section 12 are extracted below: "12 Grounds for challenge. (1) .......... (2) .......... (3) An arbitrator may be challenged only if­ (a) circumstances exist that give rise to justifiable doubts as to his independence or impartiality, or (b) he does not possess the qualification agreed to by the parties." 11. In the above matter, the 2nd respondent arbitrator has not passed any separate order on the objections challenging his appointment. Only in the award, he dealt with the objections, that too, without containing reasons. All he could say for the objections is that under the facts and circumstances, the challenge is not tenable and it is frivolous, flimsy and or at best nothing but mere suspicion. This, in my view, is not in consonance with the provisions of Section 13 and the object and spirit of the Act. 12. All he could say for the objections is that under the facts and circumstances, the challenge is not tenable and it is frivolous, flimsy and or at best nothing but mere suspicion. This, in my view, is not in consonance with the provisions of Section 13 and the object and spirit of the Act. 12. Even otherwise, the 2nd respondent is also guilty of violating the provisions of sub‑section (1) of Section 12, according to which, a person who is approached for appointing him as an arbitrator shall disclose in writing any circumstances likely to raise justifiable doubts as to his independence and impartiality. The 2nd respondent was a Director of the 1st petitioner‑company and his brother was the CEO at that time. The 2nd respondent has also signed the agreement entered into between the petitioner and the 1st respondent and in such, circumstances the duty is cast upon him to disclose in writing about his and his brother's involvement in the petitioners' company and the role played by them in the business activity of the 1st respondent and the petitioners. By not doing so, the 2nd respondent has himself put him in a position in which it is very difficult for him to come out unscathed. At least he should have disclosed to the parties in writing about the involvement and the role played by him in the affairs of the 1st petitioner's company and 1st respondent as per sub‑section (2) of Section 12. 13. I am also in agreement with the submissions of the learned counsel for the petitioners, that the appointment of 2nd respondent itself is in violation of sub‑section (5) of Section 11 of the Act. Section 11 of the Act deals with appointment of arbitrator which is extracted below: "11. Appointment of arbitrators. (1) .......... (2) Subject to sub‑section (6), the parties are free to agree on a procedure for appointing the arbitrator or arbitrators. …… ……. (5) Failing any agreement referred to in sub‑section (2), in an arbitration with a sole arbitrator, if the parties fail to agree on the arbitrator within thirty days from receipt of a request by one party from the other party to so agree the appointment shall be made, upon request of a party, by the Chief Justice or any person or institution designated by him." 14. As per sub‑section (5) if the parties fail to agree for arbitrators within 30 days, the appointment shall be made, upon request of a party, by the Chief Justice or any person or institution designated by him. 15. In this case, the 1st respondent issued a notice dated 28.12.2002 calling upon the petitioners to concur for the appointment of 2nd respondent as the sole arbitrator. It is not disputed that any consent was given within 30 days from the date of receipt of this notice dated 28.12.2002 and in such circumstances the 1st respondent should have approached the Chief Justice for appointment of arbitrators. It is also made clear that clause 8 of the agreement dated 23.12.1998 does not confer any power or any right on 1st respondent to appoint an arbitrator unilaterally. Therefore second respondent has been foisted on the petitioners by 1st respondent against their wish and without their consent. 16. The bonafide of the petitioners is also proved in this case because after filing their objections questioning the appointment of the arbitrator and requesting for the termination of the proceedings, they walked out of the proceedings and did not participate further in the proceedings. 17. In the light of the above factual and legal position, I am constrained to hold that the award passed by 2nd respondent is vitiated, warranting interference by this Court. Hence the same is set aside and the above O.P. is allowed. No costs.