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2009 DIGILAW 1563 (MAD)

VIJAYAKUMAR RAJU v. INDUSIND BANK LTD.

2009-04-30

CHITRA VENKATARAMAN

body2009
Judgment CHITRA VENKATARAMAN, J. The petitioners herein were the respondents in the proceedings before the learned arbitrator. These OPs arise out of an award dated 05.12.2005 passed in the arbitral proceedings where the petitioners are the same. The petitioners in these OPs are one and the same. The facts are identical. They relate to hire purchase agreements entered into on 29.06.2002 for hire purchase of vehicles under different agreements. The issues raised in all these OPs are one and the same. Hence, a common order is passed. For the sake of convenience, the facts in OP No. 454 of 2006 alone are referred to herein. The first petitioner herein entered into a hire purchase agreement with the first respondent on 29.06.2002 for the purchase of vehicles. The hire purchase charges under the agreement are stated to be Rs. 4,50,000 and finance charges of Rs. 1,47,420, apart from insurance premium of Rs. 20,000, totalling to a sum of Rs. 6,17,420. The said sum was to be repaid in 36 monthly instalments at Rs. 18,070 for the first instalment and Rs. 17,070 from the 2nd month to the 36th month commencing from 29.07.2002 to 29.05.2005. The second petitioner is the guarantor, guaranteeing prompt payment of the dues. The terms of the agreement are such that in the event of default committed in making the monthly payment, the petitioner was liable to pay additional finance charges at 36% per annum for the defaulted instalments. It reserved rights to the first respondent to seek possession of the vehicle to enable it to recover and have the adjustment of the outstanding amount due and payable by the first petitioner. It is not denied by the petitioner that except for making two irregular instalments, the first petitioner committed default in the future monthly instalments. Hence, on the default committed by the first petitioner, the first respondent took possession of the vehicle on 25.01.2005 and sold the same on 28.01.2005 for a sum of Rs. 2,00,000. As on 20.01.2005, the first respondent claimed that as on 28.01.2005, the amount remaining overdue was Rs. 5,30,342, towards future dues at Rs. 68,250 and additional finance charges at Rs. 1,65,339. 2,00,000. As on 20.01.2005, the first respondent claimed that as on 28.01.2005, the amount remaining overdue was Rs. 5,30,342, towards future dues at Rs. 68,250 and additional finance charges at Rs. 1,65,339. Having regard to the balance due and that the first petitioner defaulted in making the payment as per the hire purchase agreement, by notice dated 19.03.2005, the first respondent called upon the first petitioner herein to settle the balance amount due. There afterwards, on the default of the first petitioner to pay the balance, the first respondent invoked the arbitration clause under the agreement. The first petitioner objected to the appointment of the arbitrator contending that after crediting the sale proceeds of the vehicle, the first respondent had agreed to a one-time settlement. Hence, on the adjustment, there remained no amount due and consequently, there existed no dispute or difference to be referred to arbitration, nor an agreement to that effect. The first petitioner took the view that the first respondent could no longer make a claim on the basis of the hire purchase agreement. However, the first respondent made a claim for Rs. 7,82,571. After giving credit to the sale proceeds of a sum of Rs. 2,00,000, the first respondent prayed for an award to be passed for Rs. 5,10,858 with interest payable at 36% per annum from 28.01.2005 till the date of payment in terms of Clause 12 of the hire purchase agreement. Learned arbitrator passed an award on 05.12.2005 for a sum of Rs. 5,11,932. Aggrieved by the said, award, the present petition under Section 34 of the Arbitration and Conciliation Act, 1996 is filed by the borrower. The petitioner challenges the award on the ground of arbitrariness, opposed to public policy and vitiated by non-application of mind. Apart from this, the petitioner also contends that as the arbitrator had not made a disclosure of his interest, as provided for under Section 12 of the Arbitration and Conciliation Act, 1996, the award has to be set aside. The petitioner contends that the requirement of Section 12 as to the arbitrator declaring his neutrality is a non-derogable one. The petitioner submitted that there existed justifiable doubts as to the impartiality and independence of the arbitrator appointed unilaterally by the first respondent. On merits, the petitioner submitted that the learned arbitrator had failed to decide as to how the first respondent was entitled to the amount claimed. The petitioner submitted that there existed justifiable doubts as to the impartiality and independence of the arbitrator appointed unilaterally by the first respondent. On merits, the petitioner submitted that the learned arbitrator had failed to decide as to how the first respondent was entitled to the amount claimed. The petitioner also pointed out that there were variations in the calculation between the amount claimed in the claim petition and in the statement. Consequently, both on the aspect of non-application of mind as well as the non-disclosure or disclaimer of interest as provided under Section 12 of the Act, the award is liable to be set aside. A perusal of the award passed by the learned arbitrator shows that the learned arbitrator was appointed in terms of Clause 26 of the hire purchase agreement dated 29.06.2002 to adjudicate on the disputes. After going through the various clauses in the hire purchase agreement, learned arbitrator rejected the preliminary objection of the first petitioner as to the absence of consent on the appointment of the learned arbitrator. Learned arbitrator further pointed out that in the absence of any material to prove the claim of the petitioner as to the one-time settlement reached on the sale of the vehicle, the invoking of the arbitration clause was valid. In its proceedings dated 03.10.2005, the tribunal rejected the said objections. The matter stood adjourned to 07.11.2005 and again to 05.12.2005. Except for sending a letter that the arbitrator could not decide the dispute, no proof affidavit was filed. In the circumstances, learned arbitrator formulated the following questions of law : (a) Whether claimant and the respondents have entered into any agreement and whether the claimant is the owner of the vehicle ? (b) Whether the respondents have made any defaults as envisaged ? (c) Whether the claimant is entitled to receive the claim sum as prayed for in the claim petition and whether the respondent is entitled for his counter-claim ? As to the first issue, learned arbitrator pointed out that the first respondent had produced the documents relating to the agreement and the statement of accounts, which clearly proved that the first petitioner committed default in paying the instalments. Learned arbitrator pointed out that the first respondent had maintained their accounts in their regular course of business and all payments were duly accounted for in the accounts. Learned arbitrator pointed out that the first respondent had maintained their accounts in their regular course of business and all payments were duly accounted for in the accounts. Considering the loss on the sale of the re-possessed vehicle and amount still remaining payable, the tribunal held that under Clause 12 of the hire purchase agreement, the first respondent was entitled to the award as prayed for. Thus, rejecting the preliminary objection taken as to the jurisdiction of the learned arbitrator, on merits, the award was made in favour of the first respondent. Learned counsel for the petitioner reiterated her contention that the learned arbitrator had no jurisdiction to decide on a matter which was already settled as one-time settlement. Hence, in terms of Clause 12, learned counsel for the petitioner pleads that the award is liable to be set aside. She pointed out that considering the need for maintaining a fair and full disclosure by the learned arbitrator as per Section 12 of the Act, to maintain the confidence of the parties in the proceedings, the second respondent, learned arbitrator, ought to have complied with the requirements under Section 12 of the Arbitration and Conciliation Act, 1996. She submitted that immediately on the appointment of the learned arbitrator, the first petitioner herein sent a petition informing the learned arbitrator that on the seizure of the vehicle, the respondent had promised to close the account as no amount was due. Hence, as the agreement stood cancelled by the acceptance of the same as one-time settlement, there was no agreement to refer the dispute to arbitration, much less a dispute to refer to arbitration. Hence, the reference is not consensual and it is an unilateral reference. Consequently, the first petitioner issued notice to the second respondent herein to withdraw from the arbitral proceedings. The first petitioner also sent a petition on 25.04.2005, referring to the letter dated 04.04.2005 that they had already intimated the learned arbitrator and the first respondent that the petitioner had not given any consent for the appointment of the arbitrator to decide the dispute. Hence, the learned arbitrator was requested to decide this as a preliminary issue. Again, on 21.09.2005, learned counsel for the petitioners sent a letter to the learned arbitrator, requesting him to give his decision on the question of jurisdiction. Hence, the learned arbitrator was requested to decide this as a preliminary issue. Again, on 21.09.2005, learned counsel for the petitioners sent a letter to the learned arbitrator, requesting him to give his decision on the question of jurisdiction. She referred to Section 4 of the Arbitration and Conciliation Act, 1996 only to impress on the fact that considering the nature of proceedings before the learned arbitrator, Section 12 is not a derogable one. In this connection, she referred to the decision in Narayan Prasad Lohia v. Nikunj Kumar Lohia and others, AIR 2002 SC 1139 = (2002) 3 SCC 572 = 2002 (1) Arb. LR 493 (SC), particularly to paragraph 9. She also referred to the decisions in Alcove Industries Ltd. v. Oriental Structural Engineers Ltd. and another, 2008 (1) Arb. LR 393 (Del.); Rishi Electricals (P) Ltd. v. H.P. State Electricity Board, 2006 (Suppl.) Arb. LR 498 (HP); Aoki India Limited and another v. Mira International and another, 2006 (3) Arb. LR 503 (Mad.); Murlidhar Roongta and others v. S. Jagannath Tibrewala and others, 2005 (1) RAJ 278 (Bom.) = 2005 (1) Arb. LR 103 (Bom.) as well as to the extract from the book "The Law and Practice of Arbitration and Conciliation" by O. P. Malhotra - First Edition, as to the scope of Section 12 and the duty of the arbitrator to make disclosure therein, as required under the Act, that when there are justifiable doubts as to the independence and impartiality of the arbitrator by reason of his non-disclosure of the vital information as to his impartiality, the award is liable to be set aside. Per contra, learned counsel for the first respondent pointed out that given the fact that the rights of the parties herein need to be decided solely on the basis of the hire purchase agreement, no exception could be taken to the appointment of arbitrator in terms of the agreement. He pointed out that having regard to the admitted fact that the first petitioner had defaulted in making the payment and that there was never a one-time settlement as alleged by the petitioners, the arbitration clause was rightly invoked. He pointed out that having regard to the admitted fact that the first petitioner had defaulted in making the payment and that there was never a one-time settlement as alleged by the petitioners, the arbitration clause was rightly invoked. He further referred to the objection taken and negatived by the learned arbitrator and pointed out that the only objection taken by the petitioner right from the beginning was that on account of the one-time settlement reached on the sale of the vehicle, the contract had come to an end and there cannot be any arbitration on a supposed dispute. Referring to the order passed on the preliminary objection by the arbitrator dated 25.07.2005, he pointed out that the matter was adjourned by the learned arbitrator for the petitioners to substantiate the claim. However, in the absence of any proof as to the one-time settlement, learned arbitrator pointed out that under Clause 26 of the hire purchase agreement, the parties had agreed to the procedure for the appointment of the arbitrator to be by the first respondent. Having thus agreed to the terms as to the appointment of the arbitrator, it is no longer open to the petitioners to contend that the appointment was unilateral. Rightly, learned arbitrator rejected the same. He also pointed out that at no point of time, the petitioners raised any doubt for questioning the independence or impartiality of the learned arbitrator. In these circumstances, referring to Section 12(3) as well as Section 13 of the Act, he pointed out that when the first petitioner had not raised any such objection as required under Section 13(2) of the Act, it is not now open to the petitioner to make a plea under Section 34 of the Act. Hence, the challenge to the award on the basis of Section 12 of the Act cannot be maintained under Section 34 of the Arbitration and Conciliation Act, 1996. Learned counsel for the first respondent placed reliance on the decisions in Narayan Prasad Lohia v. Nikunj Kumar Lohia and others (supra); BSNL and others v. Subash Chandra Kanchan and another, Civil Appeal No. 4109 of 2006 under order dated 13.09.2006 [2006 SCACTC 499 (SC) = 2006 (3) Arb. LR 603 (SC)]; Shree Subhlaxmi Fabrics Pvt. Ltd. v. Chand Mal Baradia and others, AIR 2005 SC 2161 = (2005) 10 SCC 704 = 2005 (1) Arb. LR 603 (SC)]; Shree Subhlaxmi Fabrics Pvt. Ltd. v. Chand Mal Baradia and others, AIR 2005 SC 2161 = (2005) 10 SCC 704 = 2005 (1) Arb. LR 623 (SC); Novel Granites Ltd., rep. by its Managing Director v. Lakshmi General Finance Ltd., rep. by its Deputy Manager, (2003) 2 MLJ 831 = 2003 (3) CTC 148 = 2003 (Suppl.) Arb. LR 286 (Mad.); Rail India Technical and Economic Services Limited v. Ravi Constructions and another, 2002 (1) Kar LJ 419 = 2001 (Suppl.) Arb. LR 436 (Karnt.) (DB); S.N. Malhotra and Sons v. Airports Authority of India and others, 2008 (2) Arb. LR 76 (Del.) (DB); G. Vijayaraghavan v. M.D., Central Warehousing Corporation and another, 2000 (4) RAJ 616 = 2000 (3) Arb. LR 35 (Del.); and Kitiku Imports Trade Pvt. Ltd. v. Savitri Metals Ltd., 1998 (4) Bom. CR 602 = 1999 (2) Arb. LR 405 (Bom.) in support of his contention that contrary to the assertion of the first petitioner, the right under Section 12 of the Act is a derogable one. Having regard to the scheme of the Act, in the face of Sections 12(3) and 13(2) of the Act, if the first petitioner had failed to make his objection as per Section 13(2), quite apart from the fact that there are no materials placed to substantiate the contention as to the impartiality of the arbitrator, it is not now open to the first petitioner to question the same. In support of his contention, learned counsel also referred to the decisions in State of West Bengal and others v. Sarkar and Sarkar and another, (2006) 2 Cal LT 566; Narayan Prasad Lohia v. Nikunj Kumar Lohia and others (supra); G. Vijayaraghavan v. M.D., Central Warehousing Corporation and another (supra); Ahluwalia Contracts (India) Ltd. v. Housing and Urban Development Corporation Ltd. and another, 2007 (4) Arb. LR 539 (Del.) and unreported decision in AA Nos. 79 and 80 of 2008 of the Andhra Pradesh High Court decided on 09.02.2009 - T. Srinivasa Rao v. Union of India, rep. by the General Manager, South Central Railway and others [2009 (2) Arb. LR 581 (AP)], apart from the commentaries of Law of Arbitration and Conciliation of Justice Bachawat and Law Relating to Arbitration and Conciliation by P. C. Markanda. Heard counsel for both sides. by the General Manager, South Central Railway and others [2009 (2) Arb. LR 581 (AP)], apart from the commentaries of Law of Arbitration and Conciliation of Justice Bachawat and Law Relating to Arbitration and Conciliation by P. C. Markanda. Heard counsel for both sides. Dealing with the jurisdiction of the court under Section 34, in the decision in McDermott International Inc. v. Burn Standard Co. Ltd., (2006) 11 SCC 181 = 2006 SCACTC 283 (SC) = 2006 (2) Arb. LR 498 (SC), at paragraph 52 the Hon'ble Supreme Court has held as follows : "52. The 1996 Act makes provision for the supervisory role of courts, for the review of the arbitral award only to ensure fairness. Intervention of the court is envisaged in few circumstances only, like, in case of fraud or bias by the arbitrators, violation of natural justice, etc. The court cannot correct errors of the arbitrators. It can only quash the award leaving the parties free to begin the arbitration again if it is desired. So, the scheme of the provision aims at keeping the supervisory role of the court at minimum level and this can be justified as parties to the agreement make a conscious decision to exclude the court's jurisdiction by opting for arbitration as they prefer the expediency and finality offered by it." Arbitration is a private dispute resolution mechanism agreed upon between the parties to a contract. Being a forum thus selected by the parties, the rights of the parties as to the conduct of the proceedings, the competence of the arbitral tribunal to rule on its jurisdiction, the remedy available to the party aggrieved are all provided for under the Arbitration and Conciliation Act, 1996. The whole aspect of the Act is to secure expeditious resolution of the dispute between the parties. Hence, while regulating the rights of the parties, the Act prescribes the time frame also to regulate the respective party's right to object to the constitution and jurisdiction of the tribunal and the consequences of not objecting to the same within the time frame. Keeping this in the background, the provisions of the Act relevant for the purpose of this case need to be seen. Keeping this in the background, the provisions of the Act relevant for the purpose of this case need to be seen. It is seen that the Act reserves the right to the aggrieved party to place his objection before the tribunal to adjudicate on the dispute, on the ground of absence of an agreement, as well as on grounds relating to the qualification and jurisdiction of the arbitrator to arbitrate on. The plea as to the lack of jurisdiction or authority of the arbitrator (Section 16) or a challenge to an arbitrator on grounds of justifiable doubts as to his independence or impartiality (Section 13 read with Section 12) has to be made before the arbitrator himself in the manner prescribed under the respective sections. If the arbitrator accepts the plea of lack of jurisdiction or authority, an appeal lies to the court. However, when the plea is rejected, the remedy available is to make an application for setting aside the award under Section 34 of the Act. The right thus conferred has to be exercised in terms of Sections 13, 14 and 16 of the Act failing which, the party shall be deemed to have waived his right to object under Section 4 of the Act. In this connection, we need to look at Section 4 of the Arbitration and Conciliation Act, 1996, relating to waiver of right to object, which reads as follows : "4. Waiver of right to object - A party who knows that - (a) any provision of this Part from which the parties may derogate, or (b) any requirement under the arbitration agreement, has not been complied with and yet proceeds with the arbitration without stating his objection to such non-compliance without undue delay or, if a time limit is provided for stating that objection, within that period of time, shall be deemed to have waived his right to so object." A reading of the above section shows that where a party fails to place his objection with full knowledge of the consequences, within the time specified or without any undue delay, he shall be deemed to have waived his right to so object. As far as Section 12 is concerned, it is no doubt true that the arbitrator appointed has to disclose circumstances that are likely to give rise to justifiable doubts as to his independence or impartiality. As far as Section 12 is concerned, it is no doubt true that the arbitrator appointed has to disclose circumstances that are likely to give rise to justifiable doubts as to his independence or impartiality. Sub-section (2) states that from the time of appointment, throughout the arbitral proceedings, the arbitrator has to disclose in writing any circumstances which are likely to give rise to justifiable doubts as to his independence or impartiality. The mandate to maintain impartiality and independence, hence, has to be ensured throughout the conduct of the proceedings right from the date of appointment, so that the parties who have reposed confidence in his appointment shall continue to have the same level of confidence in his neutrality in adjudicating the dispute between the parties. Hence, if the chosen arbitrator feels that there are circumstances which may give rise a justifiable doubt as to his impartiality, he has to put on notice all those circumstances, so that the parties may have their objections filed on his appointment. If any one of the parties feels that the circumstances do indicate or give rise to a justifiable doubt as to his independence or impartiality, the said party can immediately place his objection thereon, so that the arbitrator may either clear the doubt or withdraw from the arbitration. In this regard, sub-section (3) of Section 12 states that on an appointment, or in the course of the proceedings, if there are circumstances which indicate or which give rise to justifiable doubts as to his independence or impartiality or where he does not possess the qualifications agreed to by the parties, then the appointment of arbitrator could be challenged. The challenge is not restricted to the stage before the commencement of the proceedings, but open to the party entertaining a justifiable doubt to challenge the same in the course of the proceedings, if the said party becomes aware of the same after the appointment. Thus, if a party fails to register his objection, if and when they need to, as stated under Section 13(2) read with Section 12, then going by Section 4 of the Act, an aggrieved party shall be deemed to have waived his right to so object. Thus, if a party fails to register his objection, if and when they need to, as stated under Section 13(2) read with Section 12, then going by Section 4 of the Act, an aggrieved party shall be deemed to have waived his right to so object. Even where the arbitrator does not disclose, the aggrieved party has to exercise his right under Section 13(2), lest the acquiescence in the appointment of the arbitrator and the waiver of right as given under Section 4 will operate against that party. The reason for providing for such a provision is not far to seek. This provision prevents a dilatory tactic or the obstruction of a party to stall the proceedings chosen for settlement of dispute. The question that arises then is as to whether at the stage of appointment itself the arbitrator has to disclose the circumstances indicating his neutrality. Section 12 of the Arbitration and Conciliation Act, 1996 reads as follows : "12. Grounds for challenge - (1) When a person is approached in connection with his possible appointment as an arbitrator, he shall disclose in writing any circumstances likely to give rise to justifiable doubts as to his independence or impartiality. (2) An arbitrator, from the time of his appointment and throughout the arbitral proceedings, shall, without delay, disclose to the parties in writing any circumstances referred to in sub-section (1) unless they have already been informed of them by him. (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 qualifications agreed to by the parries. (4) A party may challenge an arbitrator appointed by him, or in whose appointment he has participated, only for reasons of which he becomes aware after the appointment has been made." A reading of the section shows that the arbitrator, as a neutral body chosen by the parties, must disclose the necessary details which would ensure neutrality and faith in his impartiality and independence that there are no grounds existing to give rise to any sort of doubt as to his impartiality or neutrality. Where any such circumstances develop after the appointment, the same must be disclosed without delay. Where any such circumstances develop after the appointment, the same must be disclosed without delay. This only shows the anxiety that the parties who participated in the appointment of the arbitrator, reposing confidence in the forum chosen, have the right to question the continuance of the arbitrator, the moment circumstances existed, giving doubt to the impartiality or the independence of the arbitrator. In the decision in Vipul Agarwal v. Atul Kanodia & Co., AIR 2003 Allahabad 280 = 2003 (3) Arb. LR 242 (All.) (DB) the Allahabad High Court held as follows : "26. It should not be lost sight of that when persons approach domestic tribunal and want their matter to be determined by arbitration, they have every choice as to the person whom they should select as arbitrator, and, therefore, it is clear that the highest faith should be shown by the arbitrator. It also follows that the arbitrator must disclose to the parties all the facts which are likely or calculated to bias him in any way in favour of one or the other party. A circumstance or a fact may in fact, not bias or influence the decision of the arbitrator. The arbitrator may have too strong a character, too deep a sense of justice to be influenced by any consideration extraneous to or foreign to evidence which he has got to consider. But the question is not what is likely in fact to happen but what is likely to tend or is calculated to tend to a particular result. It is most fundamental principle of justice that a judge or a tribunal should not decide a dispute if there is a probability that he would be biased in the case. The test is whether he is likely to be biased. Actual bias need not be proved." Hence, all that is contemplated under the Act is that a party having his apprehension on the impartiality of the arbitrator must raise his objection at the earliest and cannot sleep over the matter to wait for the award to be passed and thereafter bring in his objection on matters to fall under Section 13(2). Consequently, irrespective of the involvement of a party in the appointment of the arbitrator is direct or less direct, when as in this case, by an agreement, the petitioner has consented to the appointment of the arbitrator by the first respondent company, he should have challenged the appointment of the arbitrator if he had grievance in accordance with the provisions of Section 13(2) of the Act. In the decision in Alcove Industries Ltd. v. Oriental Structural Engineers Ltd. and another (supra), the issue as to the non-disclosure of the relevant circumstances as required under Section 12 at the first instance came up for consideration. That was a case where on the appointment of the arbitrator, the petitioner contractor sought for declaration under Section 12. The contractor also sought for information from the employer. The arbitrator replied that he had no relation with the employer except for working as Arbitrator/Member, Dispute Review Board in respect of certain works executed by the contractor. For a fairly long time, there was no progress. Where the arbitrator called upon the contractor to submit his statement, the contractor replied that the arbitrator had rescued himself. However, he sought for information with reference to cases where the arbitrator had acted so. The arbitrator denied that he had rescued himself from the arbitral proceedings and that of five arbitral proceedings relating to the employer, no award had been passed in any of the proceedings for the past five years. On this, entertaining doubt as to the independence and impartiality of the arbitrator, the contractor moved the court on this issue, apart from a prayer to declare that the mandate of the arbitrator stood terminated on account of undue delay. In considering the scope of Section 12, the High Court held : "40. Section 12 of the Act casts a duty on the arbitrator to disclose in writing at the outset, such facts which may give rise to justifiable doubts as to his independence or impartiality. This obligation continues throughout the arbitral proceedings, i.e. whenever such facts come into being during the arbitral proceedings. Therefore, what the law stipulates as a disqualification to become or remain an arbitrator in a given dispute, is not the existence of actual bias, but the existence of such facts and circumstances as are likely to give rise to justifiable doubts as to his independence and impartiality. Therefore, what the law stipulates as a disqualification to become or remain an arbitrator in a given dispute, is not the existence of actual bias, but the existence of such facts and circumstances as are likely to give rise to justifiable doubts as to his independence and impartiality. An arbitrator may be challenged only on limited grounds, i.e. if circumstances exist that give rise to justifiable doubts as to his independence or impartiality or that he does not possess the qualifications agreed to by the parties. Even this challenge is limited only to such cases where the party raising the challenge who has participated in the appointment of the arbitrator becomes aware of the grounds on which the challenge is made after the arbitrator has been appointed. Therefore, if a party was aware of such facts and circumstances at the time of participating in the process of appointment of the arbitrator as would otherwise be considered good enough to give rise to justifiable doubts as to the independence or impartiality of the arbitrator, that party is disentitled from challenging the arbitrator on the same ground. Moreover, the challenge is required to be made within 15 days of the party learning of the relevant circumstances. If the challenge is not made in a timely manner, the same may fail as having being condoned and waived on the ground of his acquiescence in the holding of further proceedings." In the unreported decision in AA Nos. 79 and 80 of 2008 of the Andhra Pradesh High Court dated 09.02.2009 - T. Srinivasa Rao v. Union of India, rep. by the General Manager, South Central Railway and others (supra), relied on by the respondent, the Andhra Pradesh High Court held as follows : "Freedom has been accorded to the parties to choose a procedure for securing the appointment of an arbitrator or arbitrators. Section 12 of the Act has also provided for challenge to the jurisdiction of the arbitrator/arbitral tribunal. Sub-section (1) of Section 12 casts an obligation on a person who has been approached by the parties with a possibility of his appointment as an arbitrator, to disclose in writing all or any of the circumstances which are likely to give rise to justifiable doubts as to his independence or impartiality. Therefore, primacy is sought to be attached to two factors, viz. Therefore, primacy is sought to be attached to two factors, viz. - (1) Independence and impartiality on the part of the arbitrator/arbitral tribunal is the essential requirement; (2) Such an arbitrator is also under an obligation to disclose to the parties in writing all factors and circumstances that are likely to give rise to justifiable doubts about his independence and impartiality. Some other factors which might cause hindrance for discharge of functions by the arbitrator/arbitral tribunal can possibly emerge, by the very nature of things, during the course of the pendency/currency of the arbitral proceedings. For instance, by virtue of subsequent acquisition of new commercial contracts or interests in new enterprises, an arbitrator/arbitral tribunal, which did not suffer any impeding factor in discharge of its functions at the time of its original constitution, may suffer the same later on. For instance, one of the parties can become closely related to the arbitrator or any of the member or members of the arbitral tribunal by reason of marriage in his family with one of the parties to the disputes. Thus, this contingent/impeding factor would have cropped up during the currency of the arbitral proceedings. Similarly, if a new stake has been picked up in a commercial enterprise, concerning which the disputes are referred to the arbitrator/arbitral tribunal, all because of any scheme of arrangement or sanction of merger, etc. the arbitrator or any of the members of the arbitral tribunal may suffer the possibility of generating a doubt about their independence or impartiality in the mind(s) of one of the parties or both of them." Being a chosen forum, the Act is very cautious in providing the time frame within which a party to the agreement challenges the appointment. Section 13 deals with the challenge to the procedure. Sub-section (2) of Section 13 states that a party who intends to challenge the arbitrator, after becoming aware of any of the circumstances referred to in sub-section (3) of Section 12, shall send a written statement of the reasons for the challenge to the arbitral tribunal within 15 days after becoming aware of the constitution of the arbitral tribunal. Apart from the situation referred under Section 12(3), the challenge under Section 13(2) includes a situation where a party intends to challenge the constitution of a tribunal. Apart from the situation referred under Section 12(3), the challenge under Section 13(2) includes a situation where a party intends to challenge the constitution of a tribunal. Under sub-section (4), if the arbitral tribunal rejects such a challenge, he shall continue through the arbitration proceedings and pass an award. Sub-section (5) of Section 13 states that where an award is passed, the aggrieved party can challenge the award of the arbitrator under Section 34 of the Arbitration and Conciliation Act, 1996 for setting aside such award. If and when such petition is filed, the court may decide as to whether the arbitrator, who is challenged, is entitled to a fee. Section 16 deals with the competence of the tribunal to rule on its jurisdiction. Under this, the tribunal may rule on its jurisdiction on any objection with regard to the existence and validity of an arbitration agreement. Sub-section (2) states such a plea as to the lack of jurisdiction shall be raised not later than the submission of the statement of defence. However, on the mere participation in the appointment of an arbitrator or on the appointment of an arbitrator, an aggrieved party shall not be precluded from raising such a plea. Under sub-section (5), the arbitrator shall decide on such a plea and where he takes a decision rejecting such plea, he shall continue with the arbitration proceedings and pass an award. A reading of Sections 12, 13 and 16 of the Act shows that while Section 12 of the Act is as regards the independence and impartiality of an arbitrator appointed and a challenge as to the same has to be made under Section 13, Section 16 is with reference to tribunal deciding on its own jurisdiction, including a ruling on any objection on the existence or validity of an arbitration agreement to have the dispute to be placed before an arbitrator and its competence to rule on the procedure and its jurisdiction. A reading of these provisions shows that the legislative intention as to the right of a party to challenge the jurisdiction of the tribunal, its composition or its neutrality or impartiality must be raised at the threshold and cannot be entertained at a later stage. A reading of these provisions shows that the legislative intention as to the right of a party to challenge the jurisdiction of the tribunal, its composition or its neutrality or impartiality must be raised at the threshold and cannot be entertained at a later stage. As far as the objection under Section 12 is concerned, even if no objection had been taken as to the impartiality at the beginning, at least on entertaining a doubt as to the impartiality and independence and if the circumstances so warrant, the aggrieved party has to lodge his objection as provided under Section 12(3) of the Act. Hence, going by the provision of the section, while there is a mandatory duty cast on the arbitrator for a disclosure, the same has to be read in the context of the circumstances giving rise to a doubt on his impartiality and independence. Where there existed no connection whatsoever with either of the parties and the petitioner not having raised any objection as to his qualification as per Section 13(2) of the Act, the mere fact that the arbitrator had not made a disclosure does not, per se, affect the award as one vitiated by the non-compliance of Section 12. There are no grounds raised either before the arbitrator or before this court touching on the aspect of impartiality and independence to set aside the award. As far as the present case is concerned, the parties herein entered into a hire purchase agreement on 29.06.2002. Under Clause 24, it was specifically agreed that in case of a default in payment of the instalment of the hire amount, the hirer has to pay additional finance charges at the rate of 36% per annum from the time the amount fell in arrears. Clause 18 provides that unless and until the entire hire money along with the additional finance charges, if any, is paid, in spite of the vehicle registered in the name of the owners as per the Motor Vehicles Act, the vehicle would be the sole and absolute property of the financier/company. Under Clause 19, the hirer acknowledged that he held the vehicle as a mere bailee and shall not have any proprietary right, title or interest until he paid the whole amount due under the agreement. Under Clause 19, the hirer acknowledged that he held the vehicle as a mere bailee and shall not have any proprietary right, title or interest until he paid the whole amount due under the agreement. Clause 26 of the agreement provided that in the event of a dispute arising under the agreement, the dispute shall be referred to the sole arbitrator to be nominated by the financier/company. Admittedly, the first petitioner had signed the agreement as a borrower and the second petitioner as a guarantor. The first respondent served notice on 19.03.2005 under registered post with acknowledgement due to the petitioners herein that they have nominated Mr. S. K. Srinivasan, Advocate as arbitrator, as envisaged under the agreement. On 23.03.2005, learned arbitrator issued a notice to the petitioners fixing the date of hearing as 25.04.2005 and the venue for holding the arbitration. Learned arbitrator enclosed a copy of the hire purchase agreement, invoice, statement of accounts, statement of additional finance charges and the registration statement filed by the claimant/respondent. The petitioners filed their counter and appeared on that date. By letter dated 04.04.2005, the petitioners replied that as the agreement was cancelled by paying the sum of Rs. 2,00,000 and the one-time settlement reached, there was no dispute to refer the matter to the arbitrator. In these circumstances, the arbitrator was requested to withdraw the notice and intimate the petitioners that no dues existed. The petitioners also objected the reference to the arbitrator as an unilateral one. On 21.09.2005, once again, the first petitioner sent a letter denying the jurisdiction of the arbitrator. Denying that they ever consented to the second respondent as an arbitrator, they stated : "We do not deny that arbitrator cannot be appointed. But we only want to submit that we do not give consent to appoint you as arbitrator. The arbitrator must be appointed as per the Arbitration Act. The choice given to claimants to appoint arbitrator is illegal." By proceedings dated 25.04.2005, learned arbitrator passed an order rejecting the objection. Noting the claim of the first petitioner that the matter had been settled for a sum of Rs. 2,00,000, he pointed out that no documents to that effect had been filed by the petitioner along with his counter. The choice given to claimants to appoint arbitrator is illegal." By proceedings dated 25.04.2005, learned arbitrator passed an order rejecting the objection. Noting the claim of the first petitioner that the matter had been settled for a sum of Rs. 2,00,000, he pointed out that no documents to that effect had been filed by the petitioner along with his counter. Hence, the learned arbitrator observed : "The respondent is directed to file necessary documents in support of the contention." Learned arbitrator pointed out that the petitioner had also raised an objection that he had not consented for the appointment of a sole arbitrator. To this, the first respondent sought for time to file a reply. The matter stood adjourned to 25.06.2005; thereafter, once again adjourned to 25.07.2005. The first respondent filed a detailed reply and a copy was also sent to the petitioners. Learned arbitrator adjourned the matter to 22.08.2005. It is an admitted fact, as noted from the proceedings also, that the petitioners did not appear in spite of a notice served and a copy of the reply also given. On 22.08.2005, learned arbitrator passed an order directing the respondents to file a proof affidavit, thereby adjourning the matter to 03.10.2005. On 03.10.2005, learned arbitrator noted that the petitioners were represented by an authorised representative and had stated that unless the challenge to the arbitrator was decided, the proceedings could not go on and they had not received a copy of the proof affidavit filed by the claimant/respondent. Learned arbitrator passed an order thereon on 03.10.2005. In paragraph 4 of the order, learned arbitrator dealt with the preliminary objection as to the jurisdiction of the arbitrator. He held : "4. The respondents have raised an objection that the undersigned cannot proceed with the arbitration as they have not consented for my appointment. Learned arbitrator passed an order thereon on 03.10.2005. In paragraph 4 of the order, learned arbitrator dealt with the preliminary objection as to the jurisdiction of the arbitrator. He held : "4. The respondents have raised an objection that the undersigned cannot proceed with the arbitration as they have not consented for my appointment. As requested by the respondents, I wish to decide the same first in this backdrop, my decision on the above aspect of appointment of arbitrator is as follows : (i) Insofar as the allegation of the respondent as to the consent of the respondent not being obtained for appointment of arbitrator, we draw reference to Clause 26 of the impugned H.P. Agreement which read as follows : 'It is agreed between the parties that in case of any dispute arising under this agreement the same shall be settled by arbitration, to be held, in accordance with the provision of the Arbitration and Conciliation Act, 1996 or any statutory amendments thereof and shall be referred to a sole arbitrator to be nominated by the financier/company. The award of the arbitrator shall be final and binding on all the parties concerned, including the guarantor. The venue of the arbitration proceedings shall be at Chennai.' (ii) It is seen from the impugned agreement, the option of appointment of the arbitrator is with the claimant and the respondent has clearly agreed to the above clause. Further, under Section 11 of the Arbitration and Conciliation Act, 1996, the parties are free to agree for appointment of the arbitrator and having agreed to such appointment, it is not open on the part of the respondent to scuttle the appointment ignoring the very clause to which he is a party. Therefore, the objection of the respondent as to the appointment of the arbitrator also lacks merits and hence the same is also dismissed. (iii) In the result, the preliminary objections raised by the respondents, questioning the claimant's right to appoint the arbitrator is hereby dismissed. The respondents are hereby directed to file their proof affidavit by the next hearing date, failing which the award will be passed on the available material and records without any further notice." In the circumstances, learned arbitrator intimated the date of next hearing as 07.11.2005. As seen in the said order, the receipt of the said order was acknowledged by the first petitioner. As seen in the said order, the receipt of the said order was acknowledged by the first petitioner. On 07.11.2005, when the case was taken up, none represented the respondents. However, the matter stood adjourned to 05.12.2005 and they were asked to file the proof affidavit. On 05.12.2005, after hearing the petitioner therein, learned arbitrator passed an award. Admittedly, the petitioner herein did not appear in person or through any authorised representative. A reading of the proceedings clearly shows that all through the petitioner had taken the objection that in view of the settlement reached, there was no dispute pending for reference to arbitration. Hence, he took the stand that there existed no arbitration agreement as the dispute itself could not be said to be alive and hence, the question of going before an arbitrator did not arise. As already seen in paragraph 27, the learned arbitrator noted that there was hardly any material placed before the arbitrator to substantiate the contention of the petitioner on the one-time settlement agreed. This finding of fact remains Uncontroverted till this date. There is hardly any material placed before this court to say that the arbitrator had not adverted to any document indicating settlement of all claims and no due payable by the petitioner. Even though the petitioner makes a strong objection as to the non-compliance of Section 12 as regards the disclosure by the arbitrator, it is evident from the objection taken by the petitioner that at no point of time did the first petitioner raise an issue as regards the justifiable grounds giving rise to a doubt as to the independence or impartiality of the learned arbitrator, as contemplated under Section 13(2) of the Act. Given the fact that the petitioner made no such issue, even assuming for a moment that he had justifiable grounds, he having failed to challenge the same under Section 13(2) of the Act, the question of now raising this as an issue before this court does not arise at all. No factual foundation has been given in support of the plea of bias too. As rightly contended by the learned counsel for the first respondent, the procedural safeguards provided under the Act to have a fair trial cannot be lost sight of. No factual foundation has been given in support of the plea of bias too. As rightly contended by the learned counsel for the first respondent, the procedural safeguards provided under the Act to have a fair trial cannot be lost sight of. Whenever a party to the proceedings has a doubt as regards the independence or impartiality of the arbitrator, the Act does not contemplate that the party to the proceedings must nevertheless get along with the hearing. On the other hand, given the fact that arbitration is a chosen forum for settlement of the dispute, if a party has doubts as regards the impartiality or independence of the arbitrator, he has to challenge the appointment of the arbitrator within 15 days after becoming aware of the constitution of the arbitral tribunal. In case one of the parties to the dispute denies the existence of any dispute or the validity of an arbitration agreement, then he has to submit his objection before the arbitral tribunal in accordance with Section 16. As already pointed out, all that had been done by the petitioner was one under Section 16 of the Act and nothing was done under Section 13. The fact that the arbitrator had not made his decision does not stop the clock ticking under Section 13(2) for the petitioner to make his objection. Learned counsel for the petitioner, however, submitted that unless and until the arbitrator discloses the facts, it is not possible for the petitioner to make any such objection under Section 14 of the Act. She impressed on the court to accept the proposition that Section 12 of the Act is a non-derogable provision, in that it makes it mandatory on the arbitrator to disclose about the facts as regards his impartiality and independence. It must be remembered that Section 12 implores on the person approached in connection with his appointment as an arbitrator to disclose in writing any circumstances "likely to give rise to justifiable doubt as to his independence or impartiality". There are no materials to show that at any point of time, the petitioner petitioned indicating any doubt as to the independence or impartiality of the arbitrator. If really the petitioner had any such doubts, he should have called upon the arbitrator for a decision of disclaimer of interest or made necessary challenge as contemplated under Section 13(2) of the Act. If really the petitioner had any such doubts, he should have called upon the arbitrator for a decision of disclaimer of interest or made necessary challenge as contemplated under Section 13(2) of the Act. Therefore, going by the provisions of Section 12 that while it enjoins on the arbitrator to declare his neutrality, yet, by not declaring, one cannot presume that there is a violation of the requirement under Section 12 of the Act, thereby vitiating the very validity of the award. Going by Section 12(3) of the Act, even after clarifying or removing any such doubt, in the course of the proceedings, if the conduct of the arbitrator is such that he does not possess the qualification or that the circumstances indicate or give rise to a justifiable doubt as to his independence or impartiality, the authority of an arbitrator to proceed can nevertheless be challenged by the party. Hence, in the scheme of things, the spirit of the provisions contained in Section 12 has to be read and understood in the proper perspective that it seeks to ensure that the parties to the proceedings have reposed utmost faith and confidence in the neutrality of the arbitrator deciding the dispute. Where an arbitrator does not make a declaration, that, by itself, does not offend Section 12, since the section itself provides for sufficient safeguards to the party to the proceedings where the arbitrator withholds information which raises justifiable doubt as to his impartiality and independence. Hence, going by the provisions of Section 12(3), Section 13(2) provides ample safeguards to the petitioner. If the petitioner had any objection, then the proper remedy would be to get under Section 12(3) read with Section 13(2). If the petitioner fails to act within the time frame, the petitioner loses his right to object under Section 13(2). Hence, going by Section 4, in the face of the fact that the petitioner failed to raise any issue under Section 12(3) read with Section 13(2) of the Act, it is not now open to the petitioner to raise the same as an issue under Section 34. It may be noted that Section 13(5) provides that when the objection taken under Section 13(2) read with Section 12(3) fails, the tribunal can continue with the proceedings and the award can only be challenged in accordance with Section 34. It may be noted that Section 13(5) provides that when the objection taken under Section 13(2) read with Section 12(3) fails, the tribunal can continue with the proceedings and the award can only be challenged in accordance with Section 34. It may be relevant to note herein that when the first respondent informed the first petitioner on the appointment of the arbitrator in its letter dated 19.03.2005, the first petitioner did not call upon the learned arbitrator to disclose material facts or raise an issue as to the non-disclosure as required under Section 12(1) of the Act. If really the first petitioner had a grievance that circumstances existed as to give rise to justifiable doubts as to the impartiality or independence, he should have called upon the arbitrator to comply with the requirements of Section 12(1) or petitioned the arbitrator under Section 13(2) of the Act immediately thereon. The petitioner neither made a protest as to the choice of the arbitrator or to his impartiality or independence nor substantiated the claim that no amount was due and payable by the petitioner by reason of the final settlement between the parties. The objection as to the proceedings came only on 04.02.2005, in reply to the notice from the second respondent informing the date of hearing, enclosing a copy of the claim statement with necessary details. Going by the conduct of the first petitioner herein, I do not find any justification to accept the contentions of the first petitioner as to the violation alleged with reference to the non-compliance of Section 12(1) by the learned arbitrator. When the statute has provided necessary protection to the petitioner to challenge the composition of the arbitral tribunal and the right to challenge the same as indicated in sub-section (2) of Section 13 and with a further remedy available to challenge the order passed by the arbitrator, it is not now open to the petitioner to contend that the award is vitiated by the second respondent not making a disclosure under Section 12 of the Act. In the decision in Alcove Industries Ltd. v. Oriental Structural Engineers Ltd. and another (supra), relied on by the petitioner, the Delhi High Court pointed out to Section 12 which casts a duty on the arbitrator to disclose at the outset such facts which may give rise to justifiable doubts as to his independence and impartiality and the obligation continues throughout the arbitration proceedings. The learned judge pointed out that what the law stipulates as a disqualification to become or remain an arbitrator in a given dispute is not the existence of actual bias, but existence of such facts and circumstances as are likely to give rise to justifiable doubts as to his independence and impartiality. An arbitrator may be challenged only on limited grounds, i.e. if circumstances exist that give rise to justifiable doubts as to the independence or impartiality of the arbitrator or that he does not possess the qualifications agreed to by the parties. If the challenge is not made in timely manner, the same has to fail as having being condoned and waived on the ground of his acquiescence in the holding of further proceedings. I am in entire agreement with the said statement of law. On the facts of this case, having failed to object or raise an issue under Section 13, even as to the nondisclosure as contemplated under Section 12 of the Act, the claim now projected by the petitioner before this court cannot be brought under any of the clauses of Section 34(2) of the Act, for the reason that Section 4, dealing with waiver of right to object, comes into play. Section 13(2) of the Act is clear enough to state that within 15 days of the petitioner coming to know about the constitution of the tribunal, he has a duty to challenge the appointment of the arbitrator, as regards his objection under Section 12. In the absence of any such challenge, it is not open to the petitioner herein to contend that the award fails on the arbitrator not making disclosure under Section 12. There are no grounds to indicate even at this point of time that the learned arbitrator acted in a biased manner demanding interference under Section 34 of the Act. In the circumstances, I do not find that the decision of the Delhi High Court, would, in any manner, advance the cause of the petitioner. There are no grounds to indicate even at this point of time that the learned arbitrator acted in a biased manner demanding interference under Section 34 of the Act. In the circumstances, I do not find that the decision of the Delhi High Court, would, in any manner, advance the cause of the petitioner. Learned counsel for the petitioner placed reliance on the decision of this court in Aoki India Limited and another v. Mira International and another (supra). The said decision is a distinguishable one. The facts therein were that the petitioner in the OP and the respondent entered into an agreement towards consultancy services for the management of the product of the petitioner company. The arbitrator appointed happened to be the Director of the petitioner company. The said arbitrator and his brother were in charge of the day-to-day activities. When the first respondent sought the consent of the petitioner for the appointment of the Director as the arbitrator, no consent was given by the petitioner. When the arbitrator proceeded with the arbitration proceedings, the petitioner challenged the appointment of the arbitrator. However, without an order passed on the objection, the arbitrator passed the award. On a challenge under Section 34 of the Act, this court held that the arbitrator was guilty of violating the provisions of Section 12(1) of the Act. This court further pointed out that the arbitrator had not passed any order on the objections, challenging the appointment. Only in the award he rejected the objection, that too without any reasons. This court accepted the plea that the arbitral tribunal had not considered the objection made by the objector therein, questioning the impartiality and independence of the arbitrator and hence, the arbitrator was under an incapacity to act as arbitrator. Quite apart, the petitioners therein had not given the consent. Going by the facts therein and the one on hand, I hold that the said decision is factually distinguishable and hence, does not advance the cause for the petitioner. The decision in Murlidhar Roongta and others v. S. Jagannath Tibrewala and others (supra) relied on by the petitioner, is again a case on Sections 12 and 16 of the Act. One of the questions raised therein was as to the existence of an arbitration agreement. The decision in Murlidhar Roongta and others v. S. Jagannath Tibrewala and others (supra) relied on by the petitioner, is again a case on Sections 12 and 16 of the Act. One of the questions raised therein was as to the existence of an arbitration agreement. The court held that since the dispute related to the transaction which was subject to the bye-laws, rules and regulations of the Stock Exchange, the arbitral tribunal had the jurisdiction to decide the reference. As regards the issue raised relating to the arbitrator's failure to discharge the statutory duty imposed by Section 12 of the Act, the petitioner therein contended that the advocate who appeared on behalf of the first respondent therein was the advocate for the arbitrator in several court matters. The petitioner became aware of this after the award was passed. When the petitioners obtained certified copies of the proceedings, the first respondent therein submitted that he was not aware of these facts. However, he did not deny the allegations. The Bombay High Court held that on the facts, the learned arbitrator was under a duty to disclose this fact to both the parties. In the circumstances, it held that when the provisions of Section 12 cast a duty on the arbitrator to disclose in writing any circumstance likely to raise a justifiable doubt as to the independence or impartiality, non-discharge of the said duty by the learned arbitrator would be a ground to challenge the award made by him. This decision clearly amplifies that the rights of a party aggrieved by bias or circumstances indicating absence of impartiality is not handcuffed by reason of a non-disclosure, that even at the stage of passing of the award, if a party learns about the lack of neutrality of the arbitrator, it is open to the party aggrieved by the award to move this court that the award is vitiated not by reason of a non-compliance as to the disclosure, but by reason of nondisclosure of circumstances that give rise to justifiable doubts as to the independence or impartiality. The point to be noted is that while the section emphasizes the need for the chosen arbitrator to stay clear of any allegation on impartiality and independence, if a neutral person chosen happens to have some connection or other with the other party which may raise a doubt in the minds of the party, the arbitrator may not mandate neutrality; in fairness to the status and the confidence reposed, the chosen arbitrator has to declare those circumstances. In a case, when an arbitrator is appointed in terms of an agreement as in the present case, the responsibility of the party appointing the arbitrator is on a higher degree that the other party does not complain of the arbitrator not carrying the degree of confidence, impartiality and independence. Hence, should the other party have doubts about the impartiality or independence of the arbitrator, the proper course would be to challenge the constitution of the arbitrator in accordance with the provisions of the Act. It is not given to the party complaining to sleep over the matter and wait for the award to be passed to make an allegation in vacuum. Learned counsel also referred to the decision in Narayan Prasad Lohia v. Nikunj Kumar Lohia and others (supra) particularly to the question of derogate nature of a right given under Section 12 of the Act. A reading of the said decision shows that the parties therein were family members, who had disputes as regards family business and profits. They agreed on the arbitrators named to resolve their disputes. An award was passed ultimately by the named arbitrator. Applications were filed by one of the parties before the Calcutta High Court to set aside the award on the ground that there could not be an even number of arbitrators, which was against the statutory provisions. Hence, the same was void and invalid. The award was unenforceable and not binding on the parties. While dealing with the provisions of Section 4 and Section 10 of the Act, the Apex Court considered Sections 12, 13 and 16 of the Act relating to the challenge of the constitution of the tribunal on the ground of independence, impartiality and jurisdiction of the arbitrator. The Apex Court pointed out that such challenge must, however, be before the tribunal itself. The Apex Court pointed out that such challenge must, however, be before the tribunal itself. The Apex Court pointed out that the objection to the composition of the tribunal is a matter which is derogable. If the party chooses not to so object, there will be a deemed waiver under Section 4. The Apex Court pointed out that where the parties did not agree on the procedure or where there is a failure of the agreed procedure, the procedure provided in Section 11 will mutatis mutandis apply for appointment of 5 or 7 or more arbitrators and even if the parties provided for only two arbitrators, that did not mean that the agreement was invalid. The Apex Court pointed out that even if the third arbitrator was not appointed initially, as per Section 11(3) of the Act, yet, at a later stage, if and when two arbitrators differed, a third arbitrator could be appointed by the two arbitrators. Where the two arbitrators agreed and gave a common award, there was no frustration of the proceedings. Hence, when with open eyes a party had agreed to go for arbitration before two arbitrators and participated in the proceedings, allowing a party to resile later on would not be in furtherance of any public policy and would be most inequitable. In this context, the Apex Court pointed out that the grounds of challenge to an award are very limited. The award can be set aside only on a ground of challenge under Sections 12, 13 and 16 of the Act, provided, such a challenge is first raised before the arbitral tribunal and has been rejected by the arbitral tribunal. The only other provision is Section 34 of the said Act. Negativing the plea of the applicant therein that an appointment in conflict of the provisions of the Act from which the parties could not derogate would be a subject-matter of challenge under Section 34(2)(a)(v), the Apex Court pointed out that Section 34(2)(a)(v) applies when the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties. Even there, the right to challenge is restricted when the parties had not raised an objection to the composition of the tribunal as provided under Section 16, they must be deemed to have waived their right to object. The Supreme Court held : "16. Even there, the right to challenge is restricted when the parties had not raised an objection to the composition of the tribunal as provided under Section 16, they must be deemed to have waived their right to object. The Supreme Court held : "16. It has been held by a Constitution Bench of this court, in the case of Konkan Rly. Corpn. Ltd. v. Rani Construction (P) Ltd., JT 2002 (1) SC 587 = 2002 (1) Arb. LR 326 (SC), that Section 16 enables the arbitral tribunal to rule on its own jurisdiction. It has been held that under Section 16 the arbitral tribunal can rule on any objection with respect to existence or validity of the arbitration agreement. It is held that the arbitral tribunal's authority under Section 16, is not confined to the width of its jurisdiction but goes also to the root of its jurisdiction. Not only this decision is binding on this court, but we are in respectful agreement with the same. Thus, it is no longer open to contend that, under Section 16, a party cannot challenge the composition of the arbitral tribunal before the arbitral tribunal itself. Such a challenge must be taken under Section 16(2), not later than the submission of the statement of defence. Section 16(2) makes it clear that such a challenge can be taken even though the party may have participated in the appointment of the arbitrator and/or may have himself appointed the arbitrator. Needless to state a party would be free, if it so chooses, not to raise such a challenge. Thus, a conjoint reading of Sections 10 and 16 shows that an objection to the composition of the arbitral tribunal is a matter which is derogable. It is derogable because a party is free not to object within the time prescribed in Section 16(2). If a party chooses not to so object, there will be a deemed waiver under Section 4. Thus, we are unable to accept the submission that Section 10 is a non-derogable provision. It is derogable because a party is free not to object within the time prescribed in Section 16(2). If a party chooses not to so object, there will be a deemed waiver under Section 4. Thus, we are unable to accept the submission that Section 10 is a non-derogable provision. In our view, Section 10 has to be read along with Section 16 and is, therefore, a derogable provision." Applying the said decision to the facts herein, when the Act contemplates a challenge to the impartiality or independence or to the composition of the tribunal to be made under Section 13(2) within a period of 15 days, when there are no material to suggest that the petitioner ever challenged the same, an award does not get automatically vitiated merely by reason of the arbitrator not making a disclosure of his interest. There are no circumstances even otherwise projected to show that the award suffers from bias or circumstances raising justifiable doubts as to the independence or impartiality of the arbitrator. In the circumstances of this case, in the background of Section 4 and the decision of the Supreme Court in Narayan Prasad Lohia v. Nikunj Kumar Lohia and others (supra), I reject the contentions raised by the petitioner herein. Dealing with a similar contention but with reference to Section 16, in the decision in S.N. Malhotra and Sons v. Airports Authority of India and others (supra), the Delhi High Court held that objection as to jurisdiction could not be permitted to be raised at a later point of time even under Section 34. To hold otherwise would render the provisions of Section 16(2) to (6) and Section 4 otiose and even result in making a serious inroad into the provisions of Section 5. The Delhi High Court held : "33. .... Section 34(2)(a)(iv) cannot come to the rescue of the respondent as the said section cannot be read in isolation and allowed to render otiose the provisions of Sections 4, 5 and 16 of the Act which, in a sense, are the high points of the Act. The Delhi High Court held : "33. .... Section 34(2)(a)(iv) cannot come to the rescue of the respondent as the said section cannot be read in isolation and allowed to render otiose the provisions of Sections 4, 5 and 16 of the Act which, in a sense, are the high points of the Act. Any other interpretation of the aforesaid provisions of the statute would not only deprive the winning party of the fruit of its hard earned labour at the end of a long drawn out battle, but, in our considered opinion, would be opposed to public policy, as it would inevitably result in colossal waste of time, money and energy, all of which are necessarily expended in the arbitral process. This apart, it would frustrate the object of the Act itself, viz. to provide for expeditious disposal of a dispute by recourse to arbitration." In the context of the decision of the Supreme Court, it is not necessary to go into the extracts from the books relied on by the learned counsel for the petitioner as well as by the first respondent. The next decision relied on relates to one Rishi Electricals (P) Ltd. v. H.P. State Electricity Board (supra). Even here, the Himachal Pradesh High Court pointed out to the procedure provided under Section 13 of the Act. Where a party challenges the appointment, it is for the arbitrator to decide whether to continue the proceedings or not. Where the appointment of a person as an arbitrator raises a doubt in the mind of any one of the parties as to his independence or impartiality, it is no doubt true that he must inform the parties about such a position. But having failed to raise any such objection as to his doubt as to the impartiality or independence of the arbitrator, it is not now open to the petitioner to challenge the same under Section 34. Hence, the decision relied on also does not help the petitioner. In contrast to the submissions made by the learned counsel for the petitioners, learned counsel for the first respondent placed reliance on the decision of the Supreme Court in Civil Appeal No. 4109 of 2006 under order dated 13.09.2006 - BSNL and others v. Subash Chandra Kanchan and another (supra). In the decision in Novel Granites Ltd., rep. by its Managing Director v. Lakshmi General Finance Ltd., rep. In the decision in Novel Granites Ltd., rep. by its Managing Director v. Lakshmi General Finance Ltd., rep. by its Deputy Manager (supra) a learned Single Judge of this court had an occasion to consider the issue as regards Sections 12 and 13(2) of the Act, wherein, the arbitrator presided over more than one matter. Here too, the petitioner did not challenge the appointment of the arbitrator within 15 days after becoming aware of the facts and circumstances. This court pointed out that if for any reason the petitioner had exercised doubt on the independence and impartiality of the arbitrator, the petitioner therein could have challenged the same within 15 days from the date of appointment. This court, in paragraph 8 of the order, held as follows : "8. If, for any reason, the petitioner had exercised doubts on the independence or impartiality of the arbitrator, then the petitioner should have challenged such appointment of arbitrator within 15 days, from the date of appointment or from the date on which he became aware of the such circumstances that lead to doubt the impartiality. The petitioner has not taken any steps in this regard within the time specified under sub-section (2) to Section 13. Therefore, the petitioner cannot challenge the appointment of the arbitrator after 15 days. In the present case, the petitioner had, in fact, participated in the arbitral proceedings. Therefore, the belated challenge cannot be entertained." This court rejected the plea as a belated challenge. This court observed that inasmuch as there is no prohibition for a company to have a panel of persons for appointing as arbitrators to the disputes between that company with other individuals, there cannot be any objection for appointing a person from such panel as an arbitrator in any number of disputes. In the decision in Shree Subhlaxmi Fabrics Pvt. Ltd. v. Chand Mal Baradia and others (supra) referring to Section 4, the Hon'ble Apex Court reiterated the decision that where a party fails to state his objection as to the non-compliance of any provisions of Part I, it shall be deemed that it has waived its right to so object. In the decision in Shree Subhlaxmi Fabrics Pvt. Ltd. v. Chand Mal Baradia and others (supra) referring to Section 4, the Hon'ble Apex Court reiterated the decision that where a party fails to state his objection as to the non-compliance of any provisions of Part I, it shall be deemed that it has waived its right to so object. The decisions relied on by the respondent in G. Vijayaraghavan v. M.D., Central Warehousing Corporation and another (supra); Kitiku Imports Trade Pvt. Ltd. v. Savitri Metals Ltd. (supra); and State of West Bengal and others v. Sarkar and Sarkar and another (supra) are also on the same lines. It is not necessary herein to go into the individual decisions relied on by the learned counsel for the first respondent for the simple reason that all the decisions placed before this court reiterate the view that in the absence of a challenge made as to the appointment of the arbitrator as per Section 13(2) of the Act, it is not open to the petitioner to raise that issue under Section 34 of the Act. More so, in matters of allegation of bias or circumstances justifying a doubt as to the impartiality or independence, the petitioner has to exercise his right at the earliest opportunity. The unqualified requirement as to maintaining the independence or impartiality in the arbitration proceedings remaining a hallmark of the proceedings, should there be any circumstances pointing out otherwise, as held in the Delhi High Court decision, it is always open to an aggrieved party to raise this issue under Section 34 even if there was no challenge earlier, provided the aggrieved party acquired the knowledge only on the passing of the award. In the present case, when the parties had agreed on the procedure for appointing the arbitrators, in the absence of any bias shown or alleged to have vitiated or marred the award, I do not find any ground for disturbing the same. The petitioner had not, at any point of time, raised a dispute on this on the first respondent intimating about the appointment of an arbitrator even to invoke Section 11 or pointed out any circumstances as in the decision of the Delhi High Court. Learned counsel for the petitioner pointed out that discrepancies existed between the award amount in the claim petition and what had been stated in the statement of accounts. Learned counsel for the petitioner pointed out that discrepancies existed between the award amount in the claim petition and what had been stated in the statement of accounts. Learned counsel for the petitioner pointed out that the vehicle was sold for a sum of Rs. 2,00,000 as evidenced by the bill for the same dated 28.01.2005. In the claim petition, the first respondent prayed for an award of a suit of Rs. 5,11,922. Referring to Clause 12 of the hire purchase agreement, learned arbitrator held that even after the sale of the vehicle for the deficit amount, the finance company was entitled to direct the borrower and/or the guarantor to pay the amount received under the contract, including the additional financial charges and other charges. Satisfied of the claim, learned arbitrator passed an award for a sum of Rs. 5,11,932. Learned counsel for the petitioner submitted that in so granting the award, the learned arbitrator failed to apply his mind independently to the merits of the claim. The said argument has to be noted only for rejection, since in paragraph 3, the learned arbitrator pointed out that the claimant had maintained the accounts in the regular course of business and all payments have been duly accounted for in the accounts. The forfeited amount of additional finance charges was made in terms of the hire purchase agreement. In the absence of any other material to discount the veracity of the same, rightly, the learned arbitrator has passed the award. Hence, no exception could be taken. The petitioner had not, at any point of time, disputed the said claim to prove that there existed no further amount payable under the agreement. Under Section 34 of the Act, this court does not sit as an appellate court to go into the correctness or otherwise of the amount or the evidence let in by the first respondent. Consequently, having failed to substantiate its plea, it is no longer available as a defence for the petitioner to contend that the award suffers an error apparent for this court to interfere under Section 34 of the Act. Consequently, OP No. 454 of 2006 stands dismissed. In the light of the view I have taken, the other OP Nos. 459, 460 and 461 of 2006 also stand dismissed.