JUDGEMENT : [SOMASEKHAR SUNDARESAN, J.] Context and Background: 1. This Petition has been filed seeking to invoke the jurisdiction of this Court under Section 14 and Section 15 of the Arbitration and Conciliation Act, 1996 (“the Act”). 2. Essentially, the Petitioners request this Court to interfere mid-course, when arbitration proceedings are underway. The Petitioners filed an application before the Learned Arbitrator, calling upon him to recuse from the proceedings on the ground of his impartiality and independence being allegedly suspect. The Learned Arbitrator has refused to do so, by an order dated October 28, 2024 (“Impugned Order”), which is challenged in this Petition. 3. For this Petition to be considered, the Petitioners ought to make out a case that there is a de jure inability on the part of the Learned Arbitrator to perform his functions. Without that threshold being met, the Petition cannot be entertained. For the reasons set out in this judgement, the Petition is dismissed. Factual Matrix: 4. A brief overview of the factual matrix involved in the matter at hand, would be instructive. 5. According to the Petitioners, the arbitrator did not make the disclosure mandated under Section 12(1) of the Act. Petitioner No. 1 is the principal borrower of loans from Respondent No. 1, which is a multi-state co-operative bank. Petitioners No. 2 to 4 are guarantors of the borrowings effected by Petitioner No. 1. The arbitration proceedings have been initiated under Section 84 of the Multi-State Cooperative Societies Act, 2002 (“MSCS Act”). 6. The Petitioners allege that the Learned Arbitrator made a disclosure with a delay of nine months, and that too only after they sought it. On the basis of the disclosure, which they claim to have received only in October 2024, they filed a challenge before the Arbitral Tribunal. 7. The disclosure made by the Learned Arbitrator is found at Exhibit C to the Petition, and is dated January 20, 2024. Under Section 84(4) of the MSCS Act, it is the Commissioner for Co-operation and Registrar of Co- operative Societies (“Registrar”) who appoints arbitrators when a reference is made by any co-operative bank. The appointment being made by the statutory authority, it is not the co-operative bank that makes the appointment. 8. Under Section 84(4) of the MSCS Act, it is the Commissioner for Co-operation and Registrar of Co- operative Societies (“Registrar”) who appoints arbitrators when a reference is made by any co-operative bank. The appointment being made by the statutory authority, it is not the co-operative bank that makes the appointment. 8. Typically, when loan assets of a co-operative bank become non- performing assets, the banks report the same to the Registrar, who makes the appointment of an arbitrator for various sets of loans. By a order dated May 27, 2024, the Registrar appointed the Learned Sole Arbitrator who is conducting the proceedings now, and about whom allegations are being made by the Petitioners. Annexed to that order is a list of cases pending with the Learned Arbitrator and new cases referred to him. That forms the basis of the allegations levelled by the Petitioners. Section 13 Application: 9. The Petitioners filed an application dated October 22, 2024 before the Arbitral Tribunal purporting to invoke Section 14 of the Act. However, such application is referable only to Section 13 read with Section 12 of the Act (“Section 13 Application”). It is this Court that has jurisdiction under Section 14 while the jurisdiction in the first instance is before the Learned Arbitrator under Section 13 of the Act. For all purposes of this judgement, the Petitioners’ application to the Learned Arbitrator is referred to as the “Section 13 Application”. 10. In the Section 13 Application, the Petitioners alleged that the disclosure dated January 20, 2024 was received by them only on October 9,2024 and that the order appointing him was made available only on October 14, 2024. The key grievance with the disclosure statement is that it does not contain the contact details of the arbitrator. That, coupled with the allegation that the venue of arbitration is the Mulund branch of the bank, forms the basis of the allegation of the lack of independence of the arbitrator. 11. The annexures to the Registrar’s order dated May 27, 2024 would point to a list of 54 pending loan cases and 18 new cases relating to the Respondent Bank, for which the Registrar has appointed the same Learned Arbitrator. Consequently, the Petitioners alleged that Item 22 of the Fifth Schedule is attracted. They also alleged violation of Items 7, 13 and 14 of the Seventh Schedule, to invoke Section 14(1)(a) of the Act. 12. Consequently, the Petitioners alleged that Item 22 of the Fifth Schedule is attracted. They also alleged violation of Items 7, 13 and 14 of the Seventh Schedule, to invoke Section 14(1)(a) of the Act. 12. The Learned Arbitrator convened a hearing on October 23, 2024 on the Section 13 Application. On that date, the Learned Advocate for the Petitioners filed an application for adjournment. They stated that the main proceedings had been scheduled for November 13, 2024 but because of their Section 13 Application, the Learned Arbitrator convened a hearing on the very next day. The Petitioners claimed that they only expected the hearing to entail directions to complete pleadings on their Section 13 Application, and not that they ought to make submissions on their application on that date. Asit transpires, the Petitioners also filed an application under Section 16 of the Act. 13. On October 23, 2024, the Learned Arbitrator passed the following order:- Perused the application for adjournment. The matter was placed for final arguments on 13-11-2024 for final arguments but at the request of Ms.Samidha Padwal, Advocate for the Opponents the matter was preponed to 23-10-2024 as she informed that her clients intend to file application U/s.16 of the Arbitration and Conciliation Act, 1996. But today two applications are preferred one U/s.16 and the other U/s.14 and 15. I had heard and passed orders on application U/s.16. When she was asked to argue the application U/s.14 and 15 she expressed here inability to argue the matter and sought adjournment. When an application is filed which is on legal issue the Advocate appearing should be ready with the arguments. The ground for adjournment is that her senior intends to argue and is in other Court cannot be a ground for adjournment. lt is also observed that matter is for filing of the evidence since May, 2024 and on one or the other ground applications are being made and time is sought and this is nothing but delaying the matter. Today specifically the matter was preponed and kept and exclusive hearing of the above matters. The applications intended to be filed were on legal issues the Advocate present is expected to be ready. Hence the application is rejected. However, liberty is granted to the Opponents to file Written arguments, if any on application U/s.14 and 15 of the Arbitration and Conciliation Act, 1996 on or before 25-10-2024. The applications intended to be filed were on legal issues the Advocate present is expected to be ready. Hence the application is rejected. However, liberty is granted to the Opponents to file Written arguments, if any on application U/s.14 and 15 of the Arbitration and Conciliation Act, 1996 on or before 25-10-2024. Hence in view of this the application for adjournment stands rejected. [Emphasis Supplied] 14. The Petitioners filed their written submissions in the Section 13 Application on October 24, 2024. On October 28, 2024, the Learned Arbitrator is said to have informed the Petitioners that the order disposing of the Section 13 Application is getting ready, with clerical mistakes being corrected. He once again called on them to file their evidence before November 4, 2024. 15. The Petitioners did not file any evidence. On November 13, 2024, at a scheduled hearing, they again sought an adjournment stating that the order of October 28, 2024 was not received by them. On November 13, 2024, the Learned Arbitrator passed an order, which reads thus: Perused the application and the reply filed by the Advocate for the Opponents thereon. I find that this is one more attempt to delay the proceedings. As stated in my earlier Order the stage for filing of the evidence was from May, 2024. Till date no evidence has been filed by the Opponents. On the last occasion Orders on applications dated 22-10-2024 were passed on 28-10-2024 and the Advocate for the Opponents was informed that on correcting the mistakes the Order would be ready on 29-10-2024 and accordingly application be made. Till today, however, no application for supply of copy was made nor enquiry was made as to whether the Order was ready. On the same day i.e. on 28-10-2024 directions were given to the Advocate for the Opponents to file the evidence on or before 07-11- 2024 and thereafter the matter would be kept for final arguments. Today the present application for adjournment has been made and the Advocate informed that they would like to challenge the same. I find that this is nothing but delaying. As stated the Order was ready on 29-10-2024 and no application was made nor enquiries were made by either the Advocate or the Opponents. On perusal of the roznama also it could be observed that the filling of the evidence isbeing delayed. I find that this is nothing but delaying. As stated the Order was ready on 29-10-2024 and no application was made nor enquiries were made by either the Advocate or the Opponents. On perusal of the roznama also it could be observed that the filling of the evidence isbeing delayed. Hence I have no other alternative than to reject the application. [Emphasis Supplied] 16. The Petitioners state that they were asked to file written arguments by November 21, 2024 in the main arbitration proceedings, and orders were reserved and kept for pronouncement of award on December 4, 2024. Impugned Order: 17. The Learned Arbitrator has stated in the Impugned Order that in May 2024, leading of evidence had been scheduled. The Respondent Bank had led evidence but the Petitioners kept delaying leading of evidence. An application for cross examination was also filed on August 7, 2024, which was dealt with on September 4, 2024, but the Petitioners did not lead evidence. On October 9, 2024, another adjournment on health grounds was granted. Thereafter, a deadline for serving the evidence was fixed for October 18, 2024. On October 9, 2024, the Petitioners wrote for the first time that they had not been in receipt of the disclosure under Section 12(1) of the Act. Therefore, the Learned Arbitrator immediately gave the disclosure dated January 20, 2024, which had been made to the Registrar. On October 18, 2024, the Petitioners informed the Respondents that they would file an application under Section 16 of the Act. Therefore, the schedule wasadvanced to October 23, 2024 to consider that application, but the Petitioners also filed the Section 13 Application along with the application under Section 16. However, they were unwilling to make submissions on the Section 13 Application. 18. The orders passed on that date and the next date are already extracted above. The Impugned Order then goes on to deal with the Section 13 Application. In a nutshell, it states that orders of the Registrar appointing an arbitrator are valid for one year. On receipt of references relating to multiple loan assets having become non-performing, the Registrar had assigned multiple matters to the Learned Arbitrator on December 1, 2021. However, the Respondent-Bank actually filed the case only on September 21, 2022. The Registrar extended the mandate on January 23, 2023. Fresh approvals were also obtained on June 1, 2023, again valid for another year. However, the Respondent-Bank actually filed the case only on September 21, 2022. The Registrar extended the mandate on January 23, 2023. Fresh approvals were also obtained on June 1, 2023, again valid for another year. However, on October 4, 2023, the Respondent-Bank withdrew the applications with liberty to file afresh. The Petitioners participated in the proceedings and consented to such withdrawal on October 4, 2023. 19. When the order appointing the Learned Arbitrator was still alive (valid until June 1, 2024), the Respondent-Bank filed the matter afresh with disputes having emerged afresh with the Petitioners – this was done on January 20, 2024. On that date, the Learned Arbitrator made his disclosure. According to the Learned Arbitrator, the declaration was part of the compilation sent to the Petitioners. The Impugned Order reasons that had the Petitioners truly not received it, they would have asked for it earlier, and would not have waited until October 2024, when they ran out of time to file their evidence. The Written Statement in Defence was filed by the Petitioners on April 24, 2024, and even at this stage, they did not raise any grievance about the disclosure not having been made. 20. The Impugned Order goes on to point out that the appointment is not made by the banks but by the Registrar. Out of the 72 matters listed in the Annexure to the order dated May 27, 2024, actual arbitration cases came about in only seven cases. The Learned Arbitrator has stated that the fees paid for these arbitrations are lower than the Fourth Schedule to the Arbitration Act. The Learned Arbitrator has asserted that the disclosure under Section 12 had been made to the Registrar. Being institutional arbitration, his disclosures were meant to be shared with the parties by the Registrar. In any case, the Learned Arbitrator has asserted that the disclosure was part of the compilation that the Petitioners received, and if they had not received it, they would not have waited until October 2024 to demand it. The insinuation is that they demanded it in October 2024, when they were running out of excuses to file their evidence. Analysis and Findings: 21. I have gone through the material brought on record by the parties, with the assistance of Learned Counsel for the parties, and the detailed written submissions filed by them. 22. The insinuation is that they demanded it in October 2024, when they were running out of excuses to file their evidence. Analysis and Findings: 21. I have gone through the material brought on record by the parties, with the assistance of Learned Counsel for the parties, and the detailed written submissions filed by them. 22. At the threshold, the legal framework ought to be noticed. The procedure to challenge an arbitrator’s independence and impartiality under Section 12 of the Act is set out in Section 13 of the Act. The challenge is to be made before the Arbitral Tribunal. Section 13(4) is explicit in its terms – if the challenge fails, the arbitration proceedings shall continue. When the arbitral award is made, the party that questioned the independence and impartiality under Section 12 would be entitled to challenge the award in accordance with Section 34 of the Act, making the alleged lack of independence and impartiality, a ground of the challenge. 23. Section 14(1) provides for the circumstances in which the mandate of an arbitrator shall terminate, which is when this Court may substitute the arbitrator. Under Section 14(1)(a), if the arbitrator is de jure or de facto unable to perform his functions, or if he fails to act without undue delay, the mandate shall terminate. If a controversy remains about whether the arbitrator is actually de jure or de facto unable to perform his duties, or thathe has failed to act with undue delay, this Court may be approached under Section 14(2) of the Act. 24. In addition, if the arbitrator withdraws from office, or if the mandate is terminated by consent of the parties, this Court would have jurisdiction to replace the arbitrator, under Section 15 of the Act. 25. The Impugned Order is essentially an order dismissing an application relatable to Section 13 of the Act. For invoking this Court’s jurisdiction to substitute the arbitrator mid-course, the vital jurisdictional facts necessary would be the ingredients of Section 14 and Section 15. 26. The Supreme Court had occasion to articulate the scope of interference under Section 14 way back on August 31, 2017 in HRD Corporation , [HRD Corporation (Marcus Oil and Chemical Division) vs. Gail (India) Limited – (2018) 12 SCC 471 ] . 26. The Supreme Court had occasion to articulate the scope of interference under Section 14 way back on August 31, 2017 in HRD Corporation , [HRD Corporation (Marcus Oil and Chemical Division) vs. Gail (India) Limited – (2018) 12 SCC 471 ] . A Learned Single Judge of this Court (Bharati Dangre, J.) had occasion to deal with the inter-play between the Arbitration Act and the MSCS Act in Kalpesh Mehta , [Kalpesh Shantikumar Mehta & Ors. Vs. NKGSB Co-op. Bank Ltd. and Anr. – Commercial Arbitration Petition No. 220 of 2022 – judgement dated January 9, 2023] , which is a detailed judgement that deals with the appointments made by the Registrar; implications of a selection by the Registrar from a panel; and also gleans from the basis on which a challenge to the constitutional validity of Section 84 of the MSCS Act was repelled. Only to avoid prolix reproduction, I am not extracting from these judgements. 27. The complaint of the Petitioners is that the Learned Arbitrator is acting in haste. Therefore, there is no question of the Arbitral Tribunal not acting without undue delay. As regards de facto inability to perform the functions, it would relate to situations such as ill-health or incapacitation that renders the arbitrator unable to actually perform his functions. None of that being alleged, that facet does not warrant analysis. 28. That leaves the examination of whether there is a de jure inability to perform on the part of the arbitrator. For a de jure inability to perform, there has to be a legal incapacity to perform the duty. One example would be when an arbitrator gets appointed to some role that renders it legally impossible for him to continue even if he is physically able to be an arbitrator – for instance, elevation as a judge of a court. Another mean of becoming de jure unable would be if the contents of Seventh Schedule are attracted in any manner. It is only in such situation that I would have any scope to consider substituting an arbitrator. 29. All the allegations levelled by the Petitioners fall in the realm of the Petitioner’s perception of absence of impartiality and independence of the Learned Arbitrator. These are elements of the Fifth Schedule and the Petitioners ought to hold their horses until (and if) a challenge becomes necessary under Section 34 of the Act. 29. All the allegations levelled by the Petitioners fall in the realm of the Petitioner’s perception of absence of impartiality and independence of the Learned Arbitrator. These are elements of the Fifth Schedule and the Petitioners ought to hold their horses until (and if) a challenge becomes necessary under Section 34 of the Act. Unless any of the Items in the Seventh Schedule is attracted, this Court would have no jurisdiction. It would be inappropriate for me to rule on the merits of these facets, since that may prejudice the eventual challenge, if any is required, under Section 34 of the Act. Therefore, I must focus only on the elements where a de jure inability to act is involved. 30. I have examined the pleadings and the record to examine if any element in the Seventh Schedule is attracted. The three Items of the Seventh Schedule referred to by the Petitioners must be studied. They are Items 7, 13 and 14. Each of these is dealt with below:- 31. Item 7 of the Seventh Schedule provides as follows:- 7. The arbitrator’s law firm currently has a significant commercial relationship with one of the parties or an affiliate of one of the parties. [Emphasis Supplied] 32. As regards Item 7, there is nothing to suggest that the arbitrator is part of a law firm or that the arbitrator himself has significant commercial relationship with the Respondent-Bank. The Petitioners have alluded to the 72 cases of the Respondent-Bank in which the Learned Arbitrator is an arbitrator. The Impugned Order has explained that there are actually only seven cases out of the 72 cases for which an enabling approval had been granted by the Registrar. The list annexed to the Registrar’s order is a total list of matters for which a reference could be made, but as it transpires, not all these cases led to actual arbitration matters commencing. The Impugned Order also states that the fees payable are lower than the Fourth Schedule. 33. Be that as it may, for the mischief of Item 17 to be attracted, there ought to be a “commercial relationship” between the arbitrator and a party to the arbitration. The role of an independent arbitrator statutorily appointed by the Registrar is not a commercial relationship with the parties. 33. Be that as it may, for the mischief of Item 17 to be attracted, there ought to be a “commercial relationship” between the arbitrator and a party to the arbitration. The role of an independent arbitrator statutorily appointed by the Registrar is not a commercial relationship with the parties. Therefore, I am afraid the material on record does not lend itself to invoking Item 17 of the Seventh Schedule. 34. Item 13 of the Seventh Schedule provides as follows:- 13. The arbitrator has a significant financial interest in one of the parties or the outcome of the case. [Emphasis Supplied] 35. There is nothing to indicate that the Learned Arbitrator has a financial interest in the Respondent-Bank or in the outcome of the case. Bald and reckless allegations cannot be made without basis. Should the Petitioners have something concrete to suggest any financial interest of the Learned Arbitrator in the Respondent-Bank, surely they would have placed such material in this Petition. The only allegation appears to be the seemingly humongous number of 72 arbitration cases involving the same bank, which turns out to be seven cases and that too at a fee schedule lower than the fees under the Fourth Schedule. 36. Be that as it may, Item 13 requires the arbitrator to have a significant financial interest in one of the parties – for instance, a significant ownership interest or a lending interest or other commercial interest that has financial implications. If the outcome of the arbitration could hurt the arbitrator’s financial interests, it would lead to Item 13 getting attracted. Appointment by the Registrar in seven would not by itself lead to an inference of the arbitrator having a significant financial interest in the Respondent-Bank. 37. Item 14 of the Seventh Schedule provides as follows:- 14. The arbitrator regularly advises the appointing party or an affiliate of the appointing party, and the arbitrator or his or her firm derives a significant financial income therefrom. [Emphasis Supplied] 38. To begin with, in arbitrations under the MSCS Act, neither party to the proceedings is an appointing party. It is the Registrar who is the appointing party. Besides, Item 14 is a provision that would apply to a three-member arbitral tribunal since in any event, in no case can a sole arbitrator be unilaterally appointed. 39. [Emphasis Supplied] 38. To begin with, in arbitrations under the MSCS Act, neither party to the proceedings is an appointing party. It is the Registrar who is the appointing party. Besides, Item 14 is a provision that would apply to a three-member arbitral tribunal since in any event, in no case can a sole arbitrator be unilaterally appointed. 39. Even if the Respondent-Bank is not the appointing party, there is nothing in the record to indicate that the Learned Arbitrator advises the Respondent-Bank and derives a significant financial income from such advisory role. Bald and reckless allegations cannot be made without basis. Should the Petitioners have something concrete to suggest that the Learned Arbitrator has been providing advice to the Respondent-Bank, surely they would have placed such material in this Petition. 40. The suggestion that the Respondent-Bank provides a suggested list to the Registrar, in itself cannot be the basis for this Court to hold that the Seventh Schedule is attracted. Kalpesh Mehta has dealt with the mechanism for appointment of arbitrators adopted by the Registrar. Even when this Court appoints arbitrators under Section 11, suggestions are sought from the parties and their counsel, and the Court makes up its mind on whom toappoint. Such a consultative exercise would not by itself lead to an inference that one of the parties is the appointing party. 41. For all the aforesaid reasons, the Petition must fail, for not having made out any reasonable case to demonstrate a de jure inability of the Learned Arbitrator to perform his duties. Whether to direct the arbitrator to come up with his income statement and compare the earnings from arbitrations relating to the Respondent-Bank, is an idea that I briefly toyed with. However, I am convinced that such an approach would be inappropriate and it would lead to a roving enquiry whenever any party that is evidently evading smooth conduct of arbitration, levels a bald allegation about the arbitrator. Besides, for an arbitrator statutorily appointed in a statutory arbitration, it would be improper to embark upon such an exercise, and it would actually incentivise a party that is desirous of derailing the arbitration. 42. The analysis in this judgment is restricted to consideration of whether at this stage of the arbitral proceedings, jurisdictional facts exist for this Court to interfere in terms of Section 14 or Section 15. 42. The analysis in this judgment is restricted to consideration of whether at this stage of the arbitral proceedings, jurisdictional facts exist for this Court to interfere in terms of Section 14 or Section 15. If the Court were to have jurisdiction, whether the material on record makes out a case for interference, has to be seen. 43. It is made clear that nothing contained in this judgement would come in the way of the Petitioners agitating any grievance that they may have at the time of proceedings under Section 34 should the need arise for them to challenge any award that goes against them. 44. In the result, this Petition is dismissed. At this stage, I am not dealing with costs, which is still in the domain of the Arbitral Tribunal, which can always factor in all costs involved in the litigation across various stages of the proceedings. 45. At this stage, Learned Counsel for the Petitioner submits that the deferment of the arbitration proceedings that has continued till date, should be continued further. In view of the observations made above, no case is made out for such a deferment to continue. The arbitration shall proceed as scheduled. 46. All actions required to be taken pursuant to this order, shall be taken upon receipt of a downloaded copy as available on this Court’s website.