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2025 DIGILAW 423 (GUJ)

Gurera Synthetics Pvt. Ltd. v. Shree Ram Mills

2025-06-11

D.N.RAY, SUNITA AGARWAL

body2025
ORDER : (PER : HONOURABLE MR.JUSTICE D.N.RAY) 1. Heard Mr. Zubin Bharda, learned advocate for the Appellant. 2. The brief facts of the case are as follows: 2.1 The Appellant, engaged in the business of cloth processing under the name Gurera Synthetics Pvt. Ltd., Maharashtra, entered into a commercial arrangement with the respondent, a manufacturer of grey cloth operating as M/s. Shree Ram Mills, Surat. The Appellant processed and delivered textile goods against orders placed by the respondent and raised invoices amounting to Rs. 28,22,454/-. Of this, the respondent is said to have paid Rs. 19,53,485/-, leaving a balance of Rs. 8,68,969/- unpaid, despite repeated requests. Upon non-payment, the Appellant issued a legal notice demanding the outstanding amount along with interest @24% per annum, failing which the dispute was to be referred to arbitration under the aegis of Bharat Merchants Chamber, Mumbai. The respondent denied liability and instead claimed to have overpaid the Appellant by Rs. 2,08,132/-. 2.2 Relying on Clause 2 of the invoice terms, the Appellant invoked arbitration and claimed the outstanding principal along with accrued interest and arbitration costs (Rs.8,68,969/- along with interest @24% per annum till 30.09.2018 which came to Rs.1,28,751/- and further interest till realization along with cost of Arbitration). 2.3 The Bharat Merchants Chamber registered the matter as Arbitration Case No. A/76/2018/2019. Upon the respondent’s failure to nominate an Arbitrator, the Chamber appointed Shri Krishnadeo Agarwal to represent the respondent. Subsequently, both nominated Arbitrators appointed Shri Vijaykumar Lohiya as the presiding Arbitrator. It is Appellant’s case that the Chamber issued several notices to the respondent. By communication dated 22.12.2018, the respondent appointed an Advocate to represent her and her proprietary concern. The respondent contested the Chamber’s jurisdiction and filed a written statement denying the Appellant’s claim and challenging the authenticity of the Appellant’s account statements. Eventually, the Tribunal proceeded ex-parte and concluded the proceedings. 2.4 The Arbitral Tribunal, having accepted the Appellant’s documentary evidence and finding the claims substantiated, held that, Bharat Merchants Chamber had jurisdiction. It found that the Appellant had established delivery of goods worth Rs. 28,22,454/-, with part-payment of Rs. 19,53,485/-, and thus the respondent remained liable to pay the balance of Rs. 8,68,969/-. The Arbitrators awarded interest @18% per annum (as opposed to the claimed 24%), amounting to Rs. 3,01,011/-, bringing the total award to Rs. 11,69,980/-, with Rs. 12,000/- as arbitration cost. 28,22,454/-, with part-payment of Rs. 19,53,485/-, and thus the respondent remained liable to pay the balance of Rs. 8,68,969/-. The Arbitrators awarded interest @18% per annum (as opposed to the claimed 24%), amounting to Rs. 3,01,011/-, bringing the total award to Rs. 11,69,980/-, with Rs. 12,000/- as arbitration cost. It was further directed that in case of default within 5 days of receipt, post-award interest @18% p.a. would accrue on the awarded sum. 2.5 The respondent did not challenge the award, after which, the Appellant initiated execution proceedings before the Commercial Court, Surat, registered as Commercial Execution No. 416 of 2022. Though the respondent did not file any challenge under Section 34 of the Arbitration and Conciliation Act, but contended in execution that the appointment of the Tribunal was without respondent’s consent and thus invalid, rendering the award a nullity. 2.6 The Commercial Court framed two issues for determination: i. Whether the award passed by the learned Arbitrator in violation of Section 12 (5) of the Arbitration and Conciliation Act and hence a nullity and the second issue that was framed; and ii. Whether the Commercial Court in Arbitration proceedings under Section 36 of the Arbitration and Conciliation Act can decide the issue of nullity and refuse to execute the award on the ground of nullity, even if the award is not challenged. Both issues were answered in the affirmative, and the execution application was dismissed. 3 . Aggrieved by the order dated 01.08.2023 passed by the 5th Additional Sessions Judge, District & Sessions Court, Surat, the Appellant has approached this Court by way of the present Appeal from Order, with the following prayers: a) “That this Hon'ble Court be pleased to admit the present appeal and quash and set aside the impugned order dated 01.08.2023 passed by the passed by the 5th Additional Sessions Judge, District & Sessions Court, Surat, rejecting Commercial Execution No.416 of 2022, filed by the Appellant and in turn be pleased to direct the 5th Additional Sessions Judge, District & Sessions Court, Surat, to execute the award dated 17.01.2020 passed in Arbitration Case No.A/76/2018/2019. b) That this Hon'ble Court be pleased to grant such other and further relief as may be deemed fit and proper in the facts and circumstances of the case. b) That this Hon'ble Court be pleased to grant such other and further relief as may be deemed fit and proper in the facts and circumstances of the case. c) That this Hon'ble Court be pleased to dispense with the filing of the affidavit in support of the averments, contentions and grounds raised in the appeal as the facts are taken from the record of the Court below.” 4. Mr. Bharda, learned Counsel appearing on behalf of the Appellant submitted that the impugned order is founded on the incorrect factual premise that the award was passed by a Sole Arbitrator, whereas, the perusal of the consent-sheet at Page No.50 of the AO paper book would clearly reveal that the award was passed by a Tribunal comprising three learned Arbitrators of which one each have been appointed by the Plaintiff and the Defendant and the third Arbitrator had been chosen by the nominee Arbitrator. Further, both the parties have consented to the appointment of even the third Arbitrator. 5. Mr. Bharda further contended that the reliance upon Section 12 (5) of the Act is thoroughly misplaced, inasmuch as, the aforesaid document clearly constitutes an agreement to waive the applicability of Section 12 of the Act and therefore, the impugned order has been founded on a misplaced factual and legal premise and therefore liable to be set aside. 5.1 For the effective discussion to follow, Section 12 (5) of the Arbitration and Conciliation Act, 1996 is quoted hereinbelow for ready reference. “ Section 12 (5):- Notwithstanding any prior agreement to the contrary, any person whose relationship, with the parties or counsel or the subject-matter of the dispute, falls under any of the categories specified in the Seventh Schedule shall be ineligible to be appointed as an arbitrator: Provided that parties may, subsequent to disputes having arisen between them, waive the applicability of this sub-section by an express agreement in writing.” 6. Having given our anxious consideration to the submissions of Mr. Bharda and after perusing the impugned order and the documents on record, we are of the opinion that no case has been made out by Mr. Bharda which would impel us to interfere with the impugned order. Having given our anxious consideration to the submissions of Mr. Bharda and after perusing the impugned order and the documents on record, we are of the opinion that no case has been made out by Mr. Bharda which would impel us to interfere with the impugned order. We say so for the following reasons :- A. The so-called document of consent at Page No.50 of the paper-book as referred to hereinabove is a form of an organization by the name of Bharat Merchants’ Chamber where the names of the three Arbitrators are handwritten, below which, the signature of the Plaintiff and Defendant have been taken. From the aforesaid form, it is clear that there is no indication whether the Arbitrators referred to therein have any semblance of independence and insulation from the business houses which may be connected to the Appellant. There is no declaration on the part of all the Arbitrators that they have no interest in the subject matter of the dispute or that there is no conflict of interest. B. After the amendment to the Arbitration Act in 2015, in order to constitute a waiver in terms of Section 12 (5) of the Act, there has to be an express agreement in writing between the parties by which the conscious consent to the disputes being given to be adjudicated by a Sole Arbitrator or a Tribunal, who may otherwise have a conflict of interest or an interest over the subject matter/influence over the parties, can be entrusted with the process of adjudication. There are cases, for example, in the matter of family disputes, etc., where the parties may choose an Arbitrator from the very close circle in whom the parties can confide, instead of choosing a complete stranger as an Arbitrator. However, in such circumstances, a specific agreement has to be executed between the parties so as to waive the application of Section 12 (5) of the Act. There is no averment by the Appellant in the instant case that there is any such agreement which has been executed between the parties that shows the conscious consent of the parties to allow the present Tribunal to be constituted. The documents referred to at Page No.50 under no circumstances can be said to meet the requirement of Section 12 (5) of the Act. The documents referred to at Page No.50 under no circumstances can be said to meet the requirement of Section 12 (5) of the Act. C. The impugned order, in our view, has rightly held that the Court in execution proceedings under Section 36 of the Act, can decide the issue of nullity of the award under execution and refuse to execute the award. Just like a decree of a Court without jurisdiction is a nullity and unenforceable in execution, similarly an award in violation of the mandate of Section 12 (5) of the Act has to be held to be passed by an illegally constituted Tribunal and for the exact same reason, must be held to be unenforceable in an execution petition under Section 36 of the Act. 7. It will be noted that the said Bharat Merchants’ Chamber is situated in Mumbai and is intrinsically connected with the textile trade. It is also seen that the Appellant is located at Mumbai and is a manufacturer of textile. Therefore, the likelihood of a deep and pervasive connection between the two cannot be ruled out and on the contrary, must be inferred. From the tax invoices of the Appellant, it will be seen that the following terms and conditions are printed in every invoice, which are the subject matter of the instant arbitration:- “TERMS: 1. Any kind of dispute & complaints should be settled within seven days on receipt of this bill otherwise no claim will be entertained or accepted at all. 2. Dispute if any relating to this transaction will be subject to the arbitration rule of Bharat Merchant Chamber, Mumbai only and the award will be final and binding on the parties in case any legal proceedings is taken further for any reason whatsoever, it is clear that Bombay Courts alone will have jurisdiction. 3) Interest charged 18% after 7 days of the bill date.” 8. From the aforesaid, this Court is of the opinion that the following clauses of the Seventh Schedule of the Act will govern the relationship between the Bharat Merchants’ Chamber and the Appellant, namely Clause Nos.1, 2, 5 and 8. The aforesaid clauses are as under :- “1. The arbitrator is an employee, consultant, advisor or has any other past or present business relationship with a party. 2. The aforesaid clauses are as under :- “1. The arbitrator is an employee, consultant, advisor or has any other past or present business relationship with a party. 2. The arbitrator currently represents or advises one of the parties or an affiliate of one of the parties. 5. The arbitrator is a manager, director or part of the management, or has a similar controlling influence, in an affiliate of one of the parties if the affiliate is directly involved in the matters in dispute in the arbitration. 8. The arbitrator regularly advises the appointing party or an affiliate of the appointing party even though neither the arbitrator nor his or her firm derives a significant financial income therefrom.” 9. From the aforesaid, it is clear that not only has Bharat Merchants’ Chamber having a great deal of influence and connection with the Appellant but also all the three Arbitrators have been appointed by the said Bharat Merchants’ Chamber. In such situation, the learned Commercial Court was not in error in holding that the Arbitrators have been unilaterally appointed by the Appellant (although the reference to the Tribunal as “Sole Arbitrator” is clearly erroneous). 10. In such view of the matter, it was imperative for the parties to waive the applicability of Sub Section 12 (5) of the Act by executing an express agreement in writing, as mandated by the provisions. In the absence of such express agreement, the Arbitrators must be held to be ineligible to enter into the disputes between the parties and therefore, the award passed by such Tribunal must necessarily be held to be a nullity. In the case of Bharat Broadband Network Ltd. Vs. United Telecoms Ltd. reported in (2019) 5 SCC 755 the Hon’ble Supreme Court has held as under :- “11. Section 12 (5) has been earlier dealt with in three Supreme Court judgments. In Voestalpine Schienen GmbH v. Delhi Metro Rail Corporation Ltd., (2017) 4 SCC 665 , this Court went into the recommendations of the aforesaid Law Commission Report, and referred in great detail to the law before the amendment made in Section 12 and then held: “23. It also cannot be denied that the Seventh Schedule is based on IBA guidelines which are clearly regarded as a representation of international based practices and are based on statutes, case law and juristic opinion from a cross-section on jurisdiction. It also cannot be denied that the Seventh Schedule is based on IBA guidelines which are clearly regarded as a representation of international based practices and are based on statutes, case law and juristic opinion from a cross-section on jurisdiction. It is so mentioned in the guidelines itself.” xxx xxx xxx “25. Section 12 has been amended with the objective to induce neutrality of arbitrators viz. their independence and impartiality. The amended provision is enacted to identify the “circumstances” which give rise to “justifiable doubts” about the independence or impartiality of the arbitrator. If any of those circumstances as mentioned therein exists, it will give rise to justifiable apprehension of bias. The Fifth Schedule to the Act enumerates the grounds which may give rise to justifiable doubts of this nature. Likewise, the Seventh Schedule mentions those circumstances which would attract the provisions of sub- section (5) of Section 12 and nullify any prior agreement to the contrary. In the context of this case, it is relevant to mention that only if an arbitrator is an employee, a consultant, an advisor or has any past or present business relationship with a party, he is rendered ineligible to act as an arbitrator. Likewise, that person is treated as incompetent to perform the role of arbitrator, who is a manager, director or part of the management or has a single controlling influence in an affiliate of one of the parties if the affiliate is directly involved in the matters in dispute in the arbitration. Likewise, persons who regularly advised the appointing party or affiliate of the appointing party are incapacitated. A comprehensive list is enumerated in Schedule 5 and Schedule 7 and admittedly the persons empanelled by the respondent are not covered by any of the items in the said list.” 12. In HRD Corporation v. GAIL (India) Ltd., (2018) 12 SCC 471 , this Court, after setting out the amendments made in Section 12 and the Fifth, Sixth, and Seventh Schedules to the Act, held as follows: “12. After the 2016 Amendment Act, a dichotomy is made by the Act between persons who become “ineligible” to be appointed as arbitrators, and persons about whom justifiable doubts exist as to their independence or impartiality. After the 2016 Amendment Act, a dichotomy is made by the Act between persons who become “ineligible” to be appointed as arbitrators, and persons about whom justifiable doubts exist as to their independence or impartiality. Since ineligibility goes to the root of the appointment, Section 12 (5) read with the Seventh Schedule makes it clear that if the arbitrator falls in any one of the categories specified in the Seventh Schedule, he becomes “ineligible” to act as arbitrator. Once he becomes ineligible, it is clear that, under Section 14(1) (a), he then becomes de jure unable to perform his functions inasmuch as, in law, he is regarded as “ineligible”. In order to determine whether an arbitrator is de jure unable to perform his functions, it is not necessary to go to the Arbitral Tribunal under Section 13. Since such a person would lack inherent jurisdiction to proceed any further, an application may be filed under Section 14(2) to the Court to decide on the termination of his/ her mandate on this ground. As opposed to this, in a challenge where grounds stated in the Fifth Schedule are disclosed, which give rise to justifiable doubts as to the arbitrator’s independence or impartiality, such doubts as to independence or impartiality have to be determined as a matter of fact in the facts of the particular challenge by the Arbitral Tribunal under Section 13. If a challenge is not successful, and the Arbitral Tribunal decides that there are no justifiable doubts as to the independence or impartiality of the arbitrator/arbitrators, the Tribunal must then continue the arbitral proceedings under Section 13(4) and make an award. It is only after such award is made, that the party challenging the arbitrator’s appointment on grounds contained in the Fifth Schedule may make an application for setting aside the arbitral award in accordance with Section 34 on the aforesaid grounds. It is clear, therefore, that any challenge contained in the Fifth Schedule against the appointment of Justice Doabia and Justice Lahoti cannot be gone into at this stage, but will be gone into only after the Arbitral Tribunal has given an award. Therefore, we express no opinion on items contained in the Fifth Schedule under which the appellant may challenge the appointment of either arbitrator. They will be free to do so only after an award is rendered by the Tribunal.” xxx xxx xxx “14. Therefore, we express no opinion on items contained in the Fifth Schedule under which the appellant may challenge the appointment of either arbitrator. They will be free to do so only after an award is rendered by the Tribunal.” xxx xxx xxx “14. The enumeration of grounds given in the Fifth and Seventh Schedules have been taken from the IBA Guidelines, particularly from the Red and Orange Lists thereof. The aforesaid guidelines consist of three lists. The Red List, consisting of non-waivable and waivable guidelines, covers situations which are “more serious” and “serious”, the “more serious” objections being non-waivable. The Orange List, on the other hand, is a list of situations that may give rise to doubts as to the arbitrator’s impartiality or independence, as a consequence of which the arbitrator has a duty to disclose such situations. The Green List is a list of situations where no actual conflict of interest exists from an objective point of view, as a result of which the arbitrator has no duty of disclosure. These Guidelines were first introduced in the year 2004 and have thereafter been amended, after seeing the experience of arbitration worldwide. In Part 1 thereof, general standards regarding impartiality, independence and disclosure are set out.” xxx xxx xxx “17. It will be noticed that Items 1 to 19 of the Fifth Schedule are identical with the aforesaid items in the Seventh Schedule. The only reason that these items also appear in the Fifth Schedule is for purposes of disclosure by the arbitrator, as unless the proposed arbitrator discloses in writing his involvement in terms of Items 1 to 34 of the Fifth Schedule, such disclosure would be lacking, in which case the parties would be put at a disadvantage as such information is often within the personal knowledge of the arbitrator only. It is for this reason that it appears that Items 1 to 19 also appear in the Fifth Schedule.” 13. In TRF Ltd. (supra), this Court referred to Section 12 (5) of the Act in the context of appointment of an arbitrator by a Managing Director of a corporation, who became ineligible to act as arbitrator under the Seventh Schedule. This Court held: “50. First, we shall deal with Clause (d). In TRF Ltd. (supra), this Court referred to Section 12 (5) of the Act in the context of appointment of an arbitrator by a Managing Director of a corporation, who became ineligible to act as arbitrator under the Seventh Schedule. This Court held: “50. First, we shall deal with Clause (d). There is no quarrel that by virtue of Section 12 (5) of the Act, if any person who falls under any of the categories specified in the Seventh Schedule shall be ineligible to be appointed as the arbitrator. There is no doubt and cannot be, for the language employed in the Seventh Schedule, the Managing Director of the Corporation has become ineligible by operation of law. It is the stand of the learned Senior Counsel for the appellant that once the Managing Director becomes ineligible, he also becomes ineligible to nominate. Refuting the said stand, it is canvassed by the learned Senior Counsel for the respondent that the ineligibility cannot extend to a nominee if he is not from the Corporation and more so when there is apposite and requisite disclosure. We think it appropriate to make it clear that in the case at hand we are neither concerned with the disclosure nor objectivity nor impartiality nor any such other circumstance. We are singularly concerned with the issue, whether the Managing Director, after becoming ineligible by operation of law, is he still eligible to nominate an arbitrator. At the cost of repetition, we may state that when there are two parties, one may nominate an arbitrator and the other may appoint another. That is altogether a different situation. If there is a clause requiring the parties to nominate their respective arbitrator, their authority to nominate cannot be questioned. What really in that circumstance can be called in question is the procedural compliance and the eligibility of their arbitrator depending upon the norms provided under the Act and the Schedules appended thereto. But, here is a case where the Managing Director is the “named sole arbitrator” and he has also been conferred with the power to nominate one who can be the arbitrator in his place. Thus, there is subtle distinction……” xxx xxx xxx “54. In such a context, the fulcrum of the controversy would be, can an ineligible arbitrator, like the Managing Director, nominate an arbitrator, who may be otherwise eligible and a respectable person. Thus, there is subtle distinction……” xxx xxx xxx “54. In such a context, the fulcrum of the controversy would be, can an ineligible arbitrator, like the Managing Director, nominate an arbitrator, who may be otherwise eligible and a respectable person. As stated earlier, we are neither concerned with the objectivity nor the individual respectability. We are only concerned with the authority or the power of the Managing Director. By our analysis, we are obligated to arrive at the conclusion that once the arbitrator has become ineligible by operation of law, he cannot nominate another as an arbitrator. The arbitrator becomes ineligible as per prescription contained in Section 12 (5) of the Act. It is inconceivable in law that person who is statutorily ineligible can nominate a person. Needless to say, once the infrastructure collapses, the superstructure is bound to collapse. One cannot have a building without the plinth. Or to put it differently, once the identity of the Managing Director as the sole arbitrator is lost, the power to nominate someone else as an arbitrator is obliterated. Therefore, the view expressed by the High Court is not sustainable and we say so.” 14. From a conspectus of the above decisions, it is clear that Section 12 (1), as substituted by the Arbitration and Conciliation (Amendment) Act, 2015 [“Amendment Act, 2015”], makes it clear that when a person is approached in connection with his possible appointment as an arbitrator, it is his duty to disclose in writing any circumstances which are likely to give rise to justifiable doubts as to his independence or impartiality. The disclosure is to be made in the form specified in the Sixth Schedule, and the grounds stated in the Fifth Schedule are to serve as a guide in determining whether circumstances exist which give rise to justifiable doubts as to the independence or impartiality of an arbitrator. Once this is done, the appointment of the arbitrator may be challenged on the ground that justifiable doubts have arisen under sub-section (3) of Section 12 subject to the caveat entered by sub- section (4) of Section 12 . The challenge procedure is then set out in Section 13, together with the time limit laid down in Section 13(2). Once this is done, the appointment of the arbitrator may be challenged on the ground that justifiable doubts have arisen under sub-section (3) of Section 12 subject to the caveat entered by sub- section (4) of Section 12 . The challenge procedure is then set out in Section 13, together with the time limit laid down in Section 13(2). What is important to note is that the arbitral tribunal must first decide on the said challenge, and if it is not successful, the tribunal shall continue the proceedings and make an award. It is only post award that the party challenging the appointment of an arbitrator may make an application for setting aside such an award in accordance with Section 34 of the Act. 15. Section 12 (5), on the other hand, is a new provision which relates to the de jure inability of an arbitrator to act as such. Under this provision, any prior agreement to the contrary is wiped out by the non- obstante clause in Section 12 (5) the moment any person whose relationship with the parties or the counsel or the subject matter of the dispute falls under the Seventh Schedule. The sub-section then declares that such person shall be “ineligible” to be appointed as arbitrator. The only way in which this ineligibility can be removed is by the proviso, which again is a special provision which states that parties may, subsequent to disputes having arisen between them, waive the applicability of Section 12 (5) by an express agreement in writing. What is clear, therefore, is that where, under any agreement between the parties, a person falls within any of the categories set out in the Seventh Schedule, he is, as a matter of law, ineligible to be appointed as an arbitrator. The only way in which this ineligibility can be removed, again, in law, is that parties may after disputes have arisen between them, waive the applicability of this sub-section by an “express agreement in writing”. Obviously, the “express agreement in writing” has reference to a person who is interdicted by the Seventh Schedule, but who is stated by parties (after the disputes have arisen between them) to be a person in whom they have faith notwithstanding the fact that such person is interdicted by the Seventh Schedule. 16. Obviously, the “express agreement in writing” has reference to a person who is interdicted by the Seventh Schedule, but who is stated by parties (after the disputes have arisen between them) to be a person in whom they have faith notwithstanding the fact that such person is interdicted by the Seventh Schedule. 16. The Law Commission Report, which has been extensively referred to in some of our judgments, makes it clear that there are certain minimum levels of independence and impartiality that should be required of the arbitral process, regardless of the parties’ agreement. This being the case, the Law Commission then found: “59. The Commission has proposed the requirement of having specific disclosures by the arbitrator, at the stage of his possible appointment, regarding existence of any relationship or interest of any kind which is likely to give rise to justifiable doubts. The Commission has proposed the incorporation of the Fourth Schedule, which has drawn from the Red and Orange lists of the IBA Guidelines on Conflicts of Interest in International Arbitration, and which would be treated as a “guide” to determine whether circumstances exist which give rise to such justifiable doubts. On the other hand, in terms of the proposed section 12 (5) of the Act and the Fifth Schedule which incorporates the categories from the Red list of the IBA Guidelines (as above), the person proposed to be appointed as an arbitrator shall be ineligible to be so appointed, notwithstanding any prior agreement to the contrary. In the event such an ineligible person is purported to be appointed as an arbitrator, he shall be de jure deemed to be unable to perform his functions, in terms of the proposed explanation to section 14. Therefore, while the disclosure is required with respect to a broader list of categories (as set out in the Fourth Schedule, and as based on the Red and Orange lists of the IBA Guidelines), the ineligibility to be appointed as an arbitrator (and the consequent de jure inability to so act) follows from a smaller and more serious sub-set of situations (as set out in the Fifth Schedule, and as based on the Red list of the IBA Guidelines). 60. 60. The Commission, however, feels that real and genuine party autonomy must be respected, and, in certain situations, parties should be allowed to waive even the categories of ineligibility as set in the proposed Fifth Schedule. This could be in situations of family arbitrations or other arbitrations where a person commands the blind faith and trust of the parties to the dispute, despite the existence of objective “justifiable doubts” regarding his independence and impartiality. To deal with such situations, the Commission has proposed the proviso to section 12 (5), where parties may, subsequent to disputes having arisen between them, waive the applicability of the proposed section 12 (5) by an express agreement in writing. In all other cases, the general rule in the proposed section 12 (5) must be followed. In the event the High Court is approached in connection with appointment of an arbitrator, the Commission has proposed seeking the disclosure in terms of section 12 (1), and in which context the High Court or the designate is to have “due regard” to the contents of such disclosure in appointing the arbitrator.” (emphasis in original) Thus, it will be seen that party autonomy is to be respected only in certain exceptional situations which could be situations which arise in family arbitrations or other arbitrations where a person subjectively commands blind faith and trust of the parties to the dispute, despite the existence of objective justifiable doubts regarding his independence and impartiality. 17. The scheme of Sections 12 , 13, and 14, therefore, is that where an arbitrator makes a disclosure in writing which is likely to give justifiable doubts as to his independence or impartiality, the appointment of such arbitrator may be challenged under Sections 12 (1) to 12(4) read with Section 13. However, where such person becomes “ineligible” to be appointed as an arbitrator, there is no question of challenge to such arbitrator, before such arbitrator. In such a case, i.e., a case which falls under Section 12 (5), Section 14(1)(a) of the Act gets attracted inasmuch as the arbitrator becomes, as a matter of law (i.e., de jure), unable to perform his functions under Section 12 (5), being ineligible to be appointed as an arbitrator. This being so, his mandate automatically terminates, and he shall then be substituted by another arbitrator under Section 14(1) itself. This being so, his mandate automatically terminates, and he shall then be substituted by another arbitrator under Section 14(1) itself. It is only if a controversy occurs concerning whether he has become de jure unable to perform his functions as such, that a party has to apply to the Court to decide on the termination of the mandate, unless otherwise agreed by the parties. Thus, in all Section 12 (5) cases, there is no challenge procedure to be availed of. If an arbitrator continues as such, being de jure unable to perform his functions, as he falls within any of the categories mentioned in Section 12 (5), read with the Seventh Schedule, a party may apply to the Court, which will then decide on whether his mandate has terminated. Questions which may typically arise under Section 14 may be as to whether such person falls within any of the categories mentioned in the Seventh Schedule, or whether there is a waiver as provided in the proviso to Section 12 (5) of the Act. As a matter of law, it is important to note that the proviso to Section 12 (5) must be contrasted with Section 4 of the Act. Section 4 deals with cases of deemed waiver by conduct; whereas the proviso to Section 12 (5) deals with waiver by express agreement in writing between the parties only if made subsequent to disputes having arisen between them. Categories mentioned in Section 12 (5), read with the Seventh Schedule, a party may apply to the Court, which will then decide on whether his mandate has terminated. Questions which may typically arise under Section 14 may be as to whether such person falls within any of the categories mentioned in the Seventh Schedule, or whether there is a waiver as provided in the proviso to Section 12 (5) of the Act. As a matter of law, it is important to note that the proviso to Section 12 (5) must be contrasted with Section 4 of the Act. Section 4 deals with cases of deemed waiver by conduct; whereas the proviso to Section 12 (5) deals with waiver by express agreement in writing between the parties only if made subsequent to disputes having arisen between them. 11. Section 4 deals with cases of deemed waiver by conduct; whereas the proviso to Section 12 (5) deals with waiver by express agreement in writing between the parties only if made subsequent to disputes having arisen between them. 11. In view of the categorical decision of the Hon’ble Supreme Court, we have no hesitation in holding that the Tribunal was ineligible to adjudicate the disputes between the parties in the absence of an express agreement as mandated by Section 12 (5) of the Act. 12. In such circumstances, there was a dire necessity on the part of the parties to the dispute to specifically execute an agreement, giving their conscious waiver in terms of the proviso to Section 12 (5) of the Act. In our considered view, the aforesaid document at Page No.50 of the paper-book does not meet the requirements of being an agreement of waiver in terms of the conditions laid down in Section 12 (5) of the Act. 13. Thus, no infirmity can be attached to the impugned order and the instant Appeal, being devoid of any merit, is dismissed.