Madhya Pradesh High Court
Prasar Education And Welfare … vs Prasar Sikhshan Evam Seva Sansthan … on 27 June, 2025
Author: Subodh Abhyankar
Bench: Subodh Abhyankar
NEUTRAL CITATION NO. 2025:MPHC-IND:15943 1
IN THE HIGH COURT OF MADHYA PRADESH
AT INDORE
BEFORE
HON'BLE SHRI JUSTICE SUBODH ABHYANKAR
ON THE 30th OF APRIL, 2025
MISC. PETITION No. 1283 of 2025
PRASAR EDUCATION AND WELFARE ORGANISATION THROUGH ITS
PRESIDENT SH. ALOK AND OTHERS
Versus
PRASAR SIKHSHAN EVAM SEVA SANSTHAN THROUGH ITS PRESIDENT
SH. PRAVEEN AND OTHERS
Appearance:
Shri Shri Ajay Bagadia - Senior Advocate with Shri Paritosh Shrivastava and
Shri P.C. Bagadia for the petitioner.
Shri Vinay Gandhi-Advocate for the respondents.
ORDER
1] This writ petition has been filed by the petitioners under Article
227 of the Constitution of India seeking the following reliefs:-
7.1 This Hon’ble Court be pleased to issue a writ of
certiorari/mandamus or any other such writ, direction or order as
deemed appropriate in the facts and circumstances of the case,
quashing the impugned order dated 24/02/2025 passed by District
Judge, Ujjain (M.P.) in case no. MJC 24/2025(Annexure P/1);
7.2 This Hon’ble Court be pleased to issue a writ of
certiorari/mandamus or any other such writ, direction or order as
deemed appropriate in the facts and circumstances of the case,
quashing the Proceedings and Application under Section 14(2) of
the Act submitted by the respondent No. 1 and 2 before the
Learned District Judge, Ujjain being MJ C No. 24 of 2025
(AnnexureP/2);and
7.3. This Hon’ble Court be pleased to issue a writ of
certiorari/mandamus or any other such writ, direction or order as
deemed appropriate in the facts and circumstances of the case,
quashing the impugned order dated 28-02-2025 (Annexure P/3).
7.4 That the petition be allowed with costs, and such other relief
as may be deemed appropriate in the facts and circumstances of
the present case.”
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2] The petitioners are aggrieved of the interim orders dated
27.02.2025, 24.01.2025 and 28.01.2025, passed by the learned District
Judge, Ujjain in MJC no.24/2025 in an application filed by the
respondents no. 1 & 2 under Section 14(2) of the Arbitration and
Conciliation Act, 1996 (hereinafter referred to as “the Act of 1996”)
challenging the mandate of the Arbitrators, who have been appointed by
the parties to adjudicate upon the dispute between them.
3] Shorn of details, the facts of the case are that the petitioner no.2,
petitioner no.4 and the respondent no. 2 are real brothers and the sons
of the respondent no.3. The petitioner no.1, the petitioner no.3 and the
respondent no.1 are the Societies registered under the M.P. Societies
Registration Act (mentioned the names of all the parties concerned).
4] The case of the petitioners is that they had mutually decided to
distribute the family properties and management of the societies, and
accordingly, two Memorandums of Understanding dated 10.02.2021
were executed between them. The first Memorandum of Understanding
(in short MOU) was executed individually which was relating to
distribution of immovable properties, and the second MOU was
executed on behalf of the Societies which was for distribution of
Management of Societies. In both the MOUs, the parties have
mentioned that Mr. Asgar Ali Badshah and Mr. Mohsin Ali Merchant
are advisors of the parties and in case of any dispute the same shall be
referred to the said persons as Arbitrators. Subsequently, a dispute also
arose between the parties in respect of the fulfilment of the said MOUs,
and thus, a notice dated 12.07.2024, was also sent by the counsel for the
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petitioners to the respondents regarding the said dispute.
5] Admittedly, after the dispute was raised between the parties, they
were also required to initiate arbitration proceedings, however, as the
parties had named only two Arbitrators, they again executed two
subsequent agreements, both dated 29.07.2024, whereby they have
acknowledged and confirmed the appointment of the earlier Arbitrators
and their proximity to the parties was also agreed upon, and in addition,
they have also agreed for the appointment of the third Arbitrator viz.,
Mrs. Karuna Trivedi ( a retired District Judge). Thus, the Arbitration
Tribunal was constituted of the aforesaid three persons and before
whom, a claim was also submitted by the petitioners on 24.08.2024,
and after obtaining all the documents from the petitioners, the
respondents no. 1 & 2 also submitted a written objection of 07.10.2024,
challenging the jurisdiction of the Arbitral Tribunal, as preliminary
objections to the claims filed by the claimants.
6] The petitioners along with the respondents no. 3 & 4 and 5 also
submitted their replies, and on 19.10.2024, the respondents no.1 & 2
moved yet another application under Section 12(5) read with Section
14(2) of the Act of 1996 objecting to the jurisdiction of Arbitral
Tribunal of which also, the contesting parties filed their replies
7] On 30.11.2024, the Arbitral Tribunal heard the parties on the
objections as also the application filed under Section 12(5) r/w Section
14(2) of the Act, 1996, and the respondents no. 1 & 2 were also directed
to file their written submissions by 09.12.2024, which was also filed by
the respondents.
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8] It is further the case of the petitioners that before the aforesaid
application could be decided by the Arbitrators, the respondents no.1 &
2, on 24.01.2025, submitted an application under Section 14(2) of the
Act of 1996 before the learned District Judge, Ujjain praying that the
mandate of the Arbitral Tribunal be terminated, as the Arbitrators are de
jure ineligible to act as the Arbitrators, in terms of Section 12(5) of the
Act of 1996. The aforesaid case was registered as MJC no.24/2025,
and the District Court, vide its order dated 25.01.2025, restrained the
Arbitral Tribunal from passing any final order in the aforesaid recovery
case, also observing that the Arbitral Tribunal has not decided the
preliminary objections raised by the respondents no.1 & 2 regarding
their ineligibility to act as Arbitrators. Since the Arbitration proceedings
were not stayed the Arbitrators decided the application filed by the
respondents No.1 & 2 by rejecting the same vide their order dated
24.02.2025. Subsequent to that, on 27.02.2025, the respondents 1 & 2
also submitted three applications before the District Court, viz; one for
the amendment of the main application; second, for summoning the
record and third, for the urgent hearing of the application for grant of
injunction, and the District Judge vide its order dated 27.02.2025 itself,
has stayed the further proceedings pending before the Arbitration
Tribunal.
9] Shri Ajay Bagadia, learned senior counsel appearing for the
petitioners has submitted that since, on the application filed by the
respondents no. 1 & 2 challenging the jurisdiction of the Arbitral
Tribunal, the order was already passed by the Arbitral Tribunal on
24.02.2025, the only course available to the respondents no. 1 & 2 was
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to challenge the aforesaid order only after conclusion of the arbitral
proceedings, in an application filed under Section 34 of the Act of
1996. Thus, it is submitted that no other remedy is available to the
respondents no.1 & 2, specially of filing an application under Section
14(2) of the Act of 1996 before the District Court and if such an
application under Section 14(2) is allowed to continue, the same would
amount to the misuse of the process of the court and would also be
beyond the jurisdiction of the District Court which has already ceased
to exist no sooner the final order on the challenge of the Arbitral
Tribunal was passed by the Arbitrators under Section 12(5) of the Act
of 1996.
10] Learned Senior counsel for the petitioners has also drawn the
attention of this Court to Section 13 of the Act of 1996 which provides
for the challenge procedure. Sub section (2) of which also provides that
a party who intends to challenge an Arbitrator is required to challenge
the same by filing a written statement of the reasons for the challenge to
the Arbitral Tribunal and as per sub section (3) of section 13, unless the
Arbitrator challenge under sub-section (2) withdraws from his office or
a party agrees to the challenge, the Arbitral Tribunal is required to
decide on the challenge. Similarly sub-section (4) of Section 13
provides that if such challenge is not successful, the Arbitral Tribunal
shall continue with the arbitral proceedings and make an arbitral award
and as per sub-section (5), the aforesaid award that can be challenged
by the party challenging the Arbitrator by filing an application for
setting aside such an Award under Section 34 of the Act of 1996. Thus,
it is submitted that the Arbitration Act specifically provides for the
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challenge procedure and the consequences of the same lies in the water
tight compartments of Section 12, Section 13 and Section 14 of the Act
of 1996. Thus, it is submitted that the District Judge has no authority to
dwell upon the applications filed by the respondents no. 1 & 2 under
Section 14(2) of the Act of 1996.
11] In support of his submissions, Shri Bagadia has also relied upon
the decision rendered by the Supreme Court in the case of Newton
Engineering & Chemicals Ltd vs. Indian Oil Corporation Ltd.and two
others reported in 2007(93) DRJ 127, and the decision rendered by this
Court in the case of State of M.P. vs. Vayam Technologies Ltd.
reported in I.L.R. (2105) M.P. , 629.
12] On the other hand, the prayer is vehemently opposed by the
respondents no. 1 & 2 and the replies and extensive written submissions
have also been filed.
13] Shri Vinay Gandhi, learned counsel appearing for the respondents
no.1 & 2 has submitted that the respondents no.1 & 2 had no option but
to file an application under Section 14(2) of the Act of 1996 before the
learned District Judge Ujjain, which is the competent court as provided
under Section 2 (E) of the Act of 1996, which defies the word “Court”.
Shri Gandhi has laid special emphasis on sub section (2) of Section 14
of the Act of 1996 which provides that if a controversy remains
concerning any of the grounds referred to in clause (a) of sub-section(1)
of Section 14 of the Act of 1996 then a party may apply to the Court to
decide on the the mandate of the Arbitrator. Thus, it is submitted that
since the controversy regarding the jurisdiction of the Arbitral Tribunal
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to decide the dispute between the parties has still not been resolved
even after the order was passed by the Arbitral Tribunal that it has the
mandate to decide the lis between the parties, the District Court has the
jurisdiction under sub-section (2) of Section 14 of the Act of 1996 to
decide the same.
14] In support of his submissions, Shri Gandhi has also relied upon
the decisions rendered by the Supreme Court in the cases of Bharat
Broadband Network Limited vs. United Telecoms Limited reported as
(2019) 5 SCC 755; Ellora Paper Mills Limited vs. State of Madhya
Pradesh reported in AIR 2022 SC 280, and the decisions rendered by
this Court in the cases of Frank Airways Pvt. Ltd. vs. Airports
Authority of India {Arbitration Case no. 20/2019 decided on
13.12.2019) and Rajkumar Tamotia and another vs. Alok Sharma
{Arbitration Case no.48/2024 decided on 22.05.2025}.
15] It is also submitted that Shri Asgar Ali Badshah, the Arbitrator is
the executive member of the petitioner no.1/Society and Mrs. Karuna
Trivedi-the Arbitrator, happens to be the sister of Shri Ravindra Trivedi,
who is also an executive member of the petitioner no.1/ Society. Thus,
both of them are ineligible to act as Arbitrators, in terms of Section
12(5) of the Act of 1996, and in view of the clauses 1, 2, 5, 9 & 10 of
the VII Schedule to the Act of 1996. Thus, it is submitted that Shri
Asgar Ali Badshah and Mrs. Karuna Trivedi are de jure ineligible to
perform as the Arbitrators and, therefore, their mandate shall be deemed
to have been automatically terminated in terms of Section 12(5) r/w
Section 14 (1) of the Act of 1996.
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16] Heard the learned counsel for the parties and also perused the
record.
17] From the record, this Court finds that the facts of the case are not
disputed i.e., the parties have entered in to two Memorandums of
Understanding, which also contain Arbitration clauses. It is also an
admitted fact that pursuant to the dispute having arisen between the
parties, they have also entered into two separate agreements in respect
of the two MOUs, and they have appointed a third Arbitrator- Mrs.
Karuna Trivedi and has also acknowledged the relationship of the
earlier two Arbitrators viz.; Shri Asgar Ali Badshah and Shri Mohsin
Ali Merchant.
18] At this juncture, it would also be apt to refer to the relevant
provisions of the Act of 1996 viz.; Sections 12, 13 & 14, which read as
under:-
“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,–
(a) such as the existence either direct or indirect, of any
past or present relationship with or interest in any of the
parties or in relation to the subject-matter in dispute,
whether financial, business, professional or other kind,
which is likely to give rise to justifiable doubts as to his
independence or impartiality; and
(b) which are likely to affect his ability to devote sufficient
time to the arbitration and in particular his ability to
complete the entire arbitration within a period of twelve
months.
Explanation.1 –The grounds stated in the Fifth Schedule
shall guide in determining whether circumstances exist
which give rise to justifiable doubts as to the independence
or impartiality of an arbitrator.
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Explanation 2.–The disclosure shall be made by such
person in the form specified in the Sixth Schedule.]
(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 parties.
(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.
(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.
13. Challenge procedure.–(1) Subject to sub-section
(4), the parties are free to agree on a procedure for
challenging an arbitrator.
(2) Failing any agreement referred to in sub-section (1), a
party who intends to challenge an arbitrator shall, within
fifteen days after becoming aware of the constitution of the
arbitral tribunal or after becoming aware of any
circumstances referred to in sub-section (3) of section 12,
send a written statement of the reasons for the challenge to
the arbitral tribunal.
(3) Unless the arbitrator challenged under sub-section (2)
withdraws from his office or the other party agrees to the
challenge, the arbitral tribunal shall decide on the
challenge.
(4) If a challenge under any procedure agreed upon by the
parties or under the procedure under subsection (2) is not
successful, the arbitral tribunal shall continue the arbitral
proceedings and make an arbitral award.
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(5) Where an arbitral award is made under sub-section (4),
the party challenging the arbitrator may make an
application for setting aside such an arbitral award in
accordance with section 34.
(6) Where an arbitral award is set aside on an application
made under sub-section (5), the Court may decide as to
whether the arbitrator who is challenged is entitled to any
fees.
14. Failure or impossibility to act.–(1) The mandate of an
arbitrator shall terminate and he shall be substituted by
another arbitrator, if– (a) he becomes de jure or de facto
unable to perform his functions or for other reasons fails to
act without undue delay; and (b) he withdraws from his
office or the parties agree to the termination of his
mandate.
(2) If a controversy remains concerning any of the grounds
referred to in clause (a) of sub-section (1), a party may,
unless otherwise agreed by the parties, apply to the Court
to decide on the termination of the mandate.
(3) If, under this section or sub-section (3) of section 13, an
arbitrator withdraws from his office or a party agrees to the
termination of the mandate of an arbitrator, it shall not
imply acceptance of the validity of any ground referred to
in this section or sub-section (3) of section 12.”
(emphasis supplied)
19] A perusal of sub-section (5) of Section 12 of the Act of 1996
would reveal that
“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.”
20] And in terms of the same, the parties have also waived the
applicability of this sub-section by an express agreement in writing,
although the respondent has also disputed that agreement as well.
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21] So far as Sub-section (2) of Section 14 of the Act of 1996,
however, also provides that :
“(2) If a controversy remains concerning any of the
grounds referred to in clause (a) of sub-section (1), a party
may, unless otherwise agreed by the parties, apply to the
Court to decide on the termination of the mandate.”
22] In such circumstances, the question which falls for the
consideration of this Court is whether even after having agreed to the
appointment of the Arbitrators by way of an express agreement in
writing, whether the parties can still challenge the same by approaching
the District Court under sub-Section (2) of Section 14 of the Act of
1996.
23] It is also an admitted fact that the Arbitral Tribunal has already
passed an order holding that it has the jurisdiction to proceed with the
matter as provided under sub-section (3) of Section 13 of the Act of
1996.
24] At this juncture, it would be apt to refer to the decision rendered
by the Supreme Court in the case of Bharat Broadband Network
Limited (supra), the relevant paragraphs of the same read as under :-
“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 beSignature Not Verified
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NEUTRAL CITATION NO. 2025:MPHC-IND:15943 12substituted 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.”
[emphasis supplied]
25] In the considered opinion of this Court, the question posed by
this Court has already been answered in an emphatic manner by the
Supreme Court itself in the aforesaid case of Bharat Broadband
Network Limited (supra), and it has been held that if the controversy
still survives regarding the mandate of the Arbitrator to decide the
dispute between the parties, or also if there was a waiver by the conduct
of the parties, the only option left to the parties is to approach the
District Court under sub-Section (2) of Section 14 of the Act of 1996.
26] So far as the decision rendered by the learned senior counsel for
the petitioner in the case of Newton Engineering & Chemicals Ltd.
(supra) is concerned, the same is rendered much prior to the decision
rendered by the Supreme Court in the case of Bharat Broadband
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Network Limited (supra). Thus, it has not applicable in the present
scenario.
27] Similarly in the case of Vyam Technologies Ltd. (supra), again the
same cannot be relied upon in the light of the decision rendered by the
Supreme Court in the case of Bharat Broadband Network Limited
(supra).
28] In such facts and circumstances of the case, this Court is of the
considered opinion that the respondents no.1 & 2 have rightly
approached the District Court regarding the mandate of the Arbitral
Tribunal under sub-section (2) of Section 14, and thus, no interference
is made out. Accordingly, petition being devoid of merits is hereby
dismissed.
29] Learned Judge of the District Court is also requested to expedite
the matter and conclude the same as expeditiously as possible.
30] It is also made clear that this Court has not reflected upon the
merits of the case and all the issues remain open for the parties.
31] The parties are directed to appear before the District Court on 7 th
of July, 2025 or on such earlier date as already directed by the District
Court.
32] With the aforesaid, the present petition stands disposed of.
(SUBODH ABHYANKAR)
JUDGE
moni
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