Appointed for many disputes from one bank: an arbitrator under Section 84 is not disqualified by volume
A Division Bench of Justices Bharati Dangre and Ashish S. Chavan dismiss two petitions challenging an arbitrator appointed by the Central Registrar, holding that a declaration under Section 12 of the Arbitration Act was on record and that multiple references from a single bank create no bar.
A Mumbai partnership firm borrowed six crore rupees from a multi-state co-operative bank in 2012. When the bank invoked Section 84 of the Multi State Co-operative Societies Act, the Central Registrar appointed an arbitrator — and the firm's objection was that the appointment was made unilaterally at the bank's instance, to a man who sits for a succession of that bank's disputes. On 1 October 2026 a Division Bench of the Bombay High Court dismissed both petitions, holding that being appointed for more than one reference from a particular bank does not disqualify an arbitrator or render him unable in law to act.
A term loan, and an arbitration nobody wanted to attend
The partnership firm availed a loan facility from the bank; a sanction letter dated 6 November 2012 extended a term loan of Rs 6,00,00,000, and a term loan agreement followed on 8 November 2012. Its two partners stood as guarantors for the debt.
The bank, a scheduled multi-state co-operative bank registered under the 2002 Act, invoked Section 84. By an order dated 9 March 2026 the Central Registrar of Co-operative Societies appointed an arbitrator, whose office address on the record is that of the bank itself. Two writ petitions followed — one by the firm and one by the partners in their capacity as guarantors — seeking the quashing of the appointment order, an injunction restraining the arbitrator from taking any step in the proceedings, and a declaration that the arbitral proceedings begun under that order were “illegal, void ab initio, coram non judice and non est in the eyes of law”. By then the arbitrator had already proceeded with the reference and issued summons.
By consent of the parties the Bench issued Rule, made it returnable forthwith and heard the petitions. The judgment was reserved on 8 September 2026 and delivered on 1 October by Justice Dangre.
Why multiple appointments are not a disqualification
On the central objection the Bench adopted the reasoning that an appointment to hear a number of disputes of a similar nature “would definitely not create a disqualification in him, to act as an Arbitrator”. It was therefore not persuaded that the arbitrator had incurred a disqualification and had thereby become de jure unable to perform his functions, so as to require his mandate to be terminated and a new arbitrator substituted — which was the relief the petitions actually sought.
Two features of the record supported that conclusion. First, there is on record a declaration given by the arbitrator under Section 12(1)(a) and (b) read with the Sixth Schedule of the Arbitration and Conciliation Act, 1996 — the statutory disclosure of circumstances likely to give rise to justifiable doubts as to independence or impartiality. Second, the appointment order itself refers to his appointment for the settlement of disputes relating to this bank, with the period of his appointment extended from time to time.
“Merely because the Arbitrator is appointed for more than one disputes”, the Bench held, does not “operate as a bar for him being appointed as Arbitrator”; a person may be appointed as arbitrator for a number of references made over to him by a particular bank.
The judgment also records, for completeness, that a challenge to the constitutional validity of Section 84 itself was rejected by a Division Bench of the same Court in M/s. J. Square Steels Pvt. Ltd., Aurangabad v. Union of India. So neither the provision nor the particular appointment under it was open to the attack made.
What the petitions were really seeking is visible in the relief they asked for. Beyond quashing the appointment order, they sought an injunction restraining the arbitrator from taking any step, and a declaration that the proceedings were void ab initio and coram non judice — the vocabulary of a jurisdictional attack rather than of a complaint about one arbitrator's suitability. Having rejected the premise that the appointment was bad, and noting that the validity of Section 84 itself was already settled, the Bench treated the exercise as what it characterised it to be: an attempt to avoid participating in the arbitration at all.
Order
“In the wake of the aforesaid, we do not find any merit in the contention advanced on behalf of the petitioners to avoid their participation in the arbitration proceedings before the Arbitrator, appointed in terms of Section 84 of the Multi-State Cooperative Societies Act, 2002.”
Finding no merit or substance in either petition, the Bench dismissed both. Rule was discharged, with no order as to costs. The arbitration proceeds, and the firm and its guarantors must now meet the bank's claim before the arbitrator they tried to displace.