The Bombay High Court has directed the appointment of a substitute sole arbitrator through Presolv360 after holding that the earlier arbitrator’s mandate had effectively expired due to a series of delays, unilateral fee escalations, suspension of hearings, and eventual time-bar under Section 29A of the Arbitration and Conciliation Act, 1996. Justice Somasekhar Sundaresan observed that the arbitrator neither resigned nor continued proceedings but kept the arbitration in “suspended animation,” resulting in the mandate lapsing by efflux of time.
The dispute arose from a 2019 Business Agreement between S.S. Trading Company Ltd. and S.N.C. Trading Company. The arbitrator initially imposed costs on the respondent for repeatedly abstaining from proceedings, later escalating the matter by directing the petitioner, to pay for penalties and additional fees. On 20 April 2023, the arbitrator suspended the tribunal entirely until funds were arranged, without fixing further dates.
Subsequently, the petition was filed under Section 11 and Section 15 of the Act, seeking the appointment of a new arbitrator on the ground that the existing arbitrator had abandoned the proceedings and was no longer acting within his mandate. Although not pleaded, Section 14(1)(a) was pressed during arguments to show failure to act without undue delay.
The Court noted that despite repeated defaults by the respondent, the arbitrator neither proceeded to exercise discretion to forfeit the respondent’s right to defence under Section 25, nor moved the matter forward. The Arbitrator has also not invoked Section 39 to exercise the option of imposing a lien despite the fee dispute, the Court added. Referring to ONGC vs. Afcons, 2024 (4) SCC 481, the Court held that the arbitrator’s unilateral fee revision was only a proposal, and once the parties rejected it, the proper course was to resign, not to retain the mandate while refusing to conduct hearings
These conduct, the court held, amounted either to withdrawal from office under Section 15 or failure to act without undue delay under Section 14. In any case, the statutory timelines under Section 29A had long expired, automatically terminating the mandate.
Allowing the petition, the Court issued the following directions-
1. Presolv360, an independent Online Dispute Resolution institution, is directed to appoint a sole arbitrator to adjudicate the disputes arising from the Agreement and administer the arbitration. The Copy of the order shall be forwarded to Presolv 360 along with the mutual transfer of contact details.
2. Since Presolv360 is an ODR institution, all proceedings will be conducted online, unless the arbitrator and parties mutually agree otherwise, with due notification to the institution.
3. Presolv360 is requested to appoint an independent arbitrator as soon as possible or within two weeks of receiving the order, in accordance with the Act and its own rules.
4. Parties must provide valid email IDs and mobile/landline numbers of their advocates (and any other required particulars) to Presolv360; communication to these emails will constitute valid service.
5. Arbitral costs and fees are to be borne equally by both parties in the first instance, subject to final determination by the tribunal in the award.
6. The seat of arbitration shall remain the seat specified in the Agreement, while proceedings will primarily be conducted online.
7. The substituted Arbitrator shall take over the proceedings from the stage at which they are, and continue with the proceedings.
Appearances
For Petitioner: Mr. Aliabbas Delhiwala with Ms. Ankita Karmokar, instructed by L.R. & Associates
For Respondent: Mr. Makarand M. Kale
