The Supreme Court has set aside a Delhi High Court order that declined to substitute the sole arbitrator and instead extended his mandate by four months under Section 29A(6) of the Arbitration and Conciliation Act, 1996. The Court held that once the statutory timeline for making an arbitral award expires, the arbitrator becomes functus officio and cannot continue.
The case stemmed from the failure of the sole arbitrator to deliver the award within the statutory timeline under Section 29A of the Arbitration Act, causing his mandate to lapse and leading the appellant to seek substitution. However, the Delhi High Court has rejected the application while extending the arbitrator’s mandate. This has prompted an appeal before the Supreme Court.
The bench of Justice Sanjay Kumar and Justice Alok Aradhe noted that after excluding the COVID-19 limitation extension period, the arbitrator was required to deliver the award by February 28, 2023. As no application for extension was filed by the parties within time, the arbitrator’s mandate stood terminated by operation of Section 29A(4). Despite this, the High Court had extended the arbitrator’s tenure, which the Supreme Court found impermissible since there was no subsisting mandate to extend.
Rejecting the respondents’ argument that substitution was barred because earlier challenges under Sections 14 and 15 had failed, the Court held that remedies under Sections 14, 15, and 29A operate in different spheres, and the dismissal of an earlier challenge did not prevent the Court from exercising its jurisdiction under Section 29A(6). The Court held that “the substitution of a sole arbitrator is warranted, when his mandate ceases to exist, to effectuate the object of the Act, which mandates expeditious resolution of the dispute.”
Allowing the appeal, the Supreme Court appointed Justice Najmi Waziri (Retd.) as the new sole arbitrator and directed that the arbitral proceedings resume from the stage already reached and be concluded within six months.
Appearances
Petitioner- Mr. Pradeep Aggarwal, Adv. Mr. Lal Pratap Singh, Adv. Mr. Umesh Pratap Singh, Adv. Mr. Arjun Aggarwal, AOR Mr. Sahil Gupta, Adv. Mr. Vishal Singh, Adv. Mr. Aman Kumar, Adv.
Respondents- Mr. S.C. Singhal, Adv. Mr. Padam Kant Saxena, Adv. Mr. Parth Mahajan, Adv. Mr. Saideep Kaushik, Adv. Ms. Megha Gaur, Adv. Mr. Vibhav Mishra, Adv. Mr. Vihav Mishra, Adv. Mr. Parmanand Gaur, AOR
