The Supreme Court has dismissed a Special Leave Petition challenging the Delhi High Court judgment that upheld an arbitral award passed by the majority of a three-member tribunal, despite one arbitrator recusing himself one day before the scheduled pronouncement of the award. The Bench of Justice PS Narasimha and Justice Alko Aradhe declined to interfere with the High Court’s judgment.
The dispute arose from a 2011 Memorandum of Understanding between four individuals concerning a proposed business venture. After disputes arose, arbitration was conducted under the aegis of the Delhi International Arbitration Centre. The three-member tribunal comprised two nominated arbitrators and a presiding arbitrator. The matter was reserved for an award, and the DIAC was informed on December 10, 2018 that the majority award was ready for pronouncement on December 21.
However, on December 20, 2018, one of the arbitrators, who disagreed with the proposed findings, emailed the presiding arbitrator stating that he did not wish to continue as a co-arbitrator and recused himself. The remaining two arbitrators proceeded to pronounce the award on December 21. The majority award granted the respondent compensation towards unpaid salary for the remaining period and litigation and arbitration costs.
The award was challenged under Section 34 of the Arbitration and Conciliation Act, 1996, primarily on the ground that one member had recused before the award was pronounced. The Commercial Court rejected the challenge, following which the matter reached the Delhi High Court under Section 37.
The Delhi High Court held that the arbitrator’s mandate terminated upon his withdrawal under Section 15(1)(a), ordinarily requiring substitution under Section 15(2). However, it found the timing of the recusal material: the majority had already taken its decision and the award was ready for pronouncement. The Court held that a dissenting arbitrator could not stall the proceedings by recusing at the final stage after the majority had reached its decision.
The Supreme Court’s August 25, 2026 order recorded that it was “not inclined to interfere” with the Delhi High Court judgment and dismissed the SLP. It also permitted the petitioner to withdraw the ₹25 lakh amount deposited pursuant to the earlier proceedings, along with accrued interest.
