The Supreme Court on Friday appointed former Supreme Court judge Justice Ajay Rastogi as the substitute sole arbitrator to continue arbitration proceedings between DMI Finance Pvt. Ltd. and RCC Infraventures Ltd., after former Supreme Court judge Justice R. Banumathi (Retd.) recused herself from the proceedings.

The dispute reached the Supreme Court following an incident during the arbitral proceedings in which a witness allegedly left midway through cross-examination without signing his recorded deposition and subsequently disputed the contents of the statement. Following this, Justice R. Banumathi (Retd.) recused herself from the proceedings.

At the outset of the hearing, the Bench of Chief Justice Surya Kant, Justice Joymalya Bagchi and Justice V Mohana observed that while it was not inclined to examine the circumstances leading to Justice Banumathi’s recusal, the episode was unfortunate.

Appearing for DMI Finance, Senior Advocate Vikas Singh argued that a witness could not be permitted to disown a statement recorded before the arbitral tribunal merely by refusing to sign it and walking away. Referring to Section 27(5) of the Arbitration and Conciliation Act, 1996, he submitted that the High Court had erred in proceeding on the premise that contempt-related consequences could arise only if the arbitrator sought such action. He urged the Court to leave it to the substitute arbitrator to determine the evidentiary value of the unsigned deposition and whether the witness’s conduct warranted action under the provision.

The Bench indicated that questions relating to the witness’s testimony, including whether the unsigned deposition could be relied upon or whether any action was warranted against the witness, ought to be left to the newly appointed arbitrator. Singh agreed, clarifying that he was not asking the Supreme Court to decide those issues but only to keep them open for determination by the substitute arbitrator.

The Court also noted that eight days of cross-examination of the claimant’s first witness had already been completed and observed that the arbitration should continue from the stage at which it had been left. Counsel informed the Bench that only a part of the cross-examination remained and that the substitute arbitrator could determine how the remaining evidence should proceed.

It was further brought to the Court’s notice that an application under Section 29A of the Arbitration and Conciliation Act seeking extension of the arbitral mandate remained pending before the Delhi High Court because of the pendency of the present proceedings before the Supreme Court.

During the hearing, several names of retired judges were suggested for appointment as the substitute arbitrator. Ultimately, both parties expressed no objection to the appointment of Justice Ajay Rastogi, following which the Court appointed him as the substitute sole arbitrator.

A request was also made that the arbitral tribunal be reconstituted as a three-member tribunal in accordance with the arbitration agreement. The Court declined the suggestion, noting that the Delhi High Court had earlier appointed Justice Banumathi as the sole arbitrator after both parties had agreed to proceed before a single-member tribunal.

Before concluding the hearing, the Bench directed that the parties cooperate in the arbitral proceedings so that similar controversies do not arise before the newly appointed arbitrator, who will continue the arbitration from the stage at which it stood prior to Justice Banumathi’s recusal.