Issues Related To Bias Of An Arbitrator And Conduct Of Arbitral Proceedings Cannot Be Determined Under Section 29A Of The A&C Act: Delhi High Court Reiterates

The bench of Justice Pratibha M. Singh reiterated that the scope of Court's power under Section 29A is limited to the examination of whether the extension should be granted or not. It held that the grievance of a party with the conduct of arbitral proceedings or any other substantive challenge cannot be decided by the Court under Section 29A.

Facts

The parties, partners in the firm, entered into a Memorandum of Settlement (MoS) dated 16.07.2014. The MoS contained an arbitration clause for the settlement of any dispute arising out of the agreement.

A dispute arose between the parties, and the arbitration was invoked by the petitioners on 03.11.2015. The arbitrator entered reference, however, upon the request of the respondent, he recused from the proceedings in 2018. Thereafter, the petitioner approached the High Court for the appointment of the substitute arbitrator. The Court vide an order dated 16.01.2019 appointed the substitute arbitrator.

The proceedings began before the arbitrator and the pleadings were completed on 09.07.2019. Thereafter, the petitioners filed an application under Section 17 of the Act which was allowed by the arbitrator. Against the order of the arbitrator, the respondent filed an appeal under Section 37 of the A&C Act, causing substantial delay and lapse of time as the arbitral proceedings could not move forward due to the pendency of the appeal.

This was followed by the Covid-19 pandemic, leading to the expiry of the time provided for the completion of the arbitral proceedings. Accordingly, the petitioner filed an application under Section 29A (first application). The Court allowed the application, and the mandate of the arbitrator was extended till December 2022.

However, the proceedings again met with multiple delays and could not be completed within the extended time, leading to the filing of another application under Section 29A of the Act.

Submissions by the Parties

The respondent objected to extension of time on the following grounds:

• That the ld. Arbitrator is taking a view which is contrary and against the order of the Court.
• There were certain documents which were supplied to the present arbitrator by the substituted arbitrator, however, they are not available with the present arbitrator.
• The application does not provide for sufficient cause to extend the mandate. The proceedings have continued for 18 months, and more than 17 hearings have taken place, still the evidence for the parties has not commenced.

The petitioner countered the objections on the following grounds:

• The issue of bias and conduct of arbitral proceedings cannot be determined under Section 29A of the Act.

Analysis by the Court

The Court observed that the delays were on account of the covid-19 pandemic, the appeals against the orders passed by the arbitrator under Section 17 of the Act as during the pendency of the appeal, the proceedings could not go ahead.

The Court also observed that the objections raised by the respondent pertains to the way in which the arbitral proceedings were conducted and the alleged bias of the arbitrator.

The held that an issue related to the bias of an arbitrator in conducting the arbitral proceedings cannot be determined by a Court while dealing with the application under Section 29A of the A&C Act.

The Court held that the scope of Court's power under Section 29A is limited to the examination of whether the extension should be granted or not. It held that the grievance of a party with the conduct of arbitral proceedings or any other substantive challenge cannot be decided by the Court under Section 29A.

It held that as the petitioner has already filed an application under Section 13 of the Act, it would not be appropriate for the court to make any observations on the alleged bias of the arbitrator.

Accordingly, the Court extended the mandate of the arbitrator for a period of one year.

Case Title: Vivek Aggarwal v. Hemant Aggarwal, OMP(MISC)(COMM) 29 of 2023

Citation: 2024 LiveLaw (Del) 71

Date: 12.01.2024

Counsel for the Petitioner: Mr. Arjun Singh Bhati, Mr. Gurdeep Singh and Mr. Abhinav Nagar

Counsel for the Respondent Mr. Ratan K. Singh, Senior Advocate with Mr. Nikhilsh Krishnan and Mr. Abhishek Bhushan Singh

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