Limitation Period For Filing An Application For Substitution Of An Arbitrator Is 3 Years: Delhi High Court

The Court also held that an arbitrator would be deemed to have abandoned the arbitration if no proceedings take place for a substantial period of time.

Facts

The parties entered into an agreement dated 24.11.2008. Thereafter, the parties entered into a Hypothecation Deed dated 14.12.2009 and a supplementary agreement dated 22.05.2011.

A dispute arose between the parties is relation to the non-payment of dues by the respondent. Accordingly, the Petitioner invoked arbitration and appointed a sole arbitrator to adjudicate the dispute between the parties on 09.08.2019.

Before the arbitrator, the respondent filed an application under Section 12 of the A&C Act seeking its withdrawal due to unilateral appointment. After this application, the arbitral proceedings came to a grinding halt and the mandate of the arbitrator expired on 23.10.2022 after excluding the COVID-19 exemption.

Thereafter, the petitioner approached the Court for the appointment of a substitute arbitrator under Section 14 of the A&C Act.

Analysis by the Court

The Court observed that the respondents have not disputed the fact that the arbitrator abandoned the arbitral proceedings mid-way. It observed that the mandate of the arbitrator expired on 23.10.2022. It held that an arbitrator would be deemed to have abandoned the arbitration if no proceedings take place for a substantial period of time.

The Court held that the period of limitation for filing an application under Section 14 of the A&C Act seeking substitution of the arbitrator is three years from the date when the right to apply accrues. It held that the right to apply for substitution of the arbitrator arose on the expiry of its mandate.

Accordingly, the Court held the petition to be within limitation and substituted the arbitrator.

Case Title: North East Centre of Technology Application & Reach v. Divine Bamboo Mat Manufacturing

Citation: 2024 LiveLaw (Del) 450

Date: 08.04.2024

Counsel for the Petitioner: Mr. Raghvendra Mohan Bajaj

Counsel for the Respondent: Mr. Durga Dutt, Mr. Pradeep Yadav, Mr. Ratan Singh & Mr. Devendra Rao Madhav

Click Here To Read/Download Judgment