Delhi High Court Terminates Mandate Of Arbitrator Over Unexplained Delay Of 8 Years In Delivering Award

The Delhi High Court bench of Justice Subramonium Prasad has held that arbitral proceedings cannot remain pending for eight years without the pronouncement of an award by the learned Sole Arbitrator. While a hearing was scheduled on 17.10.2023, no reasons were provided for convening the hearing or for the prolonged delay in delivering the award. Such undue and unexplained delay defeats the very purpose of arbitration and is contrary to the public policy of India. Accordingly, the mandate of the learned Sole Arbitrator was terminated under section 14 of the Arbitration Act. Brief Facts: Petitioner issued a Work Order in favour of the Respondent for execution of the works for laying and construction of underground MDPE pipeline and associated facilities interconnecting Coal Bed Methane Wells at the Petitioner's facility (Gas gathering station) in Asansol, West Bengal for Rs. 3,72,07.251/-. The Respondent did not conclude the work to be executed at the Petitioner's facility as per the Work Order and ultimately abandoned the same, without completion, due to which disputes arose between the parties. It is stated that on 20.10.2015 The Respondent sent a legal notice cum notice invoking arbitration to the Petitioner, seeking payment of dues and invoices and invoked the arbitration clause contained in the Work Order vii. On 16.11.2015 the Petitioner as per the Work Order, nominated the learned Sole Arbitrator for the adjudication of disputes between the parties. The Petitioner contends that after a lapse of more than three years, the learned Sole Arbitrator, vide email dated 04.10.2023, scheduled a hearing for directions on 17.10.2023. It is this inordinate delay in the arbitral proceedings, particularly in the passing of the award, that has aggrieved the Petitioner, prompting the filing of the present petition. Contentions: The Petitioner submitted that the Award was reserved on 05.03.2020 by the learned Sole Arbitrator, however, despite the lapse of a significant amount of time, the award was not rendered. The learned Sole Arbitrator has manifestly failed to act without undue delay, and on this account, his mandate is required to be terminated following the legislative intent enshrined in the Arbitration Act. It was further submitted that there is no prescription under the Arbitration Act that a party ought to seek reasons for the delay from the arbitrator or provide an opportunity thereof before approaching the Court under Section 14 of the Arbitration and Conciliation Act. Per contra, the Respondent submitted that no timelines were introduced into Section 14 by the 2015 Amendment, unlike Section 29A. Accepting the Petitioner's claim that mere delay warrants termination of the Arbitrator's mandate—without any explanation from the Arbitrator—would amount to reading strict timelines into Section 14, contrary to legislative intent, or adding a ground for termination not contemplated by the provision. Observations: The Court at the outset noted that Section 14 of the Arbitration Act outlines the circumstances under which an arbitrator's mandate may be terminated—namely, when the arbitrator becomes de jure or de facto unable to perform their functions, withdraws from office, or the parties mutually agree to the termination. In such cases, a party may approach the Court to seek a decision on the termination of the mandate. The Supreme Court in Union of India v. U.P. State Bridge Corpn. Ltd., (2015) after referring to a catena of decisions held that the foremost principle of arbitration is to ensure a fair, speedy, and cost-effective trial by the Arbitral Tribunal. Unnecessary delays or expenses defeat the very purpose of arbitration. As an alternative dispute resolution mechanism, arbitration is intended to provide expeditious and effective resolution of disputes through a forum chosen by the parties. While no rigid timeline can be imposed, there must be a conscious effort to constitute the Arbitral Tribunal promptly and prevent proceedings from dragging on for years. Based on the above, it noted that the material on record shows that the learned Sole Arbitrator was appointed on 16.11.2015, and the award was reserved on 05.03.2020. However, no award has been pronounced even after nearly eight years. Although a hearing was scheduled for 17.10.2023, no reasons have been provided for either the delay or the purpose of the hearing. The court concluded that the mandate of the learned Sole Arbitrator warrants termination due to the undue and unexplained delay in delivering the award, which is contrary to the public policy of India. Case Title: GREAT EASTERN ENERGY CORPORATION LIMITED versus SOPAN PROJECTSCitation: 2025 LiveLaw (Del) 626 Case Number: O.M.P. (T) (COMM.) 102/2023 & I.A. 21494/2023 Judgment Date: 24/04/2025 For Petitioner: Mr. Raj Shekhar Rao, Sr. Advocate with Ms. Shrey Chathly, Adv ...

Delhi High Court Terminates Mandate Of Arbitrator Over Unexplained Delay Of 8 Years In Delivering Award

Mohd Malik Chauhan

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Delhi High Court Terminates Mandate Of Arbitrator Over Unexplained Delay Of 8 Years In Delivering Award

Mohd Malik Chauhan

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