Period Of Limitation For The Appointment Of Substitute Arbitrator Begins On The Date Of His Recusal/Removal, Date Of Knowledge Is Irrelevant: Delhi High Court

The High Court of Delhi has held that the period of limitation for appointing a substitute arbitrator under Section 15(2) of the A&C Act commences on the date of recusal/removal of the arbitrator and the date on which the fact of his removal/recusal comes to the knowledge of a party is irrelevant for the purpose of limitation. The bench of Justice Mini Pushkarna held that since Section 15 of the A&C Act does not contain any provision of limitation, therefore, the period of limitation would be 3 years as provided under Article 137 of the Limitation Act, 1963. The Court held that Article 137 of the Limitation Act is not based on knowledge and the Act clearly provides instances where the knowledge of a party is essential for the purpose of commencement of the limitation period i.e., Articles 4, 54, 56, 57, 59, 61, 68, 71, 92, 92-5, 110 and 123. Thus, the Court held that period of limitation for the purpose of Section 15(2) commences on the date of recusal or removal of arbitrator as provided under Section 15(1) of the Act. Facts The parties entered into two share purchase agreements dated 04.11.2006. Thereafter, disputes arose between the parties and the petitioner issued the notice of arbitration dated 27.05.2009 and requested the respondents to nominate its arbitrator. On the failure of respondent to nominate its arbitrator, the petitioner requested the Court under Section 11 of the A&C Act to appoint respondent's arbitrator. During the proceedings, both the parties agreed on a sole arbitrator being appointed by the Court, accordingly, the Court appointed a retired High Court judge as the sole arbitrator. After completion of the pleadings, evidence of the parties was concluded on 26.03.2015. The matter was posted for final arguments on 24.08.2015, however, the arbitrator, for personal reasons, recused himself vide an order dated 27.07.2015 and sent it to the parties vide an email on the same day. The petitioner, on 01.08.2015, filed an application for the appointment of substitute arbitrator under Section 15(2) of the Act. It also, on 22.08.2018, filed an application under Section 5 of the Limitation Act for the condonation of delay of 5 days in filing the petition. Contention of the Parties The petitioner sought the appointment of substitute arbitrator and condonation of delay on the following grounds: The email of the petitioner's advocate was not functioning, due to technical default, during the time when the email dated 27.07.2015 was sent by the arbitrator and the fact of his recusal only came to the knowledge of the advocate only in the second week of August 2015, therefore, the period of limitation would commence only from the second week of August, thus, the petition is within limitation having been filed on 01.08.2018.The file of the present matter got mixed up with other relevant file due to an error, therefore, the delay if any is of 5 days and it should be condoned for the reasons as given above. The right to apply for the substitution accrued only after the expiry of 30 days period from the recusal of the arbitrator, therefore, the petition is within limitation. The respondents objected to the maintainability of the petition on the following grounds: The petition is filed beyond the limitation period, moreover, the petitioner's have not provided any reasonable or sufficient reason explaining their delay. The petitioner kept sitting on the fence for three years and let the period of limitation expire. All the communication between the parties and the tribunal was by email only, moreover, the email in question was sent to three individuals working in the firm representing the petitioner and not just the advocate appearing for it, therefore, the argument that it was not aware of the recusal is without any substance. No specific date or any proof of the malfunctioning of the email of petitioner's advocate is filed with the petition.As per Section 15(2), the substitution shall be made in the same manner and according to the same Rules that were applicable to the appointment of an arbitrator, as the earlier appointment was made by the Court under Section 11(6) of the Act, the substitution was also to be made by the Court, therefore, the right to apply accrued on the same date and the petitioner cannot count period of 30 days while calculating the period of limitation on the wrong premise that respondents were to appoint substitute Arbitrator within 30 days of recusal by Arbitrator. Analysis by the Court The Court held that since Section 15 of the A&C Act does not contain any provision of limitation, therefore, the period of limitation would be 3 years as provided under Article 137 of the Limitation Act, 1963. The Court held that Article 137 of the Limitation Act is not based on knowledge and the Act clearly provides instances where the knowledge of a party...

Period Of Limitation For The Appointment Of Substitute Arbitrator Begins On The Date Of His Recusal/Removal, Date Of Knowledge Is Irrelevant: Delhi High Court

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